Trade prospects between India and Australia have multiplied in recent years, propelled by the many complementarities between the two economies. The value of bilateral trade in goods and services between the two countries increased from US $ 10.12 billion in 2007 to US $ 18.08 billion in 2020.
In 2020, India was Australia’s seventh trading partner and sixth export destination, thanks to coal and international education. On the other hand, Australia is also an increasingly important destination for Indian exports.
Trade agreement in preparation
With the official resumption of negotiations on the India-Australia Comprehensive Economic Cooperation Agreement (ECSC) at the 17th India-Australia Joint Ministerial Commission held on September 30, 2021, this bilateral trade relationship is expected to deepen further.
At the same meeting, the two sides agreed to conclude an interim agreement or an early harvest trade agreement by December 2021. Under the early harvest agreement, duties on some selected items will be reduced.
The two sides agreed that the long-standing free trade agreement, covering trade in goods and services, investments, etc. will be finalized by the end of 2022.
India Australia Trade and Investment: Trends and Prospects
India’s GDP in 2019 was US $ 2.97 trillion, while Australia’s GDP during the same period was US $ 1.4 trillion. During the same period, while India ranked 44e in the economic complexity index (ECI 0.59) and 15e in total exports ($ 330 billion) Australia ranks 79e in the economic complexity index (ECI -0.19) and 19e in total exports (US $ 284 billion).
India’s export basket to Australia mainly includes products such as petroleum products, medicines, polished diamonds, gold jewelry, clothing, etc., while the main Australian exports to Australia India include coal, LNG, alumina and non-monetary gold.
In the service sector, India’s main exports to Australia are related to travel, telecommunications, and IT, government and financial services, while Australian services exported to India are mainly related to education and services. personal.
Sectors such as food and agribusiness, health care, infrastructure as well as mining and resources have grown in importance in recent years.
In the healthcare sector, rising incomes, increased health awareness and easy access to insurance are driving demand for new businesses in medical technology as well as research and development (R&D).
In the food and agro-food category, there is increased demand in India for premium alcoholic beverages and wines, as well as health supplements and nutraceuticals like cold pressed juices, granola and baked goods, gluten free and trans fat free.
India’s education industry is also booming in the online segment, providing new opportunities for foreign investors looking to capitalize on young Indians seeking online training, upgrading and hobby learning options.
Indian exports to Australia
In 2019, India exported US $ 3.19 billion to Australia.
The main products that India exported to Australia are refined petroleum (US $ 287 million), packaged medicines (US $ 277 million) and rail cars (US $ 166 million).
Over the past 24 years, Indian exports to Australia have grown at an annual rate of 8.67%, from US $ 433 million in 1995 to US $ 3.19 billion in 2019.
Australian exports to India
In 2019, Australian exports to India amounted to US $ 15.3 billion. The main products Australia exported to India were charcoal briquettes (US $ 12.1 billion), gold (US $ 604 million) and petroleum gas (US $ 419 million).
Over the past 24 years, Australian exports to India have grown at an annual rate of 10.5%, from US $ 1.38 billion in 1995 to US $ 15.3 billion in 2019.
Education remains Australia’s largest export of services to India, valued at $ 4.46 billion and accounting for around 88% of the total in 2020. At the end of 2020, Indian students in Australia were at the top. number of 115 137.
The total value of two-way foreign direct investment (FDI) between the two countries was estimated at US $ 1.04 billion in 2020.
India offers a wealth of investment opportunities for Australian investors as there is increased demand for improved infrastructure in rapidly urbanizing cities and logistics infrastructure. With the recently announced National Monetization Pipeline, the Indian Federal Government has invited investments to the tune of US $ 81 billion by monetizing its core assets in 13 strategic sectors through this pipeline, including railways, roads, production of electricity, etc. Projects under the National Master of India The Multimodal Connectivity Plan to Economic Zones also creates multiple investment opportunities for investors.
Besides infrastructure, India’s manufacturing sector is expected to benefit from the government’s planned efforts to boost specialist and value-added segments in several sectors, such as computer hardware, electric vehicles, ACC battery storage, drones, components. automobiles, pharmaceuticals, solar modules, white goods, food processing, special steel, etc. Incentives are distributed based on the investor’s spending plans, sales, and the creation of targeted new or high-tech or value-added production capacity. The cumulative impact of these production-linked incentives (PLIs) is expected to make India a much more competitive manufacturing and supply base by 2030.
Tariffs between India and Australia
In 2018, the Indian products that paid the highest import tariffs to enter Australia were food preparations and grape wines, sparkling wines, fermented drinks, alcoholic beverages, etc. at a rate of 150%.
During the same period, the Australian products that paid the highest import tariffs to enter India were vegetables and mixtures, both fresh and dried, including grapes, prunes, apricots, etc. . at the rate of five percent.
India-Australia Bilateral Economic Partnership
In 2020, the two countries upgraded their bilateral strategic partnership concluded in 2009 to a Comprehensive Strategic Partnership (CSP). In September 2021, the two countries formally agreed to re-engage in CECA to foster cooperation in multiple areas, including critical minerals, health, critical technologies, science and agriculture.
In addition, the two sides agreed to speed up negotiations to sign an FTA by the end of 2022. According to estimates by the Center for International Economics, a 20-year FTA could lead to a net increase in GDP. from Australia up to $ 32 billion. and India’s GDP up to US $ 34.23 billion.
To help Australian and Indian business partnerships, the Australian government has launched the Australia India Business Exchange (AIBX) program. AIBX provides a range of services to help Australian businesses enter and establish themselves in India, from industry specific information to advice on how to do business with India and how to get into India. India’s online retail market.
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