Context: India and Australia raised their relationship to a “Comprehensive Strategic Partnership” after a ‘virtual’ summit between Prime Minister Narendra Modi and Australian Prime Minister Scott Morrison.
More on the news:
- Mr. Morrison’s visit to India, in January, was postponed because of the devastating bushfires in Australia, and now because of the COVID-19 pandemic.
- First virtual bilateral summit: It was India’s first virtual bilateral summit with any nation.
Key takeaways from the summit:
- Comprehensive Strategic Partnership (CSP): India has signed CSPs with the United Kingdom, Indonesia, Vietnam, and the United Arab Emirates thus far, while Australia has CSPs with China, Indonesia and Singapore.
- Benefits: the CSP would raise the level of “trust” required to improve the “trade and investment flows” between India and Australia which at present is at a low.
- Recommencement of suspended talks over the India-Australia Comprehensive Economic Cooperation Agreement (CECA), suspended since 2015 after nine inconclusive rounds of negotiations
- Mutual Logistics Support Agreement (MLSA):
- Benefits: The MLSA will allow both militaries the reciprocal use of bases, humanitarian and disaster relief cooperation, port exercises, and passage exercises.
- Other agreements announced included a framework arrangement on cyber technology, an MoU on mining and processing critical and strategic minerals including Australian rare earth metals used for electronics, governance, vocational training and water management.
- Upgradation of “2+2’’ talks: They also agreed to increase the frequency of meetings between the two Prime Ministers, and took the “2+2” format of bilateral meetings to the level of Foreign and Defence Ministers, who will meet to “discuss strategic issues” at least every two years.
- A joint declaration on a “Shared Vision for Maritime Cooperation in the Indo-Pacific.” It is as follows:
- “Both India and Australia share a vision of a free, open, inclusive and rules-based Indo-Pacific region to support the freedom of navigation, over-flight and peaceful and cooperative use of the seas.
- By adherence to international law including the United Nations Convention on the Law of the Sea (UNCLOS) and peaceful resolution of disputes rather than through unilateral or coercive actions.
- No talks on Malabar exercise: The two leaders had not discussed including Australia for “Malabar” or quadrilateral maritime exercises that would include India, Australia, U.S. and Japan, something that China has opposed in the past.
India-Australia bilateral relations
- India’s first prime minister, Jawaharlal Nehru, believed Australia is a natural part of Asia and invited it to participate in the Asian Relations Conference in Delhi in 1947, a few months before independence.
- 20th century, a period of drift and alienation: That there was a gap of nearly three decades between Rajiv Gandhi’s visit to Australia in 1986 and PM Modi’s trip in 2014 only underlines how short-sighted India’s neglect of Australia has been.
- The end of the Cold War and simultaneously India’s decision to launch major economic reforms in 1991 provided the first positive move towards development of closer ties between the two nations.
- India’s nuclear test, 1998: It complicated the possibilities of improving the bilateral relations.
- Improvements since 2000s: The bilateral relationship between the two nations was upgraded to a ‘Strategic Partnership’, including a Joint Declaration on Security Cooperation in 2009.
- Political relations: The two-way Prime Ministerial visits in 2014 built significant momentum in the bilateral relationship, signifying deepening relations.
- Trilateral Dialogues:
- India-Australia-Japan Trilateral Dialogue
- Indonesia-Australia-India Trilateral Dialogue
- Economic relations:
- Bilateral Trade: India is the 5th largest trade partner of Australia with trade in goods and services at A$ 29 billion representing 3.6% share of the total Australian trade in 2017-18, with export at A$ 8 billion and import at A$ 21 billion.
- India’s main exports to Australia are Refined Petroleum, medicaments, while our major imports are Coal, copper ores & concentrates, Gold, and education related services.
- A Civil Nuclear Cooperation Agreement: It provides the framework for substantial new trade in energy between Australia and India. It ensures that Uranium mining companies in Australia may fulfil contracts to supply Australian uranium to India for civil use.
- The Mutual Logistics Support Agreement has been signed during the summit that should enhance defence cooperation and ease the conduct of large-scale joint military exercises.
- There is a technical Agreement on White Shipping Information Exchange.
- Recently Australia and India conducted AUSINDEX, their largest bilateral naval exercise, and there are further developments on the anvil, including Australia’s permanent inclusion in the Malabar exercise with Japan.
- In 2018, Indian Air Force participated for the first time in the Exercise Pitch Blackin Australia.The third edition of AUSTRAHIND (Special Forces of Army Exercise) was held in September 2018.
- A broader maritime cooperation agreement with a focus on Maritime Domain Awareness (MDA) is also in the works and Australia has agreed to post a Liaison Officer at the Indian Navy’s Information Fusion Centre - Indian Ocean Region (IFC-IOR) at Gurugram.
- Under the NewColombo Plan of Australian government, 900 Australian undergraduates have studied and completed internships in India during the period 2015-16
- The Indian community in Australia has the population of nearly half a million (2.1 % of the population), and another over 1,50,000 persons of Indian descent immigrated from other countries (Fiji, Malaysia, Kenya and South Africa).
- India is one of the top sources of skilled immigrants to Australia.
Significance of Indo-Australia bilateral relations
- Pandemic control lessons: Australia is one of the few countries that has managed to combat COVID-19 so far through “controlled adaptation” by which the coronavirus has been suppressed to very low levels. Two of the leaders of this great Australia-wide effort are Indian-born scientists.
- Agricultural cooperation: From farming practices through food processing, supply and distribution to consumers, the Australian agribusiness sector has the research and development (R&D) capacity, experience and technical knowledge to help India’s food industry improve supply chain productivity and sustainability and meet the challenges of shifting consumption patterns.
- Trade: Australia is the 13th largest economy in the world, following closely behind Russia which stands at $1.6 trillion.
- Australia is rich in natural resources that India’s growing economy needs.
- It also has huge reservoirs of strength in higher education, scientific and technological research.
- The dominance of Indo-Pacific countries in India’s trade profile: Fostering deeper integration between India and Australia will provide the necessary impetus to the immense growth potential of the trade blocs in this region.
- Strategic: The two countries also have increasingly common military platforms as India’s defence purchases from the U.S. continue to grow.
- Australia has deep economic, political and security connections with the ASEAN and a strategic partnership with one of the leading non-aligned nations, Indonesia. Both nations can leverage their equation with ASEAN to contain China.
- Economic and Maritime dynamics in the Indo-Pacific:The Indo-Pacific region has the potential to facilitate connectivity and trade between India and Australia.
- Quad: Being geographically more proximate than the US or Japan, India and Australia can emerge as leading forces for the Quad.
- Health and safe food as well the supply chains: The promise of DTC-CPG (direct to consumer; consumer packaged goods) which could transform global supply chains. Here too there is much room for collaboration and new thinking.
- International cooperation:
- WHO’s handling of pandemic: India and 62 other countries have backed a draft resolution led by Australia and the EU to 'identify the zoonotic source' of Covid-19 and its 'route of introduction' to humans.
- Australia supports India’s candidature in an expanded UN Security Council.
- Both India and Australia are members of the Commonwealth, IORA, ASEAN Regional Forum, Asia Pacific Partnership on Climate and Clean Development, and have participated in the East Asia Summits.
- Australia is an important player in APEC and supports India's membership of the organisation. In 2008, Australia became an Observer in SAARC.
- Both countries have also been cooperating as members of the Five Interested Parties (FIP) in the WTO context.
- (Im)balance of trade: India’s trade deficit with Australia has been increasing since 2001-02 due to India-Australia Free Trade Agreement. It is also a contentious issue in the ongoing RCEP negotiations which India left.
- The two countries are also discussing a Comprehensive Economic Cooperation Agreement (CECA), however, the progress is currently stalled.
- Non-trade barriers such as Sanitary and Phyto-Sanitary (SPS) measures some of the products where Australia has a genuine comparative advantage are not exported in substantial amounts to India.
- Australia’s relatively lower share of services trade with India (4.3 percent) can be attributed to legislative barriers such as licence requirements.
- Fall in FDI: Statistics from India’s Ministry of Commerce and Industry indicate that there is a fall in the FDI inflow from Australia to India from US$ 518.64 million in 2010-12 to US$ 260.49 million in 2016-18.
- No coherent Indo pacific strategy:
- For Australia a ‘free and open Indo-Pacific’ means establishing a regional architecture with fellow democratic countries to help maintain the ‘rules-based order’ as China becomes the most powerful actor in the region.
- India’s preferred formulation of a ‘free, open and inclusive Indo-Pacific’ refers to a multipolar regional order within which Delhi can maintain its strategic autonomy
- Fate Of Quad: India’s unwillingness to invite Australia to participate in the Malabar naval exercise, despite Australian lobbying, has also sparked speculation over the fate of the Quadrilateral Consultative Dialogue (the ‘Quad) involving India, Australia, Japan and the United States.
- China’s expansive OBOR project: Although neither India nor Australia are members of the OBOR—primarily due to concerns over security and unsustainable debt burden—they are not, in any sense, less encumbered by the dynamics posed by OBOR in the Indo-Pacific.
- India’s foreign policy shortcomings: China has transformed its relationship with Australia during the period in which India ignored Australia.
- Delhi’s temptation to judge nations on the basis of their alignments with other powers stands in contrast to Beijing that puts interests above ideology, promotes interdependence with a targeted middle power, turns it into political influence and tries to weaken its alignment with the rival powers.
- Racist Attacks on Indian Students in Australia is another concerning issue which needs to be addressed with care.
Way forward: There are a host of emerging issues — from reforming the World Health Organisation to 5G technology and from strengthening the international solar alliance to building resilience against climate change and disasters — that lend themselves to intensive bilateral political and institutional engagement.
- Utilising current innovations in digital trade; such digitisation of economic activities have changed the landscape of trade, enhancing associations between economies and, in particular, South-South flows.
- Improving trade: Removal of trade barriers would lead to an increase in the exports of these commodities, although the increasing number of disputes at the WTO with regard to the Australian sector can act as a serious impediment.
- Imports of intermediate inputs would enhance the export-competitiveness of domestic firms and boost the ‘Make in India’ campaign, in addition to curbing cost-push inflation in the domestic economy.
- Leveraging the trilateral dynamics between ASEAN, Australia and India: It is evident in policy areas such as maritime security, climate change, energy security, law enforcement, governance and the politics of security institutions.
- Engaging Indonesia, Japan, France and Britain for securing Indo-Pacific:
- Engaging Indonesia in Esatern Indian Ocean: Eastern Indian Ocean, connecting the two oceans, is at the heart of the Indo-Pacific. The sea lines of communication between the Indian and Pacific oceans run through the Indonesian archipelago.
- Given the shared political commitment to the Indo-Pacific idea between Delhi, Jakarta and Canberra and the growing pressures on them to secure their shared waters, India and Australia must seek trilateral maritime and naval cooperation with Indonesia.
- Tokyo has close ties with both Delhi and Canberra. Their current trilateral dialogue can be expanded from the diplomatic level to practical maritime cooperation on the ground.
- France is a resident power with territories in the Western Indian Ocean and the South Pacific. Paris and Canberra are eager to develop a trilateral arrangement with Delhi that will supplement the bilateral cooperation among the three nations which India should endorse.
- In the east, Britain continues to lead the so-called Five Power Defence Arrangement(FPDA) set up back in 1971, after Britain pulled back most of its forces from the East of Suez.
- The FPDA brings together the armed forces of the UK, Malaysia, Singapore, Australia and New Zealand. India & Australia must explore the possibilities for engagement between India and the FPDA.
- An ‘engage and balance’ China strategy is the best alternative to the dead end of containment. The role of the US is of particular importance as it has recently been a driver of efforts towards bringing similarly aligned states in counterbalancing China.
- Upgradation of 2+2 talks: In addition, it may be prudent too for New Delhi and Canberra to elevate the ‘two plus two’ format for talks from the Secretary level to the level of Foreign and Defence Ministers.
India’s attempts towards balancing its relations with China against its own interests have restricted its interactions with Australia to some extent. But Australia is expecting India to play a bigger role in the Indo-Pacific region. There is a need to work around the impediment that is caused by trying to balance China’s objections with India interests.