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The growing importance of Australia-India trade

Did you know that India was one of Australia’s first trading partners? From the 1790s onwards, ships from Calcutta supplied the fledgling colonies of New South Wales and Van Diemen’s Land (Tasmania) with food, horses, textiles, spirits and luxury goods.

More than two centuries later, Australia-India trade is experiencing something of a renaissance. Two-way trade in goods and services has grown at a breakneck average annual rate of 28.1 per cent over the five years to 2007.  India was Australia’s 10th largest trading partner in 2007, with two way trade at $13.3 billion.

From Australia’s perspective, exports to India have grown by an average of almost 34 per cent a year over the past five years, making it Australia’s seventh largest export market in 2007.

Indeed, India’s attractiveness as an export destination for Australian goods and services looks set to increase: the Economist Intelligence Unit forecasts that India will be the fastest growing economy in the world between 2007 and 2030.

Recognising this trend, Australia’s new Trade Minister Simon Crean paid an early visit to India from 15-19 January, just six weeks after the election of the Rudd Government.  In a speech to the Confederation of Indian Industry Partnership Summit, Mr Crean said the Government was committed to taking Australia’s growing commercial relationship with India to a higher level.

Closer economic ties in recent years have delivered significant benefits to both nations.  Australia and India have decided to take advantage of this momentum by agreeing to undertake a joint feasibility study on the merits of a free trade agreement (FTA).

Mr Crean and the Indian Minister for Commerce and Industry, Kamal Nath, met in Melbourne on the 20th of May, 2008.  They agreed that the report of the FTA feasibility study should be presented to Government by the end of 2008.  “We welcomed the good momentum established in the joint FTA feasibility study and committed to adopting a bold and ambitious approach to the study” said Mr Crean.

Three products – gold, coal and copper ore – account for over 80 per cent of Australia’s merchandise exports to India, with gold being the dominant export.  India is our largest market for gold - valued at $4.2 billion in 2007.

India is also Australia’s number one export destination for vegetables (mostly chickpeas), with an average annual growth of 12 per cent over the past five years, to $91.6 million in 2007.

Education-related services exports are becoming increasingly important.  Enrolments of Indian students in Australia have increased at an average annual rate of 40 per cent since 2002, and there were over 63,000 Indian enrolments in Australian educational institutions in 2007.  Education service exports were worth $1.6 billion in 2007.

Imports of goods and services from India have also increased by an average of 11.1 per cent over the past five years.  India is Australia’s number two source of pearls and gems.

For advice on how to lodge submissions to the joint FTA feasibility study, please visit the FTA link below.

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