Australia’s Confidence in India’s Economic Future

Australia anticipates that India will become the world’s third-largest economy by 2030 and has identified key sectors as the “Superhighways of Growth” in its new roadmap for economic engagement.

Key Sectors Driving Growth

1. Clean Energy

Focus: Renewable energy and critical minerals to support India’s green transition.
Example: Australia, as the largest producer of lithium, supplies essential materials for India’s electric vehicle (EV) manufacturing.

2. Education and Skills

Focus: Collaboration on skill development and higher education to equip India’s workforce.
Example: Australian universities have opened campuses in Gujarat’s GIFT City and are expanding to Noida, offering advanced training programs.

3. Agribusiness and Tourism

Focus: Enhancing agricultural trade, food security, and fostering tourism.
Example: Australia’s advanced agritech supports India’s agricultural modernization, while increased tourism strengthens cultural ties.

Why does Australia Consider Itself a Natural Partner for India’s Economic Growth?

1. Complementary Economies

Australia provides critical resources India needs, while India supplies services that Australia requires.
Example: Australia supplies critical minerals (lithium, cobalt) essential for India’s EV manufacturing.

2. Strategic Alignment

Both nations share regional and global strategic interests, including maritime security in the Indo-Pacific.
Example: Regular participation in Quad (with the U.S. and Japan) strengthens defense and economic cooperation.

3. Geographic Proximity

Close ties across the Indian Ocean facilitate trade and collaboration.
Example: The Economic Cooperation and Trade Agreement (ECTA) has significantly boosted bilateral trade.

4. Shared Democratic Values

Both countries uphold democracy, rule of law, and a rules-based international order, fostering trust.
Example: Australia supports India’s bid for a United Nations Security Council (UNSC) permanent seat.

5. Strong People-to-People Ties

A growing Indian diaspora in Australia enhances cultural and economic collaboration.
Example: The Maitri grants program supports Indian diaspora-led initiatives for bilateral engagement.

Impact of the Economic Cooperation and Trade Agreement (ECTA)

1. Increased Bilateral Trade Volume

ECTA has accelerated trade growth by reducing tariffs and improving market access.
Example: India’s exports to Australia have grown by 66% in the past five years, nearly twice as fast as exports to other countries.

2. Tariff Reductions and Market Access

ECTA eliminates/reduces custom duties on key products, making Indian and Australian goods more competitive.
Example: Australia removed tariffs on 96.4% of Indian exports, including textiles, jewelry, and pharmaceuticals.

3. Boost to Key Sectors

Strengthens trade in minerals, energy, and education—areas where both countries have complementary strengths.
Example: Australia’s exports of lithium support India’s EV manufacturing.

4. Enhanced Services Trade and Mobility

ECTA facilitates cooperation in education, IT, and professional services, enabling easier movement of skilled workers.
Example: Indian IT and engineering professionals benefit from streamlined visa processes in Australia.

5. Foundation for a Comprehensive Agreement

ECTA lays the groundwork for a broader Comprehensive Economic Cooperation Agreement (CECA).
Example: CECA negotiations aim to expand trade in technology, healthcare, and defense.

Australia’s Support for India’s EV and Skill Development Ambitions

1. Supplying Critical Minerals for EV Manufacturing

Australia is a key supplier of lithium, nickel, and cobalt for India’s EV transition.
Example: These resources support India’s goal of increasing EV adoption eightfold by 2030.

2. Collaborating on Skill Development and Education

Australian universities provide technical education for India’s workforce.
Example: Campuses in GIFT City (Gujarat) and Noida (Uttar Pradesh) offer training in EV and clean energy sectors.

3. Investing in Training and Workforce Mobility

Australia invests in vocational training and enhances workforce mobility.
Example: The Maitri grants program supports technical training to help skill 2 crore Indian workers annually.

Way Forward

1. Strengthening Critical Supply Chains

Establish long-term supply agreements and joint ventures to boost India’s EV and renewable energy ambitions.

2. Expanding Education and Workforce Partnerships

Enhance mutual recognition of qualifications and dual-degree programs to bridge skill gaps in advanced manufacturing, clean energy, and digital sectors.

Aspect	Details	Example/Initiatives
Strategic Partnership	Comprehensive Strategic Partnership (2020) to counter China’s assertiveness in the Indo-Pacific.	Australia-India Indo-Pacific Oceans Initiative Partnership (AIIPOIP) for maritime cooperation.
Economic and Trade Relations	Bilateral trade crossed $30 billion in 2023, with growth potential under ECTA.	India imports coal, LNG, while Australia imports textiles, pharmaceuticals, IT services.
Supply Chain Resilience	India, Australia, and Japan’s Supply Chain Resilience Initiative (SCRI) ensures diversification.	Promotes fair and sustainable trade practices.
Critical Minerals	Critical Minerals Investment Partnership supports Indian investment in Australian mining projects.	Australia is a major producer of lithium, cobalt, and rare earths, vital for India’s energy needs.
Green Energy Cooperation	Collaboration on hydrogen and solar energy to promote clean energy.	Green Hydrogen Taskforce and India-Australia Solar Taskforce enhance renewable energy deployment.
Defence Cooperation	Agreements and joint exercises enhance military interoperability.	AUSTRAHIND, AUSINDEX, Pitch Black, Air-to-Air Refuelling, Mutual Logistics Support Agreement.
Regional & Multilateral Ties	Collaboration in UN, G20, and IORA for regional security and governance reforms.	Australia supports India’s UN Security Council candidature.
People-to-People Ties	India is Australia’s largest source of skilled migrants and second-largest source of international students.	India-Australia Migration and Mobility Partnership for student, professional, and researcher exchange.
Science & Technology	Cooperation on space technology and human spaceflight programs.	Agreement for transportable telemetry terminals in Cocos Island for India’s Human Space Mission.

Issues in India-Australia Relations

Issue	Details	Example/Challenges
Trade & Market Access	Prolonged Comprehensive Economic Cooperation Agreement (CECA) negotiations.	Non-Tariff Barriers like sanitary & phytosanitary standards hinder India’s exports.
Pharmaceutical Pricing	Price control in Australia on generics restricts market access for Indian pharmaceutical products.	Indian pharma companies face difficulty in expanding their footprint.
Extremism & Anti-India Acts	Rise of Khalistani extremism in Australia affecting diplomatic ties.	Vandalism of Hare Krishna Temple, Shri Shiva Vishnu Temple in Melbourne.
Nuclear Energy Cooperation	No commercial sale of Uranium to India, despite a 2014 agreement on peaceful nuclear energy use.	India rejected uranium supply due to lack of commercial viability.
Visa Issues	Australia recently increased visa fees by 125%, affecting Indian students and professionals.	Financial burden on Indian students pursuing education in Australia.