Mutual interest draws India and Australia closer with trade agreement

The newly signed trade deal between Australia and the world’s largest democracy is highly strategic, with regional security underpinned by mutual economic interest.

Piyush Goyal, India’s Minister for Commerce and Industry, after signing the trade deal with Australia last weekend. Picture: Sajjad Hussain / AFP

On Tuesday the largest Indian trade delegation ever to visit Australia hit the ground with a breathless itinerary taking in political and business leaders, fund managers, the MCG and the WACCA.

It was led by Piyush Goyal, India’s can-do Minister for Commerce and Industry and came hot on the heels of the Economic Cooperation and Trade Agreement signed between Australia and India last Saturday.

Ten days ago, some in the delegation had no idea they were off to Australia. On Wednesday they had their first dose of footy, meeting Richmond.

“When you align interests, when the excitement is fresh, when you connect the businesses of both countries, when they see the advantages and want to start working together, you can get very good outcomes.” says Goyal.

Make no mistake. This trade deal between Australia and the world’s largest democracy is highly strategic, with a firm eye on regional security, underpinned by mutual economic interest.

Goyal pitches the scale India’s market can deliver for Aussie exporters. He warns about the lack of business transparency in Australia’s largest trading partner, China, where he says India has had first-hand experience.

And he responds to criticism that India has not cut economic ties with Russia, arguing that India could play an important role in resolving the conflict in Ukraine.

The ECTA is the first trade agreement with a developed country in Prime Minister Narendra Modi’s eight-year reign.

The bond developed between the signatories Piyush Goyal and Trade Minister Dan Tehan had a lot to do with the outcome. Tehan sees Australia’s longstanding relationship defined by cricket, curries and the Commonwealth.

“I think he has put it very beautifully,” says Goyal. “Australia and India are two trusted democracies. They both believe in the rule of law, transparency and the people love each other.”

In a speech at the MCG on Thursday, Tehan recalled a five-week family trip to India as a boy.

“Wherever we went cricket was being played and they just welcomed you to join in,” he said. “So I played cricket on the streets from Delhi right down to Trivandrum in the south.”

On a trip to India last October Tehan asked officials if he could grab Goyal for a 10-minute one-on-one chat so the two could get to know one another.

Piyush Goyal is not just Trade and Industry Minister. His portfolios cover food, textiles and consumer affairs and he is leader of the Upper House in India.

Tehan’s private meeting with Goyal – involving a curry – ran for three hours, with officials outside left wondering what else was being cooked up. Tehan now describes his friendship with Piyush as the closest of all his international counterparts.

Omicron hampered progress but since the New Year and in less than 90 days the deal was done.

Beyond top-line wins on tariffs for sheep meat, wool, coal and wine, Goyal says what India offers Australian businesses is scale.

“A billion-plus market looking to meet the aspirations of the young population, looking to provide for all that they see on television and internet today. Everybody desires to get a better quality of life,” he says.

In the past Australian companies have been wary of India, where banking and legal systems lacked probity. But the Modi reform agenda since 2014 has delivered a nationwide GST, new insolvency laws and a clean-up of banking.

“You will find that we are looking at ease of doing business for the first time ever in India,” says Goyal. “We are aligned with the world in terms of the probity and integrity of our financial systems. And we are offering technology of the highest order to bring about transformation in the country.”

In exchange, India is looking to the Australian market for its apparel, home furnishing and jewellery and Goyal sees huge potential for pharmaceuticals.

“We are called the pharmacy of the world. That can help bring down the cost of healthcare in Australia,” he says. It could also help reduce Australia’s drug dependency on China.

Asked if India could replace part of the China export market for Australia, Goyal says he won’t comment on what other countries offer. “We offer a nation which has complete transparency in its work, a nation with skills and talent and a nation which is very much aligned when we talk about democracy with open government. And I think that changes the perspective significantly.”

Over several years India has been frustrated by a lack of Chinese transparency. “We have had this influx of very low quality goods, very often without transparent pricing, coming from China into India. Australia learned much later than us the difficulties of working with a non-transparent or an opaque economy,” he says. “It is important we bring about much more organised business among friendly nations who do not have a tendency to misuse open markets or the rules of free trade.”

Trade Minister Dan Tehan. Picture: Andrew Campbell

Back at the MCG Dan Tehan underlined the value of closer ties. “The geostrategic environment that we’re now operating in is very, very different to the one we faced five years ago, let alone 10, and it requires countries like India and Australia to come together like they never have before to be able to deal with that geostrategic climate in the Indo-Pacific.”

The ECTA builds on India’s geo­-strategic partnerships including the Quad of Australia, Japan, India and the US and a supply chain resilience initiative between Japan, Australia and India.

India has strong economic ties with Russia, which supplies weapons and oil. Periodic border tensions with Pakistan and China are a constant concern.

India did not support UN resolutions condemning the Ukraine invasion. “India is strictly adhering to the various economic measures that different countries have come out with,” says Goyal, adding that many European countries are far more dependent on Russia for fuel than India.

He stresses India is a peace-loving country has never been the aggressor in its history, and that if requested, Modi could help broker a solution to the Ukrainian crisis.

“India has consistently maintained that conflict should come to an end. Prime Minister Modi today is one of the tallest leaders in the world. I’m sure if all the parties to the dispute are ready, (he) would be most happy and willing to resolve this” he says.

The ECTA delivers breakthroughs like recognition of qualifications, but there were clear red lines for both countries.

Raised on a family farm, Dan Tehan’s sensitivity to India’s concerns did not go unnoticed. “I was amazed at his readiness and willingness to appreciate what it means running a small farm of two or three acres, how difficult it is to be a marginal farmer when you don’t have the advantage of high technology,” says Goyal. He says one of Australia’s issues was over people mobility.

“It was a sensitive issue and we dropped that. Similarly, there was sensitivity around some of the service sectors.”

The ECTA is an interim agreement. After the Australian election, work begins on a comprehensive economic co-operation agreement.

Goyal says India is open to all negotiation. “Both nations have shown a lot of openness and trust between each other. In that spirit I’m sure we’ll look at newer areas like digital engagement. We will look at education in a big way. Sport could play a big role.”

The minister even made a point of acquainting himself with AFL, which he finds to be a very, very vigorous game.

“Indians are quick to pick up. There was a time we used to get bashed up with the fast pace bowlers of Australia, but then we gave it right back. We now have a formidable cricketing team.”

Indian talent will be on display when Australia hosts the T20 World Cup in October.