This article was prepared by solicitors James Semit and Samir Bhagat. James and Samir are part of the Australia-India Business Group at King & Wood Mallesons.
On 22 November 2018, the Australian Government released its response (“Response”) to the Australian Government commissioned Report, An India Economic Strategy to 2035: Navigating from Potential to Delivery (“Report”). The Report was released on 12 July 2018, and provided a roadmap for unlocking the opportunities that will help India and Australia grow together, and cement India as a priority economic partner. Our previous discussion of the Report can be found here.
The Response is another key step towards strengthening the relationship between Australia and India – the Response confirms that the Australian Government endorses the Report and provides in-principle support to its 20 priority recommendations.
The Response provides high-level discussion of:
- an implementation framework;
- areas for strategic investment by the Australian Government in India; and
- action items across the key sectors identified in the Report.
The key takeaways from the Response are discussed below.
In the Response, the Australian Government notes that in order to implement certain recommendations from the Report, it will:
- prioritise economic diplomacy efforts in India around the 10 key sectors and 10 key Indian states identified in the Report as regions where Australian businesses are likely to succeed;
- appoint the Minister for Education, the Minister for Agriculture and Water Resources, the Minister for Resources and Northern Australia and the Minister for Trade, Tourism and Investment as ‘champions’ for the Report’s four lead sectors of education, agribusiness, resources and tourism respectively; and
- seek stakeholder input to assess whether more recommendations from the Report should be adopted over time – the Australian Government will consider co-investment opportunities, in partnership with state governments, industry and India.
Among other things, the Ministerial ‘champions’ will convene annually to report on the status of implementation and whether further recommendations should be adopted.
This implementation framework is certainly a step in the right direction by the Australian Government in developing a constructive relationship between the two nations.
Strategic investments in India
A number of the recommendations in the Report focus on investment by the Australian Government to strengthen the relationship with India. Accordingly, the Response identifies a number of proposed actions in response to these recommendations. These include (but are not limited to):
- the entry into a cooperation agreement between Austrade and Invest India to promote stronger two-way investment and in-market business support facilitated by familiarisation visits between Australian investors and Indian officials;
- expanding the Australian Government’s diplomatic presence in India, by opening a new Consulate-General in Kolkata in 2019 – providing access to opportunities in India’s resource-rich eastern states and emerging north-eastern states;
- establishing a Strategic Economic Dialogue with India, which brings together senior Commonwealth Government treasury and trade representatives; and
- commencing mutual recognition arrangement negotiations with India in 2019, in order to facilitate increased trade flows by streamlining customs clearances for trusted Australian and Indian businesses.
Actions by sector
The Report identified 10 key sectors in India which provide opportunities for Australian business. Notably, education was categorised as a ‘flagship’ sector, and agribusiness, resources and tourism were considered to be ‘lead’ sectors.
The Response highlights a number of actions in respect of the recommendations made in the Report. Accordingly, many of these action items are in the ‘flagship’ and ‘lead’ sectors. Specifically, they focus on:
- (education) lifting the profile of Australian education offerings in India, attracting Indian higher education students and strengthening commercial links with India;
- (resources) increasing collaboration in the Indian mining industry and highlighting the value and adaptability of Australia’s expertise, technology and equipment to mining in India;
- (agribusiness) facilitating increased agricultural trade between the two countries, and establishing an Australia-India Food Partnership which will open up opportunities for Australian agri-tech and service business; and
- (tourism) promoting and enhancing Australia as a tourism destination for Indians, including by increasing direct flights between India and Australia under the Australia-India Air Services Agreement.
Other than the above, there also several action items in relation to the health, infrastructure and science and innovation sectors (all categorised as ‘promising’ sectors in the Report). Energy is another area which has been identified as promising, as India’s energy demand is predicted to double by 2040 and Australian businesses are well placed to complement this demand.
Undoubtedly, there are clear benefits to be obtained by both Australia and India as a result of the Australian Government’s proposed actions.
The States and Territories of Australia have reacted favourably to the initial Report and subsequent Government Response and in many cases have already developed their own strategies to engage India.
In January 2018, the Victorian Government announced ‘Victoria’s India Strategy: Our shared future’ which pinpoints key sectors where Victoria’s offerings align with India’s growth strategies and shared priorities, such as strengthening the economy and job creation.
South Australia is engaging with India through a long-term partnership which aims to create new commercial opportunities with India and facilitating economic growth for both regions.
New South Wales and India have strong economic ties with the regions trading approximately $1.8 billion worth of goods each year. The New South Wales Government has focused on smart cities, infrastructure, agriculture productivity and water management as areas of mutual interest. NSW is prioritising attracting Indian investment in resources, professional services, ICT and infrastructure.
On 29 November 2018 the Queensland Government launched Queensland’s first official Queensland-India Trade and Investment Strategy which is a whole of government approach to boosting the economies of both regions through trade and investment. The strategy should result in an anticipated 15% boost of exports to India in the next 5 years, which represents a $1.5 billion injection to the economy of the state. The strategy commits Queensland India to five key initiatives:
- Elevate the profile of the Queensland-India relationship which will strengthen Queensland’s reputation in India as an expert in priority sectors;
- Build business capacity through boosting mutual cultural understanding;
- Develop market intelligence by raising awareness of opportunities in India so that businesses will target engagement with the market and increase chances of success;
- Foster relationships between businesses in Queensland and India by consistently and regularly engaging key stakeholders and influencers in Indian industries to build mutual trust - this includes establishing an annual Queensland-India trade and investment summit; and
- Facilitate collaboration to overcome shared challenges by bolstering business-government partnerships and co-developing business cases.
The release of the Response signifies a clear intention by the Australian Government to strengthen its economic ties with India. While there is still a long way to go for both countries in maximising potential benefits from each other, the proactive steps of government at the State and Federal level provide promising foundations and we look forward to tracking the implementation of various recommendations from the Report.
King & Wood Mallesons is ready to assist you to take advantage of the opportunities and recommendations set out in the Report and the Response. As a leading full service law firm in Asia, we can support your investments from Australia to India and from India into Australia.