UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

Context

• Earlier this week, PM Modi and his Australian counterpart Scott Morrison held a virtual summit – the second one since June 2020.
• Both nations agreed to unlock the untapped potential in bilateral trade and investment.
• They highlighted the need to conclude the proposed Comprehensive Economic Cooperation Agreement (CECA) at the earliest.

India-Australia Relations: A Backgrounder

• The India-Australia bilateral relationship has undergone evolution in recent years, developing along a positive track, into a friendly partnership.
• The two nations have much in common, underpinned by shared values of a pluralistic, Westminster-style democracies, Commonwealth traditions, expanding economic engagement etc.
• Several commonalities include strong, vibrant, secular and multicultural democracies, free press, independent judicial system and English language.

Historical Perspective

• The historical ties between India and Australia started immediately following European settlement in Australia from 1788.
• All trade, to and fro from the penal colony of New South Wales was controlled by the British East India Company through Kolkata.
• India and Australia established diplomatic relations in the pre-Independence period, with the establishment of India Trade Office in Sydney in 1941.
• The end of the Cold War and simultaneously, India’s decision to launch major economic reforms in 1991 provided the first positive move towards development of bilateral ties.

Various dimensions of ties

[A] Political partnership

• Both the countries are members of G-20, ASEAN Regional Forum (ARF), IORA (Indian Ocean Rim Association), Asia Pacific Partnership on Climate and Clean Development, East Asia Summit and the Commonwealth.
• Australia has been extremely supportive of India’s quest for membership of the APEC (Asia Pacific Economic Cooperation).
• Australia whole-heartedly welcomed India’s joining of the MTCR (Missile Technology Control Regime).

[B] Trade and Economy

• India is the 5th largest trade partner of Australia with trade in goods and services.
• Two-way trade between India and Australia was worth A$24.3 billion ($18.3 billion) in 2020, up from just $13.6 billion in 2007, according to the Australian government.
• After a series of attempts, in 2016, Australia opened the door for uranium exports to India.
• An Australia-India Strategic Research Fund (AISRF) which was established in 2006, supports collaboration between scientists in India and Australia on cutting-edge research.

[C] Cultural ties

• There is a longstanding people-to-people ties, ever increasing Indian students coming to Australia for higher education.
• Growing tourism and sporting links, especially Cricket and Hockey, have played a significant role in further strengthening bilateral relations between the two countries.
• India is one of the top sources of skilled immigrants to Australia.
• The number of Indian students continue to grow with approximately 105,000 students presently studying in Australian universities.
• After England, India is the second largest migrant group in Australia in 2020.

[D] Strategic Partnership

• In 2009, India and Australia established a ‘Strategic Partnership’, including a Joint Declaration on Security Cooperation which has been further elevated to Comprehensive Strategic Partnership in 2020.
• The Mutual Logistics Support Agreement has been signed during the summit that should enhance defence cooperation and ease the conduct of large-scale joint military exercises.
• There is a technical Agreement on White Shipping Information Exchange.
• Both nations conduct bilateral maritime exercise AUSINDEX. In 2018, Indian Air Force participated for the first time in the Exercise Pitch Black in Australia.
• Foreign and Defence Ministers of both countries agreed to meet in a ‘2+2’ format biennially.
• The first-ever Quad Leaders’ Virtual Summit held on 12 March 2021 saw the participation of Prime Ministers of India, Australia, Japan and President of USA.
• A Civil Nuclear Cooperation Agreement between the two countries was signed in September 2014 during the visit of then PM Tony Abbott to India.

Significance of the ties

• COVID Management: Australia is one of the few countries that has managed to combat COVID-19 so far through “controlled adaptation” by which the coronavirus has been suppressed to very low levels.
• STEM: From farming practices through food processing, supply and distribution to consumers, the Australian agribusiness sector has the desired R&D capacity, experience and technical knowledge.
• Natural resources: Australia is rich in natural resources that India’s growing economy needs. It also has huge reservoirs of strength in higher education, scientific and technological research.
• Alliance with US: The two countries also have increasingly common military platforms as India’s defence purchases from the US continue to grow.
• Affinity with ASEAN: Australia has deep economic, political and security connections with the ASEAN and a strategic partnership with one of the leading non-aligned nations, Indonesia.
• Containing China: The Indo-Pacific region has the potential to facilitate connectivity and trade between India and Australia. Both nations can leverage their equation in QUAD to contain China.

International cooperation

• Support at UNSC: Australia supports India’s candidature in an expanded UN Security Council.
• APEC: Australia   is   an   important   player   in   APEC   and   supports   India’s membership of the organisation. In 2008, Australia became an Observer in SAARC.

Some irritants in ties

• Trade imbalance: India’s trade deficit with Australia has been increasing since 2001-02 due to India-Australia Free Trade Agreement. It is also a contentious issue in the ongoing RCEP negotiations which India left.

• High tariff on agri products in India: India has a high tariff for agriculture and dairy products which makes it difficult for Australian exporters to export these items to India.
• Non-tariff barriers in Australia: At the same time, India facesnon-tariff barriers and its skilled professionals in the Australian labour market face discrimination.
• Visa Policy: India wants greater free movement and relaxed visa norms for its IT professionals, on which Australia is reluctant.
• Future of QUAD: Australian lobby has sparked speculation over the fate of the Quadrilateral Consultative Dialogue (the ‘Quad) involving India, Australia, Japan and the United States.
• Nuclear reluctance: Building consensus on non-nuclear proliferation and disarmament has been a major hurdle given India’s status as a nuclear power.     
• Racism against Indians: Increasing Racist attacks on Indians in Australia has been a major issue.  

Way forward

• Upgradation of 2+2 format: It is prudent too for New Delhi and Canberra to elevate the ‘two plus two’ format for talks from the Secretary level to the level of Foreign and Defence Ministers.
• Removal of trade barriers: Both nations need to resolve disputes at the WTO with regard to the Australian sector can act as a serious impediment.
• Balancing China: An ‘engage and balance’ China strategy is the best alternative to the dead end of containment.

Conclusion

• Given the changing geopolitics, both Canberra and New Delhi are keen to move beyond mere rhetoric and build a robust partnership
• The key is to keep the Australia story thriving in India, and India story thriving in Australia on a consistent basis in public memory.
• This involves a holistic multi-stakeholder strategy and approach which deepens understanding and appreciation of each other.