Why India is the world’s next economic powerhouse

No longer renowned exclusively for its food, cricket and slums, India is touted as the next beacon of hope for investors looking at new frontiers

QUEENSLAND’S resources industry giants, teachers and tech entrepreneurs are being urged to look past China and invest in the world’s emerging economic powerhouse, India.

From its rough Himalayan peaks in the north to the salty Laccadive Sea in the south, India’s terrain is about as diverse as its own economic story.

No longer renowned exclusively for its food, cricket and slums, the subcontinent is touted as the next beacon of hope for Australian investment.

How Australian businesses will engage with the world’s fastest-growing large economy over the next five years is the focus of an economic strategy authored by University of Queensland chancellor and retired diplomat Peter Varghese.

Mr Varghese, a former Secretary of the Department of Foreign Affairs and Trade and High Commissioner to India, believes now is the time for Queensland businesses to buy into the Indian narrative.

“The kinds of things that a growing Indian economy is going to need are in many respects the kinds of things that Australia is well-prepared to supply,” he says.

“This is the world’s largest agricultural community, urbanising, it is a large informal economy which is formalising and it is a country with a young demography, a mean age of 27.”

Ph.D candidate Madhumita Ramakrishna with UQ Chancellor and former High Commissioner of Australia to India Mr Peter Varghese AO in India. Photo: Cameron Laird

The ex-diplomat’s Australia-India Economic Strategy, released last year, notes ten sectors Australian businesses can exploit to maximise growth in India.

“I’ve tried to give the Australian business community something that they can touch and feel in terms of where the hell do you begin in a market as big and complicated as the Indian market?”

Resources and tourism are key growth areas for the relationship, but India’s deficit in education makes it Australia’s “flagship” export, according to Mr Varghese.

Growth of India’s $2.7 trillion economy is hovering around 7 per cent.

Mr Varghese says the subcontinent’s “palpable aspiration” requires Australia’s attention if our investment will grow from $10 billion to $100 billion by 2035.

With 40 per cent of Australia’s exports going to just two markets, China and Japan, Mr Varghese says India represents security in our economic interests.

“For any country, these days, moving into a much more uncertain global economic environment, the idea of spreading your risk and not putting too many eggs in one or two baskets becomes just prudent management,” he says.

Australia’s interest in India is a reciprocal one.

Indian Foreign Service diplomat Anil Wadhwa is authoring his country’s plan for conducting business down under.

He argues Indian businesses have an equal opportunity to straddle Australia’s ongoing economic growth.

“Very often we talk about the size of the market and the distance but I think these are misnomers,” he said.

“While the size of the market might be limited when you compare it to the Indian size, Australia is an ideal strategic partner for India to achieve what we call a transformative and inclusive economic growth that is more democratic in nature.”

Australia’s 25.5 million population pales in comparison’s to India’s 1.3 billion, but we are a similar people, one of the continent’s most well-known businessman believes.

Anand Mahindra, executive chairman of Mahindra Group speaks with Australian media in the company's Mumbai head office. Photo: Cameron Laird

Anand Mahindra, Chairman of the Mahindra Group, has invested in Australia since 2005.

The billionaire businessman, whose global company sells farm machinery, vehicles and IT services to Australia, says the two countries can form a natural social and trade partnership.

“The thing that Australia can count on first and foremost in any agreement… this (India) is a country that has the same values,” he says.

“This is the largest democracy in the world.

“We may not look the same but the fact is that as far as what we feel about freedom and about democracy and its principles are identical. That’s the bedrock of trust.

“When you look at what’s happening in Hong Kong today it just shows you much more starkly what the differences are.”

Mr Mahindra believes India’s reliance on natural resources and food technology are two areas Australia can thrive.

“Even though we are major proponents to electric vehicles, to be honest, it’s not as if fossil fuels are going to be extinct from tomorrow,” he says.

“For a country like ours they will be needed for a long time and there is a very very strong economic relationship that can be established.”

At 942 million tonnes, India is the world’s second-largest coal consumer.

Despite this, mineral-rich Australia delivers 5 million tonnes of thermal coal to Indian ports, 4.5 per cent of its total imports.

India’s reliance on coal is expected to continue beyond 2030 as the government and businesses aim to connect 350 million people to reliable electricity.

Mining giant Adani is aiming to ship the first of 10 million tonnes of coal from its Queensland Carmichael Mine by 2021.

Karan Adani, son of Gautam Adani, says delivering the “massive mine” is the company’s first focus.

Adani Global CEO Jeyakumar Janakaraj and Adani Ports COO Avinash Rai at Adani's Mundra port in India. Photo: Cameron Laird

He says the performance of the regional Queensland mine will dictate the company’s future investment in Australia.

“We do believe it’s a very good investment and we do believe that the country is looking for more foreign investors coming in, especially Indian investors,” he says of Australia.

Mr Varghese encourages businesses who have previously turned away from India to have faith and hang on.

“There is going to be nothing linear about the Indian growth story, India is far too complicated a country,” he says.

“Its trend line is going to be in the right direction and that’s what we need to be focussing on.”

The writer travelled to India as a guest of the Confederation of Indian Industry