INDIA
23 December 2014
Indo-Aussie “sweet spot”
The Indo-Australian relationship, which has long been defined by the 3Cs of cricket, curry and Commonwealth, now seems set to rise to a higher level and exploit the potential of a new "sweet-spot".
Indian Prime Minister Narendra Modi wowed Australian audiences on his recent visit to Australia to participate in the G20 Summit, chaired by his Australian counterpart, Tony Abbott. The Indo-Australian relationship, which has long been defined by the 3Cs of cricket, curry and Commonwealth, now seems set to rise to a higher level and exploit the potential of a new "sweet-spot".
In recent times, both the Australian and Indian economies have reached critical junctures. And to successfully navigate these junctures, the two countries should look to each other as new engines of growth.
The Australian economy achieved two to three decades of excellent performance driven by widespread reforms, mainly undertaken in the 1980s and 1990s, and strong demand for its natural resource exports, especially from China. But as strong export growth pushed the Australian dollar exchange rate up, the competitiveness of the manufacturing sector was adversely affected, and some service activities were offshored, including to India.
More recently, with the slowing of the Chinese economy, Australia’s most important economic partner, Australia’s natural resource exports have been hit. To unleash a fresh phase of strong economic growth, Australia must undertake new deeper economic reforms, and diversify its exports to partners like India which have enormous growth potential.
The Indian economy also enjoyed a couple of decades of strong economic performance, following a wave of reforms started in 1991. But the Indian economy also hit the wall a few years back, as the benefits of earlier reforms waned. The country has been suffering from poor infrastructure, deep corruption and a policy environment that has not been business-friendly.
Since his election in May 2014, Indian Prime Minister Modi has been trying to restart the Indian economic machine through impressive economic reforms. He took full advantage of his visit to Australia to pass on this message in order to deepen this under-developed partnership.
The Prime Minister was very right to do so. Australia may now be home to some 450,000 Indians, making them the fourth biggest migrant community after the UK, New Zealand and China. But trade and investment links are still modest. Trade between the two countries, which is just one-tenth of the value of Australia/China trade, has even been falling these past three years.
In a speech to the Australian parliament (the first ever by an Indian leader), Mr Modi stressed that Australia is "a vital partner in India’s quest for progress and prosperity". "There are few countries in the world where we see so much synergy", he said. He welcomed Australia's growing role in driving the prosperity and shaping the security of the Asia Pacific and Indian Ocean region.
The Prime Minister sees "Australia as a major partner in every area of our national priority" like skills and education, housing, healthcare, clean energy, smart cities, agriculture and water. In a spirit of shared partnership, he highlighted that India can be the answer to Australia’s search for new economic opportunities and the desire to diversify its global economic engagement. He insisted Australia and India are "united by the ideals of democracy ... (which) offers the best opportunity for the human spirit to flourish".
Australia's usually rowdy Parliament was reportedly "hypnotised" by the charisma of the Indian leader. "Never seen any leader as rapturously received in Australia as Prime Minister Modi", Mr Abbott said in the Australian Parliament.
Mr Modi also took his pitch to a power breakfast in Brisbane with top business leaders from Australia's Queensland and India. He highlighted the efforts of his government to eliminate unnecessary laws and regulations, make processes easier and shorter, and ensure that the government is more transparent.
In Melbourne, the Prime Minister met some of Australia's richest people at a business forum attended by mining magnate Gina Rinehart, Visy Industries chairman Anthony Pratt and logistics entrepreneur Lindsay Fox. He pointed out that trade between the two countries was still largely confined to a "small basket" of things like coal, gold and education. "We need to impart more dynamism into bilateral trade and investments," he said.
The Prime Minister received a rock-star welcome when he addressed a crowd of some 17,000 people at an event organised by the Indian Australian Community Foundation at Sydney Olympic Park. He reportedly drove the packed audience into delirium. People flew in to the event from the US, Singapore, New Zealand, Adelaide and Perth. A train from Melbourne to Sydney (the "Modi-express") brought over 200 people to see the Indian leader.
Mr Modi spoke at length about his government's plans for economic development in India. He said he expected the "large and growing" Indian community in Australia would help build links between the two countries. "I request you to contribute. God has given you so much," Mr Modi said. He also drew attention to how several Indian companies are making significant investments in the Australian mining sector, notably Adani's major investment in a coal mine, rail and port project in Queensland.
The Prime Minister also underscored India and Australia's "shared values", especially their strong democratic traditions. "Without democracy, do you think I would be here?" he said. He also spoke about sporting ties between India and Australia. "Neither India or Australia could live without cricket," he said.
At the G20 summit, Mr Modi managed to win international support in India's fight against "black money", illegal funds sent to tax havens like Mauritius, Switzerland, Liechtenstein and the British Virgin Islands. This important initiative highlights the importance he attaches to good governance for development.
Prime Minister Modi's visit to Australia was the first by an Indian leader since Rajiv Gandhi's of 28 years ago. It should never have taken so long, and this will change, said Mr Modi. His visit also comes hot on the heels of Prime Minister Tony Abbott September visit to India as Mr Modi's first official State Guest.
Prime Minister Abbott has stated his intention to secure a free trade agreement with India in 2015, following similar deals Australia has recently signed with China, Japan and Korea. "By the end of next year we will have a free trade deal with what is potentially the world's largest market," Mr Abbott vowed.
During this visit, the two governments signed a Framework for Security Cooperation in recognition of the expanding defense and security ties between the two countries. With China’s growing naval presence in the Indian Ocean, Indo-Australian maritime cooperation has been expanding. Agreements were also signed on social security, transfer of prisoners, fighting drug trafficking, arts and cultural cooperation, and tourism.
The two leaders also agreed to speed up arrangements to implement the civil nuclear agreement signed in September that will ensure the supply of Australian uranium for India's nuclear energy programme. And in a sign of the good will between the two countries, the Australian government returned a 900 year statue of a Dancing Shiva. This precious object, which had been stolen from a temple in Tamil Nadu, had been bought by the National Gallery of Australia from a dodgy dealer.
There are moments in history when the interests and destinies of two nations can converge. And that certainly seems to be the case for Australia and India right now. The friendship that Prime Ministers Abbott and Modi have forged has created stronger foundations for their countries’ partnership. All that remains is for the peoples of these two countries to seize the moment, and exploit the immense potential of this Indo-Aussie sweet spot.
In recent times, both the Australian and Indian economies have reached critical junctures. And to successfully navigate these junctures, the two countries should look to each other as new engines of growth.
The Australian economy achieved two to three decades of excellent performance driven by widespread reforms, mainly undertaken in the 1980s and 1990s, and strong demand for its natural resource exports, especially from China. But as strong export growth pushed the Australian dollar exchange rate up, the competitiveness of the manufacturing sector was adversely affected, and some service activities were offshored, including to India.
More recently, with the slowing of the Chinese economy, Australia’s most important economic partner, Australia’s natural resource exports have been hit. To unleash a fresh phase of strong economic growth, Australia must undertake new deeper economic reforms, and diversify its exports to partners like India which have enormous growth potential.
The Indian economy also enjoyed a couple of decades of strong economic performance, following a wave of reforms started in 1991. But the Indian economy also hit the wall a few years back, as the benefits of earlier reforms waned. The country has been suffering from poor infrastructure, deep corruption and a policy environment that has not been business-friendly.
Since his election in May 2014, Indian Prime Minister Modi has been trying to restart the Indian economic machine through impressive economic reforms. He took full advantage of his visit to Australia to pass on this message in order to deepen this under-developed partnership.
The Prime Minister was very right to do so. Australia may now be home to some 450,000 Indians, making them the fourth biggest migrant community after the UK, New Zealand and China. But trade and investment links are still modest. Trade between the two countries, which is just one-tenth of the value of Australia/China trade, has even been falling these past three years.
In a speech to the Australian parliament (the first ever by an Indian leader), Mr Modi stressed that Australia is "a vital partner in India’s quest for progress and prosperity". "There are few countries in the world where we see so much synergy", he said. He welcomed Australia's growing role in driving the prosperity and shaping the security of the Asia Pacific and Indian Ocean region.
The Prime Minister sees "Australia as a major partner in every area of our national priority" like skills and education, housing, healthcare, clean energy, smart cities, agriculture and water. In a spirit of shared partnership, he highlighted that India can be the answer to Australia’s search for new economic opportunities and the desire to diversify its global economic engagement. He insisted Australia and India are "united by the ideals of democracy ... (which) offers the best opportunity for the human spirit to flourish".
Australia's usually rowdy Parliament was reportedly "hypnotised" by the charisma of the Indian leader. "Never seen any leader as rapturously received in Australia as Prime Minister Modi", Mr Abbott said in the Australian Parliament.
Mr Modi also took his pitch to a power breakfast in Brisbane with top business leaders from Australia's Queensland and India. He highlighted the efforts of his government to eliminate unnecessary laws and regulations, make processes easier and shorter, and ensure that the government is more transparent.
In Melbourne, the Prime Minister met some of Australia's richest people at a business forum attended by mining magnate Gina Rinehart, Visy Industries chairman Anthony Pratt and logistics entrepreneur Lindsay Fox. He pointed out that trade between the two countries was still largely confined to a "small basket" of things like coal, gold and education. "We need to impart more dynamism into bilateral trade and investments," he said.
The Prime Minister received a rock-star welcome when he addressed a crowd of some 17,000 people at an event organised by the Indian Australian Community Foundation at Sydney Olympic Park. He reportedly drove the packed audience into delirium. People flew in to the event from the US, Singapore, New Zealand, Adelaide and Perth. A train from Melbourne to Sydney (the "Modi-express") brought over 200 people to see the Indian leader.
Mr Modi spoke at length about his government's plans for economic development in India. He said he expected the "large and growing" Indian community in Australia would help build links between the two countries. "I request you to contribute. God has given you so much," Mr Modi said. He also drew attention to how several Indian companies are making significant investments in the Australian mining sector, notably Adani's major investment in a coal mine, rail and port project in Queensland.
The Prime Minister also underscored India and Australia's "shared values", especially their strong democratic traditions. "Without democracy, do you think I would be here?" he said. He also spoke about sporting ties between India and Australia. "Neither India or Australia could live without cricket," he said.
At the G20 summit, Mr Modi managed to win international support in India's fight against "black money", illegal funds sent to tax havens like Mauritius, Switzerland, Liechtenstein and the British Virgin Islands. This important initiative highlights the importance he attaches to good governance for development.
Prime Minister Modi's visit to Australia was the first by an Indian leader since Rajiv Gandhi's of 28 years ago. It should never have taken so long, and this will change, said Mr Modi. His visit also comes hot on the heels of Prime Minister Tony Abbott September visit to India as Mr Modi's first official State Guest.
Prime Minister Abbott has stated his intention to secure a free trade agreement with India in 2015, following similar deals Australia has recently signed with China, Japan and Korea. "By the end of next year we will have a free trade deal with what is potentially the world's largest market," Mr Abbott vowed.
During this visit, the two governments signed a Framework for Security Cooperation in recognition of the expanding defense and security ties between the two countries. With China’s growing naval presence in the Indian Ocean, Indo-Australian maritime cooperation has been expanding. Agreements were also signed on social security, transfer of prisoners, fighting drug trafficking, arts and cultural cooperation, and tourism.
The two leaders also agreed to speed up arrangements to implement the civil nuclear agreement signed in September that will ensure the supply of Australian uranium for India's nuclear energy programme. And in a sign of the good will between the two countries, the Australian government returned a 900 year statue of a Dancing Shiva. This precious object, which had been stolen from a temple in Tamil Nadu, had been bought by the National Gallery of Australia from a dodgy dealer.
There are moments in history when the interests and destinies of two nations can converge. And that certainly seems to be the case for Australia and India right now. The friendship that Prime Ministers Abbott and Modi have forged has created stronger foundations for their countries’ partnership. All that remains is for the peoples of these two countries to seize the moment, and exploit the immense potential of this Indo-Aussie sweet spot.