Plenty of scope to grow India trade

24 Nov, 2014 07:20 AM
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Indian Prime Minister Narendra Modi told the Australian Parliament that India's population is not just growing but that two-thirds of its people are under the age of 35.
India is a land of untapped potential for Australian business and exporters
Indian Prime Minister Narendra Modi told the Australian Parliament that India's population is not just growing but that two-thirds of its people are under the age of 35.

HAVING landed the three biggest fish in east Asia, the government's free trade super trawler is sailing for India in search of a catch of equal significance to our long-term job growth and prosperity.

Distinct from the three previous deals struck with our largest trading partners elsewhere in Asia, India is a land of untapped potential for Australian business and exporters.

This near neighbour has long been overlooked. We currently only have $15 billion in two-way trade with India. This is compared to $150 billion with China, $70 billion with Japan, and $32 billion with South Korea.

We do more trade with New Zealand, with a population the size of Melbourne, at $20 billion.

Yet the world's largest democracy will soon be more populous than China and more lucrative than Japan. When people talk of untapped potential, India is a wealth of opportunity waiting to be seized.

India's demographics mean that if this opportunity for a free trade deal is seized now, it has the potential in the long term to pay dividends above and beyond all of our new deals combined.

In his address to Parliament last week, Prime Minister Narendra Modi made the key point that India's population is not just growing but that two-thirds of its people are under the age of 35.

India will not just eclipse China with its youthful population, its middle class is growing at a faster rate than expected. In 2007, the middle class made up just 50 million and was estimated to grow to 250 million by 2020. Instead, it has met this target six years early and is projected to be over 500 million by 2025.

Not since the Second World War reconstruction period has any country seen this kind of wealth expansion in a population.

Given our globalised economy, we could not be better placed to offer the goods, services, energy and infrastructure to meet India's demand.

The opportunities that India presents are across the board. In agriculture we export only $600 million worth of goods, largely in pulses or beans. This is despite India being the largest consumer of dairy produce in the world.

Each year the country produces over 140 million tonnes of milk, 17 per cent of the global production and the world's largest single source. Then it consumes it all domestically.

To put that in perspective, Australia produces roughly 10 million tonnes of milk, a large proportion going overseas.

Such is India's demand for dairy the country placed a ban on exports when stocks became low in 2011. Domestic consumption is increasing, particularly of processed products such as cheese and cream, as the average income rises.

As India's incomes grow, the population is also increasing its demand for high quality education. While we already have a burgeoning population of Indian students in our institutions at over 9000, applications for courses grew last year by over 50 per cent.

This is significant for an export industry worth $1.2 billion from Indian students alone. This growth reflects our status as increasingly the preferred destination to study by Indian students.

Making it easier for these students to study and work in Australia will not only benefit our education exports but help build cultural and personal ties.

With coal, gas and uranium already blazing a path to the sub-continent, Prime Minister Modi has also pressed the fact that much of India's infrastructure is yet to be built, meaning Australian skills as well as resources will be needed to design and deliver roads, rail and airports.

Greater access for goods, skills, energy and infrastructure will all mark this trade deal. The determination of both prime ministers combined with Trade Minister Andrew Robb's track record makes the ambitious twelve-month deadline realistic.

While increasingly the globalisation of trade has formed unlikely partnerships, this agreement will make the natural connection to India more obvious. It will solidify and transform a partnership so that, thankfully, descriptions of the relationship will no longer depend on the cricket field but look to genuine achievement in the creation of common wealth.

Dan Tehan is the federal member for Wannon.

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READER COMMENTS

JSA
24/11/2014 8:56:02 PM

As an Indian, I am just hoping that government will open up food market and make packaged products much cheaper. Indians also need expertise in producing derivative food products, which is largely unseen in India. This is a critical area Australia and New Zealand can assist India.

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