Red carpet awaits Modi in Australia

Relations between India and Australia in the Asia-Pacific region seem to be warming up. After Tony Abbott’s recent visit to India, it is now the turn for Australia to lay the red carpet for the Prime Minister Narendra Modi when he visits the country for G20 summit in Brisbane middle of next month.

Modi will be the first Indian Prime Minister to visit Australia since Rajiv Gandhi came to see Bob Hawke in 1986. He will be one of the three world leaders to address the joint session of the federal parliament. The other two leaders are Chinese President Xi Jinping and British Prime Minister David Cameron. This shows the growing recognition and acceptance of India.

But Australia is equally conscious of keeping China in good humour. It declined to join the India-US-Japan Trilateral, which is being upgraded to the level of foreign ministers, at the instance of Beijing. But Abbott has agreed for a first bilateral naval exercise with India scheduled in 2015.

Australia has supported India’s full membership of four international export control regimes – Nuclear Suppliers Group, Missile Technology Control Regime, Wassenaar Agreement and Australia Group and also membership of Asia Pacific Economic Cooperation. Abbott termed this nuke handshake as “a sign of the mutual trust and confidence that our two countries have in each other” He is appreciative of India’s Look East Policy and has recognised the importance of India as a “valuable partner” in Asia-Pacific region. He has also lauded Modi’s recent visit to Japan and termed the outcome as “successful”. He termed the geopolitical importance of Asia-Pacific saying “So as economic weight shifts to the Indo-Pacific region, the strategic balance moves too.”

There are obvious reasons why Australia needs India more. India is already Australia’s fifth-largest export market. Australia wants the bilateral trade to grow to its full potential which is now stagnating at only $15 billion. Further, Australia is eager to conclude the negotiations on Comprehensive Economic Cooperation Agreement with India by 2016 which would boost bilateral trade and investment. At present Indian investment in Australia is about $11 billion whereas Australian investment in India is $600 million. In fact, Australia sees massive opportunity for investments in India with Modi’s call for “Make in India”.

India too is interested in investing in resource rich Australia. Leading Indian investors like Sterlite Industries and Aditya Birla group are in copper mines while Asian Paints and Reliance are in uranium exploration. Australia has massive reserves of uranium, gold, copper, zinc among other minerals and its coal feeds power plants in India. In fact, Australian coal, iron ore and gas has powered the economic transformations of Japan, Korea and China.

Australia had worked over three decades to boost its bilateral trade with China to the level of $150 billion. While consolidating its gains there, Australia now wants to tap the untapped potential in bilateral trade with India.

Both the countries are looking forward for finalisation of Regional Comprehensive Economic Partnership (RCEP) in the Indo-Pacific region. At present Australia is the chair of Indian Ocean Rim Association. The region is important and concerns for maritime security remain vital as trade grows.

Human resources development is an area of India’s interest. There is a 450,000-strong Indian community in Australia and 36,000 Indian students are pursuing their study there, particularly in vocation education.

Modi’s forthcoming visit to Australia is likely to be significant. Former Prime Minister Manmohan Singh deliberately missed the bus to Australia by declining to attend the Commonwealth Heads of Government meeting in Perth hosted by Julia Gillard in 2011 which many analysts believed was because the Labour government reversed John Howard’s decision to allow uranium exports to India. Earlier former Prime Minister Atal Bihari Vajpayee declined to attend the CHOGM meeting hosted by Howard in Coolum in 2002 which many viewed as a consequence of Canberra overreacting to India’s nuclear tests in 1998. All eyes would now be on Modi in Brisbane.