‘On the cusp of transformation’: Australia pursues closer India ties alongside China thaw

Australia is seeking an expanded trade deal with India by the end of this year in the hope of building a bigger export market at the same time it tries to stabilise relations with China.

Trade Minister Don Farrell is confident of holding a meeting with his Chinese counterpart in China soon, despite frictions over defence and security because of the AUKUS submarine pact.

Trade Minister Don Farrell at a promotion for Australian produce in Mumbai.Credit: Alex Ellinghausen

But he highlighted the potential for closer ties with India after meeting government and business leaders in Mumbai and New Delhi this week, saying a new trade pact would help diversify exports.

Farrell outlined the plans after Prime Minister Anthony Albanese said he wanted the economic agreement done this year alongside closer defence and cultural ties.

A trade deal signed last year opened the way for $2.5 billion in exports to India in January alone, Farrell said, but the next agreement was meant to remove barriers to investment.

Australia exports more than $24 billion to India each year, Farrell said, although most of this is coal and education and the government wants to build up trade in critical minerals and renewable equipment such as solar panels.

“I think the relationship with India is on the cusp of transformation,” Farrell said.

“They’re either the top or the second-largest tourist group coming into the country and are coming back in much faster than most other countries.

“Their students are either the top or the second-top group of students coming to study in Australia, and they make up the top or the second-top group of migrants coming into Australia.”

While the public aspects of the prime minister’s visit have featured the colour of the Holi festival and the theatre of an appearance with Indian counterpart Narendra Modi at the cricket, the talks behind the scenes have been about faster progress on trade and investment.

One controversy emerged during the trip when Albanese was asked about the Modi administration’s punishment of the BBC for airing a documentary that criticised the Indian leader over riots that killed Muslims when he was the chief minister of Gujarat.

With the events raising concerns about freedom of the press, Albanese responded by citing a statement by Foreign Minister Penny Wong that she had engaged with her Indian counterpart on the matter.

“I have discussions based upon Australia’s values and I’m consistent about that,” Albanese said.

“Australia stands up for press freedom. But India is a great democracy. And to dismiss that is, I think, wrong.”

Energy Minister Chris Bowen has warned about future supply of renewable technology, given China’s dominance of solar panel production, and Albanese on Friday talked up the potential for Indian investment with Australia in solar.

Albanese announced a new Centre for Australia-India Relations on Friday, with Tim Thomas as chief executive, and said he wanted a full Comprehensive Economic Co-operation Agreement finalised this year.

Farrell held a teleconference with Chinese Minister of Commerce Wang Wentao on February 6 and was invited to fly to Beijing “in the near future” for more talks.

Asked if a date had been set, Farrell said: “No, but it’s getting sooner.”

The trade minister said the growth in Indian trade did not mean replacing China given the scale of Chinese trade.

“Our two-way trade with China last year was near enough to $300 billion, far and away our largest trading partner,” he said.

“They’re larger than Japan, Korea, the United States, France and England put together, so it’s a big market.

“We’ve had a set of trade difficulties with China. But again, we’ve started to stabilise that relationship.

“I’m planning to go to China, and try and open the door to those other Australian products that have been subjected to difficulties.”

Those trade challenges have included Chinese curbs on Australian coal, barley, wine, lobsters and other products, but Farrell said shipments were resuming even though China had not formally announced any change.

“Anecdotally, it doesn’t matter which product that you’re talking about, something’s happening,” he said.

“The problems didn’t occur overnight. They’re not going to be solved overnight.

“You’ve got to remember the words that Chinese Trade Minister Wang said to me, and they were quite deliberate.

“He said: ‘The freeze is over. We’re moving to a warm spring’. Now, he didn’t say that by accident. That was, I think, a positive sign.”

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