India–Australia Relations on the Upswing

April 26, 2022

The Second India–Australia Summit, held on 21 March 2022, took stock of various new initiatives and mechanisms agreed under the Comprehensive Strategic Partnership (CSP), inked in June 2020.1 The relationship has been further bolstered by the signing of the India–Australia Economic Cooperation and Trade Agreement (IndAus ECTA) on 2 April 2022 between the two Trade Ministers, in the presence of the respective Prime Ministers.2 The agreement is a major milestone that promises to propel bilateral trade to new heights and achieve ambitious targets for Indian and Australian economies.

India–Australia relations have indeed transitioned from a difficult past to a promising future. Till the year 2000, there was considerable cynicism between the two countries and lack of cooperation in most sectors, primarily owing to contrasting views on the commonwealth, India’s independent foreign policy and Cold War dynamics. When India conducted nuclear tests in 1998, Australia imposed tough economic sanctions, resulting in further deterioration of relations. Economic and trade cooperation as well as people-to-people links were also limited.

However, since 2000, the two countries began to forge an increasingly cooperative partnership, essentially driven by the changing regional landscape in Asia and China’s aggressive behaviour, as also improving India–US relations, as signified by the nuclear deal . Bilateral relations were further bolstered by Prime Minister Narendra Modi’s visit to Australia in 2014 and recent partnerships forged as part of the Quad meetings and other mini-laterals.

Virtual Summit

At the Virtual Summit on 21 March 2022, all areas of cooperation were discussed between the two leaders, and the key strategic and economic outcomes were highlighted in the joint statement.3 Regarding Indo-Pacific region, the two leaders expressed their shared commitment to free, open and rules-based order, supported by a robust regional architecture, and ASEAN centrality. On the Ukraine crisis, they expressed concern over the conflict and the resultant humanitarian crisis, as also emphasised on the importance of dialogue and diplomacy based on the UN charter, international law, respect for sovereignty and territorial integrity of states, to resolve the crisis. The leaders called for immediate cessation of violence against the civilian population in Myanmar, release of detained leaders there and unhindered humanitarian access. The two leaders committed to humanitarian assistance, adherence to counter-terrorism commitments and human rights in Afghanistan. Concerning South China Sea, both sides underlined the importance of freedom of navigation and over flight, consistent with international laws, particularly UN Convention on the Laws of the Sea (UNCLOS). It was announced that India will participate in the Indo-Pacific Endeavour Exercise 2022, which aims to promote security and stability in Australia’s near region through bilateral and multilateral engagement, training and capacity building.4.

On the economic front, Australia–India Infrastructure Forum was launched to enable Australian firms to explore India’s vast infrastructure opportunities. A new Consulate-General in Bengaluru was announced to help plug Australian businesses into India’s digital economy and innovation ecosystem.5 The Progress on Comprehensive Economic Cooperation Agreement (CECA) was reviewed, with both sides committed to a full CECA by the end of the year. The two countries shared their commitment to cooperate on such aspects as critical minerals, and emphasised the need for resilient and sustainable supply chains for their transportation. An MoU was signed between Australia’s Critical Minerals Facilitation Office and Khanij Bidesh Ltd for joint cooperation on critical minerals. Further, Australia and India pledged to cooperate on research, production and commercialisation of clean technologies, critical minerals and energy.

Among other new declarations are the India–Australia Centre of Excellence for Critical and Emerging Technology Policy, to be set up in Bengaluru, and establishment of Gen Rawat India–Australia Young Defence Officers’ Exchange Programme. Australia committed the largest single investment in the bilateral relationship with India of about US$ 280 million across skills, diplomacy, clean technology, critical minerals and space exploration.6 Indian diaspora in Australia is more than 6 lakh people and about 1 lakh students, totalling about 3 per cent of the Australian population.

Convergences

Recent years have seen a significant transformation of the India–Australia strategic relationship. With CSP signed in June 2020, an array of institutional mechanisms have been initiated to promote bilateral cooperation, including Joint Declaration on Maritime Cooperation, Arrangement on Mutual Logistics Support, Framework arrangement for Cyber & Cyber Enabled Critical Tech Cooperation and MoU on Mining and Processing of Critical and Strategic Minerals. The inaugural 2+2 Ministerial Dialogue was held in September 2021 and the two Foreign Ministers have been meeting regularly. The two nations have a robust defence partnership. Besides dialogues, training and exchanges, they conduct regular joint military exercises, as also anti-piracy coordination and white shipping information sharing. Bilateral military exercises that have been conducted include AUSINDEX 2021, PITCH BLACK 2018 and AUSTRAHIND 2018.Australia has consistently supported India’s NSG membership, and permanent seat in the UN Security Council.7 India and Australia signed the civil nuclear agreement in 2014 and Australia made the first uranium shipment to India in 2017. However, trade in uranium since then has been lacklustre owing to issues regarding safeguards, and Australian domestic politics. 8

On multilateral issues, both countries are members of the Quad, along with Japan and the United States, and cooperate on various positive agendas relating to the Indo-Pacific. India and Australia have similar concerns vis-à-vis China’s coercive behaviour. Australia has pushed back on China’s aggressive trade barriers, and has called for independent investigation of COVID-19 origins. India, on its part, has given a strong response to China’s unilateral attempts to alter status quo on the Ladakh border.

India and Australia cooperate closely at ASEAN forums viz. East Asia Summit, ASEAN Regional Forum and ASEAN Defence Ministers Meeting, as also at G20, which India is going to host next year. The two countries have a robust issue-based trilateral mechanisms with Japan (since 2015), Indonesia (2017) and France (2020). Some multilateral initiatives where India has taken lead and the two countries cooperate are Supply Chain Resilience Initiative (SCRI), Coalition of Disaster Resilient Infrastructure (CDRI), and Infrastructure for Resilient Island States (IRIS) and International Solar Alliance (ISA). In the Indian Ocean, both countries engage with partners in forums at Indian Ocean Rim Association (IORA), Indian Ocean Naval Symposium (IONS); as also at many multilateral exercises, such as Malabar and now Talisman Sabre and Indo-Pacific Endeavour.

India and Australia have a shared vision on the Indo-Pacific. India’s approach to the region was articulated by PM Modi in 2018 through the vision of SAGAR9 (Security and Growth for All). To implement the vision of SAGAR, the Indo-Pacific Oceans Initiative (IPOI) was launched in 2019.10. India has also strengthened its outreach with Pacific island countries, through FIPIC (Forum for India–Pacific Island Cooperation). Australia’s strategic view on Indo-Pacific is spelt out in 2020 Defence Strategic Update. Australia’s strategic objectives as defined in this document include –the shaping of strategic environment in the region, deterring actions that are against Australian interests and responding with credible military force, if required. South Pacific region is Australia’s primary area of influence and its deep engagement in the region is defined by the Pacific Step-up initiative, which was first announced at the Pacific Island Forum Leaders' Meeting in September 2016 as a 'step-change' in its engagement with the region.11

Divergences

While India and Australia cooperate on most areas, analysts observe that there are many issues of divergences also. Australia has looked at strategic and security issues through the lens of its US alliance, which has now got further strengthened with AUKUS deal, whereas India follows an independent foreign policy in international relations and tries to balance its strategic calculations. The two nations have differing views on Myanmar, for instance. For India, developments in Myanmar are a matter of strategic concern, due to its proximity to the country’s northeast region and militants operating from across the border. Australia, on its part, has strongly condemned the military coup and detainment of senior leaders. Australia’s response to the Ukraine crisis is aligned with its allies in West, while Indian response is based on its national interests and historic ties with Russia. Australia, just as India, Japan and many others, has realised the importance of self-reliance in defence manufacturing and resilient supply chains. Australia has increased its defence budget and is acquiring advanced weapon systems, including nuclear-propelled submarines and hypersonic missiles under AUKUS deal.12

The Promise of IndAus ECTA

Recognising that a free trade agreement between the two countries will usher in economic growth and build trust and respect, the two nations signed the historic IndAus ECTA on 2 April 2022.13 With ECTA in place, the trade is likely to increase from the current estimates of US$ 27 billion to about US$ 45–50 billion over the next five years, and is expected to create over 10 lakh additional jobs.14 The deal will eliminate tariffs on more than 85 per cent of Australian goods entering India and almost all Indian exports to Australia. Indian companies will get supply of energy and raw material, while Australia will get better access to the rapidly growing Indian market. Labour-intensive sectors in India like textiles, pharmaceuticals, etc., will create new jobs and Indian students and software professionals will benefit from the liberalised visa regime. In addition, the agreement will assist Indian finished product exports in petroleum, cosmetics, linen clothing, jewellery and furniture.

Way Forward

Being two major powers with shared interests, India and Australia can play a significant role in creating a strong and prosperous Indo-Pacific region. The Quad partnership must be leveraged and widened in its relevance and influence, by enhancing security and economic cooperation among the member nations. India needs to engage more proactively with ASEAN nations and give required assistance, including in the defence field, like in the case of the supply of BrahMos supersonic cruise missiles to Philippines. India and Australia need to take a leadership role in maritime security affairs in the two oceans, and have deeper engagements with the Pacific and Indian Ocean island countries. Joint defence manufacturing has a tremendous potential to be explored, leveraging Aatmanirbhar Bharat initiative. Furthermore, broader long-term reciprocal access arrangements, similar to foundational agreements with US, can be looked at to emphasise real-time maritime domain awareness and information sharing, besides interoperability and operational coordination. Close cooperation in critical emerging technologies will be a win-win for both countries, for example in fields of Artificial Intelligence, semiconductors, drones, 6G, blockchain, etc. While the ECTA has been inked, CECA should be concluded at the earliest. Some other focus areas can be enhanced trade in uranium under the rubric of civil nuclear cooperation and joint infrastructure connectivity projects.

Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrikar IDSA or of the Government of India.