is committed to taking its relationship with India to a higher level and to engaging with India on a long term strategic basis across so many areas – from defense to energy to economic development and, of course, to education."

Julia Gillard
Prime Minister

"In the past five years, India’s economy has grown by an average of around 9% per annum. Its economy has doubled in size over the past decade. And it has the people, skill base and resources to repeat that performance over the coming decade."

Wayne Swan



"Relations between Australia and India are evolving into a strong partnership and India is committed to working with Australia to upgrade our bilateral relations in all areas."

Manmohan Singh

"My government is committed to taking Australia’s relationship with India to a higher level.

Julia Gillard

Looking beyond “C3”

“Australia believes democratic India has a crucial role to play in world affairs as our region rises to further global prominence.

“And that’s why Australia firmly believes India should become a permanent member of the United Nations Security Council and a member of APEC.

“Australia is committed to taking its relationship with India to a higher level and to engaging with India on a long term strategic basis across so many areas – from defense to energy to economic development and, of course, to education.

Thus she described Indo-Australian relationship about a year back during her visit to India in August 2009. She was then Deputy Prime Minister and Education minister of Australia. She is Julia Gillard, the newly elected first woman Prime Minister of country.

India is currently the second largest source of overseas students in India and the second most popular destination after the United States for Indian students who want to study abroad. India is already Australia’s fastest growing export market for education services raising $2 billion in export income.  Nearly half a million students come to Australia every year, including nearly 100,000 from this nation. They live and work in Australia. “These students contribute to our multicultural society while they gain skills and knowledge to take home. This makes student exchange an endeavour of mutual benefit to both our nations”, Gillard stressed in her speech.

Stating that India’s rise is absolutely central to the story of Asia shaping the future of the world economy Treasurer Wayne Swan at the  Australia India Business Council's National Conference on June 11, 2010 said that in the past five years, India’s economy has grown by an average of around 9 per cent per annum. Its economy has doubled in size over the past decade. And it has the people, skill base and resources to repeat that performance over the coming decade.

The bilateral trade between India and Australia has touched nearly $22 billion in fiscal 2008-09 signifying an impressive 55 per cent growth.

Australia and India agreed in April 2008 to undertake a feasibility study for a possible bilateral free trade agreement (FTA) to explore the scope for building an even stronger economic and trade relationship. Both the governments agree that the proposed FTA once agreed upon and implemented would hugely benefit both the countries  in trade and services. India is Australia's fourth biggest export market. Country's exports to India have increased by an annual average of over 25 per cent over the past five years.

“The joint study finds that an Australia- India FTA is feasible. It makes a strong economic case that both Australia and India would gain significant economic benefits from a comprehensive FTA. An FTA would open up trade, investment and job opportunities in both countries. An FTA with India will continue the momentum of Australia’s economic integration with Asia – the fastest growing region in the world.” the Australian minister for Trade said at the 12th meeting of the India-Australia Joint Ministerial Commission (JMC) held in New Delhi, India on May 4, 2010.

"FTA Feasible": Study Group

Recent years have seen remarkable growth in the trading relationship between India and Australia, fuelled by the many complementarities between the two economies. Over the past
five years, bilateral trade in goods and services has increased by 24 per cent annually to US$16 billion in 2008–09. Two-way investment is also significant, estimated at over US$1.5 billion including portfolio investment in 2008.

Against this backdrop, Australia and India agreed in April 2008 to undertake a feasibility study for a possible bilateral free trade agreement (FTA) to explore the scope for building an even stronger economic and trade relationship.

The feasibility study shows that significant barriers to goods and services trade remain in
both countries.

An FTA between India and Australia would be expected to address tariff and non-tariff barriers. It would go beyond each country’s commitments in the World Trade Organization (WTO) and cover substantially all trade in goods.

Services liberalisation would seek to remove barriers that impose additional costs on exporters
and erode competitiveness. A possible FTA would be expected to have substantial services
sector coverage.

Australia-India investment flows are modest relative to bilateral trade, reflecting both regulatory
and other impediments and, to some extent, a lack of awareness of business opportunities in the other country. A possible FTA may address this imbalance by removing – or reducing – existing restrictions in both foreign investment regimes. It could also focus on enhancing transparency and strengthening investment protection mechanisms.

A comprehensive FTA offers scope to take the relationship to the next level to the mutual
advantage of both economies. It could foster even stronger growth, including through more diverse trade and investment flows. Cooperation, capacity building and exchange of information on other issues such as the protection of intellectual property rights (covering all issues including TRIPS & CBD, and GIs inclusive of non-food GIs), SPS & TBT matters, competition policy and government procurement could also be considered during possible FTA negotiations.

In order to make an assessment of the possible trade gains from the proposed FTA,
independent economic modelling was commissioned in both the countries for the study. The
results provide insights into how an FTA might impact on bilateral trade and investment flows as well as economic welfare. Economic modelling is necessarily based on certain assumptions and the results of the modelling for this study should be regarded as indicative rather than as exact estimates. Different economic modelling methods, GTAP-CGE modelling and modelling based on an analysis of complementarity, were used in the study to estimate the welfare gains to both countries. The results indicate that the welfare of the two countries would increase with
the conclusion of an FTA. The welfare gains for both the countries could be in the range of 0.15
and 1.14 per cent of Gross Domestic Product (GDP) for India and 0.23 and 1.17 per cent of GDP for Australia. An Australia-India FTA could result in a modest positive impact on total global economic output.

The Joint Study Group concludes that a bilateral FTA is feasible and it recommends that both
governments consider the negotiation of a comprehensive India-Australia FTA.

Source: Department of Foreign Affairs & Trade, Government of Australia

Independent modelling conducted for the study by the Centre for International Economics indicates that an Australia-India FTA could result in a net increase in Australia’s GDP by up to US$32 billion (A$45.5 billion) and India’s GDP by up to US$34 billion (A$48.3 billion) over a period of 20 years. (Source: Department of Foreign Trade, Government of Australia).

“India is the world’s largest democracy and is a market of 1.2 billion people. Its youthful population, diversified economy and growth trajectory present significant opportunity for Australian business, especially in the agriculture, energy, manufacturing, mining and services sectors,” the Australian Trade minister observed.

Today both India and Australia are at the epicenter of the new economic forces shaping the world, particularly in the Asia-Pacific region. Both the countries are striving to take the bilateral relations beyond proverbial Three Cs (Cricket, Curry and the Commonwealth). “The most important feature today is the ‘Fourth C’ that stands for Commerce…I see strong prospects for our bilateral relationship moving beyond the 3Cs; definitely to the 4th C and beyond” so feels Ms Sujatha Singh, Hon’ble High Commissioner of India to Australia. Her high hopes are glaringly reflected in the Indo-Australian trade that has grown from $ 3.23 billion in fiscal 2003-04 to $ 12.53 billion in fiscal 2008-09.In fiscal 2009-10 till December 2009 the bilateral trade stood at US$ 9.65 billion. India's exports to Australia zoomed from $ 584 million in 2003-04 to $ 1.44 billion in 2008-09. In the first nine months of fiscal 2009-10 exports from India stood at US$ 1 billion. Imports from Australia however increased to $ 11.09 billion in 2008-09 from $ 2.64 billion in 2003-04. Till December 2009 in fiscal 2009-10 India's imports from Australia was worth US$ 8.65 billion.

Strategic partnership building brick by brick*

India and Australia are two countries with shared interests and shared values. We are both pluralist democracies. We are both global in our outlook, but also closely integrated into the Asian region. Our economic relationship is expanding rapidly. We have a shared desire to enhance and maintain peace, stability and prosperity in Asia. We both value multilateral institutions and recognise the need to reform and renovate them. Our people-to-people links are broad-based and growing.

To give expression to the expansion and dynamism of our bilateral ties, we have agreed to take the relationship to the level of a strategic partnership.

Bilateral cooperation

In line with this strategic partnership, the two Prime Ministers affirmed their desire to intensify their contacts with each other. Dr Singh said he looked forward to visiting Australia at a mutually convenient date.

As two countries committed to political pluralism and parliamentary democracy, the Prime Ministers emphasised the need to reinvigorate bilateral parliamentary exchanges. Aware of the critical role that the young people of today will play in meeting the challenges and taking forward the initiatives of the 21st century, the two leaders welcomed the proposal to establish a new young political leaders program. A familiarisation visit of Australian young political leaders to India is likely to take place in 2010 to work out the modalities.

International and Regional Cooperation

Dr Singh and Mr Rudd reaffirmed the strong security and defence ties between India and Australia and welcomed a Joint Declaration on Security Cooperation that will see the two countries intensify their efforts to maintain peace, stability and prosperity.

Regional and multilateral cooperation is an important strand of the India – Australia relationship. The two leaders reaffirmed the key role being played in the Asian region by bodies such as the East Asia Summit, the ASEAN Regional Forum and the Asia Europe Meeting. The Prime Ministers welcomed the outcomes of the Fourth East Asia Summit (EAS) held in Hua Hin on 25 October, and agreed that the agenda of the EAS should continue to be strengthened. In particular, they welcomed the agreement reached by EAS leaders to convene an EAS Finance Ministers' meeting and to have officials consider a Comprehensive Economic Partnership in East Asia. Mr Rudd reaffirmed Australia’s firm support for India’s membership of the Asia Pacific Economic Cooperation grouping when the membership moratorium ends next year.

The Prime Ministers welcomed ongoing discussion about how the institutional architecture of the region could evolve over time. Dr Singh welcomed Mr Rudd’s intention to convene a 1.5 track conference in Sydney in December 2009 to consider further Australia’s Asia Pacific community initiative.

The Prime Ministers reconfirmed their support for reform of the United Nations to ensure it reflects the realities of the 21st century, including by modernising the United Nations Security Council (UNSC). In this context, Mr Rudd reiterated Australia's support for a permanent seat for India on the UNSC.

Mr Rudd and Dr Singh welcomed the decision to make the G20 the premier forum for international economic cooperation.

Both countries stressed the need to increase agency-level cooperation in areas of mutual interest such as terrorism.

Dr Singh and Mr Rudd reaffirmed their shared vision of a world free of nuclear weapons and agreed to work together in a spirit of partnership on global disarmament and non-proliferation.

Expanding Economic Links

The bilateral economic relationship continues to expand rapidly to mutual benefit and there is significant untapped potential for even stronger trade and investment links. The Prime Ministers noted that the Joint Study Group Report on the feasibility of Free Trade Agreement between the two countries will be submitted shortly and agreed to consider its recommendations expeditiously with a view to taking further action.

The Prime Ministers agreed to constitute an India-Australia CEOs Forum which would involve prominent companies from each country across the spectrum of key economic sectors.

Energy, climate change and water cooperation

Energy security and climate change are serious challenges facing the international community. The Prime Ministers reiterated that Australia and India believe that a comprehensive outcome at the Copenhagen Conference in accordance with the principles and provisions of the UNFCCC and the Bali Action Plan, is critical to meeting the challenge of climate change.

Mr. Rudd noted India’s plans to meet its future energy requirements by exploring and developing all sources of energy, including nuclear, renewable and non-conventional resources.

Both sides recognized the benefits of enhancing bilateral commercial exchanges of renewable and non-renewable energy resources. The two Prime Ministers also agreed that energy security concerns are best met by reconciling the long-term interests of both energy producing and energy consuming countries through a truly open and competitive energy market. Both sides also expressed their willingness to join efforts which promote a cooperative response to any global energy crisis, noting the important role of open and transparent energy trade and investment markets.

The Prime Ministers agreed that meaningful progress in the areas of energy security and climate change should be made through national, bilateral and multilateral efforts in a manner that does not limit the possibilities of accelerated economic and social development. The leaders agreed to work to address these global challenges.

Both leaders stressed the determination of Australia and India to work together to achieve a comprehensive, fair and effective outcome at Copenhagen, with the involvement of all countries in line with their common but differentiated responsibilities and respective capabilities.

In developing a global response to climate change, the leaders agreed to engage constructively with each other, and with other countries, including under the UNFCCC and in other multilateral fora such as the East Asia Summit (EAS) and the Asia-Pacific Partnership on Clean Development and Climate (APP).

Practical collaboration by Indian and Australian agencies is continuing to meet the challenge of climate change, including under the Asia-Pacific Partnership on Clean Development and Climate. The Australian Government will provide A$1 million (4.315 crore rupees) to support a joint solar cooling and mini-grids project being undertaken by India’s The Energy and Resources Institute (TERI) and Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO). The Prime Ministers noted the positive contribution being made by the Global Carbon Capture and Storage Institute (GCCSI). An International Advisory Panel, which includes a TERI representative, will play a key role in guiding the work of the GCCSI.

India and Australia are faced by the imperative of managing scarce water resources. Dr Singh and Mr Rudd welcomed the signing of a Memorandum of Understanding in the Field of Water Resource Management. Mr Rudd also announced Australia would devote A$20 million in funding over five years under the Australian Centre for International Agricultural Research for joint research in dry-land agriculture in India.

A knowledge partnership

India and Australia are building a broad knowledge partnership, ranging from developing collaborative projects in education from primary school up to university, to conducting joint research in many fields. Science and technology cooperation is a critical part of this partnership.

Both Prime Ministers acknowledged the important role science plays in the bilateral relationship and the potential to work more closely in this area of shared strength. Building on the success of the Australia-India Strategic Research Fund, Australia will increase its commitment to bilateral research efforts to A$10 million per year for the next five years, which will be matched by India.

The expanded fund will introduce a new 'grand challenge' component, which will support large-scale research projects designed to deliver practical solutions to some of the major challenges shared by both countries. The areas of focus will be “energy”, “food and water security”, “health” and “the environment”. The expanded fund will also introduce a substantial new fellowship program, comprising exchanges for early-career researchers from both countries and short-term visits by senior scientists. Both governments will continue to support leading-edge research in areas including in information and communication technology, micro-electronic devices and materials, earth sciences, nanotechnology, astronomy and biotechnology.

The two Prime Ministers welcomed the recent agreement that India and Australia would hold an annual ministerial dialogue on education, which would include representatives from education institutions and industry. Mr. Rudd welcomed India's proposal to revive Nalanda University.

Dr. Singh conveyed the high priority that Government of India attaches to the safety, security and well being of Indian community in Australia. Mr Rudd reiterated that Australia had a zero tolerance approach to violence and was committed to taking all possible measures to protect the safety and welfare of all international students including Indian students. He provided Dr Singh with an update on the efforts of the Australian Government and its state government counterparts to enhance law enforcement, extend student welfare measures, re-register all education providers, audit vocational education and training institutions, and strengthen the integrity of the visa system.

Culture and Sport

Cultural ties between Australia and India are vibrant and expanding. The Prime Ministers agreed that strengthening these enduring people-to-people links to enhance mutual understanding is vital to the future of the relationship. In 2010, India will host a 'Days of India' cultural event in seven Australian cities. The Australia International Cultural Council has selected India as the focus country for a major year-long cultural program in 2012. The two Prime Ministers welcomed the decision to launch negotiations on a film co-production agreement covering a wide range of audio visual formats.

Sport has long occupied an important place in the India-Australia relationship. Australia is looking forward to participating in the Delhi 2010 Commonwealth Games and is supporting the preparations. The Australian Sports Outreach Program will be boosted to deliver more grass-roots sports-based activities to India’s youth, women and people with a disability, in collaboration with Indian partners. Mr Rudd also launched Business Club Australia in India, which will use sporting events, especially the Commonwealth Games, to build business links between the two countries.

* Joint Statement between India and Australia during visit of Prime Minister Kevin Rudd on November 12, 2009 in New Delhi, India

"...The rise and resilience of the Indian economy has commanded the attention of the world, and the attention of Australians in particular.
India, for instance, has become Australia’s third largest export destination, and one of Australia’s fastest growing major export markets. Australia’s total exports to India have almost tripled in the last five years. And the IMF projects that by 2015 India will receive more than one-tenth of Australia’s merchandise exports.
Together, India and Australia have an important role to play on the world economic stage – contributing to debate about the global economic architecture needed to build sustainable growth", said Treasurer Swan.

Australia’s economic successes over the past 18 months or so are not just a product of stimulus only. They are also a product of more than 25 years of hard fought economic reforms as has been pointed out by Swan. Reforms like floating the dollar, bringing down tariff walls, and establishing superannuation which gave Australia a strong pool of national savings to keep investment dollars flowing. India also is unfolding its market economy along with its reforms process. Can there be any better match for either of these two countries who are sincerely and seriously following economic reforms process that would ensure stronger economy and a better tomorrow.