Tapping into India’s burgeoning economy
by Minister for Trade, Tourism and Investment The Hon Steven Ciobo MP
Welcome to a new edition of business envoy, focusing on India. Just over 25 years ago India was barely engaged in the global economy. Today, it is the world's fastest growing major economy and will become the third largest economy by 2030.
Growth is driven by the world's largest and youngest working-age population, domestic consumption, investment in infrastructure, education, and innovation. Emblematic of its rise – a billion new smartphones will be sold in India in the next five years.
Prime Minister Narendra Modi's Bharatiya Janata Party's recent win in state elections underlines his mandate for ongoing economic reform. This result followed progress on difficult reforms – introducing a national GST, demonetisation and broader economic policies such as financial inclusion initiatives, easing of investment restrictions and an innovative approach to competitive federalism, all serving to create a better business environment.
Prime Minister Modi's bold reform agenda creates opportunities for Australia. Increasing two-way trade and investment with India is part of the Australian Government's plan to boost jobs, growth and prosperity.
We're making progress. In 2015-16, two-way trade in goods and services was nearly $20 billion – double what it was a decade ago.
Two-way investment is at $22 billion, having grown 15 fold over the same period.
However it's the potential for future growth that is the focus of the Turnbull Government. Currently, more than 60 per cent of the value of Australia's merchandise exports comes from just three commodities: coal, gold and vegetables. We need to actively identify fresh ways to build on these traditional strengths and diversify our trade and investment relationship. Education, skills and tourism have opportunities for growth. As does the 'new economy' – providing high value-add services in innovation and technology, fintech, medtech, agritech and IT.
We are also continuing to work towards a comprehensive and ambitious bilateral trade agreement and participating alongside India in the Regional Comprehensive Economic Partnership negotiations involving 14 other countries. Wide-ranging and high-quality outcomes in both these negotiations would facilitate increased and diversified goods and services trade between India and Australia, as well as more cross-border investment.
This edition will give a sense of where new trade and investment opportunities exist for Australian business and highlight examples of successful collaboration between Australia and India. In the coming months, DFAT, Austrade and state and territory governments will continue to support Australian businesses to explore opportunities that enhance trade and investment ties with India, including at Australia Business Week in India.