Speech

Launch of Opportunities in Infrastructure and Resources Sectors in India report

KPMG offices, 147 Collins Street, Melbourne, 10 April 2008

Acknowledgments and introduction

• Mike Moignard, Senior Trade Commissioner, and other Austrade officials;
• Kumar Parakala, KPMG Australia’s National Leader – India Business Practice, and other KPMG representatives;
• Ladies and Gentlemen

Thank you very much for inviting me to launch this report today.

This report – Opportunities in Infrastructure and Resources in India - is a timely and significant document.

• Timely because the Australian Government is committed to raising the trade and economic relationship with India to a new level; and
• Significant because Australian business has the expertise and capacity to pursue the tremendous opportunities that India presents in the infrastructure and resources sectors. 

As the Shadow Trade Minister I signalled from Opposition that a Labor Government would pursue a higher level of engagement and commitment with India.  

Reflecting this, soon after the Rudd Government was elected I visited India as part of my first major overseas visit. 

In addition to meeting with Indian Government Ministers and Indian and Australian business men and women in Dehli I also spent time in Mumbai meeting with the Bombay Chamber of Commerce, as well as representatives from numerous regional chambers in India. 

There is no doubt there are major challenges in seeking to engage with the Indian economy. 

India still has a heavy reliance on subsistence agriculture but also has increasingly sophisticated services and manufacturing sectors. 

It is essential that those two sectors continue to develop –which will require significant improvements to India’s infrastructure - to enable the transition out of subsistence agriculture.

India is experiencing incredible economic expansion––9.2 per cent growth in 2007 and 7.6 per cent over the past five years. 

The IMF’s latest World Economic Outlook released last night suggests GDP growth will still be around 8 per cent this year and next. 

Total trade between Australia and India has been growing by more than 30 per cent on a yearly basis.

India is now Australia’s 9^th largest trading partner and Australia is India’s 10^th largest trading partner.

India is Australia’s fastest growing major export market – making it our sixth largest export market.

During my January visit, I said in a speech to the Confederation of Indian Industry Partnership Summit in Gurgaon, that the rapidly growing level of trade between our two countries reflects two major factors:

• The opportunities a more liberalised international trading system developed under the GATT and WTO framework has provided to our respective countries; and
• Domestic economic reforms undertaken in recent times in both of our countries– Australia’s reform program beginning in 1983 and India’s reform program beginning in 1991.

It has been those two factors that have enabled our commercial sectors to maximise the gains from international trade.

I also made the point in a speech to the Bombay Chamber of Commerce and Industry that there is more to trade policy than international, regional and bilateral trade negotiations – as critical and time consuming as they are for opening up new trade opportunities for business. 

A key goal of the Australian Government is to ensure that trade policy is an integral part of our broader economic policy. 

All arms of economic policy must be working together to drive productivity growth. 

Productivity growth is central to international competitiveness, and international competitiveness is key to a strong and prosperous trade performance. 

Continuous economic reform is therefore fundamental to improving productivity growth and international competitiveness.

This point resonated strongly with the Bombay Chamber who requested that I relay those very same messages to the Indian Government in New Dehli - which I did. 

I make those points because even though Australia and India are at different stages of economic development we are both seeking to compete in the global economy and therefore we both need to ensure we continue with our respective domestic reform agendas.

A key challenge for both of us – and where our respective business sectors can work closely together - is in infrastructure and resource development. 

Infrastructure constraints have undermined Australia’s export performance in recent years. 

The new Government has quickly put in place measures to deal with this including the establishment of Infrastructure Australia which will better coordinate the planning and development of infrastructure in Australia. 

The Indian Government is also focusing closely on its infrastructure needs.

India's Prime Minister Manmohan Singh has called his country's "infrastructure deficit" a vital area of national endeavor. 

As outlined in this report, the Indian Government has identified that to sustain a growth rate of 8 to 9 per cent over the long term significant infrastructure development is required. 

Investments of the order of $US500 billion are expected to take place in the coming years for developing ports, airports, roads, railway and real estate.  

India is still at the take-off point in infrastructure. 

But if the private sector can seize the initiative there is great scope to develop a strong infrastructure base upon which to build an even stronger economy.

Australian business has the opportunity to be part of this new phase in India’s development and this report will greatly assist you in this process. 

The report ranges over mining, oil and gas; roads, ports and airports; building and construction and related material and equipment, special economic zones and even real estate development.

It also has information on the composition of relevant Ministries, key stakeholders, private sector players and contractors.

And it presents its information in a very logical way, describing each of these categories in terms of their current scenario, their future outlook and the opportunities they present for Australian enterprises in India’s burgeoning infrastructure sector.

The Government is committed to taking our relationship with India to a new and higher level.

But to achieve this we need business to advise us on the issues we should pursue with the Indian government to facilitate development of the business relationship. 

This report is an example of government and business working collaboratively in developing our engagement with India.  

Under an MOU signed in July 2006, a number of Austrade-KPMG joint initiatives have already been initiated in India, where both organisations have considerable operations.

Tomorrow, a series of industry briefings will be broadcast nationally by video conference from Austrade Melbourne to provide further details on the opportunities available to Australian industry in India.

And from Monday to Wednesday next week, Senior Trade Commissioner Mike Moignard will join the report’s authors, KPMG’s Arvind Mahajan and Naresh Makhijani, in a series of private meetings with key Australian infrastructure and resources exporters in Sydney, Brisbane and Perth.

Conclusion

The Australian Government through Austrade can be of considerable assistance to businesses seeking strategic partnerships in these enterprises.

The current Austrade-administered Australian Government promotion in India, called Utsav (“Celebrate”) Australia is doing a great job in raising awareness in India of Australian expertise.

It can only add value to Australian infrastructure and resource companies gravitating to the sub-continent.

Adding value is the recent cooperation agreement signed between the Export Finance and Insurance Corporation (EFIC), Australia’s export credit agency, and its Indian counterpart, the Export-Import Bank of India, to help promote trade and investment deals involving Australian and Indian companies.

I commend the Opportunities in Infrastructure and Resources in India report to all Australian businesses keen to pursue these areas of trade with India.

This report will certainly help business take advantage of Australia’s fastest-growing and sixth-largest export market.

It will help us along the road of transforming our commercial relationship with India to a new and broader level.

Thank you.

Media contact: Mr Crean's Office (02) 6277 7420 - Departmental (02) 6261 1555