The Thriving Australia–India Partnership – Analysis

By K. V. Kesavan

Despite its enormous potential, the India–Australia partnership had remained low key for a long time. But since 2014 the two countries have instilled a new dynamism in their relations. Australian Prime Minister Malcolm Turnbull’s visit to India from 9–12 April carried a great deal of significance for the flourishing bilateral partnership. Though it was his first visit to India, he and Prime Minister Narendra Modi had met on the sidelines of the G20 meeting held in China in September 2016.

In a joint statement during Turnbull’s visit, both prime ministers reaffirmed their commitment to maintaining a peaceful and prosperous Indo-Pacific region based on mutual respect and cooperation. Their bilateral talks focused considerably on their determination to deepen security and defence engagements. They noted that their countries have made significant progress through the bilateral Framework for Security Cooperation signed in 2014. They reiterated the importance of freedom of navigation and overflight, unimpeded lawful commerce and the settlement of all maritime disputes by peaceful means in accordance with international law.

In recent years, India and Australia’s maritime relations have progressed and there are great opportunities for further cooperation going forwards. In October 2015, after a gap of seven years, Australia and India re-commenced their joint naval exercises in the Bay of Bengal. And they will conduct similar exercises off the West Australian coast in early 2018.

A new dimension in this domain is Japan’s role in the Indo-Pacific. Both India and Australia have collaborated with Japan in matters concerning maritime security and connectivity in the region. And they have already created a trilateral mechanism at the foreign secretary level to promote cooperation on issues of regional and global peace and security.

There is a strong synergy between Japanese Prime Minister Shinzo Abe’s ‘open and free Indo-Pacific strategy’, India’s ‘Act East’ policy and Australia’s growing interest in the Indo-Pacific region. This could provide opportunities for them to shape their security environment and even collectively engage with China’s increasing presence in the Indian Ocean.

Along with strategic issues, both leaders saw potential in their trade and investment relations. Bilateral trade has been steadily growing, reaching AU$19 billion (US$14.4 billion) last year. But as Turnbull admitted, this is only a small fraction of the enormous untapped potential.

A major breakthrough in trade and investment could occur if India and Australia finalise the on-going negotiations for the Comprehensive Economic Cooperation Agreement. But nine rounds of negotiations have already taken place since it began in 2011 without producing a result. Despite being aware of the importance of the trade talks, Turnbull did not display much optimism in a speedy outcome. In fact, he called upon both countries to be ‘realistic’ while facing the challenges posed by the trade negotiations.

One of the current sticking points in the negotiations is that Australia wants India to lower or remove tariffs on many agricultural and industrial goods. India, on the other hand, wants Canberra to relax its rules on the entry of India’s skilled professionals into Australia. Australia is the second largest destination for India’s young university students. While the Australian government welcomes Indian students, it is getting increasingly touchy about providing them with work permits or permanent resident status.

Many Indian observers are sceptical of the potential FTA, believing that India would gain little from the agreement since Australian tariffs on most imports are already close to nil. But Australia insists that even when Canberra gets rid of all its tariffs, its FTA partners will still benefit much more than countries without an FTA.

Turnbull also evinced great interest in promoting the bilateral investment relations, and threw his support behind India’s Adani Enterprises plan to set up a mega mining project in Queensland, Australia. The Adani Group plans to establish one of the world’s biggest coal mines at a cost of AU$21 billion (US$15.91 billion). When completed, the plant would export coal to India on a long-term basis. But Adani has faced a series of challenges posed by Native Title law and environmental lobby groups.

Turnbull met the Chairman, Gautam Adani, in New Delhi and assured him of the government’s support for the project. Turnbull was confident that the Australian government would soon act to resolve the Native Title concerns with the mine. But it remains to be seen how Adani will manage the financial issues involved in the project before it takes off.

Australia is a major supplier of coal to India, and looks set to consolidate its role as a reliable partner in meeting India’s energy security needs by supplying uranium, as per their agreement signed in September 2014. During his visit, Turnbull assured India that Australia would start selling uranium to India very soon. Incidentally, Australia has also consistently supported India’s membership of the Nuclear Suppliers’ Group.

Turnbull’s trip to India displayed some promising signs of progress in India–Australia ties, but it remains to be seen how much of the recent bilateral discussions will become a reality.

This article was published in East Asia Forum.


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Observer Research Foundation

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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