Australia and India are geographically continental-size countries. Both are vibrant democracies. Both are cricket-crazy Commonwealth nations. English is the dominant language in both former British colonies. Yet, it is a puzzle why the relationship between the two bordered on indifference in the past. The answer lies in the frosty relations that emanated from the Cold War era geopolitics.
However, the historic coldness of the Cold War era has cracked, and the total indifference between the two nations has today changed by 180 degrees. Call it the blend of the three C’s (Cricket, Curry and Commonwealth), or the fallout of the Free Trade Agreement (FTA), or, simply the Modi Magic. With Australian PM Anthony Albanese’s historic meeting with PM Narendra Modi, in Ahmedabad’s Narendra Modi Stadium, the bilateral ties between the two major democracies are about to transform commerce and geopolitics.
Geopolitics of QUAD
Prime Minister Narendra Modi’s visit to Australia in 2014 was the first Indian prime ministerial visit in 28 years after former PM Rajiv Gandhi’s visit in 1986. Although Modi’s visit was in response to Australian PM Julia Gillard’s visit to India in 2012, it set the ball rolling for further friendship and the strengthening of the new security architecture of the Quad.
Albanese’s visit falling between United States Secretary of State Anthony Blinken’s visit to India a week ago and Japanese Prime Minister Fumio Kishida’s visit between March 19 and 21, marks the visit by the other three Quad member countries to India. This follows a week after the Foreign Ministers of all the Quad grouping met in New Delhi on March 3.
The Quad, a partnership between India, Japan, Australia and the US, is the key pillar of the new diplomatic network of four major countries committed to supporting free and open Indo-Pacific trade. It complements other bilateral, multilateral and regional cooperation, including with ASEAN member states and Pacific partners.
The Quad’s origins date back to the collaboration in response to the December 2004 Indian Ocean tsunami. Today, the Quad has a very positive and practical agenda for the region’s vast and pressing challenges. The Quad’s agenda includes the Covid-19 vaccines, climate change, critical and emerging technology, infrastructure, cyber security, humanitarian assistance and disaster relief, space and maritime security, countering disinformation and counter-terrorism. The Quad’s partners are steadfast supporters of ASEAN centrality, ASEAN-led architecture and ASEAN’s outlook on the Indo-Pacific region.
The FTA fallout The visit by PM Albanese is the fruition of the historic Free Trade Agreement (FTA) between Australia and India, passed by the Australian Parliament in 2022. This is poised to almost double bilateral trade from $ 27.5 billion to $ 45-50 billion by 2035.
The India-Australia Economic Cooperation and Trade Agreement (ECTA) follows on the heels of the India Economic Strategy 2022 update launched in March 2022, the inking of the ECTA in April 2022 and the ECTA coming into force on December 29, 2022. These three trade deals constitute milestones for the Comprehensive Strategic Partnership between the two major democracies.
India has much to gain from the IndiaAustralia ECTA; first, the creation of 10 lakh additional jobs for Indians. Second, benefit over one lakh Indian students in Australia from post-study work visas. Third, increase exports from India to Australia by $10 billion by 2026-27. The ECTA will ensure that Indian goods on all tariff lines get free access to the Australian market at zero customs duty.
In exchange, 90 per cent of Australian exports by value get zero duty access to the Indian market. The ECTA will ensure an end to double taxation, the availability of cheaper raw materials and faster approval for medicines.
A caveat: In the past, developing countries supplied raw materials to developed nations which, in turn, supplied manufactured goods. Today the role is reversed. Union Commerce and Industry Minister Piyush Goyal aptly remarked: “There is a lot of potential for exporting finished goods to Australia since they hardly manufacture anything. We will get cheaper raw materials which will make us more competitive globally.”
PM Albanese’s visit is the fourth meeting between him and PM Modi. In 2022, 10 Cabinet ministers travelled from India to Australia. The recent bonhomie, trade ties and comprehensive strategic partnership between the two major powers are bound to transform commerce and geopolitics of the IndoPacific region.
Leave a Reply