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Speech

Australian Minister for Trade, Mark Vaile

Trade and Investment Conference of
The Federation of Indian Chambers of Commerce and Industry
New Delhi, 18 October 2000

Australia and India: Business and the Bilateral relationship

Introduction

Ladies and gentlemen. It is a real pleasure for me to have the opportunity to address you today. This is my first ever visit to India. Although I represent a large country in the geographical sense, I can now fully appreciate the special scale of India and its unique atmosphere. I'm very pleased to be here.

I am aware of the important role played by FICCI as an umbrella organisation in the Indian business sector. This trade and investment conference is a most welcome expression of the interest FICCI is taking in the developing business relationship between Australia and India. I would like to use this opportunity to talk about recent developments in the bilateral relationship between our two countries, and then examine ways in which an even stronger economic relationship might develop in the future.

The bilateral relationship

Speaking in general terms, this has been a particularly important year for the Australia/India relationship. The visit by my colleague, the Minister for Foreign Affairs, Mr Downer, in March helped to set political relations back on a more positive track. This was followed in April by the seventh meeting of the Joint Ministerial Commission in Canberra, where I had the honour of leading the Australian delegation, and the meeting of the Australia-India Joint Business Council in Sydney. Both events helped prepare some of the ground for the visit to India by the Prime Minister, John Howard, in July. A busy year by any standard!

As Australia's Trade Minister, I'm aware that our two countries share many common interests. For example, Australia and India have both actively supported the launch of a new Round of multilateral trade negotiations in the WTO. Similarly, our views coincide on the future trade agenda of the Indian Ocean Rim - Association for Regional Co-operation (IOR-ARC).

The visit to India by John Howard in July not only marked the culmination of our mutual efforts to put the bilateral relationship back on track, but also signalled the beginning of a campaign to expand cooperation in a number of areas. The Prime Minister's visit focused attention on the enormous potential for enhanced economic cooperation, particularly in the Information Technology and LNG sectors.

India's prowess in IT makes this country a sought after partner. India has seen a rapid expansion in its information technology industry and the nation has developed a considerable pool of manpower and expertise in this area. Australia, on the other hand, is lacking the resources to meet all of our IT needs.

Our two countries agreed at the Joint Ministerial Commission in April to explore the mechanisms for enhanced cooperation in IT. Officials on both sides have since been busy putting together ideas on how we might jointly take this cooperation forward. As some of you may know, later today, together with the Indian Minister of Information Technology, Pramod Mahajan, I will sign a Memorandum of Understanding on Information Industries Cooperation.

The MOU is only a beginning, but it will, we hope, provide the framework for a rapid expansion of our cooperation in a wide range of IT activities. The opportunities are real. A joint study by Austrade and Ernst and Young earlier this year confirmed the potential in this sector.

Building the business relationship

IT is only one of the areas where we hope to see an expansion in our business ties with India. We see considerable potential for the further development of the bilateral economic relationship.

Australia welcomes the continued efforts of the Indian government to maintain the bold economic reform program that began in 1991. We encourage India to continue moving ahead with legislation aimed at further liberalising key sectors in the Indian economy. We also encourage India as it moves away from quota-based barriers to trade towards reliance on tariffs, as well as in its intention to work gradually towards tariff reductions. Any country wishing to be a major force in international trade must engage in economic reform and trade liberalisation. And India rightly aspires to be a global economic power and has much to offer to the world as a whole.

Australia understands that economic adjustment is not easy. But we believe that the performance of the Australian economy over recent years demonstrates the rewards that come from persisting with the process. We have outperformed most other industrial economies, and from this position of relative strength, look to develop a strong and cooperative economic relationship with India.

As India's economic reform program gathers momentum there will be a significant expansion of its industrial base. To ensure that this process proceeds smoothly, India will need an adequate supply of energy to the industrial sector. Australia already has a foot in this door. Coal has been one of our most important export commodities to India for many years. It has, for example, helped power Indian steel mills.

But I understand that industry here is increasingly looking at LNG as a preferred option to help meet its future power needs. During his recent visit, Mr Howard identified this as an area where Australia is well placed to assist India. We are well situated geographically, have abundant gas reserves and have the right level of power generation technology. I am glad to say that we are now actively exploring the option of selling Australian LNG to the eastern coast of India.

Part of the purpose of my visit this week is to try and identify other emerging sectors where we believe that Australia can make a significant contribution to India's further economic development. We start from a reasonable base, and I would like to give those of you who may not be fully aware a few examples of the areas where we are trading successfully.

One of these is agribusiness. Tasmanian apple-growers have recently developed India into their most important market for 'red delicious' apples. Not only are Australian agricultural products deservedly recognised internationally for their quality, but Australia also has considerable expertise in agricultural production technology and in the distribution and storage of agricultural products. These are areas where we believe that we have much to offer India. Australian companies were very interested in the Indian government's recent announcement permitting private sector investment in the infrastructure for the bulk handling of grain - an area where Australia has some of the best expertise.

Railways, ports, fisheries, mining, health and education are other areas that offer considerable potential for bilateral cooperation. Already, Australia is the second most popular overseas education destination for Indian students after the United States. We believe that Australia's cost competitive and high educational standards have the potential to cater to a growing number of Indian students.

These are just a few examples from what is a rapidly growing list of opportunities that are clearly available to Australian companies willing to take advantage of them. The Australian government is committed to supporting our companies in India. Despite outward appearances of a common language, a common legal and institutional heritage and a common passion for cricket, doing business in India does present the novice with considerable challenges. Later this morning I will launch the results of a Business Case Studies exercise- Winning in India- that my department has compiled. It presents the experiences of ten successful Australian companies doing business in India and draws out lessons for others wishing to join them.

Many Australian companies have told us that one of the most important considerations for success in the Indian market is the identification of a good local agent or business partner. Another common refrain from many companies has been the need for patience, perseverance and persistence. However, those Australian companies that have worked hard to establish themselves in India can attest to the fact that the effort has been worthwhile.

P&O Ports Australia has successfully developed a state-of-the-art port in Mumbai, and has won several contracts for the development of other ports in southern India. Other recent Australian investment in India has come from Kerry Packer - who, earlier this year, took a 10% stake in the Indian telecommunications manufacturer, Himachal Futuristic Communications, taking his total investments in India to over A$600 million - and Rupert Murdoch - who has invested in a number of Indian IT joint ventures and film studios. AMP's engagement with India is growing strongly.  When prominent Australian businesses such as these invest in India, it is a testimony to the attractiveness of the market to Australia.

Some of you may be aware that Jack Welch, the CEO of General Electric of the US visited India last month. I was struck by his comments that GE would be building its largest research laboratory in the world in Bangalore and that it would be critical to GE's worldwide success. He was full of praise for the skilled workforce available in Bangalore and said it was one of the most fertile places for IT talent. That is some recommendation from the CEO of one of the world’s largest companies.

As I said earlier, this has been a particularly significant year for Australia/India relations. Given the current standing of the bilateral relationship, I think that the opportunities for enhanced trading and investment have never been better. I would urge all Australian companies, no matter which sector they are dealing in, to give serious consideration to the existing opportunities and potential opportunities that India offers.

Indian investment in Australia

Of course, economic relations are not a one-way street. We have noted the increasing interest that a number of Indian companies have shown in the prospects for investment in Australia. We welcome that, and indeed look forward to seeing more Indian investment in Australia.

In 1999, India was the fifth largest supplier of travel goods and handbags to the Australian market. It was the fourth largest supplier of clothing, the third largest of pearls and gemstones and the second supplier of textiles. This is a good base on which India can develop its trade with Australia.

Historically, India's attention has been firmly fixed on the United States and Europe. But I hope that we have recently witnessed the start of a process that will see Australia as a major investment destination for Indian companies. Last year, Sterlite Industries bought a copper mine in Tasmania. Satyam has recently opened a branch office in Melbourne. NIT plans to establish a Centre of Excellence in Australia and Indian company Pentasoft Technologies sponsored the Australian cricket team in the recent ICC world championship in Nairobi. We hope the Sydney Olympics, which I understand were well covered by Doordarshan, can further entice Indian business to invest in Australia.

Conclusion

I believe that the foundations are firmly in place for very considerable growth in our bilateral trade. But we all need to work together to ensure that the momentum in developing our bilateral political, trade and economic relations is maintained in the years ahead. Government will play its part, and we envisage senior Australian and Indian trade officials meeting on a regular basis to compare notes on bilateral and international trade issues.

Bilateral trade has shown dramatic growth over the past decade, providing further evidence of the success of the Indian government's market opening policies. It should not be too long before bilateral trade reaches the four billion dollars mark, but the potential for the next decade is enormous.

It's not really sensible to put a figure on potential future trade, but we all know that India is likely to grow into one of the world's major new economies. Nobody represented here today can afford to miss out on that expansion process, and Australia stands ready to contribute wherever it can.

It's been good to have this opportunity to speak about the Australian-Indian bilateral relationship with you today. I'm genuinely excited by the prospects that exist for developing our trade and investment relationship further, and I can assure you that I'll stay interested in future developments in that relationship long after this particular visit has been completed.

Local Date: Saturday, 22-Nov-2008 05:04:29 EST