Australia and the Great Economic Powers: India

Francisco A. Laguna & Jennie Linder Cunningham

This week we conclude our series on Australia, focusing on the country’s trade relations with India.

Maps of Australia and India  Photo Credit:

Maps of Australia and India
Photo Credit:

Trade between Australia and India has increased rapidly over the past decade.  It may prove to become a positive alternative to China, particularly if the Australia – China Free Trade Agreement stalls. With a market nearly the size of China’s and a population and economy that is increasingly modernizing, bilateral trade between India and Australia has increased to $17.4 billion in 2012, up from just $3.3 in 2000. In discussing the trade relationship, the Australian Department of Foreign Affairs and Trade stresses the fact that India is the world’s largest democracy.

Adelaide Photo Credit: Archidroid via Wikimedia Commons

Photo Credit: Archidroid via Wikimedia Commons

From a politico-economic standpoint, developing their relationship seems to be a beneficial choice. In 2011, negotiations began between the two nations to conclude a Comprehensive Economic Cooperation Agreement, along the lines of Australia’s existing bilateral FTAs. Australia supports India’s efforts to take a greater role in the international community, particularly in terms of its campaign to gain a permanent seat on the UN Security Council. India also participates in the East Asia Summit (along with Australia and New Zealand) and became a member of ASEAN in 1996. In another recent development, then-PM Kevin Rudd and Indian PM Dr Manmohan Singh agreed to “upgrade relations” between India and Australia to that of Strategic Partnership in 2009, following 2006’s Memorandum of Understanding on Defense Co-operation, and later issuing a Joint Declaration on Security Cooperation. PM Julia Gillard visited India in 2012, at which time another joint statement issued concerning bilateral collaboration.  Further pointing to the possibility of efforts to balance China’s growing power, India’s defense minister, A.K. Antony, visited Australia for the first time in June 2013, meeting with Australia’s defense minister, Stephen Smith. Smith noted that India was critical to securing “the strategic arc we now find from the Pacific to India”. The ministers issued a joint statement, and some observers found key language in the statement to indicate a possible future venture to counter China, much of which utilized phrasing from the US’s standpoint on China’s moves in the western Pacific and South China Sea.

Parliament House in Melbourne Photo Credit: Adam Carr via Wikimedia Commons

Parliament House in Melbourne
Photo Credit: Adam Carr via Wikimedia Commons

India’s Look East policy has technically been in effect since just after the Cold War, but it appears to be actively operationalizing the policy, to include recent meetings with relevant heads of state, including, as mentioned, Australia. The Joint Declaration on Security Cooperation that resulted from Rudd’s 2009 visit intrigued many observers, some of whom view is as filling the “missing link” in a possible four-country security dialogue – proposed but presumably abandoned in 2007. The Quadrilateral security dialogue would include Australia, India, the US, and Japan.  Historically, the US has pursued bilateral security agreements in the Asia-Pacific, but “the system has been evolving in recent years through the development of security frameworks that facilitate direct dialogue and cooperation between US allies”, in particular, the Trilateral Security Dialogue, which includes Australia, the US and Japan. However, just as the US has begun to pursue a closer strategic relationship with India, Australia appears to be in the early stages of doing the same. The recent economic cooperation should both strengthen and be bolstered by any level of security cooperation, and if Australia continues to view India as an ally, strategic partner (both regionally and bilaterally), and certainly as a major economic market to potentially rival that of China, expect to see far greater cooperation and trade with India in coming months. Additionally, expect to see increased interest in economic and security cooperation between the US, Australia, Japan, and India, in the near future, as the “Look East” and the US “pivot” policies gather momentum and operationalize; these policies certainly include Australia as a major partner and possible influence in the region.

TransLegal has two correspondent offices in Australia in Sydney and Perth.  We are available to answer your questions concerning doing business in the country.


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