As the United States and China face escalating tensions, Australia and India have announced their intention to strengthen their strategic partnership. This comes in response to the perceived Chinese threat in the Indo-Pacific region, which has led Australia and India to recognize the potential benefits of deepening their relationship with one another. With the Indian and Australian economies closely linked and increasingly reliant on each other for both trade and security, this deeper association will be beneficial for both countries.
Geopolitical Benefits of Australia-India Collaboration
With this declaration of cooperation between Australia and India, the two countries will be able to stand united and work together in the face of growing tensions in the Indo-Pacific region. As part of this partnership, the two countries will be able to develop greater coordination in diplomatic and military matters, enabling the countries to be more effective in addressing security challenges and countering aggressive Chinese assertiveness in the region.
The strategic partnership between Australia and India will also create opportunities for increased collaboration in Indo-Pacific security affairs and the strengthening of India’s presence in the Indo-Pacific region. This will allow Australia to extend its influence beyond its own borders. According to Australia’s minister of defense, Linda Reynolds, “the Australia–India partnership lays the foundation to offset Chinese power and preserve sovereignty in the Indo-Pacific, allowing Australia and India to jointly seek regional stability and prosperity.”
Economically, the two countries will benefit from increased trade and investment ties. As part of this deal, India will receive exclusive access to Australia’s goods, services and technology markets. This, in turn, will boost Australian exports and create an unprecedented level of investment in India from Australian businesses. In addition, both countries stand to gain from increased ties in the health and scientific sectors and from mutually beneficial development initiatives.
Expanding this relationship could potentially result in cost savings for Australia and India in other areas as well. In particular, the countries could potentially form a joint venture for defense procurement and collaboration, which could reduce costs for both countries and provide them with a common platform for the development of technology.
Events Marking the Initiative
The Australia–India relationship has been growing in strategic importance over the past year, and several events have been hosted to mark the increasing importance and scope of the ties between the two countries.
The Australia–India Strategic Dialogue and Australian–Indian Business Reception were two such events hosted by the two countries. The first event brought together government and industry representatives from both countries, while the second was geared towards the business community.
The two events highlighted the potential benefits of the Australia–India partnership and provided a platform for discussion on how the two countries can collaborate in the commercial sector. The bilateral agreement between Melbourne and Mumbai also came out of the discussions at these events. The agreement provides for a range of economic and investment activities, including potential joint ventures, foreign direct investment and new trade promotion activities, and recognizes the need for increased collaboration between the two countries.
Current Trends in India-Australia Collaboration
The current focus of Australia-India collaboration is in three main areas: trade; investment; and strategic advocacy.
Trade
The total bilateral trade between India and Australia was worth US$20.8 billion in 2019-2020, with Australia exporting US$13.1 billion to India and importing US$7.7 billion worth of goods. Major exports from Australia to India include coal, copper ore, transport machinery, and medical instruments. Following the events Marking the Strategic Initiative during the year, both governments pushed for a Comprehensive Economic Partnership Agreement (CECA) – India’s first with a major economy outside South Asia – to facilitate the exchange of goods and services.
Investment
India is Australia’s 10th largest source of foreign direct investment, with the majority invested in capital (e.g. real estate), trade and services sectors. Meanwhile, Australian-based funds have over US$9 billion invested in Indian companies. In 2020, Australian Super, an industry super fund, made an additional US$400 million investment in India’s long-term infrastructure projects.
Strategic Advocacy
Australia and India have jointly supported initiatives to uphold the international rules-based order and strengthen economic, defense, and security cooperation in the Indo-Pacific. Tentative steps have been made towards establishing a Quadrilateral Dialogue to link the four democracies of India, Australia, the United States and Japan – something that was previously attempted in 2007.
Australian-Indian Multilateral Partnerships
In addition to the bilateral ties enjoyed between Australia and India, both countries are members of a number of multilateral organizations in the Indo-Pacific region, including the ASEAN (Association of Southeast Asian Nations) Regional Forum and Asia-Pacific Economic Cooperation (APEC).
Both countries have also been working together to advance the goals of key regional organizations such as the ASEAN Economic Community, of which Australia is a signatory and India is an observer. The countries have also been collaborating on initiatives to address issues like climate change and the management of transnational crime. Additionally, India and Australia have been working together to ensure the safety and security of maritime routes in the region.
India and Australia have made considerable progress in strengthening their strategic partnership. The two countries are working together to create economic opportunities, bolster regional security and support the international rules-based order. For their part, India and Australia both stand to benefit from the deepening of their strategic ties. From a stronger economic and security relationship to increased scope of investment, Australia and India are sure to reap the rewards of their collaboration in the years to come.
