New Trade Frontiers Between India and Australia: Challenges and Opportunities Post COVID-19

Introduction

Bilateral relations between Australia and India during the post-war period were marked by “strategic apathy,” if not “strategic detachment”. While Australia had shifted its alliance preferences from England to the United States, India has carved a non-aligned path while keeping a close relationship with the erstwhile Soviet Union (Smith, 2010). Now, Asia has become the new Europe when the Cold War ended, and the post-Cold War period lasted far into the second decade of the new century. Asia has emerged as the launching point for everything that signifies growth and development (Ranjan, 2016). The idea that the Asians own the twenty-first century has become a common theme in policy circles around the world. In 2018, Australia published “An India Economic Strategy to 2035,” a document that outlined the strategic sectors where the country should invest in. The document stated that by 2035, Australia wants India to be its third largest export market.

India is likewise enthusiastic about its relationship with Australia. “Modi's Act East policy has enlarged the canvas by putting Australia at the centre of India's eastern strategy and the South Pacific back on India's political radar”. Furthermore, Modi's November 2014 visit to Australia was the first by an Indian Prime Minister in nearly three decades, and it held a lot of promise. Modi stated that Australia was no longer on the outside of New Delhi's “vision,” but rather “in the centre of our ideas.” He promised to work with Canberra at the G20 and regional multilateral forums, to strengthen the bilateral security collaboration, and to reach an agreement on a free trade agreement (Bajpaee, 2017).

But, only a few of these commitments were kept. Within and beyond the Quad, progress was achieved in defence and security cooperation, but a free trade agreement proved too difficult. “India was Australia's eighth-largest trading partner and fifth-largest export market in 2018-19, driven by coal and international education”. Bilateral “trade with India was $30.3 billion in 2018-19, and the level of investment was $30.7 billion in 2018”(The Economic Times, 2021). “While China is Australia's largest two-way trading partner in goods and services, accounting for 29 per cent of Australia’s trade with the world”. Bilateral trade reached $251 billion in 2019-20”(The Hindustan Times, 2021). Their “exports to China grew by 9 per cent to reach $168 billion”. China remained “Australia’s biggest services export market, particularly in education and tourism” (Jaishankar, 2020).

Australia is the 34th most popular destination for India's total exports. India, on the other hand, is Australia's fourth-largest export market. Pharmaceuticals, textiles, jewelry, automobiles, and mineral fuels are among India's biggest exports to Australia; followed by computer and information services, as well as tourism, in top service exports (Chakraborty et al.,2019). Nevertheless, Australia sees India as a potential significant market for its products. Coking coal is Australia's most important export to India, accounting for 65 percent of all exports to India(Business Standard, 2021). Gold, copper, aluminum, and petroleum products are among India's other Australian imports (Chakraborty et al.,2019). India imports significant quantities of coal since it does not manufacture high- quality coal. Australia could potentially be a supplier of high-quality coal, which would aid India's carbon reduction efforts. Hence, Australia has the potential to be India's strategic energy partner.

To meet domestic demand, Indian corporations have engaged in coal mining in Australia. Lanco Infratech Limited for example made the greatest such strategic investment in 2010. It is noteworthy that India has huge potential for Australian exports, but Australia is still not a big market for Indian items. Not surprisingly, the bilateral defence and security collaboration was elevated to a Comprehensive Strategic Partnership (CSP) at the June 2020 Morrison-Modi virtual summit, with both sides committing to ‘deepen and broaden' defence co-operation within the partnership. Morrison said the CSP will “increase the level of trust required” to promote trade and investment flows between Australia and India, which are currently “not where both would like them to be,” The broad aims of the joint strategy were to resolve the economic and social effects of Covid-19; each has signed CSPs with a number of other nations (Sarma, 2020)