As the trade war with China escalates over its ban on Australian coal, can we diversifyinto other markets – including the country with the world’s second-biggest population, India?
Given our current trade with India is about one tenth of that with China, it is hard to see it replacing
China for us in the short or even medium term.
But a look at the products on China's ''banned'' list highlights potential opportunities for Australia to explore and expand with India.
China accounts for 51 per cent of world coal consumption, while India is only 12 per cent. With this low consumption and the Indian government aiming for self-sufficiency, it is unlikely that much more of our coal will find a market there.
Australia needs to look to other markets as China rejects coal and other exports.Credit:Dominic Lorrimer
Barley used to be a big export to India for Australia and it had a recent boost with India accepting our malting barley. Sugar. however, is already produced in large quantities by India and one of its key exports so there are few opportunities for us there.
Beef is just a “no go” zone for religious and cultural reasons in India – but Australian lamb could be an expanding market as interest in Western cuisines increases, especially among the young, urban middle class.
Growing demand from the same group for Western-style furnishings could provide openings for Australia to export to India which is one of the world's largest importers of timber.
Similarly, wine is a real ''status'' product for the young, urban group in India, which imported 5.2 million litres worth around $40 million in 2018. But Australia lagged France, Chile and the US in this market.
Wine is a status symbol among India’s growing young, urban, middle class.Credit:iStock
The biggest wine opportunities in India are in the massive growth in all kinds of online sales, especially for some mid-tier price wines, plus demand for wine education.
Copper ore and concentrates are also much in demand in India, with around 90 per cent of it imported. While Australia is on the list of suppliers it is nowhere near the top.
India has provided strong numbers in tourism and education in Australia and we could work hard to expand this as interest from China falls away.
One of the big potential categories in India is for Australia’s “clean and green” horticulture
products. Food imports in India tripled in the last decade and could grow faster in the next, with the
urban middle class, e-commerce and supermarkets playing a big role.
It is clear there is much potential for Australia to expand into India.
But to find a balance to our trade dependence on China, Australia should “think big” about radically
changing our approach to trade, which at heart has been a simple transactional relationship
vulnerable to shock changes, as we are discovering.
India can be part of the solution to Australia’s trade problems with China.
Better for Australia to seek collaborations rather than transactions, and regional rather than national partners.
Our universities are pioneering some innovative collaborations – RMIT University has a four-year
post-graduate course that includes half in Australia and half in India. Others will follow.
We can do this in other sectors – horticulture is one that goes beyond the transactional – where we
can collaborate with India in creating innovations, research, agtech and skills training.
Collaborations of this kind need a combination of investment, knowledge, resources and local market capability. Once established, these relationships will be long standing and not vulnerable to short term shifts.
The Indian diaspora (comprising both Australians of Indian origin and Indians resident in Australia) is a great source of cultural ties and can support these deeper business connections.The Indian-born population is the third-largest migrant community in Australia, making up 8.1 per cent of our overseas-born population and 2.4 per cent of our total population.
India remains Australia's largest source of skilled migrants and the second-largest source of international students – surely a rich asset that can build people-to-people links.
The big regional partnership opportunity which has long been neglected by most countries is the
Indian Ocean region, with 2.5 billion people and a young population, average age of only 30.
Right now, the region is lacking leadership and by teaming up with India we might just help it claim
its place, with all countries benefiting economically.
This region could provide the pathway, albeit a complex one, for our much-vaunted trade
diversification, especially if we approach it with a collaborative mindset, rather than seeking the
Australia has historically been Pacific Ocean focused – and big trading partners such as China, US,
Japan and South Korea, plus our biggest strategic defence alliance are all there. Balancing this perspective with an Indian Ocean focus allows Australia to keep the best of what it has
while taking a leading role in creating a new regional player in global trade and defence.
It would give us some insulation against Chinese trade reprisals of the kind seen in recent months.
And it might gain us more respect in Beijing.
India can be part of a solution to Australia's trade problem with China but it is never likely to replace it. That’s why a regional approach makes sense.
Australian Prime Minister Morrison has developed a good relationship with Indian leader Narendra
Modi – the two countries have become closer on defence and supply chains, so now is the time to
talk trade and it would be good to see them take a leading role in building a strong Indian Ocean
Stephen Manallack is chairman of Genesis India Australia Horticulture Project and a blogger at Into India.
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