From UPSC perspective, the following things are important:
Prelims level: CCEA, ECTA
Why in the News?
A stocktake visit for the India-AustraliaComprehensive Economic Cooperation Agreement (CECA) recently concluded in New Delhi.
Key Takeaways from the Meet
The discussions covered a wide range of critical aspects of the CECA, including:
Trade in goods and services
Mobility and agri-tech cooperation
Market access modalities that align with India’s food security objectives.
Both sides emphasized their shared commitment to ensuring that the CECA produces meaningful benefits and delivers a balanced outcome for both nations.
The discussions have opened up pathways for enhanced collaboration in areas such as agricultural innovation, market access, and supply chain resilience.
About India-Australia CCEA Negotiations:
CECA is a comprehensive trade agreement between India and Australia.
More comprehensive than the earlier India-Australia Economic Cooperation and Trade Agreement (ECTA) , which is a limited trade agreement in force since December 2022.
Negotiations for CECA began in May 2011, suspended in 2016, and re-launched in 2021 after concluding the ECTA.
So far 10 rounds of negotiations have taken place.
Key Features of CECA:
Covers goods, services, digital trade, government procurement, and Rules of Origin/Product-Specific Rules Schedule.
New areas: competition policy, MSMEs, innovation, agri-tech, critical minerals, sports.
India-AU Trade Statistics:
2023-24:
India’s imports from Australia fell by 15% to USD 16.15 billion.
India’s exports to Australia rose by 14.23% to USD 7.94 billion.
Australia is India’s 13th largest export destination and 14th largest import source.
PYQ:
[2017] ‘Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and:
(a) European Union
(b) Gulf Cooperation Council
(c) Organization for Economic Cooperation and Development
(d) Shanghai Cooperation Organization
From UPSC perspective, the following things are important:
Mains level: Indian students in developed countries;
Why in the News?
Australia’s Education Minister announced a plan to establish a National Planning Level (NPL) that will cap the number of new international students at 2.7 lakh for the 2025 calendar year, subject to parliamentary approval.
What does the 2025 Cap entail?
Australia plans to introduce a cap on new international students at 2.7 lakh for the calendar year 2025.
Distribution of Seats:
Publicly funded universities: 1.45 lakh students (maintaining 2023 levels).
Vocational education and training (VET) sector: 95,000 new students.
Other universities and non-university providers: 30,000 students.
Certain categories, such as school students, research degree pursuers, students in standalone English language courses, government-sponsored scholars, and students from specific regions (e.g., Asia Pacific), are exempt from the cap.
Trends in Indian Student Enrollment in Australia:
In 2023, Australia admitted 5.61 lakh international students, in 2022, it saw 3.88 lakhs, in 2021, it had 2.82 lakhs, in 2020, it had 3.96 lakhs, and in 2019, it saw 5.19 lakh students.
2024 Projections: Between January and May 2024, the total student commencements reached 2.89 lakh, with additional intakes expected later in the year, possibly surpassing 2023 levels.
Five-Year Trend: The 2025 cap will result in the lowest intake in the past five years, considering the effects of the COVID-19 pandemic on previous years’ admissions.
Possible Impacts on Indians Since Last Year:
Enrollment Numbers: The number of Indian students in Australia saw a decline from 126,487 in 2023 to 118,109 in 2024.
This comes on the back of moves by the Australian government to curb migration over the past six months, including higher IELTS band score requirements and the Genuine Student Test for applicants.
Universities, especially the Group of Eight (Go8) research-intensive universities, have criticized the capping as a “bad policy” that will adversely impact them.
Rising Costs: The Australian government increased the visa processing fee from AUD 710 to AUD 1,600 (approximately Rs 40,524 to Rs 91,321) as of July 1, 2024. This could deter prospective applicants due to financial constraints.
Way Forward:
Increase Scholarships and Financial Aid: The Australian government and universities should offer more scholarships and financial aid packages to offset the higher costs and attract international students, particularly from India.
Strengthen Bilateral Education Ties: Enhance collaboration between Australian and Indian educational institutions to create joint programs and exchange opportunities, ensuring a steady flow of students despite the cap.
From UPSC perspective, the following things are important:
Prelims level: NA
Mains level: India-Australia Relations, Role of Indian Diaspora
Central Idea
PM Modi addressed a community event in Sydney, emphasizing the strong foundations of trust and respect between India and Australia.
He credited the Indian diaspora for the success of this relationship.
The event aimed to strengthen cultural ties and was attended by over 21,000 people, including Australian PM Anthony Albanese.
India-Australia Relations: A Backgrounder
The India-Australia bilateral relationship has undergone evolution in recent years, developing along a positive track, into a friendly partnership.
The two nations have much in common, underpinned by shared values of a pluralistic, Westminster-style democracies, Commonwealth traditions, expanding economic engagement etc.
Several commonalities include strong, vibrant, secular and multicultural democracies, free press, independent judicial system and English language.
Historical Perspective
Early colonization: The historical ties between India and Australia started immediately following European settlement in Australia from 1788.
A penal colony: All trade, to and fro from the penal colony of New South Wales was controlled by the British East India Company through Kolkata.
Diplomatic ties: India and Australia established diplomatic relations in the pre-Independence period, with the establishment of India Trade Office in Sydney in 1941.
Expansion of ties: The end of the Cold War and simultaneously, India’s decision to launch major economic reforms in 1991 provided the first positive move towards development of bilateral ties.
Various dimensions of ties
[A] Political partnership
Both countries are members of-
G-20
ASEAN Regional Forum (ARF),
IORA (Indian Ocean Rim Association),
Asia Pacific Partnership on Climate and Clean Development,
East Asia Summit and
The Commonwealth
QUAD (Quadrilateral Security Dialogue)
Australia has been extremely supportive of India’s quest for membership of the APEC (Asia Pacific Economic Cooperation).
Australia wholeheartedly welcomed India’s joining of the MTCR (Missile Technology Control Regime).
[B] Trade and Economy
5th largest trade partner: India is the 5th largest trade partner of Australia with trade in goods and services.
Huge trade volume: Two-way trade between India and Australia was worth A$ 24.3 billion ($18.3 billion) in 2020, up from just $13.6 billion in 2007, according to the Australian government.
Uranium exports: After a series of attempts, in 2016, Australia opened the door for uranium exports to India.
R&D: An Australia-India Strategic Research Fund (AISRF) which was established in 2006, supports collaboration between scientists in India and Australia on cutting-edge research.
[C] Cultural ties
P2P ties: There is a longstanding people-to-people ties, ever increasing Indian students coming to Australia for higher education.
Bond over cricket and tourism: Growing tourism and sporting links, especially Cricket and Hockey, have played a significant role in further strengthening bilateral relations between the two countries.
Skilled workforce: India is one of the top sources of skilled immigrants to Australia.
Indian students: The number of Indian students continue to grow with approximately 105,000 students presently studying in Australian universities.
Diaspora: After England, India is the second largest migrant group in Australia in 2020.
[D] Strategic Partnership
In 2009, India and Australia established a ‘Strategic Partnership’, including a Joint Declaration on Security Cooperation which has been further elevated to Comprehensive Strategic Partnership in 2020.
The Mutual Logistics Support Agreement has been signed during the summit that should enhance defence cooperation and ease the conduct of large-scale joint military exercises.
There is a technical Agreement on White Shipping Information Exchange.
Both nations conduct bilateral maritime exercise AUSINDEX. In 2018, Indian Air Force participated for the first time in the Exercise Pitch Black in Australia.
Foreign and Defence Ministers of both countries agreed to meet in a ‘2+2’ format
The first-ever Quad Leaders’ Virtual Summit held on 12 March 2021 saw the participation of Prime Ministers of India, Australia, Japan and President of USA.
A Civil Nuclear Cooperation Agreement between the two countries was signed in September 2014 during the visit of then PM Tony Abbott to India.
Significance of the ties
COVID Management: Australia is one of the few countries that has managed to combat COVID-19 so far through “controlled adaptation” by which the coronavirus has been suppressed to very low levels.
STEM: From farming practices through food processing, supply and distribution to consumers, the Australian agribusiness sector has the desired R&D capacity, experience and technical knowledge.
Natural resources: Australia is rich in natural resources that India’s growing economy needs. It also has huge reservoirs of strength in higher education, scientific and technological research.
Alliance with US: The two countries also have increasingly common military platforms as India’s defence purchases from the US continue to grow.
Affinity with ASEAN: Australia has deep economic, political and security connections with the ASEAN and a strategic partnership with one of the leading non-aligned nations, Indonesia.
Containing China: The Indo-Pacific region has the potential to facilitate connectivity and trade between India and Australia. Both nations can leverage their equation in QUAD to contain China.
International cooperation
Support at UNSC: Australia supports India’s candidature in an expanded UN Security Council.
APEC: Australia is an important player in APEC and supports India’s membership of the organisation. In 2008, Australia became an Observer in SAARC.
Some irritants in ties
Trade imbalance: India’s trade deficit with Australia has been increasing since 2001-02 due to India-Australia Free Trade Agreement. It is also a contentious issue in the ongoing RCEP negotiations which India left.
High tariff on agri products in India: India has a high tariff for agriculture and dairy products which makes it difficult for Australian exporters to export these items to India.
Non-tariff barriers in Australia: At the same time, India faces non-tariff barriers and its skilled professionals in the Australian labour market face discrimination.
Visa Policy: India wants greater free movement and relaxed visa norms for its IT professionals, on which Australia is reluctant.
Future of QUAD: Australian lobby has sparked speculation over the fate of the Quadrilateral Consultative Dialogue (the ‘Quad) involving India, Australia, Japan and the United States.
Nuclear reluctance: Building consensus on non-nuclear proliferation and disarmament has been a major hurdle given India’s status as a nuclear power.
Racism against Indians: Increasing Racist attacks on Indians in Australia has been a major issue.
Way forward
Upgradation of 2+2 format: It is prudent too for New Delhi and Canberra to elevate the ‘two plus two’ format for talks from the Secretary level to the level of Foreign and Defence Ministers.
Removal of trade barriers: Both nations need to resolve disputes at the WTO with regard to the Australian sector can act as a serious impediment.
Balancing China: An ‘engage and balance’ China strategy is the best alternative to the dead end of containment.
From UPSC perspective, the following things are important:
Prelims level: NA
Mains level: India and Australia growing relationships
Central Idea
Prime Minister Narendra Modi’s upcoming visit to Australia highlights the significance India attaches to its bilateral relationship with Australia, despite the cancellation of the Quad Summit meeting in Sydney. The transformation of this relationship over the past decade, coupled with its broad bipartisan support in Australia, demonstrates the establishment of a new chapter in India-Australia ties.
India-Australia Relations: A Backgrounder
The India-Australia bilateral relationship has undergone evolution in recent years, developing along a positive track, into a friendly partnership.
The two nations have much in common, underpinned by shared values of a pluralistic, Westminster-style democracies, Commonwealth traditions, expanding economic engagement etc.
Several commonalities include strong, vibrant, secular and multicultural democracies, free press, independent judicial system and English language.
Historical Perspective
The historical ties between India and Australia started immediately following European settlement in Australia from 1788.
All trade, to and fro from the penal colony of New South Wales was controlled by the British East India Company through Kolkata.
India and Australia established diplomatic relations in the pre-Independence period, with the establishment of India Trade Office in Sydney in 1941.
The end of the Cold War and simultaneously, India’s decision to launch major economic reforms in 1991 provided the first positive move towards development of bilateral ties.
What is the Significance of this upcoming visit?
Strengthening Bilateral Relations: The visit reaffirms the commitment of both India and Australia to further strengthen their bilateral relationship. It provides an opportunity for high-level engagements, discussions, and collaborations on various issues of mutual interest.
Enhancing Economic Cooperation: The visit can pave the way for boosting economic cooperation between India and Australia. It provides a platform to explore new avenues for trade, investment, and technological collaboration, benefiting both economies and creating business opportunities.
Showcasing Commitment to the Indo-Pacific Region: Prime Minister’s visit to Australia will demonstrates the commitment of both countries to the Indo-Pacific region’s peace, stability, and development. It reinforces the role of India and Australia as significant stakeholders in the region.
Collaboration on Strategic and Security Issues: The visit presents an opportunity to discuss and collaborate on strategic and security issues, including maritime security, counterterrorism, cybersecurity, and defense cooperation. This will contribute to regional stability and address common security challenges.
Promoting People-to-People Connections: People-to-people interactions and cultural exchanges are crucial for fostering closer ties between nations. Prime Minister Modi’s visit will promote people-to-people connections, strengthen the Indian diaspora’s engagement, and enhance cultural understanding between India and Australia.
The growing partnership between India and Australia
Enhanced Bilateral Engagements: The frequency of high-level visits and interactions between the leaders of India and Australia has increased, showcasing the importance both countries place on their bilateral relationship.
Multilateral Collaboration: India and Australia collaborate closely in various multilateral forums such as the Quad, G7, East Asia Summit, G20, and the Indian Ocean Rim Association. They address important regional issues, including maritime domain awareness, supply chain resilience, climate change, and food and energy security.
Strategic Cooperation: Both nations recognize the need to build secure and resilient supply chains. They focus on strategic areas such as clean energy, electric vehicles, semiconductors, aerospace, and defense, fostering collaboration and joint initiatives.
Space Collaboration: Space cooperation has gained prominence in the India-Australia partnership. Australia participates in India’s Gaganyaan Space Programme, and the International Space Investment grants program encourages collaboration in the space sector.
Educational Ties: Australia is a preferred destination for Indian students, with a large number of Indian students studying there. Efforts are being made to address challenges related to student mobility, visa backlogs, and research collaboration, strengthening educational ties between the two countries.
People-to-People Linkages: Cultural exchanges, diaspora connectivity, and people-to-people contacts play a crucial role in strengthening the partnership. Initiatives like the opening of a new consulate in Bengaluru and the establishment of a center for Australia-India relations in Sydney contribute to fostering cultural linkages.
Economic Cooperation: The focus is on expanding economic ties and trade relations. Efforts are being made to increase the current trading partnership, setting clear targets to elevate it by 2030. Comprehensive Economic Cooperation Trade Agreement discussions are underway to deepen economic cooperation.
Regional Stability: India and Australia, along with other Quad members, work together to ensure peace, stability, and prosperity in the Indo-Pacific region. They address regional challenges and maintain a rules-based order.
Counterbalance to China: The India-Australia partnership is seen as a counterweight to China’s non-rules-based approach in the region. It provides a strategic balance and promotes a free and open Indo-Pacific.
The India-Australia partnership: Opportunities for further collaboration and growth
Trade and Investment: There is immense potential to expand bilateral trade and investment between India and Australia. Both countries can explore new sectors and avenues for collaboration, including technology, renewable energy, infrastructure, agriculture, healthcare, and manufacturing. Initiatives like the Comprehensive Economic Cooperation Agreement (CECA) can further facilitate trade and investment flows.
Innovation and Technology: India’s thriving tech ecosystem and Australia’s advanced research and development capabilities present opportunities for collaboration in innovation and technology-driven sectors. Joint research projects, technology transfer, and startup collaborations can foster mutual growth and innovation.
Defense and Security: The defense and security collaboration between India and Australia can be further strengthened. Opportunities exist for joint military exercises, defense equipment co-production, technology-sharing, and intelligence cooperation. Collaborative efforts can contribute to maritime security, counterterrorism, and regional stability.
Education and Research: The education sector offers opportunities for deeper collaboration, including student exchanges, joint research programs, and faculty exchanges. Strengthening academic ties can enhance cultural understanding and promote knowledge sharing between institutions in both countries.
Sustainable Development and Climate Change: Both India and Australia face significant challenges related to sustainable development and climate change. Collaborative efforts in renewable energy, climate adaptation, and environmental conservation can address common concerns and promote sustainable development practices.
Regional Engagement: India and Australia can leverage their partnership to enhance regional engagement and cooperation in the Indo-Pacific. By working together in multilateral forums such as the Quad, ASEAN, and the Indian Ocean Rim Association, they can promote a rules-based order, regional stability, and prosperity.
Health and Biotechnology: The COVID-19 pandemic has highlighted the importance of collaboration in health and biotechnology. Joint research on vaccines, healthcare innovations, and disease prevention can strengthen public health systems and contribute to global health security.
Conclusion
India and Australia have transcended past misperceptions and established a promising partnership that holds tremendous potential in the 21st century. As Prime Minister Menzies’ decision in 1955 remains a relic of the past, India and Australia are committed to nurturing a vibrant and enduring partnership, solidifying their place as key actors in the global arena.
From UPSC perspective, the following things are important:
Prelims level: ETCA
Mains level: India-Australia relations
After 10 years of negotiations, India and Australia have finally agreed an interim free trade deal called the India-Australia Economic Cooperation and Trade Agreement (ECTA).
What is the news?
Australia’s parliament has ratified the ECTA.
The two countries has signed the ECTA on April 2 this year.
The trade deal will now come into effect on a mutually agreed date.
Key terms of the India-Australia ECTA
Under the India-Australia ECTA, duties on 100 percent tariff lines will be eliminated by Australia, covering 6,000 broad sectors.
Meanwhile, India’s tariffs on 90 percent of Australian goods exports, including meat, wool, cotton, seafood, nuts, and avocados, will be removed.
From day one, Australia will offer zero-duty access to India for almost 96.4 percent of exports by value. Presently, many of these products have a 4-5 percent customs duty imposed by Australia.
Key benefits offered
Exporters, businesses, workers, and consumers in both markets are set to benefit from the trade liberalization, market opening, and freer movement of people.
Implementation of the trade agreement will create an estimated 1 million jobs.
The India-Australia ECTA agreement is expected to increase bilateral trade to about US$45-50 billion in the next five years from the existing US$31 billion.
India hopes to increase its merchandise exports by US$10 billion BY 2026-27.
Special benefits to India
IT sector to be a big gainer as it contributes significantly to both economies
Visas to be offered to Indian chefs and yoga instructors
Work opportunities for Indian students pursuing education in Australia
Cheaper raw materials from Australia will make Indian goods more competitive in the global market
Medicines approved under rigorous US and UK regulatory regimes will benefit from a fast track mechanism to get approval in Australia (improving market prospects for India’s patented, generic, and biosimilar medicines)
Volume of India-Australia Trade
Australia is the 17th largest trading partner to India and India is Australia’s ninth largest trading partner.
In 2021-22, India’s goods exports to Australia valued US$8.3 billion and imports were about US$16.7 billion. Two-way trade in goods and services in 2020 were valued at US$24.3 billion.
India’s merchandise exports to Australia grew 135 percent between 2019 and 2021.
India’s exports consist primarily of a broad-based basket largely of finished products. Around 96 percent of Australia’s exports are raw materials and intermediate products.
How will Indian IT firms benefit from the deal?
Along with ECTA, the Australian parliament has also approved an amendment to the Double Taxation Avoidance Agreement (DTAA) – a long-standing tax issue for Indian companies operating in Australia.
As per industry estimates, Indian IT firms lost more than $1 bn in taxes due to the existing provisions in DTAA.
Most IT firms take up projects where they do some portion of work on-site, and some from India.
However, Australian courts had ruled that even the work done from India can be taxed as per local Australian laws.
The same income was subject to taxes in India too.
What’s in it for pharma companies?
ECTA says Indian drugs that have already been approved in the UK and US will get faster approval in Australia too.
India has the highest number of USFDA-approved sites and other stringent regulatory agencies approvals too — which will yield results once ECTA comes into effect.
India exported $387 mn worth of pharma products to Australia registering a growth of 11.58% FY22.
India can now expect share in Australia’s US$ 13 billion pharma market to go up.
Will ECTA give a push to labour-intensive industries?
Getting easier access for apparel, textiles, leather, footwear, gems & jewellery, furniture, machinery and electrical goods in western markets is India’s key aims in trade deals.
ECTA will see India getting zero duty on 98.3% of tariff lines from the day the agreement comes into force and on 100% of tariff lines within five years.
Can India cut its trade deficit with Australia?
At the moment, Australia exports much more to India than it imports.
During the last financial year, India had a trade deficit of $8.5 billion with Australia with $8.3 billion worth of exports and $16.8 billion worth of imports.
Entering the Australian market is not just about lower tariffs as Australia is already a very open economy.
There already are firmly established players in Australia and displacing them would need cutting trade costs and signing a comprehensive deal.
From UPSC perspective, the following things are important:
Prelims level: NA
Mains level: India-Australia relations
The Union Cabinet has approved the signing of an Audio Visual Co-production Treaty between India and Australia, which is aimed at facilitating joint production of films between the two countries.
India – Australia Relations
Both the countries share the ethos and values of pluralism, liberal democracy, steadfast commitment to rule of law, Commonwealth traditions, international peace, development and security.
The establishment of diplomatic relations between them dates back to the Pre-independence era. It started with the opening of the Consulate General of India as a Trade Office in Sydney in 1941.
Since then the ties have blossomed and currently, they enjoy a multi-faceted cooperation spanning areas of political interactions, economic collaboration, scientific research, strategic convergence, friendly people-to-people ties especially diaspora links and sporting ties of hockey and cricket.
Areas of cooperation
1.Political Dimension
Both the countries are members of G-20, ASEAN Regional Forum (ARF), IORA (Indian Ocean Rim Association), Asia Pacific Partnership on Climate and Clean Development, East Asia Summit and the Commonwealth. Australia has been extremely supportive of India’s quest for membership of the APEC (Asia Pacific Economic Cooperation).
Australia whole-heartedly welcomed India s joining of the MTCR (Missile Technology Control Regime).
2. Economic Dimension
In recent years, the India-Australia economic engagement has magnified significantly. Australia has been very appreciative of economic reforms undertaken by India and its improving ease of doing business rankings because of the reforms was undertaken by the current government. India has welcomed Australia to participate in its Make in India, Smart Cities, AMRUT (Atal Mission for Rejuvenation and Urban Transformation), Clean Ganga Project etc. initiatives.
India and Australia are partners in the trilateral Supply Chain Resilience Initiative (SCRI) arrangement along with Japan which seeks to enhance the resilience of supply chains in the Indo-Pacific Region.
Recently, India signed a historic trade agreement with Australia, the India-Australia Economic Cooperation and Trade Agreement (Ind- Aus ECTA).
It is the first Free Trade Agreement (FTA) that India has signed with a major developed country in over a decade. Credit: Business Standard
The current government has invited Australia s private sector participation in Indian economy. It says red tape in India has been replaced by red carpet and has welcomed private investors.
3.Trade and Economic
The establishment of India-Australia Joint Ministerial Commission (JMC) in 1989 encouraged dialogue at a government and business level on multiple issues of trade and investment.
India-Australia CEO Forum is a significant mechanism through which business leaders from both nations engage in mutually fruitful dialogue to enhance bilateral trade and investment relationship. The Forum consists of heads of Indian and Australian business from multiple sectors like energy and resources, agri-business, financial sector, telecommunications, IT, education and pharmaceuticals. The last meeting of the Forum was held in New Delhi on 29th August 2017.
The city of Canberra, Australia hosted the seventh India-Australia Economic Policy Dialogue during 16-18 July 2017.
India’s main exports to Australia are Refined Petroleum, medicaments, while our major imports are Coal, copper ores & concentrates, Gold, and education related services.
India s major imports from Australia are coal, non-monetary gold, copper, wool, fertilizers, wheat, vegetables and education-related services.
India and Australia have been each other’s important trading partners.
Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner.
India-Australia bilateral trade for both merchandise and services is valued at USD 27.5 billion in 2021.
India’s merchandise exports to Australia grew 135% between 2019 and 2021. India’s exports consist primarily of a broad-based basket largely of finished products and were USD 6.9 billion in 2021.
India’s merchandise imports from Australia were USD 15.1 billion in 2021, consisting largely of raw materials, minerals and intermediate goods.
4.Civil Nuclear Cooperation Agreement
A Civil Nuclear Cooperation Agreement between the two countries was signed in September 2014 during the visit of the Australian Prime Minister to India. The agreement came into force from 13 November 2015.
The Australian Parliament passed the “Civil Nuclear Transfer to India Bill 2016” on 01 December, 2016 which ensures that Uranium mining companies in Australia may fulfil contracts to supply Australian uranium to India for civil use with confidence that exports would not be hindered by domestic legal action challenging the consistency of the safeguards applied by the IAEA in India and Australia’s international non-proliferation obligations.
It also ensures that any future bilateral trade in other nuclear-related material or items for civil use will also be protected.
5.Defence Cooperation
The Mutual Logistics Support Agreement has been signed during the summit that should enhance defence cooperation and ease the conduct of large-scale joint military exercises.
There is a technical Agreement on White Shipping Information Exchange.
Recently Australia and India conducted AUSINDEX,their largest bilateral naval exercise, and there are further developments on the anvil, including Australia’s permanent inclusion in the Malabar exercise with Japan.
In 2018, Indian Air Force participated for the first time in the Exercise Pitch Blackin Australia. The third edition of AUSTRAHIND(Special Forces of Army Exercise) was held in September 2018.
A broader maritime cooperation agreement with a focus on Maritime Domain Awareness (MDA) is also in the works and Australia has agreed to post a Liaison Officer at the Indian Navy’s Information Fusion Centre – Indian Ocean Region (IFC-IOR) at Gurugram.
6.Education
Under the New-Colombo Plan of Australian government, 900 Australian undergraduates have studied and completed internships in India during the period 2015-16
7.Diaspora
The Indian community in Australia has the population of nearly half a million (2.1 % of the population), and another over 1,50,000 persons of Indian descent immigrated from other countries (Fiji, Malaysia, Kenya and South Africa).
India is one of the top sources of skilled immigrants to Australia.
8.Energy Cooperation
A Joint Working Group on Energy and Minerals was established in 1999 to expand bilateral relationship in the energy and resources sector. The 8th JWG meeting held in New Delhi in June 2013.
As energy is one of the central pillars of economic cooperation, both sides agreed during the visit of our Prime Minister to Australia in November 2014 to cooperate on transfer of clean coal technology and welcomed Australia’s desire to upgrade the Indian School of Mines, Dhanbad.
9. International cooperation
India and 62 other countries have backed a draft resolution led by Australia and the EU to ‘identify the zoonotic source’ of Covid-19 and its ‘route of introduction’ to humans.
Australia supports India’s candidature in an expanded UN Security Council.
Both India and Australia are members of the Commonwealth, IORA, ASEAN Regional Forum, Asia Pacific Partnership on Climate and Clean Development, and have participated in the East Asia Summits.
Australia is an important player in APEC and supports India’s membership of the organisation. In 2008, Australia became an Observer in SAARC.
Both countries have also been cooperating as members of the Five Interested Parties (FIP) in the WTO context.
An India Economic Strategy to 2035
In 2018, Australia’s Prime Minister has announced implementation of “An India Economic Strategy to 2035”, a vision document that will shape India-Australia bilateral ties.
It is based on three-pillar strategy- Economic ties, Geostrategic Engagement and Rethinking Culture-thrust on soft power diplomacy.
The focus of this report is on building a sustainable long-term India economic strategy.
The report identifies 10 sectors and 10 states in an evolving Indian market where Australia has competitive advantages, and where it should focus its efforts. These are divided into a flagship sector (education), three lead sectors (agribusiness, resources, and tourism) and six promising sectors (energy, health, financial services, infrastructure, sport, science and innovation).
Significance of the Relations
Australia is one of the few countries that has managed to combat COVID-19 so far through “controlled adaptation” by which the coronavirus has been suppressed to very low levels. Two of the leaders of this great Australia-wide effort are Indian-born scientists.
From farming practices through food processing, supply and distribution to consumers, the Australian agribusiness sector has the research and development (R&D) capacity, experience and technical knowledge to help India’s food industry improve supply chain productivity and sustainability and meet the challenges of shifting consumption patterns.
Australia is the 13th largest economy in the world, following closely behind Russia which stands at $1.6 trillion.
Australia is rich in natural resources that India’s growing economy needs.
It also has huge reservoirs of strength in higher education, scientific and technological research.
The dominance of Indo-Pacific countries in India’s trade profile: Fostering deeper integration between India and Australia will provide the necessary impetus to the immense growth potential of the trade blocs in this region.
The two countries also have increasingly common military platforms as India’s defence purchases from the U.S. continue to grow.
Australia has deep economic, political and security connections with the ASEAN and a strategic partnership with one of the leading non-aligned nations, Indonesia. Both nations can leverage their equation with ASEAN to contain China.
The Indo-Pacific region has the potential to facilitate connectivity and trade between India and Australia.
Being geographically more proximate than the US or Japan, India and Australia can emerge as leading forces for the Quad.
Associated Issues
Trade deficit: India’s trade deficit with Australia has been increasing since 2001-02 due to India-Australia Free Trade Agreement. It is also a contentious issue in the ongoing RCEP negotiations which India left.
India’s desire for visa reforms in Australia, which would permit more Indian workers to seek employment in Australia, remains unmet. India wants greater free movement and relaxed visa norms for its IT professionals, on which Australia is reluctant. Australia and India are yet to nurture a common bilateral ground to figure out the basis of their cooperation.
The formation of the Japan–America–India (JAI) partnership at the G20 summit in Buenos Aires in 2018 is cause for Australian concern. India’s unwillingness to invite Australia to participate in the Malabar naval exercise, despite Australian lobbying, has sparked speculation over the fate of the Quadrilateral Consultative Dialogue (the ‘Quad) involving India, Australia, Japan and the United States.
Building consensus on non-nuclear proliferation and disarmament has been a major hurdle given India’s status as a nuclear power. Trade and maritime security on the other hand seem the most viable points of collaboration. Although a defence agreement was signed in 2014, the defence relationship has yet to develop fully.
Although security has received a lot of significance in the relationship, in practice Australia-India defence cooperation remains relatively undeveloped. There are a considerable number of defence and security dialogues between the two countries, but none has been translated into more substantive cooperation.
Increasing Racist attacks on Indians in Australia has been a major issue. The relationship was further strained over the attacks on Indian students studying in Melbourne, and the resulting media coverage caused serious damage to Australia’s standing in India.
Need of the Hour
Upgradation of 2+2 talks. In addition, it may be prudent too for New Delhi and Canberra to elevate the ‘two plus two’ format for talks from the Secretary level to the level of Foreign and Defence Ministers.
Utilising current innovations in digital trade; such digitisation of economic activities has changed the landscape of trade, enhancing associations between economies and, in particular, South-South flows.
Removal of trade barriers would lead to an increase in the exports of these commodities, although the increasing number of disputes at the WTO with regard to the Australian sector can act as a serious impediment.
India and Australia have a strong track record of collaborating in research and innovation. The $84 million Australia-India Strategic Research Fund (AISRF) is Australia’s largest. The Australian Government’s $1.1 billion National Innovation and Science Agenda presents new opportunities to engage with India. The agenda resonates well with India’s ‘Start-up India’ and ‘Make in India’ campaign.
It is evident in policy areas such as maritime security, climate change, energy security, law enforcement, governance and the politics of security institutions.
Engaging Indonesia, Japan, France and Britain for securing Indo-Pacific
An ‘engage and balance’ China strategy is the best alternative to the dead end of containment. The role of the US is of particular importance as it has recently been a driver of efforts towards bringing similarly aligned states in counterbalancing China.
Conclusion
Their ties are extremely important for the Indo-Pacific region which is in flux. They stand out for their solemn commitment towards democratic values, international peace, rule of law, development and multiculturalism.a
| Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth
Note4Students
From UPSC perspective, the following things are important:
Prelims level: Critical Minerals
Mains level: Read the attached story
India and Australia have decided to strengthen their partnership in the field of projects and supply chains for critical minerals.
What is the news?
Australia has confirmed that it would commit A$5.8 million to the three-year India-Australia Critical Minerals Investment Partnership”.
What are Critical Minerals?
Critical minerals are elements that are the building blocks of essential modern-day technologies, and are at risk of supply chain disruptions.
These minerals are now used everywhere from making mobile phones, computers to batteries, electric vehicles and green technologies like solar panels and wind turbines.
Based on their individual needs and strategic considerations, different countries create their own lists.
However, such lists mostly include graphite, lithium, cobalt, rare earths and silicon which is a key mineral for making computer chips, solar panels and batteries.
Aerospace, communications and defence industries also rely on several such minerals as they are used in manufacturing fighter jets, drones, radio sets and other critical equipment.
Why is this resource critical?
As countries around the world scale up their transition towards clean energy and digital economy, these critical resources are key to the ecosystem that fuels this change.
Any supply shock can severely imperil the economy and strategic autonomy of a country over-dependent on others to procure critical minerals.
But these supply risks exist due to rare availability, growing demand and complex processing value chain.
Many times the complex supply chain can be disrupted by hostile regimes, or due to politically unstable regions.
They are critical as the world is fast shifting from a fossil fuel-intensive to a mineral-intensive energy system.
What is China ‘threat’?
China is the world’s largest producer of 16 critical minerals.
China alone is responsible for some 70% and 60% of global production of cobalt and rare earth elements, respectively, in 2019.
The level of concentration is even higher for processing operations, where China has a strong presence across the board.
China’s share of refining is around 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.
It also controls cobalt mines in the Democratic Republic of Congo, from where 70% of this mineral is sourced.
In 2010, China suspended rare earth exports to Japan for two months over a territorial dispute.
What are countries around the world doing about it?
US has shifted its focus on expanding domestic mining, production, processing, and recycling of critical minerals and materials.
India has set up KABIL or the Khanij Bidesh India Limited to ensure mineral security of the nation.
Australia’s Critical Minerals Facilitation Office (CMFO) and KABIL had recently signed an MoU aimed at ensuring reliable supply of critical minerals to India.
The UK has unveiled its new Critical Minerals Intelligence Centre to study the future demand for and supply of these minerals.
From UPSC perspective, the following things are important:
Prelims level: Exercise Talisman Sabre
Mains level: Paper 2- India-Australia relations
Context
India and Australia, which share common values and interests, must work together with resolve to shape the economic and strategic environment so that it continues to support collective security and prosperity.
India-Australia ties: A background
The ties are a Comprehensive Strategic Partnership full of practical, tangible actions that strengthen ties and benefit the region.
India and Australia are a small group of countries to hold annual leaders’ summits and biennial 2+2 talks involving foreign and defence ministers.
The defence forces of both the countries are undertaking more complex activities together, such as in Exercise Malabar with the US and Japan.
We coordinate closely on maritime domain awareness.
This year both countries deployed P-8 surveillance aircraft to each other’s territories for joint patrols.
Australia has also committed to a package of partnership initiatives in our update to the India Economic Strategy.
Cooperation on climate and sustainability: India and Australia have great potential to cooperate on climate and sustainability.
Why India matters to Australia
Securing supply chain: India’s economy, manufacturing capabilities and talent ensure it will play a key role in securing supply chains and restarting post-pandemic growth.
Balance of power: Its military has the capacity and capability to respond to natural disasters, help stabilise an uncertain region and contribute to an effective balance of power.
Technological and scientific capabilities: Its technological and scientific capabilities are gateways to a cleaner and more sustainable world.
Commitment to democracy: Most of all, India’s people have the optimism, the commitment to democracy, the drive and the goodwill to make our region safer, freer and better.
Vision for open, inclusive and resilient Indo-Pacific region
As the bilateral relationship deepens, both the countries must begin to work more together with others in the region.
Responding to humanitarian crises and natural disasters: There is enormous potential in the Indian and Pacific oceans, where we each have vital interests in combating climate change, illegal fishing and people smuggling and responding to humanitarian crises and natural disasters.
Australia has a vision for an open, inclusive and resilient Indo-Pacific region.
It is a vision for a region that is more integrated rather than divided, where trade and investment flow freely based on agreed rules and treaty commitments, where disputes are resolved through dialogue in accordance with international law, and where a strategic culture that respects the rights of all states, big and small, prevails.
It is a vision that Australia share with partners like ASEAN, and partners like India.
Whether through joint activities with like-minded countries, or the support of regional and multilateral architecture, Australia is ensuring the region has options and balance.
Conclusion
India and Australia’s interests don’t just align, they are inextricably entwined. Expect this relationship to grow and prosper, our cooperation to deepen.
From UPSC perspective, the following things are important:
Prelims level: International Cyber Engagement Strategy
Mains level: Paper 2- India-Australia relations
Context
Western and media attention may be focused on the conflict between Russia and Ukraine, but countries have not taken their eye off the Indo-Pacific where there is clear evidence of the changing world order.
India and Australia faces a common threat to cyber security
The India-Australia ECTA is a concrete example of the bilateral faith in common values, and understanding of threats and goals.
A reflection of this is cooperation in cyber security.
China is accused of having amassed a large number of cyber weapons and has allegedly carried out sophisticated operations aimed at espionage, theft of intellectual property, and destructive attacks on internet resources of some countries.
Advanced Persistent Threat (APT) groups: Australia and India have been at the receiving end of several such campaigns by the so-called Advanced Persistent Threat (APT) groups, supported by or assumed to be located in China.
Steps toward cooperation in cyber security
At the June 2020 virtual bilateral summit, Prime Minister Narendra Modi and his Australian counterpart Scott Morrison elevated the bilateral relationship to a Comprehensive Strategic Partnership.
New cyber security framework: The new cyber framework includes a five-year plan to work together on the digital economy, cybersecurity and critical and emerging technologies.
Bilateral research: This will be supported by a $9.7 million fund for bilateral research to improve regional cyber resilience.
An annual Cyber Policy Dialogue, a new Joint Working Group on Cyber Security Cooperation and a joint working group on ICTs have been established.
An annual India-Australia Foreign Ministers Cyber Framework Dialogue will be held.
India to be part of International Cyber Engagement Strategy: India will now be included in a core Australian initiative called the International Cyber Engagement Strategy — it began in 2017 to actively conduct capacity-building arrangements in Indonesia, Singapore and Thailand, and support similar activities in Malaysia, Vietnam and Cambodia.
A joint Centre of Excellence for Critical and Emerging Technology Policy, to be located in Bengaluru, will be set up.
Steps taken by India to improve cyber security
India has set up the office of the National Cybersecurity Coordinator, a national Computer Emergency Response Team (CERT-IN), a national Critical Information Infrastructure Protection Agency (NCIIPC), and made appropriate amendments to the Information Technology Act and Rules to enhance its cyber security posture.
This has upped India’s rank to 10th in the Global Cyber Security Index (GCI) 2020, from 47th just two years earlier.
India has capable cybersecurity professionals.
Conclusion
Deepening cooperation can develop avenues for mutual learning and create complementary markets in cyber tools and technologies, boosting bilateral business and strategic commitments on both continents.
From UPSC perspective, the following things are important:
Prelims level: ETCA
Mains level: India-Australia relations
India and Australia signed an Economic Cooperation and Trade Agreement (ECTA) in the presence of PM Narendra Modi and his counterpart in Canberra Scott Morrison.
India-Australia ECTA
It is the first trade agreement of India with a developed country after more than a decade.
The Agreement encompasses cooperation across the entire gamut of bilateral economic and commercial relations between the two friendly countries.
It covers areas like Trade in Goods, Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Telecom, Customs Procedures, Pharmaceutical products, and Cooperation in other Areas.
Eight subject specific side letters covering various aspects of bilateral economic cooperation were also concluded as part of the Agreement.
Background of the ECTA
The negotiations for India-Australia ECTA were formally re-launched on 30 September 2021 and concluded on a fast-track basis by the end of March 2022.
India and Australia enjoy excellent bilateral relations that have undergone transformative evolution in recent years, developing along a positive track, into a friendly partnership.
Growing India-Australia economic and commercial relations contribute to the stability and strength of a
Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner.
Features of the agreement
The ECTA between India and Australia covers almost all the tariff lines dealt in by India and Australia respectively.
India will benefit from preferential market access provided by Australia on 100% of its tariff lines.
This includes all the labour-intensive sectors of export interest to India such as Gems and Jewellery, Textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices, and Automobiles.
India will be offering preferential access to Australia on over 70% of its tariff lines, including lines of export interest to Australia which are primarily raw materials and intermediaries such as coal, mineral ores and wines etc.
As regards trade in services, Australia has offered wide ranging commitments in around 135 sub sectors and Most Favoured Nation (MFN) in 120 sub sectors which cover key areas of India’s interest like IT, ITES, Business services, Health, Education, and Audio visual.
Both sides have also agreed to a separate Annex on Pharmaceutical products under this agreement, which will enable fast track approval for patented, generic and biosimilar medicines.
Way ahead
The India-Australia ECTA will further cement the already deep, close and strategic relations between the two countries.
It will significantly enhance bilateral trade in goods and services, create new employment opportunities, raise living standards, and improve the general welfare of the peoples of the two countries.
From UPSC perspective, the following things are important:
Prelims level: ECTA
Mains level: Paper 2- INDAUS-ECTA
Context
Prime Ministers of India and Australis will preside virtually over the signing of a bilateral Free Trade Agreement(ECTA) negotiated in torturous detail over the last decade.
Background
Negotiations for a bilateral Comprehensive Economic Cooperation Agreement began in May 2011.
But the negotiations continued in fits and starts, without significant progress or indeed real political direction.
In June 2020, as part of the Joint Statement after establishing a Comprehensive Strategic Partnership, it was decided to re-engage on a CECA.
Consequently, at the 17th India-Australia Joint Ministerial Commission meeting in September 2021, CECA negotiations were re-launched.
During virtual summit in 2022, India-Australia fleshed out areas of cooperation ranging from science and technology to climate change and defence to people-to-people ties, and included possibilities of joint surveillance and real-time intelligence sharing.
On the eve of the summit, the Morrison government invested over USD 280 million to give a fillip to cooperation with India; to further grow its economic relationship and support jobs and businesses in both countries; as well as to empower the Indian diaspora.
About INDAUS-ECTA
The INDAUS ECTA (India-Australia Economic Cooperation and Trade Agreement), reflects vision of the essential unity of the two countries.
The ECTA deal is apparently fully in compliance with WTO rules and Article 24 of GATT.
Article 24 of GATT allows countries to grant special treatment to one another by establishing a free-trade association, provided that “(1) duties and other trade restrictions would be eliminated on substantially all the trade among the participants, (2) the elimination of internal barriers occurred within a reasonable length of time….”
The ECTA should give a boost to India’s labour-intensive manufacturing sector, with a considerable leg-up to the pharma, textile, gemstone and jewellery sectors.
Indian students in Australia will find an easier pathway to employment, and there will be greater ease of visa for a range of skilled human capital from India in demand in Australia, including chefs and yoga instructors.
Most of the farming and dairy sector seems to have been kept away from the present agreement.
Australian coal will probably get relatively unfettered access to India.
Significance of the ECTA for India-Australia relations
The ECTA represents a watershed moment in bilateral relations.
ECTA is also a significant turning point for India’s foreign policy — both in terms of geo-strategy as well as geo-economics.
Partnership with the convergence of interests: India and Australia today represent a partnership with a near complete convergence of interests and values.
Shared concerns over China: Two multicultural, federal democracies that share concerns about stability in the Indo Pacific, are apprehensive about Chinese hegemonic designs, and are increasingly coordinating their policies, are natural partners of the future.
Conclusion
The ECTA signals that India’s relations with Australia — two central pivots of the Quad — are as strong and resilient as ever.
From UPSC perspective, the following things are important:
Prelims level: Solomon Islands
Mains level: Chinese expansion in Pacific
The Solomon Islands has defended plans to sign a security deal with Beijing that could allow China to boost its military presence in the South Pacific island nation. This has left Australia very concerned.
Solomon Islands
Solomon Islands is a sovereign country consisting of six major islands and over 900 smaller islands in Oceania, to the east of Papua New Guinea and northwest of Vanuatu.
It has a land area of 28,400 square kilometres and a population of 652,858.[10] Its capital, Honiara, is located on the largest island, Guadalcanal.
The country takes its name from the Solomon Islands archipelago, which is a collection of Melanesian islands.
It also includes the North Solomon Islands (a part of Papua New Guinea), but excludes outlying islands, such as the Santa Cruz Islands and Rennell and Bellona.
The islands have been settled since at least some time between 30,000 and 28,800 BCE, with later waves of migrants, notably the Lapita people, mixing and producing the modern indigenous Solomon Islanders population.
From UPSC perspective, the following things are important:
Prelims level: Maitri scholarships and fellowships
Mains level: Paper 2- India-Australia relations
Context
On March 21, Prime Ministers of India and Australia held their Virtual Summit and took stock of the pace of implementing the Australia-India Comprehensive Strategic Partnership.
India-Australia relations
Since we elevated our relationship in 2020, we have advanced practical actions on cyber and critical technologies, maritime affairs, defence ties, economic and business links and Quadrilateral cooperation.
The two Prime Ministers announced a range of tangible and practical initiatives spanning the breadth of our shared economic, strategic, and regional interests.
Areas of cooperation
Energy partnership: Both countries are working on a new and renewable energy partnership, to support the development of technologies such as green hydrogen and ultra-low cost solar.
We are also supporting research and investment to unlock Australian critical minerals for Indian advanced manufacturing.
We will boost collaboration on innovation, science and entrepreneurship, to scale up ideas that address global challenges.
Space sector: We are also increasing investments into our countries’ rapidly growing space sectors.
We are establishing the Australia-India Centre of Excellence for Critical and Emerging Technology Policy — and a Consulate-General — in Bengaluru.
Australians value highly the Indian diaspora and student contributions to its community — whether economic, social, or cultural.
Australia and India are also working to ensure a peaceful and stable region.
Both countries are committed to a free and open Indo-Pacific.
In our defence relationship, there is an enhancement in information sharing and operational cooperation.
Such arrangements also help continue delivering quality humanitarian support to the region, seen recently when India helped Australia’s Pacific family, Tonga and Kiribati.
Conclusion
These investments in strategic, economic, and community ties show what we can achieve when two multicultural democracies join in a spirit of trust and understanding.
From UPSC perspective, the following things are important:
Prelims level: Free Trade Agreements
Mains level: Various bilateral trade instruments
India and Australia are expected to complete negotiations for an interim free trade agreement (FTA) soon, a move aimed at boosting economic ties between the two countries.
The final agreement is officially dubbed as the CECA is expected to be completed by the end of 2022.
The pact covers areas such as goods, services, investment, rules of origin, customs facilitation, legal and institutional issues.
This new strategic economic agreement is expected to increase bilateral trade in goods to $100 billion within five years.
What is a Free Trade Agreement (FTA)?
A FTA is a pact between two or more nations to reduce barriers to imports and exports among them.
Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
The concept of free trade is the opposite of trade protectionism or economic isolationism.
Key benefits offered by FTA
Reduction or elimination of tariffs on qualified: For example, a country that normally charges a tariff of 12% of the value of the incoming product will rationalize or eliminate that tariff.
Intellectual Property Protection: Protection and enforcement of intellectual property rights in the FTA partner country is upheld.
Product Standards: FTA enhances the ability for domestic exporters to participate in the development of product standards in the FTA partner country.
Fair treatment for investors: FTA provides treatment as favorably as the FTA partner country gives equal treatment for investments from the partner country.
Elimination of monopolies: With FTAs, global monopolies are eliminated due to increased competition.
How many FTAs does India have?
India has signed it’s first Free Trade Agreement (FTA) with Sri Lanka in 1998.
Likewise, India had FTAs with: Nepal, Bhutan, Thailand, Singapore, ASEAN, Japan and Malaysia.
India has signed Preferential Trade Agreements such as:
Asia Pacific Trade Agreement (APTA) with Bangladesh, China, India, Lao PDR, Republic of Korea, and Sri Lanka
Global System of Trade Preferences (GSTP)
India – MERCOSUR PTA etc. with South American countries
Back2Basics: Types of Trade Agreements
(1) Free Trade Agreement
(discussed above)
(2) Preferential Trade Agreement
In this type of agreement, two or more partners give preferential right of entry to certain products.
This is done by reducing duties on an agreed number of tariff lines.
Here a positive list is maintained i.e. the list of the products on which the two partners have agreed to provide preferential access.
Tariff may even be reduced to zero for some products even in a PTA.
India signed a PTA with Afghanistan.
(3) Comprehensive Economic Partnership Agreement
Partnership agreement or cooperation agreement are more comprehensive than an FTA.
CECA/CEPA also looks into the regulatory aspect of trade and encompasses and agreement covering the regulatory issues.
CECA has the widest coverage. CEPA covers negotiation on the trade in services and investment, and other areas of economic partnership.
It may even consider negotiation on areas such as trade facilitation and customs cooperation, competition, and IPR.
India has signed CEPAs with South Korea and Japan.
(4) Comprehensive Economic Cooperation Agreement
CECA generally cover negotiation on trade tariff and Tariff rate quotas (TRQs) rates only.
It is not as comprehensive as CEPA.
India has signed CECA with Malaysia.
(5) Framework Agreement
Framework agreement primarily defines the scope and provisions of orientation of the potential agreement between the trading partners.
It provides for some new area of discussions and set the period for future liberalisation.
India has previously signed framework agreements with the ASEAN, Japan etc.
(6) Early Harvest Scheme
An Early Harvest Scheme (EHS) is a precursor to an FTA/CECA/CEPA between two trading partners. For example, early harvest scheme of RCEP has been rolled out.
At this stage, the negotiating countries identify certain products for tariff liberalization pending the conclusion of actual FTA negotiations.
An Early Harvest Scheme is thus a step towards enhanced engagement and confidence building.
From UPSC perspective, the following things are important:
Prelims level: Not much
Mains level: Religiious intolerance accross the world
Australian PM Scott Morrison has introduced a contentious piece of anti-discrimination legislation called the “Religious Discrimination Bill” in their parliament.
What is the Bill about?
The bill aims to eliminate discrimination on the ground of religious beliefs or activities.
It will ensure Australians are protected from discrimination on the basis of religious belief or activity.
The timing of the introduction of this bill, ahead of the federal elections is being seen as an attempt by the Morrison government to target religious voters.
What does the Religious Discrimination Bill say?
The Act makes it unlawful to discriminate against a person on the grounds of religious belief or activity in a range of areas of life including work, education, access to premises, and the provision of goods, services, and accommodation.
Discrimination is unlawful if it occurs, for example, because of a religious belief or activity that the person holds or engages in.
It is also unlawful if it occurs because of the person’s association with someone else who holds or engages in a religious belief or activity, regardless of whether or not they themselves hold or engage in a religious belief or activity.
Contentious provisions
The bill also allows faith-based organizations such as religious schools to hire and enrol people from particular faiths.
The bill states that religious bodies can give preference, “in good faith, to persons who hold or engage in a particular religious belief or activity”.
It goes on to say that a religious body does not discriminate against a person under this Act by engaging, in good faith, in conduct that a person of the same religion as the religious body could reasonably consider.
Because of this clause, the bill has alarmed some LGBTQI groups and some legal experts who say that the bill will discriminate against gay teachers and students.
Criticisms
Some critics of the bill see it as a piece of legislation that is legalizing hate.
Some are questioning the government and asking for proof that people are discriminated against on the basis of religion in the country.
Further, there are also demands to protect gay students from discrimination.
From UPSC perspective, the following things are important:
Prelims level: Various types of trade agreements
Mains level: Free Trade Agreement (FTA)
India and Australia have agreed to conclude a Free Trade Agreement (FTA) by the end of 2022.
What is a Free Trade Agreement (FTA)?
A FTA is a pact between two or more nations to reduce barriers to imports and exports among them.
Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
The concept of free trade is the opposite of trade protectionism or economic isolationism.
Key benefits offered by FTA
Reduction or elimination of tariffs on qualified: For example, a country that normally charges a tariff of 12% of the value of the incoming product will rationalize or eliminate that tariff.
Intellectual Property Protection: Protection and enforcement of intellectual property rights in the FTA partner country is upheld.
Product Standards: FTA enhances the ability for domestic exporters to participate in the development of product standards in the FTA partner country.
Fair treatment for investors: FTA provides treatment as favourably as the FTA partner country gives equal treatment for investments from the partner country.
Elimination of monopolies: With FTAs, global monopolies are eliminated due to increased competition.
How many FTAs does India have?
India has signed it’s first Free Trade Agreement (FTA) with Sri Lanka in 1998.
Likewise, India had FTAs with: Nepal, Bhutan, Thailand, Singapore, ASEAN, Japan and Malaysia.
India has signed Preferential Trade Agreements such as:
Asia Pacific Trade Agreement (APTA) with Bangladesh, China, India, Lao PDR, Republic of Korea, and Sri Lanka
Global System of Trade Preferences (GSTP)
India – MERCOSUR PTA etc. with South American countries
Back2Basics: Types of Trade Agreements
(1) Free Trade Agreement – discussed above
(2) Preferential Trade Agreement
In this type of agreement, two or more partners give preferential right of entry to certain products.
This is done by reducing duties on an agreed number of tariff lines.
Here a positive list is maintained i.e. the list of the products on which the two partners have agreed to provide preferential access.
Tariff may even be reduced to zero for some products even in a PTA.
India signed a PTA with Afghanistan.
(3) Comprehensive Economic Partnership Agreement
Partnership agreement or cooperation agreement are more comprehensive than an FTA.
CECA/CEPA also looks into the regulatory aspect of trade and encompasses and agreement covering the regulatory issues.
CECA has the widest coverage. CEPA covers negotiation on the trade in services and investment, and other areas of economic partnership.
It may even consider negotiation on areas such as trade facilitation and customs cooperation, competition, and IPR.
India has signed CEPAs with South Korea and Japan.
(4) Comprehensive Economic Cooperation Agreement
CECA generally cover negotiation on trade tariff and Tariff rate quotas (TRQs) rates only.
It is not as comprehensive as CEPA.
India has signed CECA with Malaysia.
(5) Framework Agreement
Framework agreement primarily defines the scope and provisions of orientation of the potential agreement between the trading partners.
It provides for some new area of discussions and set the period for future liberalisation.
India has previously signed framework agreements with the ASEAN, Japan etc.
(6) Early Harvest Scheme
An Early Harvest Scheme (EHS) is a precursor to an FTA/CECA/CEPA between two trading partners. For example, early harvest scheme of RCEP has been rolled out.
At this stage, the negotiating countries identify certain products for tariff liberalization pending the conclusion of actual FTA negotiations.
An Early Harvest Scheme is thus a step towards enhanced engagement and confidence building.
From UPSC perspective, the following things are important:
Prelims level: Malabar naval exercise
Mains level: Paper 2- India-Australia relations
Context
A few days ago, India’s Defence Minister and External Affairs Minister held the inaugural ‘2+2’ talks with their Australian counterparts.
Transforming relations between India-Australia
Both are vibrant democracies which have respect for international laws and a belief in the equality of all nations irrespective of their size and strength.
Both draw their congruence from a rule-based international order, believe in inclusive economic integration in the Indo-Pacific region, and face challenges from a belligerent China.
Prime Minister Narendra Modi and Australian Prime Minister Scott Morrison elevated their bilateral strategic partnership to a Comprehensive Strategic Partnership in June 2020.
Growing convergence on issues: There is a growing convergence of views on geo-strategic and geo-economic issues.
The convergence is backed by a robust people-to-people connection.
Both countries have stepped up collaborations through institutions and organisations on many issues in bilateral, trilateral, plurilateral and multilateral formats.
Bilateral security cooperation: Given their common security challenges and in order to enhance regional security architecture, both countries have intensified bilateral security cooperation.
Further, elevation of their ‘2+2’ Foreign and Defence Secretaries’ Dialogue to the ministerial level emphasises the positive trajectory of their transforming relations.
They have also stepped up security dialogue with key partner-countries to deepen coordination in areas where security interests are mutual.
The Malabar naval exercise by the Quad (Australia, India, Japan, the U.S.) is a step in this direction.
Partnership with like-minded countries: Beyond bilateralism, both countries are also entering into partnerships with like-minded countries, including Indonesia, Japan and France, in a trilateral framework.
Trade ties: Trading between India and Australia has seen remarkable growth in recent years.
Two-way trade between them was valued at $24.4 billion in 2020.
Trade is rapidly growing and encompasses agribusiness, infrastructure, healthcare, energy and mining, education, artificial intelligence, big data and fintech.
An early harvest agreement by December will pave the way for an early conclusion of a bilateral Comprehensive Economic Cooperation Agreement between both countries.
Issues in deeper economic integration
High tariff on agri products in India: India has a high tariff for agriculture and dairy products which makes it difficult for Australian exporters to export these items to India.
Non-tariff barrier in Australia: At the same time, India faces non-tariff barriers and its skilled professionals in the Australian labour market face discrimination.
Consider the question “A growing convergence of views on geo-strategic and geo-economic issues between Indian and Australia makes it imperative to forge a partnership guided by principles with a humane approach. Comment.”
Conclusion
The Quad has gained momentum in recent months. The time is ripe for these countries to deliberate on a ‘Quad+’ framework. The geo-political and geo-economic churning in international affairs makes it imperative for India and Australia to forge a partnership guided by principles with a humane approach.
It is a multilateral naval exercise that includes simulated war games and combat manoeuvres.
It started in 1992 as a bilateral exercise between the Indian and US navies. Japan joined in 2015.
This year the exercise will be held in two phases, the first from Tuesday off the coast near Visakhapatnam, and the second in the Arabian Sea in mid-November. Last year it was held in early September off the coast of Japan.
Major highlight: Quad Participation
For the first time in over a decade, the exercise will see the participation of all four Quad countries.
This will be the second time Australia will participate. In 2007, there were two Malabar Exercises.
The first was held off Okinawa island of Japan in the Western Pacific — the first time the exercise was held away from Indian shores — and the second in September 2007.
The following year, Australia stopped participating. Japan became a regular participant only in 2015, making it a trilateral annual exercise since then.
Why is Australia’s participation important?
The 2+2 dialogue ended with an agreement to uphold the rules-based international order, respect for the rule of law and freedom of navigation in the international seas and upholding the territorial integrity and sovereignty of all states.
As the standoff in eastern Ladakh continues, the participation of four large navies from the Indo-Pacific region will send a message to China.
It was the possibility of riling up China that had prevented India from expanding the Malabar Exercise, and from Australia joining it.
Quad is an exception
Over the last few months, the Indian Navy has conducted a number of Passage Exercises (PASSEX) with navies from Japan, Australia and the US.
But those were basic exercises to increase operability between the navies, while Malabar involves simulated war games.
From UPSC perspective, the following things are important:
Prelims level: Quad Group
Mains level: Deterrence in Australia-China Ties
Australia and China’s cordial economic ties, established over the last three decades, have been soured this year over several points of friction.
Try this question
Q. Discuss the Quadrilateral Security Dialogue (or the Quad) and its purpose to establish “Asian Arc of Democracy”.
Various points of friction
(1) Australia’s Covid-19 inquiry
Australia’s appeal for an independent global inquiry into the origins and initial response of Covid-19 created fury in Beijing.
China alleged that Australia was teaming up with the US to spread “anti-China propaganda”.
(2) Tension over journalists
The second diplomatic spat began with the detention of an Australian news anchor based in Beijing by the Chinese authorities after she was suspected of “criminal activities” that endangered China’s national security.
The Australian government said the journalist was held under “residential surveillance” at an unknown location.
Following this, the journalists sought refuge in Australian diplomatic missions, as they were not allowed to leave the country.
(3) Ideological issues
The two countries have also been at loggerheads on other ideological issues previously too.
After reports of China keeping Uighur Muslims in state-run detention camps surfaced, Australia was swift to respond and expressed “deep concern” over the “human rights situation.”
Australia also supported Hong Kong’s autonomy cause. It decided to extend visas for Hong Kong residents.
In both instances, China responded staunchly and asked Australia to not meddle in its “internal matters.”
(4) Economic dependence
China is Australia’s largest trading partner in terms of both exports and imports.
China’s share in Australia’s exports reached a record A$117 billion, or 38 per cent, in 2019, more than any other country.
Australian sectors like mining, tourism, education benefit from trade with China. China even imports products such as milk, cheese, wine and meat.
Over the years, it has been increasing its investment in Australian infrastructure and real estate products too.
Exercise Malabar is a trilateral naval exercise involving the United States, Japan and India as permanent partners.
Originally begun in 1992 as a bilateral exercise between India and the United States, Japan became a permanent partner in 2015.
Past non-permanent participants are Australia and Singapore.
The annual Malabar series began in 1992 and includes diverse activities, ranging from fighter combat operations from aircraft carriers through Maritime Interdiction Operations Exercises.
Significance of Australia’s inclusion
Earlier, India had concerns that it would give the appearance of a “quadrilateral military alliance” aimed at China.
Now both look forward to the cooperation in the ‘Indo-Pacific’ and the strengthening of defence ties.
This has led to a convergence of mutual interest in many areas for a better understanding of regional and global issues.
Both are expected to conclude the long-pending Mutual Logistics Support Agreement (MLSA) as part of measures to elevate the strategic partnership.
From UPSC perspective, the following things are important:
Prelims level: Five Power Defence Arrangement
Mains level: Paper 2- India-Australia relations, IORA
Let’s play a game. India and this country are both members of Commonwealth of nations. Cricket, English language and Nuclear relations is something common to both of us. In fact, India was this nation’s eighth-largest trading partner and fifth-largest export market in 2018-19. The Indian diaspora in this country is now third largest and fastest growing diaspora. Any guesses?
What is a middle power?
In international relations, a middle power is a sovereign state that is not a great power nor a superpower, but still has large or moderate influence and international recognition. The concept of the “middle power” dates back to the origins of the European state system.
Plugging the big gap in India’s diplomatic tradition
India remains preoccupied with the perennial challenges in its neighbourhood, resulting in missing out on the opportunities for productive partnerships with the middle powers.
Thursday’s virtual summit between Prime Minister of India and the Australian premier, Scott Morrison, is an important part of Delhi’s current diplomatic effort to plug that big gap in India’s diplomatic tradition.
Let’s see what opportunities Australia holds for India
Economicweight: With a GDP of more than US$1.4 trillion, Australia is the 13th largest economy in the world, following closely behind Russia which stands at $1.6 trillion.
Australia is rich in natural resources that India’s growing economy needs.
It also has huge reservoirs of strength in higher education, scientific and technological research.
Its armed forces, hardened by international combat, are widely respected.
Canberra’s intelligence establishment is valued in many parts of the world.
Australia has deep economic, political and security connections with the ASEAN and a strategic partnership with one of the leading non-aligned nations, Indonesia.
Canberra has a little “sphere of influence” of its own — in the South Pacific (now under threat from Chinese penetration).
All these Australian strengths should be of interest and value to India.
Jawaharlal Nehru, believed Australia is a natural part of Asia and invited it to participate in the Asian Relations Conference in Delhi in 1947, a few months before independence.
India’s nuclear test and it’s repercussions
A political dust-up between Delhi and Canberra in the wake of India’s nuclear tests in 1998 complicated the possibilities that the end of the Cold War opened up.
But since 2000, Canberra has taken consistent political initiative to advance ties with India by resolving the nuclear difference and expanding the template of engagement.
Comparing India and China’s approach to Middle powers
A gap of nearly three decades between Rajiv Gandhi’s visit to Australia in 1986 and Modi’s trip in 2014 only underlines how short-sighted India’s neglect of Australia has been.
It was exactly in these years that China transformed its relationship with Australia.
Delhi’s temptation to judge nations on the basis of their alignments with other powers stands in contrast to Beijing.
Beijing puts interests above ideology, promotes interdependence with a targeted middle power, turns it into political influence and tries to weaken its alignment with the rival powers.
Growing India-Australia relations
The Indian diaspora — now estimated at nearly 7,00,000— is the fastest growing in Australia and has become an unexpected positive factor in bilateral relations.
Common membership of many groupings like the G-20, East Asia Summit, IORA, and the Quad has increased the possibilities for diplomatic cooperation on regional and global issues.
Other host of emerging issues — from reforming the World Health Organisation to 5G technology and from strengthening the international solar alliance to building resilience against climate change and disasters — can lend to intensive bilateral political and institutional engagement.
Geopolitics and Security cooperation
The geopolitical churn in the Indo-Pacific, growing Chinese assertiveness and the uncertain US political trajectory open space for security cooperation.
Over the last few years, defence engagement between the two countries has grown.
Defence engagement is likely to be capped by a military logistics support agreement to be unveiled at the summit.
For future, there is a need from both security establishments to develop strategic coordination in the various sub-regions of the Indo-Pacific littoral.
Eastern Indian Ocean: top priority
The eastern Indian Ocean that lies between the shores of peninsular India and the west coast of Australia ought to be the top priority.
This is where Delhi and Canberra can initiate a full range of joint activities.
Joint activities should include maritime domain awareness, development of strategically located islands and marine scientific research.
Seeking trilateral cooperation with Indonesia
The sea lines of communication between the Indian and Pacific oceans run through the Indonesian archipelago.
Given the shared political commitment to the Indo-Pacific idea between Delhi, Jakarta and Canberra and the growing pressures on them to secure their shared waters, Modi and Morrison must seek trilateral maritime and naval cooperation with Indonesia.
Three other natural partners to expand cooperation
Besides Indonesia, three other powers present themselves as natural partners for India and Australia — Japan, France and Britain.
Tokyo has close ties with both Delhi and Canberra.
Their current trilateral dialogue can be expanded from the diplomatic level to practical maritime cooperation on the ground.
France is a resident power with territories in the Western Indian Ocean and the South Pacific.
Paris and Canberra are eager to develop a trilateral arrangement with Delhi that will supplement the bilateral cooperation among the three nations.
Engagement between India & EPDA
There is the less discussed role of Britain, which wants to return to the oriental seas.
In the east, Britain continues to lead the so-called Five Power Defence Arrangement set up back in 1971, after Britain pulled back most of its forces from the East of Suez.
The FPDA brings together the armed forces of the UK, Malaysia, Singapore, Australia and New Zealand.
Modi and Morrison must explore the possibilities for engagement between India and the FPDA.
Try a question:
India and Australia nuclear deal was a major breakthrough in the bilateral relation. But this bilateral partnership has so much more potential in other areas. Critically examine.
Conclusion
It is only by building a series of overlapping bilateral and minilateral platforms for regional security cooperation that Delhi and Canberra can limit the dangers of the growing geopolitical imbalance in the Indo-Pacific.
From UPSC perspective, the following things are important:
Prelims level: Mutual Logistic Support Agreement, AUSINDEX
Mains level: Paper 2- India-Australia relations.
India-Australia relations have been growing in depth and diversity. Though two countries have been collaborating in various areas there is still potential to be realised in many areas. This article discusses the India-Australia ties. The area in which the two countries are collaborating and scope to further it.
Relations with much potential
Mr. Modi convened a virtual multilateral summit to bring South Asia together to face the pandemic, and he also spoke online with G-20 leaders on similar issues.
On June 4, India will have its first virtual bilateral summit with Australia.
The convergence of interests and values has been patently obvious.
But the time has also come to translate that potential into reality.
So, let’s see how India and Australia are expanding the scope of cooperation
1) The two countries have sought to reconstruct their increasingly turbulent regional geography in the Indo-Pacific and see the Quad (with Japan and the United States) as the most potent instrument to promote cooperation.
The Quad, not surprisingly has been causing apprehensions in Beijing.
2) It is expected that the ‘Mutual Logistics Support Agreement’ will be signed during the summit.
That should enhance defence cooperation and ease the conduct of large-scale joint military exercises.
3) Last April, Australia and India conducted AUSINDEX, their largest bilateral naval exercise.
And there are further developments on the anvil, including Australia’s permanent inclusion in the Malabar exercise with Japan.
4) It may be prudent too for New Delhi and Canberra to elevate the ‘two plus two’ format for talks from the Secretary level to the level of Foreign and Defence Ministers.
Now, let’s look at the cooperation in areas that matter to the lives of the people of the countries-
1) Pandemic control through controlled adaptation: Lesson from Australia
Australia is one of the few countries that has managed to combat COVID-19 so far through “controlled adaptation” by which the coronavirus has been suppressed to very low levels.
Two of the leaders of this great Australia-wide effort are Indian-born scientists.
There is much that the two Prime Ministers can share on this front.
2) Collaboration in health, safe food and supply chains
In terms of health and safe food as well the supply chains that facilitate their delivery, there are important lessons to be learnt.
One of Australia’s richest businessman and first patron of the Australia-India Leadership Dialogue recently described the promise of DTC-CPG (direct to consumer; consumer packaged goods) which could transform global supply chains.
Here too there is much room for collaboration and new thinking.
3) Higher education
The recovery of Australia’s universities, most of which are publicly funded and many rank among the top in the world, is still in question.
But they are proving to be resilient and pioneers in distance and online learning.
Australian universities could well open earlier than most and emerge as a safer destination for quality education than their European or Ivy league counterparts.
Consider the question “India’s relations with Australia have of late acquired a dept and diversity which is visible in their cooperation in diverse areas. Comment.”
Conclusion
As India and Australia with shared values try to bring about fresh order in a turbulent world, the virtual summit, in this sense, could not have been better timed.
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 2- International relations.
Context
The raging fire in Australia gives provides an opportunity for India and Australia to deepen their dialogue including on energy.
Scope for the two countries
At this moment India and Australia have a rare opportunity to translate their converging interests into a partnership.
At Australia India Leadership Dialogue last month in Melbourne, the breadth and depth of the relationship was evident.
As a consequence of the bushfires, the debate on global warming, climate change and fossil fuels is going to intensify in the weeks ahead.
Environmental activism has gained ground throughout Australia.
Indian Ocean Dipole may have triggered the drought that is related to the fires.
The campaign against fossil fuels and the export of coal is sure to intensify.
India and Australia are two economies with a great stakeholding in fossil fuels.
It is critical for India and Australia to ensure that their dialogue on energy acquires momentum.
Both countries must simultaneously strengthen the International Solar Alliance and the search for other alternative green fuels.
Common threat of China
Leadership Dialogue also recognised that we are living through a period of immense turbulence, disruption, and even subversion.
Presence of assertive China is the single biggest challenge to our two countries.
In India, there is a consensus that the Australia-India relationship is an idea whose time has well and truly come.
Area of coordination
India and Australia can work on the area of water management to trauma research to skill and higher education.
Both the countries can also work in the area of maritime security, cybersecurity, counterterrorism,
In a survey, Indians ranked Australia in the top four nations towards which they feel most warmly.
Both have a strategic interest in ensuring a free, open, inclusive and rules-based Indo-Pacific region.
Indians are today the largest source of skilled migrants in Australia.
there is need for an early conclusion of a bilateral Free Trade Agreement.
Conclusion
There is a large scope for both countries to coordinate on wide issues like energy, research, security and work together for the benefit of both countries.
