China wary Australia's sharp India turn

After his recent visit to India, former Australian PM Abbott has said India is perfectly placed to substitute for China in global supply chains

The recent visit of former Australian Prime Minister Tony Abbott to India during the first week of August in a different avatar, as a Special Envoy on Trade of his successor Scott Morrison underscores the country's seriousness to take forward ties under a plan.

Abbott's August 2-6 sojourn was aimed to nudge New Delhi on the Comprehensive Economic Cooperation Agreement (CECA) stalled since he stepped down from office in 2015 without fulfilling his goal of formalising a pact with India.

Since then, much has changed in the quality of the India-Australia bilateral engagement, upgrading ties to Comprehensive Strategic Partnership that encompasses areas outside the narrow interpretation of things military. India now awaits scheduling the first 2+2 meeting between the foreign and defence ministers, which would complete a similar arrangement with the other two members of the Quadrilateral Security Dialogue, Japan and the United States.

Besides democratic values, both sides share a vision on the Indo-Pacific, the emerging geopolitical construct with a liberal shade of economic partnerships built into the structure. After decades of less engagement, the India-Australia relationship moved into a transformational course during the last 15-odd years, acquiring more significant momentum in the past few years.

The scope of ties now expands to acquire depth in agriculture, critical minerals, energy education and science and technology. Economic cooperation and trade and investments remain areas of particular focus. The accent during Abbott's visit can be gauged from the discussions the former prime minister held with ministers of commerce, coal and mines, energy, power, NITI Aayog and finance, signing off with a call on Prime Minister Narendra Modi.

The nature of discussions centred on how both countries can further strengthen bilateral trade, investment, and economic cooperation, which can assist India and Australia in addressing challenges as the world prepares for a post-pandemic new order.

While India is seeking to expand its manufacturing capacity to take forward the Atmanirbhar Bharat vision, it also dovetails into the plan to attract global manufacturers seeking to exit China as part of an alternate supply chain that countries are keen to develop. With NITI Aayog, the special trade envoy discussed emerging technologies, critical minerals, and India's Productivity Linked Incentive scheme.

On his return from India, Abbott wrote in the Monday edition of "The Australian", "The pandemic has put up in flashing neon lights the extent to which the world has become dependent on Chinese imports, including in critical supply chains, that can be turned on and off like a tap. But the answer to almost every question about China is India. Although currently not as rich as China, as a democracy under the rule of law, and as the world's second-largest producer of steel and pharmaceuticals, and with its own version of Silicon Valley, India is perfectly placed to substitute for China in global supply chains."

The Abbott government signed a Free Trade Agreement with China in 2015 but now feels the decision did not deliver on its objective as China became an economic powerhouse and is now acquiring military sinews.

With the global economy and trade facing a downturn following the outbreak of the worldwide health pandemic, the bilateral trade between the two countries during 2020 stood at $24.4 billion, down from $29 billion during 2017-18, with India now ranked as the 7th largest trade partner and 6th largest export market. Indian imports include coal, copper ore and concentrate, gold, vegetables, lentils, fruits, nuts, and wool.

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After India pulled out of the Regional Comprehensive Economic Partnership and its inability to be a member of the Asia Pacific Economic Cooperation, for many countries, an agreement like CECA is the route to expand bilateral trade and investment with one of the largest markets world.

In his new role, Abbott also serves as an advisor to the United Kingdom Board of Trade as both countries embark upon a path to strengthen trade deals with India. Amid reports back home whether the former PM could also be discussing the pending UK-India FTA, the Australian Guardian quoted a spokesperson of Canberra's Department of Foreign Affairs and Trade (DFAT) that Abbot signed a conflict of interest declaration ahead of the trip to New Delhi. While announcing the visit Trade, Tourism and Investment Minister Dan Tehan said the Australian government partly supported it and the former PM would not be remunerated for his work.

Ahead of it, Australian High Commissioner Barry O'Farrell characterised Abbott's visit as a commitment to strengthen the economic relationship, deepen trade and investment links with India and take "our economic relationship to the next level" with emphasis on building secure and resilient supply chains.

Australia visualises that India would require goods and services over the next two decades that it can offer. These could be in areas like agriculture, education, skill training and health, a sector that assumes immense importance as Covid19 showed how even developed countries were struggling with inadequate infrastructure as waves swept through. The projection includes India emerging as the third-largest economy globally in less than a decade, despite the blip suffered during 2020.

The basis for Australia's interest in developing trade and economic ties with India lies in the India Economic Strategy. This 500-page document charts a roadmap to navigate the relationship from "potential to delivery" by 2035.

Prepared by former DFAT Secretary Peter Varghese, the IES has identified three-pillar strategies: economic, geo-politics and people, ten sectors where Australia has a competitive edge with education as a flagship sector. It is one of the largest services sector exports, recording $6 billion with a little over 1.15 lakh Indian students studying in Australia.

The other sectors, broken down into three lead sectors, are agribusiness, resources and tourism and six promising sectors, energy, health, financial services, infrastructure, sport, sciences and security. The relationship is on course to move away from the traditional description of India and Australia sharing "Cricket, Curry and Commonwealth."

(The writer is a journalist)

Disclaimer: The views expressed above are the author’s own. They do not necessarily reflect the views of DH.