Fresh thinking needed in the Australia-India relationship
Asialink Business CEO, Mukund Narayanamurti wrote in the Australian on the future of the Australia-India bilateral relationship.
Malcolm Turnbull’s recent visit to India has duly cast the spotlight on one of Australia’s most promising economic partners.
Yet much of the narrative around the opportunities for Australian business remains outdated. The economic relationship continues to be marked by underperformance: Two-way trade is a relatively meagre $19 billion, placing India significantly behind our relationship with China, Japan and South Korea, and growth remains sluggish. We’ve had more success through our collaboration with India in the arts, culture, sport and research than in the business sphere.
Five strategic shifts in mindset are essential for the Australia-India relationship to evolve from its current state of inertia and old ideas, and for Australian businesses to translate the promise that India offers into performance.
First, although coal continues to dominate the minds of the political and business elite, we must understand that Australian thermal coal will never power India as long as it is unaffordable to Indians.
It would be political suicide in India to provide unaffordable electricity. Coal prices in India have historically been much lower than international benchmarks and domestic power sector competition is fierce. Putting the proposed Adani project aside (which combines mine, rail and port infrastructure), only some form of blending cheap Indian coal with foreign coal can make foreign coal economically viable.
Much would need to change for Australian thermal coal to be supplied in the quantities to which our political and business elite aspire. However, Australian mining, equipment and technology suppliers can offer the solutions that India’s mining sector so desperately needs to improve efficiency levels. This should be our short to medium term focus.
Second, we must understand that India boasts some of the world’s most arable land. Our agricultural produce might be “clean, green and safe”, but India’s agricultural sector is highly sensitive and will not allow foreign produce to be dumped in the market. Rather than fresh produce, Australia should focus on exporting farming and food safety technologies, along with storage, logistics, and water management services.
The third and fourth shifts relate to education — a key growth area in the relationship.
Our universities need to compete more effectively for a higher-calibre student base from India. Australia’s competitive advantages in the long-term cannot just be pricing, easier admittance standards, or the current uncertainty in the US due to the Trump administration.
To attract India’s very best talent, we must raise the bar so that our Group of Eight universities is viewed in similar light to the US Ivy League. This means offering scholarships to the best students, creating more tours for Year 12 students from the top Indian schools to Australian universities, and more welcoming migration laws to enable the best and brightest to stay and work in Australia post-graduation.
Similarly, though India may need 400 million workers trained by 2022, vocational education still holds significant stigma in the hearts and minds of Indians. A liberal arts degree from a less reputable university might be more socially accepted than a trade qualification. This stigma, together with the lack of margins in the vocational education sector, means that it is not only hard to build a student base but exceptionally hard to scale it to the size that makes it economically attractive. Perhaps more than any other sector, carefully scoping the market opportunity is essential in vocational education.
Finally, we must view India for the nation that it is today — beyond commonalities like cricket, democracy and the English language, which create a mirage of comfort that negates any meaningful collaboration.
We must listen to what the Indians are actually conveying — they might not need us as much as we need them. For instance, Australian super funds can learn from foreign pension funds on how to invest in Indian infrastructure projects without being paralysed by sovereign risk. Our advanced manufacturing sector can learn from India’s smart manufacturing agenda (“Industry 4.0”), while our entrepreneurs can learn from the extraordinary ability of Indian start-ups to champion world leading frugal product, process and service innovations.
Growing our relationship with India means staying ahead of global competition and championing a unique future to which both nations remain unhesitatingly committed.
The time is ripe for strong political and business leadership to tackle the inertia in the bilateral relationship. This will require a strategic shift in thinking to migrate from old ideas to new ones that offer more credible opportunities for Australian business.
Mukund Narayanamurti is the chief executive of Asialink Business. He has also served as an adviser to state and federal government departments in Australia on engagement with India.
This article was first published in The Australian.