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On December 18, India launched its much-awaited Australia Economic Strategy (AES) report, authored by Anil Wadhwa, former secretary (East) of the Ministry of External Affairs (MEA). AES is the only strategy report ever produced by the Indian government for a specific country, and is a reciprocal report to Australias India Economic Strategy to 2035 (IES 2035) report, authored by Peter Varghese, the former head of the Department of Foreign Affairs and Trade, and released in 2018. The IES2035 set a target for India to become one of Australias top three export markets, to make India the third-largest destination in Asia for Australian outward investment, $100 billion by 2035, and to establish a bigger, better trade basket with balanced trade relations between both countries.

The economy is at the very center of Indian diplomacy today. It emphasizes Indias major economic reforms across diverse sectors (including agriculture, mining, defense production, railways, space and atomic energy) and focuses on international outreach to attract foreign investment. With severe disruptions in industrial production and consumption, the Indian governments economic focus has been on spurring demand and building infrastructure, which are key drivers to help India achieve its $5 trillion economy target by 2024. Most recently, the MEA has launched an Economic Diplomacy Website to showcase Indias economic, sectoral, and state-wise strengths that make India an attractive economic partner. India is focusing on weaving its regional aspirations with its national ambitions.

For Australia-India ties, 2020 has been a year of promise. The year started with the Australia India Business Exchange (AIB-X), one of the largest trade missions to India in the past five years, followed by the historic virtual summit between the Australian and Indian prime ministers in June, which led to the elevation of the bilateral relationship to a Comprehensive Strategic Partnership. The Indo-Pacific provides a meeting point for Australian and Indian interests, capturing a mix of Indias broadening horizons, widening interests, and globalized activities, on display through the Supply Chain Resilience Initiative (Australia, India and Japan) and the Quad grouping (United States, India, Japan and Australia), supplemented by Australias recent participation in the Malabar exercises. The growing significance of these ties is also evident from the recent creation of a new vertical in the Ministry of External Affairs, which has an Oceania territorial division with Australia at its center. The new division also includesASEAN and the Indo-Pacific divisions within it.

The release of the AES is timely, covering a wide range of sectors and keeping in mind post-COVID-19 recovery, which both Australia and India will need to work on. The emphasis in the document is on a wide variety of sectors as well as other emerging fields for the future. It offers creative ideas for advancing ties in areas in which Australia and India have not engaged with each other, like cost effective clinical trials, traditional medicines like Ayurveda, IT-specific visas for talent flow, healthcare, trauma care, and aged-care support.

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The AES strongly recommends a six-month review of the strategy and IES 2035 implementation for the next two years. It asks for sector-specific specialized delegation exchanges, sharing of more success stories between both countries, and a focus on matching of businesses with similar goals. It also focuses on achieving a more operationalized and granular approach to execution, developing corporate Australias interest in Indias growth story, ensuring regular engagement between trade bodies, sector-specific joint working groups, mutual investment funding across key sectors, the setting up of startup and innovation and humanities funds, more direct flights between Australia and Indias major business hubs, and a renewed focus on negotiating an Australia-India free trade Agreement (FTA).

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The two reports (IES 2035 and AES) together create a perfect roadmap for the future economic engagement between India and Australia. The shift that is categorically needed for Australian businesses is from Why India? to How-to in India? What would be the drivers of that shift?

First, a goods, services, and investment-focused FTA with Australia would boost key Indian exports like textiles, clothing, auto parts, and jewelry, and offer an independent venue for negotiation with Australia. It will also facilitate investment flows from Australia, which has the worlds third-largest pool of investment funds under management. An FTA could bolster the confidence that businesses have in the Indian operating environment. The welfare gain from the FTA could be in the range of 0.15 and 1.14 percent of GDP for India and 0.23 and 1.17 percent for Australia, further enhancing key engagement in sectors like agriculture, food processing, mining, and natural resources.

Second, India is exporting only 10 percent of its GDP and is heavily dependent on domestic consumption. Australias advanced manufacturing accounts for around half of Australias A$100 billion plus annual manufacturing output and is one of the fastest growing export sectors. India can explore synergies with Australia in advanced manufacturing as part of Make in India 2.0 (which includes segments such as robotics, artificial intelligence, genomics, chemical feedstock, and electrical storage). Advanced manufacturing technologies today are vital to gain global competitiveness in cost, speed, innovation, and quality.

Third, the success of Indias e-mobility and renewable-energy goals primarily depend on the availability of critical minerals, used across telecommunications and electronics, healthcare, transportation, aerospace, defense industries in advanced applications. Australia has released a list 24 key critical minerals of which it can emerge as a potential supplier, along with the list of critical minerals projects in the country, which offers off-take and investment opportunities to public and private sector organizations across the world. Indias public and private sector, along with its government consortium (KABIL) on critical minerals, can look at these assets to secure future supplies and build an efficient energy economy and future competitiveness. Australias mining equipment, technology and services sector can offer a range of solutions to the mining industry in India, which lags behind other mining countries across all stages of mininggeoscience, exploration, development, production, and reclamation.

Fourth, the discourses on education partnership between both countries must go beyond enrollment numbers and look at capacity building partnerships in science, technology, engineering, and mathematics.

Fifth, deeper cultural understanding is integral to strong bilateral ties. Australia must make an effort to understand the New India better. The opportunities will not come to Australian businesses; they must be sought out actively and assertively.

Let us hope that the quality of the relationship will catch up with its ambition: that it will share the relentless spirit and ethos of the cricketing ties between the two countries, and bolster economic ties as well. The word engagement is crucial which should become a permanent national project for both countries.

Natasha Jha Bhaskar is General Manager of Newland Global Group, a corporate advisory firm specializing in the Australia-India space, based in Sydney.

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Australia and India Economic Relations: The Stars Have Aligned - The Diplomat