Why in the News?

Australia is confident in India’s promising economic future, anticipating it will become the world’s third-largest economy by 2030.

What are the key sectors identified as the “Superhighways of growth” in the new Roadmap for Australia’s Economic Engagement with India?

• Clean Energy: Focus on 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 goals.
• Education and Skills: 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 to offer advanced training programs.
• Agribusiness and Tourism: Enhancing agricultural trade and food security and fostering tourism between the two countries. Example: Australia’s advanced agritech supports India’s agricultural modernization while increased bilateral tourism strengthens cultural ties.

Why does Australia consider itself a natural partner for India’s economic growth?

• Complementary Economies: Australia produces resources that India needs, and India provides services that Australia requires. Example: Australia supplies critical minerals (like lithium and cobalt) essential for India’s electric vehicle (EV) manufacturing.
• Strategic Alignment: Both nations share common regional and global strategic interests, including maritime security in the Indo-Pacific region. Example: Regular participation in Quad (with the U.S. and Japan) strengthens defense and economic cooperation.
• Geographic Proximity: Australia and India are geographically close across the Indian Ocean, facilitating easier trade and collaboration. Example: The Economic Cooperation and Trade Agreement (ECTA) has significantly increased bilateral trade.
• Shared Democratic Values: Both countries are committed to democracy, rule of law, and a rules-based international order, fostering mutual trust. Example: Australia supports India’s bid for a United Nations Security Council (UNSC) permanent seat.
• Strong People-to-People Ties: A large and growing Indian diaspora in Australia acts as a bridge for cultural and economic collaboration. Example: Australia’s Maitri grants program supports Indian diaspora-led initiatives to boost bilateral engagement.

How has the Economic Cooperation and Trade Agreement (ECTA) impacted trade between India and Australia?

• Increased Bilateral Trade Volume: ECTA has accelerated trade growth between the two countries 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 India’s exports to the rest of the world.
• Tariff Reductions and Market Access: ECTA has eliminated or reduced custom duties on a wide range of products, enhancing the competitiveness of Indian and Australian goods. Example: Australia removed tariffs on 96.4% of Indian exports, including textiles, jewelry, and pharmaceuticals.
• Boost to Key Sectors: The agreement has strengthened trade in minerals, energy, and education—areas where both countries have complementary strengths. Example: Australia’s exports of critical minerals like lithium support India’s electric vehicle (EV) manufacturing ambitions.
• Enhanced Services Trade and Mobility: ECTA facilitates greater cooperation in education, IT, and professional services, including easier movement of skilled workers. Example: Indian professionals in IT and engineering benefit from streamlined visa processes for work in Australia.
• Foundation for a Comprehensive Agreement: ECTA serves as a stepping stone toward a broader Comprehensive Economic Cooperation Agreement (CECA) to further deepen economic ties. Example: Negotiations for CECA are ongoing to expand trade in technology, healthcare, and defense collaboration.

What steps is Australia taking to support India’s ambition for manufacturing electric vehicles and addressing its skill development needs?

• Supplying Critical Minerals for EV Manufacturing: Australia is leveraging its position as a leading producer of critical minerals essential for EV production. Example: Australia, the largest producer of lithium and with significant reserves of nickel and cobalt, supplies these key raw materials to support India’s goal of increasing EV adoption eight-fold by 2030.
• Collaborating on Skill Development and Education: Australian universities are providing high-quality technical education to equip the Indian workforce with advanced skills. Example: Australian universities have established campuses in GIFT City (Gujarat) and soon in Noida (Uttar Pradesh) to train Indian professionals in emerging technologies, including EV and clean energy sectors.
• Investing in Training and Workforce Mobility: Australia is investing in initiatives to improve vocational training and enhance workforce mobility between the two nations. Example: Through its Maitri grants program, Australia is fostering collaboration in technical training to meet India’s aim of skilling two crore people annually.

Way forward: 

• Strengthen Critical Supply Chains: Deepen collaboration on critical minerals by establishing long-term supply agreements and joint ventures to support India’s EV and renewable energy ambitions.
• Expand Education and Workforce Partnerships: Enhance mutual recognition of qualifications and dual-degree programs to address India’s skill gaps in advanced manufacturing, clean energy, and digital sectors.

Mains PYQ:

Q Quadrilateral Security Dialogue (Quad) is transforming itself into a trade bloc from a military alliance, in present times Discuss. (UPSC IAS/2020)

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now