Australia needs to see India as more than a market

Australia’s conversation about India often begins with scale. India has a huge population, a fast-growing economy, a rising middle class and increasing geopolitical weight. These facts matter. But they are no longer enough to guide Australian strategy.

The more important question is not whether India is growing. It is how Australia should engage with the kind of economy India is becoming. For too long, Australian firms have viewed India through narrow lenses: as an export market, an education market, a source of students, a destination for resources, or a difficult but promising place to do business. These remain important, but they do not fully capture India’s changing role in the global economy.

India is not simply becoming a larger consumer market. It is becoming a capability platform. This distinction matters. A market is somewhere firms sell. A capability platform is somewhere firms learn, build, partner and develop the skills, systems and relationships that shape future competitiveness.

India’s transformation is visible in several areas. Its digital public infrastructure has changed the way payments, identity and services operate at scale. Its reform agenda remains uneven, but changes in digital infrastructure, logistics, taxation and investment facilitation have made India a more serious economic partner than many Australian firms recognise. Its technology and services sectors have moved far beyond low-cost back-office work. Its global capability centres now support multinational firms in analytics, cybersecurity, cloud systems, finance, digital transformation and artificial intelligence.

For Australia, this requires a shift in mindset. While India is Australia’s fifth-largest trading partner, with two-way goods and services trade worth A$54.4 billion in 2024–25, there needs to be a new phase of Australia–India engagement; one that cannot be built only around selling more commodities, attracting more students or negotiating better market access. These will continue to matter. But they should sit within a broader strategy focused on capability building.

That means asking different questions. How can Australian firms use India not only as a market, but as a partner in technology, services, innovation and talent development? How can universities build deeper links with Indian institutions, firms and start-up ecosystems? How can Australian companies work with India’s digital and services capabilities to become more competitive in Asia?

These questions matter because the global economy is changing. Trade is no longer only about goods crossing borders. Increasingly, value is created through data, software, analytics, digital services, skills, platforms and trusted relationships. India’s importance comes not only from the size of its domestic market, but from the capabilities it is developing and exporting.

This is where Australia’s current approach can be too cautious and episodic. Interest in India often rises during high-level visits, trade negotiations or periods of geopolitical attention. But sustained business engagement remains difficult. Investment is increasingly two-way: at the end of 2025, Australian investment stock in India was A$26.8 billion, while Indian investment stock in Australia was A$45.3 billion.

But many Australian firms still underestimate the complexity of India’s states, institutions, regulations, business networks and consumer markets. Others are interested in India but lack the knowledge, relationships and patience required to operate there effectively.

India is not an easy market. But that is precisely why Australia needs deeper India capability. A serious India strategy requires sector knowledge, long-term institutional relationships, local partnerships, state-level understanding and a willingness to learn from India rather than only sell to it.

There are several areas where Australia can build a more strategic agenda. The first is education. Australia has long benefited from Indian students, but the relationship needs to move beyond recruitment. The next phase should involve joint degrees, research partnerships, industry-linked education, digital learning, lifelong skills and deeper collaboration with Indian institutions. Education should be treated not simply as an export sector but as part of a shared talent system.

The second is technology and services. India’s role in global capability centres creates opportunities for Australian firms to work with Indian partners in analytics, cybersecurity, AI, cloud systems and enterprise transformation. This should not be viewed only as outsourcing. It should be seen as part of a broader reorganisation of global knowledge work.

The third is clean energy and critical minerals. Australia has resources and project expertise. India has scale, demand and manufacturing ambitions. A stronger partnership could link Australian minerals and energy capabilities with India’s industrial and decarbonisation priorities.

The fourth is health, agribusiness and infrastructure. India’s growth will create demand for better healthcare, food systems, logistics, urban services and infrastructure. Australian firms have expertise in these areas, but success will depend on adapting to Indian conditions rather than assuming Australian models can simply be transferred.

The fifth is the Indian diaspora. Australia has a large and highly skilled Indian-origin community, but this remains an underused strategic asset. The diaspora can help bridge trust, knowledge, networks and cultural understanding. It should be seen as part of Australia’s India capability, not merely as a demographic fact.

The key point is that Australia needs to move from a transaction-based approach to a capability-based partnership. A transaction-based approach asks: what can we sell to India? A capability-based approach asks: what can Australia and India build together?

This is not a call for unrealistic optimism. India’s reform process remains uneven. Foreign firms will continue to face regulatory complexity, infrastructure gaps, policy variation across states and intense competition. But these challenges should encourage Australian business and government to invest more seriously in the knowledge needed to engage well.

India will be one of the central economies shaping the Indo-Pacific. But Australia’s opportunity is not automatic. Geography, diaspora links and trade agreements create openings, not outcomes.

If Australia wants a deeper relationship with India, it needs a deeper understanding of India’s changing economy. India is no longer only a market to enter. It is a country with which Australia will need to build capabilities, institutions, partnerships and trust.

The future of Australia–India engagement should therefore be judged not only by trade numbers, but by whether the relationship helps both countries become more capable. That is the real strategic opportunity.

Vikas Kumar is Professor of International Business in the University of Sydney Business School.