Australia matters to India more than ever

Prime Minister Malcolm Turnbull’s first State visit to India is an indication of the success of India’s Act East policy, says Dr Rahul Mishra.

Fresh from his visit to Papa New Guinea, Australian Prime Minister Malcolm Turnbull is in India on what is his first State visit to the country.

There has been regular interaction between the Australian leadership and the Indian government. Four months after Prime Minister Narendra Modi assumed office in May 2014, then Australian prime minister Tony Abbott visited India, with Prime Minister Modi reciprocating in November that year. The Indian and Australian prime ministers also held bilateral meetings on the sidelines of the 2015 and 2016 G-20 summits in Antalya (Turkey) and Guangzhou (China).

After completing his political engagements in New Delhi, Prime Minister Turnbull would head to Mumbai on April 11 to hold meetings with the governor of Maharashtra and key business leaders. Though trade and education are the driving forces behind Prime Minister Turnbull’s visit, it seems the main agenda of the visit will be to bolster energy cooperation between the two countries, as he will be in attendance at the India-Australia Energy Roundtable. 

Twenty-five years ago, when then prime minister P V Narasimha Rao launched India’s Look East policy, the focus countries were those in the Southeast Asian region. The success of the first phase of Look East led to phase II which brought in a strategic dimension the policy.

In 2014, when Prime Minister Modi came to power, he proposed to widen and deepen the scope of Look East by making it the ‘Act East’ policy, and its refocus brought the countries of Oceania -- Australia, New Zealand, and the South Pacific -- and of Northeast Asia, like Japan and South Korea, into India’s policy priorities.

To and fro visits not just with Australia, but also with Japan and South Korea, demonstrate that Act East has definitely brought in more intense strategic calculations, wider trade and economic partnership requirements, and a greater role for India in the Indo-Pacific region. 

India’s Act East policy has also enabled New Delhi to think bigger -- whether in terms of investments, intra-regional and regional connectivity, and trade, or politico-military and strategic engagements. Thankfully, New Delhi is also beginning to ‘Act Bigger’.

Keeping these aspects in view, Australia matters to India more than ever.

Prime Minister Turnbull’s visit is an important opportunity for India to engage Australia for several reasons.

First, India was Australia's 10th largest trading partner and fifth largest export market in fiscal year 2016. The current visit will help both sides work towards improving the declining bilateral trade.

In 2015-16, two-way trade stood at US$ 12.16 billion, down from US$ 13.02 billion in 2014-15. In fact, there has been a sharp decrease in two-way trade since 2011-12 when bilateral trade stood at US$ 18.05 billion.

In 2015, Australian investment in India amounted to US$ 10.6 billion, whereas Indian investment in Australia totalled US$ 11.6 billion. Both sides are in the process of fast-tracking the negotiations for Comprehensive Economic Cooperation Agreement, which has the potential to increase trade volumes and allow India to have greater access to the Australian market.

Though the deal is not likely to be concluded during Prime Minister Turnbull’s visit, it will certainly provide an impetus to the CECA negotiations.

Second, Australia is one of the key partners of India in the domain of civilian nuclear cooperation. An MoU on civil nuclear cooperation was signed during Prime Minister Abbott’s visit to New Delhi in September 2014. With Australia’s 2016 Civil Nuclear Transfers to India Act in place, India is hopeful for an early conclusion of uranium sale.

Given that Australia will be a reliable source of coal, uranium, gas and renewable energy once the commercial negotiations are done, India is looking at Australia for its energy security.

Third, Australia is home to nearly 450,000 Indians, and India is the third largest source of immigrants for the country. Around 46,000 Indian students are currently studying in Australia. In fact, it is one of the most desirable foreign destinations for Indian students, and the second most important source of exports from Australia to India.

Prime Minister Turnbull, accompanied by Education and Training Minister Simon Birmingham, has brought along a strong delegation from the education sector comprising vice chancellors of several important Australian universities. Education is one of the important sectors where both countries are looking forward to cooperate, and it will also strengthen people-to-people ties.

Fourth, Australia is supportive of India’s membership to the Nuclear Supplier’s Group, where China has been a hindrance for India. Additionally, Australia has been vocal about India’s permanent membership in a reformed and expanded United Nations Security Council and Asia-Pacific Economic Partnership. India is also hoping for the finalisation of the Regional Comprehensive Economic Partnership, and Australia’s support and willingness is important for the early conclusion of the RCEP

Fifth, with China’s increasingly assertive behaviour, and a rather ad-hoc policy approach of the US under President Donald Trump, expectations of India playing a greater role in maintaining peace and stability in the Indo-Pacific region have been augmented.

Mutually convergent strategic interests and economic goals make it natural for Australia and India to work in close coordination.

Australia has also been supportive of a larger participation from the Indian side on issues of regional and global importance. Canberra perceives India as a key security partner.

India already has a trilateral dialogue with Australia and Japan where they discuss security issues of regional importance. India and Australia are in the league of prime stakeholders in the Indian Ocean and, therefore, have an inherent interest in safeguarding the sea-lanes of communication.

Sixth, like India, Australia too is weighing its options vis-à-vis China’s One Belt, One Road or the Belt and Road initiative. Chinese Premier Li Keqiang, during his recent visit to Australia, failed to reach an agreement with Australia on OBOR, as Northern Australia was seen as a lucrative destination by the Chinese for collaborating on OBOR.

The key reason behind Canberra’s reluctance is perceived to be Australia’s proximity to the United States, which doesn’t approve of OBOR.

Moreover, USA’s key Asian allies Japan and Taiwan are also keeping away from OBOR.

Additionally, India’s cautious approach towards the OBOR project makes it even more convincing for Australia to turn down the Chinese request.

In summation, Prime Minister Turnbull’s visit is an indication of the success of India’s Act East Policy, demonstrating that bilateral relations have come a long way.

Convergent interests and commercial gains have been the driving force for both countries to cooperate. Australia has expressed its interest in partnering with India in a range of issues of bilateral and multilateral nature.

However, to make that a reality, both Australia and India need to pursue regular dialogues and proactively engage with each other.

Dr Rahul Mishra is a New Delhi-based strategic affairs expert.