Four Seasons Hotel Sydney, 19 May 2005

Ninth Australia-India Joint Ministerial Commission Dinner

INTRODUCTION

Honourable Minister Mr Nath, High Commissioners Mr Shukla and Mr McCarthy

Distinguished guests, ladies and gentlemen.

Earlier this afternoon, Mr Nath and I brought the 9 th meeting of our Joint Ministerial Commission to a successful conclusion.

I very much enjoyed our discussions, which ranged over our mutual trade and investment interests.

By the standards generally used to measure the shape of relations between countries - high-level political visits, interaction between communities and business, and trade and investment flows - I would say that Australia-India relations have never been in better shape.

From the work completed today, and from our dealings in the WTO and elsewhere, Mr Nath is someone that I can do business with.

And in my view, our two countries have the capacity to be even greater partners.

Judging by our current export growth, India is responding to this complementarity.

Trade is already in great shape - the latest ABS figures for 2004 show that t otal trade of goods and services between Australia and India was worth A$7.4 billion, placing India 13 th on the list of Australia's trading partners.

Australia's exports of goods and services to India amounted to almost $6 billion and the five-year trend in growth in exports is 24.6 per cent - the highest among our top thirty markets.

While export growth in recent years has been due in large measure to major increases in exports of gold to India, there have also been considerable increases in exports of copper ores, coal and integrated circuits over this period. There are also signs that services trade is picking up, particularly in health, education and tourism.

Investment ties are also growing in importance in the bilateral economic relationship.

Australia is India's 8 th-largest overseas investor, with close to $1 billion approved for around 140 joint ventures.

Apart from resources, sectors of particular interest for Australian companies in the Indian market include infrastructure development, information technology, financial services, retail, and processed food and wine.  

A number of Indian companies have also secured an important place in the Australian market.

Construction continues on the world's largest ammonia plant in the Burrup Peninsula in Western Australia - built with an investment of $630 million by Burrup Fertilisers, financed by India's Oswal Group.

This investment is expected to generate substantial export income for Australia - and very significant returns to the Indian parent company.

Indian companies such as Sterlite, Tata Iron and Steel, and the Birla Group are also investing in Australia's world-class mining industry.

And, of course, representing India's high-tech sector, companies such as Tata consulting, Wipro, Infosys, Polaris, and Pentasoft continue to invest in Australia.

The presence of major Indian companies such as these in Australia is a testimony to the attractiveness of our market, and a vote of confidence in the bilateral trade and economic relationship.

As I have said before, Australia is one of the most open, stable and resilient economies in the world.

Australian GDP growth has outpaced the OECD average in nine out of the past ten years.

Indeed, the OECD's recent economic survey of Australia concludes that the Australian economy has been a model for other OECD countries, in the comprehensive way that structural reforms have been conceieved and implemented.

Given our sustained economic growth, low unemployment, low inflation, low interest rates and high and rising productivity, it is not surprising that more Indians want to do business with us.

And so do others. Australia welcomes foreign investment and business integration. We are host to many firms that are making the most of our rich resources, sophisticated service industry and efficient manufacturing.

In 2004 the Department of Immigration and Multicultural and Indigenous Affairs (DIMIA) created an onshore Sponsored Business Visitor Visa that is business friendly for Indian business people.

This visa allows business in Australia to sponsor short-stay business visitors. The great advantage is that applications can be processed electronically, thus simplifying and accelerating the visa application and issuing process.

The growth in bilateral trade and investment between India and Australia has been part and parcel of a decade of globalisation.

Like Australia, India has undergone a globalising decade of its own. 

As India has looked outwards since the early 1990s, and particularly since 1993, the Indian economy has grown more strongly than during any previous period. 

The last decade's structural reforms have helped India become one of the world's fastest growing economies, a fact that has caught the eye of the international community including Australia.

The Indian economy is vast: a population of over 1 billion with an annual GDP growth rate that has averaged around 6 per cent since 1991, climbing to 8.2 per cent last financial year.

And there have been real benefits to the Indian people: higher growth rates and lower inflation have propelled stronger increases in per capita income, leading to rises in the standard of living.

This stronger real income growth was in no small part due to industrial reforms, enhanced trade and greater foreign investment.

As a result, the bundle of goods the Indian consumer can afford to buy is now greater than ever before. 

India's strengths lie in its large reserve of skilled labour, an established corporate sector and industrial base, thriving financial institutions and vigorous entrepreneurial business sector.

India is also the world's largest democracy, with widespread use of English, comparable legal and administrative systems to Australia and a strong commitment to education. Australia and India are natural partners - like having Ponting and Tendulkar on the same team, we'll get many runs together.

The future is promising, not least because the man who took up the mantle of government in 2004, Prime Minister Manmohan Singh, is generally regarded as the architect of India's reform program over a decade ago.

By embracing globalisation and the opportunities for economic growth it can bring, both our countries have achieved real gains for our communities. 

This presents our two countries with genuine opportunities, both for engagement in the global economy, and for our bilateral relations. 

This is certainly evident in the links between Australia's and India's Information and Communications Technology industries.

This relationship has been strongly reinforced with the signing of a Memorandum of Understanding and the formation of the Australia India Information Industries Business Network.

Many Australian companies have explored the Indian market and some of them have set upa presence in India recognising complementarity in skill and cost structures. Likewise, Indian firms are beginning to invest in Australia.

Australian companies have the skills in hi-tech sectors and value added ICT solutions to complement the impressive software development and implementation skills of Indian companies.

Joint ventures and collaborations between such companies present tremendous opportunities for developing novel products and services and joint bidding for projects in global markets.

For example, in October 2004, India's Tata Consultancy Services announced the extension of its existing development in Australia to include a SAP centre of excellence in Melbourne.

SAP is the largest inter-enterprise software company and the world's third largest independent software supplier.

The centre will support the activities of more than 1200 world-wide SAP consultants working with Tata.

In addition to the ICT sector, high growth has also been observed in the areas of education and tourism.

Overall enrolments of Indian students were around 21,000 in 2004, with

India the fourth-largest source of international students - both representing significant recent growth.

Australia is the third most popular destination for Indians studying abroad - already Australia's top off-shore source of post-graduate enrolments, and the top-ranked source of Computing Science and Engineering students.

I believe the prospects for sustained growth of the Indian economy over the medium term and a rapidly-growing, young population will see continued demand for international education services.

And the surging education relationship inevitably will enmesh the wider Australian and Indian societies with one another.

The inauguration of Qantas direct flights to Australia from Mumbai in September 2004 further stimulates people-to-people links, with multiplier effects on our future trade and tourism prospects.

India is already Australia's second-fastest growing tourism market and the number of Australian visitors to India is also increasing - with an impressive increase in numbers last year.

The Australian Tourism Forecasting Committee expects the number of Indian visitors to Australia to continue to grow strongly.

New opportunities also lie in India's booming entertainment industry.

Total revenues of the Indian film industry in the year 2003 were US $1 billion.

Bollywood, the world's largest producer of films, spends millions of dollars in foreign location shooting and post-production work.

Australia is well-placed to meet this niche demand, with its unspoilt land and sea-scapes, magnificent beaches and iconic backdrops, as well as its modern technical facilities.

Since 1998, 40 Indian films have been shot in Australia. There is room for growth not only in production, but also software and post-production services.

The continued expansion of India's higher-income consumer class to a forecast 110 million by 2006 should assist the further diversification of Australian goods and services exports.

In particular, the retail and food sectors (including wine) are experiencing rapid growth.

Australia has sold over 50 categories of wine and processed food products to India over the past year. This is expected to grow further as a result of a recent Indian Food Buyers Mission to Australia.

And when the Commonwealth Games travel from Melbourne in 2006 to New Delhi in 2010, Australia will be well-placed to share expertise developed in event management, construction and sports technology products and services.

I have outlined what we are already doing together. Today, Mr Nath and I talked about ways to further strengthen the framework for our future bilateral commercial engagement with India.

The Joint Ministerial Commission is a key opportunity to find ways to do this.

And I am delighted with the results of today's talks - where Minister Nath and I agreed to task our officials with developing a Trade and Economic Framework (TEF) to support the further expansion of economic and commercial ties.

The basic objective of the proposed TEF would be to set the direction for the facilitation and future development of the bilateral trade and economic relationship. A key aim is to boost cooperation and enhance policy dialogue on issues of mutual interest.

This important new step and the wider JMC process are underpinned by an expanding and deepening range of official dialogue, including the Joint Working Group on Energy and Minerals, the Joint Business Group on Natural Fibres and Textiles, and the Joint Science and Technology Committee, as well as the Joint Working Groups on Tourism and Education.

These dialogues have allowed India and Australia to lay the groundwork for better understanding of each other's perspectives and policies, to identify and take advantage of synergies in experience and expertise, and look for new areas of cooperation.

As I have discussed with Minister Nath today, a successful and ambitious conclusion to the WTO Doha Round remains Australia's highest trade priority.

We agree that ministerial engagement will be extremely important this year.

We also agree that ongoing cooperation between the G20 group of developing countries of which India is a member and the Cairns Group which Australia chairs will be equally important. Both groups are usefully maintaining pressure on both the EU and US to ensure they demonstrate the flexibility and leadership needed to get an acceptable outcome this year.

I would like to take this opportunity to express my appreciation to Minister Nath for the vital role he has played in the group of Five Interested Parties in the agriculture negotiations - the group that played such a key role during the negotiations in Geneva to finalise a Framework Package in July last year, and his ongoing commitment to the process and participation in informal Ministerial meetings at Davos, Mombasa and Paris.

The Round is crucial for developed and developing countries alike - with the least developed countries of the world deriving 70 per cent of their income from exports from the agricultural sector.

Recent World Bank analysis suggested that if all regions removed all protection in agriculture and food, the global gains by 2015 would amount to around $265 billion, with over half of these gains going to developing countries. Analysis has also repeatedly shown that the benefits of liberalisation will be highest if reform is undertaken across all three pillars - domestic support, market access, export competition - and across all countries.

This is why we must live up to the expectation set out in the Doha mandate and realise the far-reaching reform that is needed to ensure we move to a freer, more equitable agricultural trading system. This is what our farmers in both India and Australia expect of us.

Enhancing the bilateral trade relationship is in keeping with the fundamental interests of the two countries and is conducive to the stability and security that our governments pursue for our people, our region and globally.

We have a rich legacy of common experience to draw upon as inspiration for the task that lies ahead of us.

I look forward, with confidence, to further growth in our bilateral relationship which will be to the benefit of our peoples in the years ahead.

Thank you.