25-30% increase in bilateral trade in sight: C. Sarat ChandranC. Sarat Chandran, Director, Indo-Australian Chamber of Commerce (Chennai) shares his views on bilateral trade between the two countries with BE

Q) Apart from coal, gold and copper, which sectors are being emphasised by Australia for export to India?

A) The main sectors are food and wine. Under food there are products such as confectionery and bakery items, as well as, dairy products. Wine is an area where Australia is looking to increase exports as it believes that the wine market has good potential for growth in India. Apart from finished goods, Australian technology is also being exported and this is an area that India can vastly benefit from.

Q) What about emerging export areas from India to Australia?

A) The largest areas are of course Information Technology (IT) and Business Process Outsourcing (BPO). Another major area is automobile components, in which India is doing good business. India’s twin advantages of skilled labour, as well as, low cost labour have led to booming exports in these two industries. An export industry, which is slowly building up is textiles, especially home furnishings. These are industries in which India excels and does the largest amount of trade, not only with Australia, but other foreign countries.

Q) Bilateral trade between India and Australia grew by 55 % last year. What is the target for 2010-11?

A) Last year, the bilateral trade amounted to about USD 15 billion - USD17 billion. This is not very high and therefore I think that this can definitely increase. I expect that this year it may increase by about 25-30%. However, this bilateral trade relationship is a bit skewed as Australian exports to India are higher than Indian exports. There has been growth in trade between the two countries because of investment and not because of increase in the quantities of goods and services traded. The focus is now more on exchanging services such as IT, BPO and educational consultancy rather than goods. India has also been investing in copper mines, automobile components and food in Australia and this is where there is an immense scope for expansion.

Q) Rajeev Ranjan, Principal Secretary, Industries Department, said that a new mineral policy would soon be announced. How will this affect imports to Australia?

A) I think rather than a new mineral policy, what will be more helpful for the mining industry in the long run is the opening up of the Indian mining and financial services. The change in FDI will enable Australia to invest in India, which will be useful for us as Australian technology can help to modernise the Indian mining industry. Thus, in the long run, instead of focusing on increasing exports, India will gain by first importing foreign technology, learning to apply this technology, eventually developing its own and then exporting superior quality products to other countries.

Q) Peter Varghese, the High Commissioner of Australia, was hopeful that a Free Trade Agreement between the two countries would soon be agreed upon. Which are the sectors that can benefit from such an agreement?

A) As Australian imports from India are low now, India will not gain significantly. However, in the long run, the Indian market will become more open because of such an agreement, thus encouraging investments from Australia. For example, many major Australian banks already have a presence in India – ANZ, National Bank of Australia and others. Their Indian branches can, and some have, started supporting their Australian offices. Thus, foreign skill and expertise will eventually help us boost export.

Q) In your opinion, how will the present decision of the Indian government to allow foreign universities in India benefit Australian educational institutions and vice versa?

A) Some Australian universities are world-class and would certainly like to open campuses in India. They will want to take advantage of the large student populations in countries such as India and China. Only a small percentage of the total student body can afford to study abroad. However, by opening campuses here, Australian universities can capture a larger market. Their established reputation will help them attract students here. I also think there is a huge potential in the area of vocational training. The service industry is rapidly growing in India and young people will need vocational training to supplement their theoretical learning to become employable. Australia specialises in various areas of vocational education such as fashion designing, hospitality, mining and construction, among others.

Q) Has tourism to Australia been affected after the series of racial attacks on Indian students?

A)This has adversely affected the number of Indian students going to Australia for education as families are obviously worried and there are other options such as Singapore, Canada, Britain and USA. This has not affected trade and tourism as the problem has largely been restricted to Indian students and not those Indians who have settled there. This is a passing phase and our bilateral relationship will continue to grow. Australia will take measures to prevent future attacks as it has a huge stake in India. At the end of the day, Indian and Chinese students make up a large proportion of Australia’s lucrative foreign students.