BOOK REVIEW: ‘AUSTRALIA ECONOMIC STRATEGY REPORT’

The “Australia Economic Strategy (AES) Report” has been put together by the Confederation of Indian Industry (CII) in collaboration with (Klynveld Peat Marwick Goerdeler) KPMG under the leadership of former Ambassador Anil Wadhwa, who retired as Secretary (East), Ministry of External Affairs, Government of India.  The document tries to identify and analyse the existing and potential areas of economic collaboration between India and Australia.  This report was published in direct response to the “India Economic Strategy Report 2035” which was released by Australia (Department of Foreign Affairs and Trade) in July of 2018.

India and Australia are natural partners because of their shared values of democracy and rules-based order along with a shared history of colonialism.  Both India and Australia are geographically situated in the dynamic and turbulent Indo-Pacific, which has been identified as the new economic powerhouse of the world.  The Indo-Pacific has become the new geoeconomic (and hence geopolitical) centre of gravity of the planet, and, since geoeconomic engagement can most fruitfully be progressed within the bounds of a consensually-derived rules-based order, India-Australia cooperation has acquired a special degree of criticality.  India and Australia are already working synergistically on several multilateral platforms such as IORA, ASEAN+, QUAD, WTO, APEC, etc.  India and Australia can utilise this experience to strengthen the bilateral cooperation which will, in turn, benefit the whole region.

Indian industries are the main beneficiaries of this report as it provides valuable insights that would naturally guide them to expand their presence in the Australian economy.  The report paints an elaborate picture of the possibilities and benefits of India-Australia economic cooperation, by utilising an exhaustive set of data and inputs from various ministries, academic institutions, and think tanks.  It does not shy away from articulating the challenges in enhanced economic cooperation between the two countries and gives several relevant recommendations and blueprints for the mitigation of these challenges.

The AES consists of seven detailed chapters that individually and collectively shed light on the macroeconomic aspects of the Australian economy.  The report uniquely presents a balanced perspective of the existing condition of the Australian economy and identifies the key sectors that could propel economic cooperation between India and Australia to new heights.  Each chapter targets a specific area of macroeconomics, which is then further divided into several subtopics.  Every chapter begins with a brief synopsis of the particular sector and then, using multiple case studies, highlights the Australian ecosystem, the opportunities for investment, and the existing framework of collaboration.  Well-drafted recommendations for the efficient implementation of collaboration strategies are provided at the end of every chapter.  The strongest point of the report is its coherence.  The homogenous structure of every chapter provides an element of familiarity and keeps the reader glued to the document.

The first chapter focuses on the macroeconomics of Australia and India.  It provides a detailed analysis of India-Australian affairs, with a sharp focus being maintained on geopolitics, geo-economics and demography.  It also contains some useful insights on Australia’s growth strategy along with that country’s state-wise economic distribution.  In a nutshell, the first chapter prepares a base for the reader to comprehensively understand Australia’s economic environment.

The second chapter of the report analyses Australia’s business environment, using several metrics, such as ‘ease of doing business’, the ‘labour market’, ‘business structure’, and so forth.  As the chapter progresses, it highlights several pointers that directly or indirectly affect businesses in Australia, such as banking and financial institutions, a skilled workforce, infrastructure, innovation capabilities, and, Chinese influence in businesses.  It also highlights the limited understanding of Indian companies by Australian business, and quite correctly identifies this as something that urgently needs to be addressed.

As the report progresses through its third chapter, it focuses upon India’s aspiration to become a manufacturing hub in the post-Covid world order.  It analyses Australian imports in goods and services and identifies multiple sectors wherein India can leverage its strength and expertise to increase its share of the Australian market.  The next chapter specifically targets the investment sectors of both the countries.  It provides an insightful analysis of Indian FDI in the Australian market and vice versa.  Additionally, it also identifies sub-sectors in which India can expand its share of FDI in Australia and vice versa.

The fifth chapter lists the core sectors where Indo-Australian collaboration is the most exhaustive and those in which both the countries can deepen their respective investments and cooperation.  It lays equal emphasis upon traditional as well as emerging sectors and maps out current and futuristic demand and supply trends.  The chapter also includes some ‘case studies’, which portray real-world challenges and explains how various companies have dealt with these challenges in establishing their imprint upon the Australian market.  The report highlights a number of key sectors wherein partnership needs to be strongly pursued, thereby facilitating the free flow of capital.  The traditional sectors in which India can utilise its untapped potential include mining (along with its key technological features), pharmaceuticals, medical equipment, agri-business, railway infrastructure, gems and jewellery, and, physical infrastructure.  Apart from these conventional sectors, the report recommends the revival of the “India-Australia Energy Security Dialogue” while emphasising new cooperative sectors such as renewable energy — with particular focus upon solar panels, windmills, hydrogen fuel, etc.  Analysing the importance of recreational sectors, the report gives special focus on the untapped potential of the tourism sector, which it avers will, as a spin-off, enhance trade and business relationships, too.

In the sixth chapter, the report further develops its focus upon emerging sectors that are partially or completely untouched.  It critically examines the labour sector in terms of wages and labour availability and suggests that India’s surplus of labour can be exploited by Australia to bridge the gaps between the labour requirement and availability in that country.  It also calls for greater cooperation between the two countries in the defence sector.  India and Australia have similar strategic goals and both want a multipolar Indo-Pacific region.  The defence production ecosystem in both countries has huge potential for collaboration, as both, India and Australia have taken transformative steps that seek to realise the full potential of their respective domestic industry.  The chapter seeks a sharp increase in technology collaborations and research partnerships amongst industry and research institutions, respectively.  It invites Australian firms and industries to invest in India’s other emerging sectors such as sports technology, textiles, textile designing, digital gaming, animation and education technologies, etc.  It also talks about the potential partnerships in water management, shipbuilding and space technologies.  The report presents a succinct summary of its arguments and presents a set of cogent recommendations for the rapid development of a comprehensive implementation strategy to achieve the objectives of the AES.

The AES is unique in and of itself because it is, perhaps, the first attempt by the Government of India to draft such a document for any country.  The report is an excellent joint effort by the CII and KPMG to highlight and address the most promising areas of India-Australian economic collaboration, without seeking to hide the associated challenges and problems.  It has taken into account a robust process of post-Covid recovery in both countries to model the likely shape and form of various sectors of the Indian and Australian economies.  A point of seminal importance that imbues this report with a refreshing degree of realism is the factoring of Chinese investments in every sector of the Australian economy.  Yet, the report does not adopt a defeatist attitude to the pervasiveness of the Chinese influence but instead focuses upon sector-specific success stories of investments and collaborations between Australia and India in the face of Chinese competition.  This analysis of successful investments will help in generating a ‘can do’ spirit of competitiveness in the India-Australia bilateral economic engagement and will boost investor and consumer confidence.

The AES calls for a “six-monthly review” of the strategy, so as to ensure the efficient implementation of its recommendations.  India’s Minister of “Railways, Commerce and industry, Consumer Affairs, Food and Public Distribution”, Shri Piyush Goyal, has stated that the report is designed on the principle of 3Bs i.e., a ‘Bigger’, ‘Better’, and more ‘Balanced’ trade basket.  The flexible and open approach of the report will help both countries in achieving their untapped potential in multiple areas.

In conclusion, it bears reiterating that the report offers an insightful overview of the Australian economy and presents a number of opportunities that exist in scientific collaboration, trade and commerce, and investment.  A variety of schemes and initiatives of the Indian government, too, have been incorporated in order to strengthen the existing framework.  The effective implementation of the recommendations would almost certainly boost the “Supply Chain Resilience Initiative” that was launched by Australia, India, and Japan, in April of 2021, in order to promote inclusive and sustainable growth in the region.

About the Reviewer:

Ms Nikita Vats is a Research Associate at the National Maritime Foundation.  Her current research focusses upon the Indo-Pacific in general and the India-Australia maritime relationship in particular.  She may be reached at indopac3.nmf@gmail.com