Prioritising Recommendations

The intersection of 10 sectors and 10 states is at the heart of the strategy recommended in this report. It focuses on aligning Australia's economic strengths, makes planning for entry into the Indian market more manageable, identifies where the future growth is, and works with the grain of competitive federalism in India.

To reach the 2035 targets of India becoming our third largest export market and third largest destination in Asia for Australian outward investment, the strategy outlined in this report has five underlying drivers: grow the Australia India knowledge partnership; make the most of the complementarities between our economies; improve the ability of our markets to operate with each other; develop well-informed understanding of each other; and build relationships which will sustain themselves for the long term.

Within these drivers, the strategy identifies 90 specific recommendations. This report proposes many be implemented now, but recognises that some will have to wait until more resources are available or India's domestic reform agenda is more advanced. I have highlighted the top 10 recommendations for immediate implementation and the top 10 recommendations that could make the biggest difference.

As a report to the Australian Government, these recommendations are primarily for government to act on and lead. But collaboration with the private sector and Australian state governments is essential to their success. The recommendations also serve to inform businesses of where government is best placed to put its resources.

Two fundamental factors define our approach. First, a long term commitment to India is essential. Second, Australia must keep improving its international competitiveness to succeed in India's increasingly crowded landscape. This of course applies not just to success in the Indian market.

The recommendations of this report form a body of practical steps that can serve the relationship for years to come. Developments in both economies will affect when the timing is right for individual recommendations.

While each of the recommendations presents a strategic opportunity, some will have a greater impact than others.

Figure 1: The organising principles of the India Economic Strategy

Figure 1: The organising principles of the India Economic Strategy

Priority recommendations to be implemented now

6.1.2Reposition 'Brand Australia' to improve the perception in India of the quality of Australian education

  • A 'Study in Australia' education hub should be established in New Delhi based in commercial offices rather than in our diplomatic mission
    • India is big enough to accommodate all Australian providers, which need to stop seeing each other as competition and instead to collaborate in a coordinated manner
    • this hub would be responsible for the international marketing and promotion of Australian education and training, and be led by an upgraded Austrade presence with on the ground support from the Department of Education and Training and Universities Australia
    • the hub would work directly with industry, peak bodies, and local providers to build a 'Study in Australia' brand which highlights the quality of Australian education
    • universities that have a presence in India could consider co-locating in the hub.

15.3Universities Australia should explore options for a consortium of Australian universities to be the lead partner in the establishment of one of India's six new proposed Indian Institutes of Technology (IITs)

  • The Indian Government plans to open six new IITs by 2020. An Australian consortium should be the lead partner with one of these six.
  • Andhra Pradesh or Karnataka would be good locations for such a joint venture.

29.1Work with the Indian Government to put in place mechanisms to provide better forecasting and greater visibility of fluctuations in Indian demand for agricultural commodities imported for Australia

  • Australia could provide globally-competitive forecasting services directly to India's Directorate General of Foreign Trade to help ensure earlier advice on policy decisions such as tariff increases
    • including through deeper relationships between the Australian Bureau of Agricultural Resource Economics (ABARES), the Bureau of Meteorology (BOM) and the Indian Meteorological Department.
  • Import tariffs and trade restrictions are often applied in response to changes in domestic production driven by seasonal conditions or due to specific Indian Government schemes.
  • Improved weather and monsoon forecasting, and monitoring of Indian Government schemes, could add an element of predictability that could assist India to know earlier its likely harvest levels.
  • Understanding and managing climatic variability is an area of Australian strength and working with India could also support the provision of timely information to the Australian side.

37.Promote increased direct air services between Australia and India

  • Though air service arrangements are not inhibiting aviation capacity in the short term, no Australian carrier currently flies directly to India.
  • The Australian Government should encourage Australian and Indian carriers to increase direct air services between the two countries.
  • Australian airports should explore options to increase incentives for Indian airlines to use Australian airports, or for third country airlines if they are connecting directly from India.
  • The Australian Government should consider increasing aviation access to additional regional Indian tier two cities under air service negotiations, with a mind to opportunities evolving out to 2035.

55.1Convene an Australia-India Infrastructure Council as a forum for collaboration between government and the private sector from both countries, including at the state level

  • A platform for the exchange of expertise in infrastructure financing and guidance on how companies identify opportunities, mitigate risks, and develop appropriate entry and exit strategies to investing in India.
  • A mechanism for sharing regulatory expertise, potentially through the joint development of a policy roadmap. This could include sharing Australian expertise in infrastructure financing, value capture and user charges, in issuing municipal bonds or green bonds, and in toll-operate-transfer and 'Build-Operate-Transfer' models.
  • Support for state government engagement, given a large proportion of the expertise in regulation, implementation and management of transport infrastructure sits at the state level in both Australia and India.
  • Share Australian Governments' asset recycling and privatisation experiences. This represents a practical way to respond to India's infrastructure priorities and potentially open up opportunities for Australian funds seeking brownfield infrastructure investment opportunities.

67.Scale up the Australia-India Strategic Research Fund (AISRF)

  • Double the current total funding for the AISRF, remove funding from the Australian aid program, and make funding ongoing (that is, make Australia's contribution $10 million per annum).
  • Consider three possible revisions to the AISRF:
    • larger projects along the lines of the 'Grand Challenge Fund' which have been conducted in the past
    • more direct funding to ensure all PhDs on projects spend time in the other country; this forms lifelong networks that build on and exceed the valuable institutional networks that AISRF collaboration already brings
    • while maintaining a necessary focus on industry partnerships and commercialisation, increase investment in priority areas of fundamental science, for example, joint activities in gravity waves or quantum computing which could deliver long term benefits.

74.1Upgrade the small Austrade presence in Kolkata into a full Consulate-General

  • Focusing on economic diplomacy in mining and resources in India's eastern mineral-rich states of West Bengal, Chhattisgarh, Jharkhand and Odisha.
  • A mission in Kolkata would represent a strategic investment in Australia's ability to access opportunities in India's resource-rich eastern states and the emerging north-eastern states.
  • This could build closer relationships with state governments, including on shared policy experiences and advocacy for reforms in the Indian mining sector and to service the expanding mining equipment, technology and services (METS) sector in Kolkata, other mining-related activity and attract inward investment.

78.2Australia should take the lead in working with other countries to bring India into APEC

  • India is interested in joining the APEC but only if there is a consensus to admit it. Taking the lead on this would serve the bilateral relationship well and would be consistent with Australia's Indo-Pacific Strategy.
  • It would bring India into the circle of APEC's important trade facilitation work.
  • It would also ensure that if APEC were eventually to negotiate an APEC wide Free Trade Agreement (FTA), India would be a party to it.

82.1Establish a Strategic Economic Dialogue with India to facilitate a broader and deeper discussion of the economic relationship and reform priorities

  • It should convene every two years with the Australian Treasurer, Trade Minister and the chair of the Productivity Commission alongside the Indian Ministers for Finance and Commerce and the Deputy Chair of the National Institute for Transforming India (NITI Aayog).
  • This would take the place of the Joint Ministerial Commission.
  • The dialogue could include Australian state representatives when meeting in Australia and Indian state representatives when meeting in India.

84.Strengthen the Australia-India CEO Forum

  • The BCA should take on the secretariat duties of the CEO Forum. In doing so, it should work closely with the relevant Indian chamber to convene participation on the Indian side.
  • The BCA should also draw on guidance from its members and advice from Government to take forward an intersessional policy agenda for the CEO Forum.

Priority recommendations to be implemented over the medium and long term

16.Increase financial support for Indian and Australian doctoral students by introducing a Joint Research Fund

  • The availability of financial support is a major 'pull' factor for Indian students considering undertaking PhD programs overseas.
  • Australia should increase the availability of funding for Indian and Australian PhD students by establishing a Joint Research Fund with strong links between industry and academia
    • the inclusion of PhD students from both countries would be a compulsory requirement of some or all applications for funding
    • short term mobility for PhD students from both countries should be a subset of this fund.
  • A Joint Research Fund would be separate from and broader than the AISRF because the AISRF does not fund doctoral students at present. This fund would also not be limited to research in the sciences.

18.Australian universities should partner with business to promote India literacy in Australia through the expansion of Indian studies, including language studies, in Australian universities

  • Large Australian and Indian corporates with commercial interests in both countries should sponsor new faculties and courses on Indian studies in Australian universities
    • a small number of Chairs of Indian studies in major universities should be established
    • the study of Indian languages should be expanded
      • six universities in Australia taught an Indian language in 1996, now only two do, while over a dozen universities offer courses in Mandarin and Japanese.
  • Another way to increase the credibility of Australian education in India is for Australian universities to boost research and teaching on issues of high priority to India
    • we need to make our education offerings more relevant to Indian students as well as increase the India literacy of Australian students.

27.1Increase financial and political support for the Australia-India Mining Partnership at the Indian School of Mines Dhanbad (IIT-ISM) to ensure it continues to grow out to 2035

  • Use the partnership with the IIT-ISM to showcase Australian expertise.
  • The framework for engagement under this partnership is established. Modest funding of activities is essential for it to deliver outcomes in the short to medium term. Support could be directed to:
    • executive training programs, with a focus on Australian standards and systems and advanced technology applications
    • joint research projects on extractive and refining technologies
    • facilitating student and faculty exchange between the IIT-ISM and Australian institutions
    • promoting further linkages between Australian industry and the IIT-ISM in the fields of clean coal and mine safety
    • making the Austrade-managed Business Development Manager embedded in the IIT-ISM a permanent role in addition to the Austrade presence in Kolkata.
  • Such activities could build further institutional and branding support for Australian universities to develop and deliver management training courses and study tours in partnership with the IIT-ISM.
  • Develop a communications and marketing strategy for the partnership at IIT-ISM.

32.3Establish an Australia-India Food Partnership, including an International Agricultural Services Hub to package Australian policy, implementation and services expertise

  • The Food Partnership would provide a framework for:
    • strengthening engagement between Australian and Indian agriculture and food industries
    • strengthen Australia's reputation as a longstanding reliable partner in agriculture
    • work with Indian policy makers to assist in the design and implementation of effective agricultural legislation, regulation and policy making.
  • The Hub could offer:
    • a one-stop shop of advice across university, industry and public sectors
    • blended financing, including in-kind contributions from the private sector
    • a unique Australian brand
    • bespoke services available through fee for service
    • if successful in India the concept could be extended to other developing markets.

41.1Develop 'India ready' training programs aimed at raising awareness of cultural tastes, preferences and expectations of Indian leisure and business tourists

  • This could be undertaken through a tender process allowing for a consortium of commercial stakeholders (VET providers and Indian partners) to put forward innovative proposals.
  • The Australia India Tourism & Travel Council has industry-wide links and should act as an advisory body.

51.1Establish an industry body to package Australian health sector offerings specifically for India

  • Similar to the Water Industry Alliance or the Australian Water Partnership, perhaps affiliated with an existing health sector peak body.
  • This initiative would support public and private partnerships for sharing Australia's health sector expertise with India, open opportunities for Australia to learn from India's approaches and seek co-investment collaborations.
  • It would likely require seed funding.

68.1Explore the option of collaborating with India through its Global Innovation Technology Alliance (GITA)

  • The 2+2 model for funding industrial research encourages greater industry buy-in and has a focus on commercialisation.
  • Before such a program is conceived, the Australian Government should make a medium to long term commitment to engage with the market, test appetites and build partnerships. Lessons could be learnt from India's experience with GITA in the next two to three years.

69.1Put India in the top tier of target countries for each of Australia's six industry Growth Centres

  • The industry Growth Centres seek to boost sector productivity by:
    • increasing collaboration and commercialisation
    • improving access to global supply chains and international opportunities
    • enhancing management and workforce skills
    • optimising the regulatory environment.
  • As part of their focus on international opportunities, engagement with India should be given priority.

74.2When resources permit, establish a Consulate-General in Bengaluru to focus on economic diplomacy in technology and innovation

  • A post in Bengaluru would represent a strategic investment in Australia's ability to access opportunities in the world's fourth-largest, and second fastest growing, technology cluster.

78.1Establish an Australia-India Standards Trade Enabling Program, to facilitate and promote standards harmonisation, technical alignment and regulatory coherence

  • This should be a multi-year initiative to promote common standardisation and would build on Standards Australia's existing relationship with the Bureau of Indian Standards.
  • In the first instance, the government should commission Standards Australia to produce a Standards Market Potential Report to inform the development of this program. This would identify the opportunities, technical gaps and challenges for further Australia-India collaboration on a sector-by-sector basis, including digital trade.

Implementation of the India Economic Strategy

  • Assign a cabinet level ministerial champion for each of the 10 priority sectors identified in this report.
  • The Minister for Trade, Investment and Tourism to chair a Ministerial Committee to oversee implementation of the recommendations in this report and to ensure that the India Economic Strategy receives high level political leadership and focus.
  • This Ministerial Committee be supported by a committee of senior officials, chaired by a Deputy Secretary of DFAT, and comprising senior officials from the federal departments and agencies most directly involved in the Australia India economic relationship
    • with state government officials invited to participate as appropriate.