Address to the AFR India Business Summit 2018
Thank you very much, the Australian Financial Review, for your engagement and support and the opportunity to provide the opening address here at the AFR India Business Summit.
Can I begin by paying my respects to the traditional custodians of the Sydney region, the Gadigal people of the Eora nation, and acknowledge all of Australia's Indigenous people and their elders.
Let me also thank many who helped us to be here today – Peter Varghese and his work. I also want to acknowledge the officials from the Department of Foreign Affairs and Trade as well as the support from India, parliamentary colleagues and friends, such as the co-chair of the Australian Parliamentary Friends of India, Hindi-speaking Julian Leeser.
Can I particularly welcome our Indian friends living here and visiting, welcome all.
One thing people in this room have in common is an appreciation of the potential and the reality of the economic relationship between our two countries.
India offers Australian business more potential growth opportunities over the next 20 years than any other single market.
A burgeoning middle class, combined with strong political and business leadership, is transforming India's economy.
Many Australian businesses still tend to think of the Indian economy as relatively closed. Yet the Indian economy of today is vastly different from the one of the 1990s.
Today, India's average applied tariff is one-tenth of what it was in 1990.
Total trade as a portion of India's gross domestic product was 13 per cent in 1990 yet today total trade stands at 40 percent of total GDP, broadly the same as in Australia.
All signs are pointing towards the continuation of India's integration into the global economy. If India were to grow annually at 6 per cent out to 2035 – and I think growth has been between 6 and 8 per cent since 2013 – its economy would grow more than twice as large as it currently stands in 2035 as compared to last year.
Central to that growth is – and we encourage – continued liberalisation efforts: continued opening of India's economy and continued growth of opportunities and liberalisation engagement such as through Regional Comprehensive Economic Partnership discussions.
Skill India and Digital India are two critical drivers and indeed my counterpart, Suresh Prabhu, shared with me this week some of the exciting things India is doing in the digital space. Skill India and Digital India are economic drivers that are being supported by, for example, GST and bankruptcy law reform, providing new business confidence to invest in India at the same time as Indian companies move up the value chain.
India offers great opportunities for trade and people in both our countries already understand the rich tourism offerings and education experiences in one another's country.
That's why I want more Australians – all Australians – to better understand India, to update their perceptions of India and to imagine where Australia's relations with India can take us.
Australia continues to see record spending and arrivals of people from India. India is predicted to be worth between $1.9 billion and $2.3 billion towards our tourism market by 2020. In September this year, I launched Tourism Australia's latest UnDiscover Australia campaign with India being a key market in that campaign. Tourism Australia and their partners are using the UnDiscover campaign to leverage the upcoming Indian cricket team's tour of Australia, offering some great airfares and deals.
In India, Tourism Australia is partnering with a number of airlines including Air India, Jet Airways and Qantas, as well as a number of travel agents.
Importantly, recognising the relationship needs to be two-ways, Australia is also partnering with a number of airports to sponsor the 2019 CAPA India Aviation Summit in Delhi.
Our Government is committed to working with Australia's business community to lead this step-change in our collective understanding of India and the business opportunities on offer.
I know there is a delegation of Australian superannuation funds visiting India next week – the second in the space of three months. Familiarisation visits such as these help Australian investors to form a balanced view of India's economic prospects and relay directly to the Indian system the priorities, the risk appetite and the return expectations of Australian investors.
I am also pleased that India's quasi-sovereign National Investment and Infrastructure Fund has become a regular visitor to our shores.
These exchanges demonstrate the great capacity for us to drive the investment between our two nations.
It is time for a deeper look at each other. That is why the timing of this Australia-India Council and AFR Summit is so important.
Today, our Prime Minister Scott Morrison will announce the Australian Government's response to Peter Varghese's India Economic Strategy and he will be with you later today. It is a vision that looks at today and out to tomorrow, beyond election cycles and AGMs over more than the next decade and a half. Our Government will be supporting Peter's 10 short-term and 10 medium-to-longer term priorities in principle and taking specific actions. This is a seminal piece of work that will genuinely act as a roadmap for the journey ahead in our bilateral relationship. And Australia is in it for the long haul.
We want this to be a turning point in our economic engagement. Today, Australia's Prime Minister and India's President, the first to visit Australia in our 69 years of diplomatic relations, will share the stage with some of Australia's most influential corporate leaders.
All the big issues are on this Summit agenda:
- the drivers of Indian economic growth, the dynamism in its business environment, the impact of macro-reforms and why the time is right for accelerating our engagement;
- India's large-scale urbanisation, and the world's-largest contribution to global energy demand forecast over the next two decades; and
- the prospects for Australian investment in India, and strategies for targeting investment within India's diverse collection of states.
As with any overseas market, but perhaps even more so for vast and diverse India, knowing the right people can make all the difference.
This is where our deep and growing education relationship with India bodes so well for a rich and vibrant future.
More than 75,000 Indian students enrolled in Australian education institutions last semester alone and this has enormous potential for positive impact for the future.
75,000 students in one semester: that's a lot of friendships, a lot of contacts, a major brains trust and a cultural understanding that will transcend our business, commercial, cultural, governmental, diplomatic and security contacts and relations for years to come.
The education sector will rightly be discussed in detail today. It is important to note our Government's commitment to the education relationship with India has been well-supported over the last decade through the Endeavour Scholarship Program and the New Colombo Plan. We believe the education partnership is one that is best underpinned by two-way movement, by ensuring Australian students equally increase their understanding of and exposure to India. That is why with direct government financial assistance, we've supported more than 5,000 Australian students to study in India as well as providing targeted support for around 700 Indian students to study in Australia.
Beyond the benefits of two-way international student flows, education is also about forging partnerships for skilling India's workforce, a priority that stands at the heart of Prime Minister Modi's economic agenda – skilling the workforce, alongside collaboration on science and innovation, and partnering across industry to commercialise joint research. I saw some of this collaboration first-hand in my visit to India as Minister for Education and Training in June last year. Then in June this year I also had this discussion with India's Human Resource Development Minister Prakash Javadekar, who led a delegation to the 4th Australia India Education Council meeting in Adelaide, we saw the signing there of three important MOUs between:
- Western Sydney University and India's Centurion University;
- Joint PhD agreement between Curtin University and the Indian Institute of Technology Guwahati; and
- Deakin University and the Central University of Jammu.
And Australia announced it would contribute a further $5 million to the Melbourne-based Australia India Institute.
Already, our research collaboration is substantial – with 6,574 joint research publications in the last three years. And that's set to grow, especially in India's top areas of research: engineering, medical and health sciences, information and computing, and other sciences.
One example of a company that has invested in Indian markets for overseas education is IDP Education.
IDP, an ASX-listed company half owned by Australian universities, facilitates student placement in Australia and other English-speaking countries.
IDP has ensured that it reaches out directly into India operations, starting in Delhi in 1995. It weathered the hard times of the downturn in 2009, but today engages across 32 student offices with more than 900 staff.
IDP has succeeded at scale in India because it has taken a long-term approach to providing a service highly valued by Indian students.
That is, expertise and individual care in connecting them with the right course in Australia or elsewhere that will help them achieve their global education and career aspirations. At this summit we will hear more about IDP from CEO Andrew Barkla this afternoon.
Education is one of the standout areas in which our economies are complementary. And our support can fuel and drive growth of both of our economies.
Another area is energy.
It will be fascinating to hear Sanjeev Gupta and others exploring the potential in steel and renewables later today.
As background, let's remember the broad outline of our coal and steel story.
Coking coal comprises over 50 per cent of our goods exports to India, and Australia is on track to supply increased quantities of quality coking coal for steel making in support of the Make in India policy.
India's low level of steel intensity – only around one third of the world average – points to rising demand as its economy grows out to 2035.
By then, we project that over 90 per cent of India's coking coal demand will be met by imports.
I was pleased to launch a report by the Minerals Council of Australia recently focusing on economic opportunities in India, including in mining technologies and services to make mining safer and more efficient, to again provide that opportunity for mutual benefits whereby Australian service skills and expertise is utilised to help advance and develop India's planning opportunities.
Australia is well positioned to meet India's continued strong import demand.
In terms of the minerals sector, NSW-based Whitehaven Coal, Australia's largest independent coal producer, has found a growing market for its high-quality coking coal for India's steelmaking. Last year the Indian market accounted for 31 per cent of the company's total sales.
The expansion of Whitehaven and other miners' assets in NSW and elsewhere is continuing to drive employment during the export phase of the mining boom. Whitehaven alone employs more than 1,500 people in the NSW North West region where its operations are centred. These are high-skilled, high-paying jobs, which are helping to grow and sustain regional communities in Australia. Their imports into India are of course driving growth and opportunities in India's economy as well.
We're also investing in understanding India's east coast gas market through collaboration with Brookings India and supporting India in its pursuit of renewables, including through their hosting of the International Solar Alliance.
There is also significant potential for growth in agricultural trade. I was pleased to launch with my colleague David Littleproud, our Minister for Agriculture and Water Resources, a report by Western Sydney University Professor Brajesh Singh at Parliament House in Canberra earlier this year and I understand Professor Singh is now in India engaging in aspects of his report.
As a reliable supplier of world-class, quality agricultural produce, with absolutely world-leading technology, productivity, knowledge and skills, Australia is well-placed to support India's food security as its demand for increased quantities and varieties of food grows. But also to ensure our skills and knowledge helps to support increased productivity and production across India's agricultural market.
The five-fold increase in the value of Australia's almond exports to India in the last decade provides a taste of what's possible.
But these days complementarity is not just about the fit between trading partners' supply and demand, it's also about collaboration in areas of mutual interest and building on shared strengths.
Innovation will drive the next wave of economic growth, and as I've mentioned, we're seeing valuable outcomes from science and technology collaborations with India.
In the 2018 Budget, our Government committed a further $10 million over four years to our joint research fund, the Australia-India Strategic Research Fund.
Australia also has experience to share in improving international competitiveness and the environment in which businesses operate – we've learnt a thing or two from our 27-year journey of uninterrupted annual economic growth and we are eager to share those experiences with a country like India to help ensure economic growth delivers the maximum benefits available.
Elevating the examples of Australians who are doing well in India will be important to help incentivise and motivate others to follow their lead and to realise the full potential of this relationship.
Everyone has to work out their own strategy for entry into India, to stand out in what is a crowded marketplace, and to identify how best to build long-term relationships.
But studying the lessons from those who have succeeded is a great way to inspire others.
For business software provider Atlassian took the next step after its success in the United States by opening a new office in Bengaluru.
Atlassian has ambitions, and is investing in them, to build its Indian operations to match its other global offices.
The Future Fund's success in India is also instructive.
The 7.7 per cent returns it achieved over its first 10 years of operation in India illustrate the benefits of investment and diversification towards this new and young growth market.
Its India strategy and achievements also helped to burnish its global reputation as a fund that is able to pick value and exceed market benchmarks by investing over the long-term. It's a demonstration of the mutual benefits Australian investors yielding strong returns by investing in the growth and development of India's economy.
And just in the last month we've seen Australian powerhouse WorleyParsons undertake the largest capital raising on the ASX for a foreign acquisition – buying the engineering, chemicals and resources division of Jacobs Engineering Group. In the process WorleyParsons will increase their presence in India to almost 4000 people providing engineering and project delivery services to the critical and growing energy and resource sectors. This is yet another alignment of Australian skills and expertise with Indian potential, driving growth in core industries.
Useful as these and other examples of Australian success are, nothing beats hearing from experts born and bred in the market. And today we are going to hear from many of those.
Deepak Bagla, CEO of Invest India will be able to offer the latest market intelligence on India's foreign investment regime.
We will hear from the President and Director-General of one of India's three chambers of commerce, the Confederation of Indian Industries – closely attuned to the international strategies of many Indian companies, both small and large.
Sharing these experiences will help all of us better understand some of the complexities of India's markets and the opportunities therein.
I am confident this Summit will provoke Australian businesses to actively consider how to plug into India's growth story and help them inform and refine their own international strategies.
Our business, our economy, and our government will be driven and informed by the comprehensive response that our Prime Minister releases today. And we warmly welcome the commitment Prime Minister Modi has made to see the complementary strategy in return developed in India for India's economic engagement with Australia.
These signs show we approach this relationship maturely, with strategy, planning, foresight and a commitment for the long haul.
India's scale alone is enticing. But the complexities are challenging. However there are many complementarities between our economies and the many and thriving personal connections between our people can set Australia apart.
As we'll hear from the Prime Minister later today, our Government will get behind comprehensive, practical initiatives, a framework that will bring a strategic focus to deliver a deeper, long-term economic partnership.
I thank you all, for your commitment to the strength of this partnership, to ensuring not only its resilience, but indeed its vibrancy in the future years ahead.
Vibrant India is a great partner and friend to Australia and vibrant India is going to be an even closer partner and friend of Australia in the years ahead thanks to the steps being taken here today.
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