Inside Story

Australia and India: is it different this time?

Along with the vast increase in migration, most signs point to increased cooperation between Australia and India

Robin Jeffrey 14 August 2018 1726 words

People to people: prime minister Malcolm Turnbull with his Indian counterpart, Narendra Modi, on the Delhi Metro Blue Line in April 2017. Andrew Meares/Fairfax Pool/AAP Image

My collection of reports on Australia–India relations amounts to about twenty items, beginning with New Horizons: A Study of Australian-Indian Relationships, a 1946 report by Sir Bertram Stevens, former premier of New South Wales. Its 200 pages advise that Australia “must prepare to take advantage of the new and vast markets which are opening up in India.”

That sounds familiar. Here’s Ellerston Capital’s Ashok Jacob, speaking earlier this month in Sydney at the launch of An India Economic Strategy to 2035: “Any CEO, any board, that does not take a good hard look at India will be asked in ten years’ time, did you at least look at it, did you visit the place, do you know what your competitors’ markets in India look like?” Jacob is a long-time figure in Australian big business, a member of one of India’s great business families and chair of the Australia–India Council.

The trail to 2018 is littered with weighty documents making similar points, among them India: The Next Economic Giant (2004), India: New Economy, Old Economy (2001), Australia’s Trade Relationship with India (1998), India’s Economy at the Midnight Hour: Australia’s India Strategy (1994) and Australia-India Relations: Trade and Security (1990).

So, has anything changed?

Yes. Lots. The times are different, and so is the report Jacob was helping to launch. To begin with, its author, Peter Varghese, is one of the outstanding public servants of his generation, a former high commissioner to India and secretary of the Department of Foreign Affairs and Trade. His family’s origins are in Kerala, on India’s southwestern coast, though he would probably describe himself as a proud Queenslander. He is currently chancellor of his alma mater, the University of Queensland.

As Varghese observes, bilateral relationships are built on three elements: commerce, strategic interests and people. Ideally, a relationship has all three; in the past, the Australia–India relationship lacked the lot. India’s economic policies, focused on import substitution and self-sufficiency, gave a major role to state-run enterprises and produced a prickly thicket of regulation. Its “non-aligned” foreign policy equated the Soviet Union with the United States, a position that seldom lined up with Australian views. And, as late as 1981, Australia had only about 15,000 India-origin residents who were not Anglo-Indians. It was a negative trifecta.

Since then, the most obvious and important change is in the demography. Today, Australia has 700,000 residents of Indian origin. The number has trebled in ten years and continues to grow.

It’s a bit early to look among them for Silicon Valley–style entrepreneurs, or a Nikki Randhawa Haley (the former governor of South Carolina, now US ambassador to the United Nations), a Harjit Singh Sajjan (the Canadian defence minister) or a Salman Rushdie. But Australia has an unmissable group of young Indians who will connect the two countries by their constant coming and going. They will be looking for ways to turn their India skills and contacts into assets in Australia. And they’ll arouse in Australian friends and partners a readiness to connect with India.

Indian newcomers also have an asset shared with the British, Americans, South Africans, New Zealanders and Canadians who live here: a knowledge of English that ranges from okay to mother-tongue. The new diaspora gives the Australia–India relationship one of the three dimensions on which nation-state relationships are built: people.

What about the other two elements — strategic interests and trade?

Although the report is entitled an “economic strategy,” it argues that “an India economic strategy cannot exist in isolation… India should be seen not only as an economic partner but also as a geopolitical partner.” In the new world of a declining, frenzied United States and a rising, muscle-flexing China, lesser players look anxiously for friends and partners. “We have moved from Asia-Pacific to Indo‑Pacific to describe the crucible of our strategic environment,” Varghese writes. “And a large part of that shift is driven by how we see India.”

The term “Indo-Pacific” has been in vogue since the beginning of this decade and represents an effort to involve India in international agreements and discussions and thereby to dilute the effects of a powerful China. “The Indian Ocean provides a meeting point for Australian and Indian interests,” Varghese reminds us. “It extends the scope of our growing strategic congruence.”

It’s not that India is about to become an Australian “ally,” in the way that Australia is bound to the United States by treaty. But as maritime law assumes greater importance, from northeast Asia to the islands of the Indian Ocean, Australia and India will find growing cause to consult and act in concert.

But the focus of Varghese’s report is, of course, commerce and “the underlying complementarity between our two economies.” It presents two ambitious targets: to make India Australia’s third-largest export market and its third-largest investment destination by 2035. Using Australian Treasury projections, the report assumes an Indian growth rate averaging 6 per cent a year for the next twenty years. “There is no market over the next twenty years which offers more growth opportunities for Australian business than India,” Varghese argues in his letter submitting the report to the prime minister.

The report emphasises four areas of prime opportunity — education, agribusiness, resources and tourism. The “flagship” is education, where Australia has already succeeded in attracting tens of thousands of fee-paying Indian students. But there is potential for much more. India’s immense population of young people needs vastly more educational options. This is especially true of vocational training, in which only seven million Indian people are currently enrolled, compared to an estimated ninety million in China.

Tertiary education of all kinds is jealously regulated in India, and foreign participation can be viewed with suspicion. But vocational education also suffers from strong prejudices. Being a mechanic, an electrician or even a hands-on engineer is not something to aspire to, even if the salary might be good. India is looking for institutions that can navigate the regulatory jungle, deal with large numbers, make a profit — and, perhaps hardest, make vocational education attractive. Online programs may satisfy some of these requirements. The potential market is huge.

At the white-collar, clean-hands end of education, the Varghese report points out that although Australia has successfully attracted fee-paying students, it still lacks the prestige of universities in the United States and Britain. The report recommends enhancing Australia’s reputation as an educational destination by setting up a well-publicised program of Alfred Deakin Scholarships for outstanding doctoral candidates and supporting the existing New Generation Network of postdoctoral fellows established by the Australia–India Institute.

Among the report’s priority sectors, the education “flagship” is followed by three “lead sectors” (agribusiness, resources and tourism) and then by six “promising sectors” (energy, health, financial services, infrastructure, sport and innovation).

Varghese emphasises the importance of working with India’s federal system — “competitive federalism” is a feature of prime minister Narendra Modi’s government, based on his thirteen years as chief minister of the state of Gujarat — and commends the efforts of Australian states to maintain a presence there. (Victoria, for instance, has offices in Bengaluru and Mumbai.)

Ten of India’s states are singled out as places of opportunity for Australian businesses. Eight of them are obvious — the two western powerhouses of Maharashtra and Gujarat; the Delhi National Capital Region and Punjab, once India’s leading agricultural state, in the north; and Tamil Nadu, Karnataka, Telangana and Andhra Pradesh, in the south.

The two other states are dark horses — West Bengal and its once great capital Kolkata, and the vast northern state of Uttar Pradesh. The inclusion of the latter draws attention to two aspects of the Varghese report that echo its predecessors: Australia’s need for (a) cultural and linguistic capacity and (b) patience. Uttar Pradesh is an immense potential market that will require plenty of both. Its population is 220 million; female literacy was 59 per cent in 2011; and in 2016 the infant mortality rate was the worst in India, at sixty-four deaths per thousand births. Education and health services beg for attention.

As Varghese emphasises, “regional languages become more important when directly engaging states and cities,” and this is especially true of Uttar Pradesh. Hindi, its common language, has 520 million speakers across India but is taught at only two Australian universities — the Australian National University in Canberra and La Trobe University in Melbourne. “Austrade’s current portal for international students can be viewed in eleven languages, including Russian and Italian, but there are no Indian languages.”

Six case studies of success reflect the title of one of the report’s sections, “The long view: patience, perspective and preparation.” All six enterprises explored the market carefully, maintained a constant presence in India, and planned to stay for the long term. None is a small-time player. They include the Macquarie Group, BlueScope Steel, the ANZ Bank, Monash University, the Future Fund and Simtars, Queensland’s mining safety research organisation.

So what, as they say on television, could possibly go wrong? A constructive critique of the report from an Indian perspective pinpoints a lack of focus on India’s goal of becoming a manufacturing colossus and providing jobs for tens of millions of young job-seekers. (“Make in India” is one of the BJP government’s signature campaigns.) Australian commercial propositions that offer little in these areas are likely to find muted enthusiasm among Indian businesspeople, politicians and policy-makers. The report, however, discounts the chances of India’s following an East Asian path of development, with large factories propelling rapid growth. It may be right, but India may not respond enthusiastically to this approach. “What employment prospects do your proposals offer?” is likely to be a regular Indian question.

On this view, the report’s other deficiency is its suggestion that greater commercial ties lead to closer strategic alignment. India has always seen trade and foreign policy as separate. India has a Ministry of External Affairs; Australia has a Department of Foreign Affairs and Trade. To assume that commerce and foreign policy go hand in hand might be to invite disappointment.

But even if the strategic and commercial flowers in the relationship bouquet don’t blossom as Australians might hope, the third flower — the India-origin population, 700,000 and growing — means the relationship has changed irrevocably. The Varghese report marks the beginning of a new era for Australian demography, commerce and foreign policy. ●