india-australia trade: Planets are aligning for India-Australia to deepen economic connections: Austrade’s Catherine Gallagher



India and Australia signed the Economic Cooperation and Trade Agreement (IAECTA) in April, a moment that was hailed as a watershed by leaders of both the nations. The trade agreement looks to catapult trade between the countries, at a time when the world faces recessionary pressures and geopolitical realignments. The Australian government is also banking on its flagship trade and investment promotion programme — The Australia India Business Exchange (AIBX), a platform to build investment partnerships and enable commercial outcomes — to increase the commercial relationship with India. In a conversation with ET Digital, Catherine Gallagher, Minister Commercial & Senior Trade Commissioner-South Asia, Australia Trade and Investment Commission (Austrade), talks about what AIBX looked to achieve, why the trade agreement between the two countries is crucial and the future of the bilateral relationship. Edited excerpts:
Economic Times (ET): Tell us more about AIBX. What is on the agenda and what is the focus this year?Catherine Gallagher (CG): This was the third Australia India Business Exchange (AIBX) that was held between September 26 to September 30 this year, with the first one in 2020 just before the Covid lockdown. It is a programme that aims to build business literacy between Australia and India and also to build connections. While we target all businesses of relevance, we tend to focus on SMEs that want to play in that space.
We have a document called the India Economic Strategy that was written in 2019. It is like a guidebook and has identified sectors for Australia. We have five streams — the first being education, the second being agribusiness, and the third is resources, which includes mining and minerals. The other two areas are technology and health, which include digital health.

We have 100 delegates this year and we are being quite particular about the numbers. We did not want to have a big delegation, but wanted to really hand-pick those exporters that we felt and we know are of the size, scale, maturity to come and work with India. It is not just businesses, but also building bridges with government or semi-government agencies. For example, in the health sector, we have got the CEO of the Australian Digital Health Agency as a part of the delegation to understand the scheme of Ayushman Bharat.
ET: Within the setup, what is your role? Are you a facilitator?CG: At Austrade, our role is to facilitate trade and investment. So, we help Australian companies to identify partners and prepare a lot of country insights. We work out the markets and sectors that have complementarity between countries and have 60 offices across 45 countries.
We work with our colleagues in Australia who know which Australian companies have got the expertise, who are actually taking an interest in growing in certain ways. Our job here is to identify those counterparts in India and build the networks.
Austrade is also a marketing arm, so we promote where we have got capability. What we do not do is, once we provide the matches, we do not get involved in the negotiations between businesses.
ET: On April 2, 2022, the Economic Cooperation and Trade Agreement got done. How significant is that going to be now?CG: I think all FTAs in whatever form create a lot of excitement, and certainly there is excitement around this one, I think, on both sides. As you would have read, it is the first agreement in 10 years that India has done with a developed nation and I think that a lot of those other nations — and we call them like-minded nations — are looking on in envy because it is a really significant step forward.

ET: How has trade been after Covid? I think bilateral trade is around $25 billion and people would say that given the level of engagement between both the countries, it should have been much more. How do we realise that potential?CG: The India Economic Strategy (IES) written in 2018 by a former high commissioner for India talks about our strong relationship with the country, but one that lacked economic connection. This is a legacy issue and it has been like that for some time, so we have got a lot of catching up to do. With the signing of ECTA, hopefully the next phases will help address that. But for the period in between, trade has gone up. The last figure that you have mentioned ($25 billion) was for 2021 and we are now at about $34 billion.
A lot of it is because of the increase in the price of coal. If you look at the trade basket, about half is coal. We could do a lot more and the ECTA aims to widen that basket. ECTA benefits both sides, with 96 percent of Indian goods imports entering Australia duty-free and tariffs being eliminated on more than 85 percent of Australian goods exports to India (valued at more than $12.6 billion a year), rising to almost 91 per cent (valued at $13.4 billion) over 10 years.
The IES report also states that one of the biggest impediments is that there is just not enough knowledge between the two business communities about the opportunities to work together. But I think the planets are aligning in terms of that. You could say that we have got certain skills and strengths that India does not, but India also has the components that we need. For example, India has high-quality students who, on merit, can get into our top universities. So, this is a very good synergy and for us, education is one of our biggest export services.
ET: If you leave out coal and education, what other sectors hold promise?CG: Technology is certainly an area of promise and it goes both ways. The big 5 of Indian tech firms are all in Australia and have created about 18,000 jobs in the country. Similarly, we have a lot of companies coming into India and using Indian talent — like ANZ Bank has about 6,000 employees and about 1,000 with Atlassian. Technology-enabled administration solutions provider Link Group also has a sizeable presence in India. We have a lot of smaller companies that one may not have heard about but are doing quite a lot in India.
Australian resource exports to India, particularly metallurgical coal, dominates trade basket.In the infrastructure space, we have an architectural design company called Populous that designed the Narendra Modi Stadium (previously referred to as Motera Cricket Stadium) in Ahmedabad. Specialist power and water consulting firm Entura provides dam safety and has about 50 engineers here.
So, we believe we will do a lot of work in sectors like infrastructure, built environment and areas of services like road safety systems. Health is another big area.
ET: Merchandise trade has always been a focus of most trade agreements. But this time, services have also seen considerable focus. Do you think when it comes to the architecture and the design of the agreement, we have got it right for services?CG: I actually cannot comment on that because I am not in the policy space, although I think that they are working pretty hard to make it work.
But in the goods space, I must say that there has been some good progress for Australia. Our wine will have access to Indian markets, along with wool and meat. There are several other products, but these three spark a lot of interest for our exporters.
In the areas where India is very keen to see more movement, which is around students’ post-study work rights, introduction of working holiday visas, I think we have made progress. We are having a thousand new visas for working holidays, which is because it is such a great way to get young people to travel around and gain some insights.
ET: How much of increased trade between the two countries is also to do with the geopolitics around the region? How much of that plays a part do you think?CG: You know the relationship is strengthening all the time, but what we have been doing in the areas of focus began some time before the current environment. So, I think it is about planets aligning. While geostrategic movements affect everyone, I think that our trade would have gone down this path anyway because it was already well on the way.
I think the more important thing is relationships. Outside of geopolitics, you still need to have respectful, strong relationships at the highest levels. We have seen that throughout the relationship with India.
ET: How do you see trade evolving between the two countries once the agreement is operationalised?CG: We would hope the way it will pan out is that there will be more trade certainly from this visit and with AIBX we would expect that some of our exporters will meet with partners who want to take more interest with the tariffs moving. There has been a lot of interest, particularly in lamb, because with the tariffs being removed, it will really make Australian lamb a better proposition. Similarly, duty on wine is being lifted. Mind you, that duty only really takes effect for Australia’s high-quality, high-priced wines. So that is an area we are hoping will see a lot more movement and recognition. We are getting a lot more enquiries from Indian importers about what is on offer and how we could go forward. The ECTA has triggered that interest.
Also, medical devices like cochlear ear implants have been impacted positively through the ECTA by making health technology cheaper and more accessible to the Indian market.
ET: How do you see global trade this year? We still have supply chain disruptions; we are talking about a probable recession and you have the war in Europe. How do you see trade panning out?CG: I think my view of trade is probably as good as anyone else’s at the moment, but anything can change suddenly, as we have seen. But you are right, there are supply chain issues that will continue, there are talks of recession. The only light I see right now for us is that yet again there are murmurs that Australia might avoid a recession. So, I would suggest that Australia should be looked at as a very good model for how to run an economy.
ET: Even India is expected to dodge the recession bullet.CG: Yes. So, there again, we have got a lot of synergies. Very, very different, but in many ways not so different.