With India becoming the largest source of skilled migrants to Australia, people-to-people links are spearheading business, trade and investment ties between the two countries.
"There are around 400,000 Australians of Indian origin and I pay tribute to the significant contribution they make to our country. Modern Australia is unimaginable without them," Australian Prime Minister Tony Abbott told Business Standard. In 2012-13, India was Australia's largest source country for migrants at 21.1 per cent of the total.
Abbott, who spent three months in India in the early 1980s, said he had invited Prime Minister Narendra Modi to visit Australia and to the G-20 summit in Brisbane this November. No Indian prime minister has visited Australia since Rajiv Gandhi in 1986. This is set to change with bilateral visits planned by both prime ministers. "The high-level contacts and visits," said Australian Foreign Minister Julie Bishop, "underscores that we recognise India as not only our neighbour, our major trading partner, a key strategic ally, but a friend."
| INDIA ON AGENDA |
|
Two-way trade between the countries has grown from A$5.1 billion in 2003 to A$15.2 billion in 2013. Exports to India, however, fell during 2013-14 to A$ 8.3 billion from A$11.4 billion in 2012-13. Imports rose from A$2.3 billion in 2012-13 to A$2.8 billion in 2013-14.
Australia and India have been negotiating since May 2011 to conclude a Comprehensive Economic Cooperation Agreement to address tariff barriers, increase transparency and enhance investment protection. "The Australian coalition government has an ambitious trade negotiating schedule, of which the Comprehensive Economic Cooperation Agreement features as a priority," a spokesperson for the Australian Trade and Investment Minister said.
India presents significant opportunities for Australian businesses, especially in agriculture, energy, manufacturing, mining and services. "With the Modi government, business is hoping there will be more transparency and less red tape," said Sheba Nandkeolyar, national vice-chair of the Australia India Business Council.
While Australia is phasing out aid to India, it aims to enhance technical cooperation to improve water, food and energy security. "We hope to conclude a civilian nuclear agreement to supply Australian uranium for India's energy needs," Bishop said at the Australia India Business Council annual dinner here on Thursday. Australia, which has no nuclear power stations, has almost 40 per cent of the world's known uranium reserves. It exports uranium to China, Japan, Taiwan and the United States.
India has been importing Australian coal and in recent years Indian companies are also investing in Australian coal mines. Recently, Adani Mining's A$16.5 billion Carmichael Coal Mine and Rail Infrastructure project in Queensland's Galilee Basin received the Australian federal government's approval. The pit-to-port project, which involves open cut and underground coal mining, will produce 50 million tonnes of thermal coal a year. The project has an estimated 60-year resource value of A$300 billion and at full production is projected to add A$2.97 billion to the Queensland state economy each year. It will generate more than 6,000 jobs during the construction and operational phases.
A spokesperson for Adani told Business Standard, "Last month's repeal of the Australian carbon tax will lower costs for Indian firms exporting from the country. It reflects the Australian government's strong commitment to supporting export opportunities in the resources sector, and further underlines the cost-effectiveness of the Carmichael mine."
But the Australian Conservation Foundation, the country’s main national environment group, warns that local communities concerned about the impact of the mine and rail project on their farms, businesses and health can challenge the government’s decision.
The project still requires a Queensland government environmental authority clearance, mining lease, and a water licence. "We will work to ensure that the balance of the approvals required from the government will follow on previously advised timelines. We are confident that timely conclusion of the approval and build phases will ensure we meet our first coal guidance for 2017," the Adani spokesperson said.
A report by the Institute for Energy Economics and Financial Analysis has, however, warned the Australian coal industry is at significant financial risk, as major global powers commit to cut carbon emissions and invest in renewable energy.
"India is the last major bastion of growth in imported coal demand, but it is also unviable for Australian export coal, which requires a wholesale price of electricity double India's current level. Also, why would India lock in imported fossil fuel inflation when domestic renewables are commercially viable, deflationary and would provide valuable energy system diversity, enhancing national energy security for India?" the institute's director of energy finance studies (Australasia), Tim Buckley, said.
"The Carmichael project requires a thermal coal price in excess of US$100 a tonne to be commercially viable - Australian prices currently sit below US$70 a tonne. Given the low energy content of the Carmichael coal and the very high ash content, Adani Mining at current prices would be looking at revenue of below US$50 a tonne, giving rise to a material cash loss on every tonne of coal sold," he added.
The stock of Indian investment in Australia is A$11 billion and Australian investment in India in resource and infrastructure projects is around A$10 billion. India also remains the second largest education market for Australia, despite a downturn in demand for Australia's education services since 2009 following attacks on Indian students. The country is looking at the ICC Cricket World Cup next year, being jointly hosted by Australia and New Zealand, as another opportunity to enhance business and tourism links.
