Australia and India have long held a trustful bilateral relationship, gathering serious momentum in recent times. For around ten years, Australian businesses have monitored the rapid growth of their close neighbour, and vice versa, in anticipation of more formal access to new and evolving million and billion-strong customer markets.
As set out in Australia’s An update to an India Economic Strategy to 2035: Navigating from potential to delivery (dfat.gov.au) and India’s ‘Australia Economic Strategy’ (AES2020), opportunities to accelerate Australia-India business span numerous sectors. Taking India’s technology, talent pool and manufacturing capability combined with Australia’s natural competitive advantages in land, agriculture & natural resources and infrastructure, the countries seem a perfect match.
The most forward-thinking businesses with a presence in Australian or Indian markets (or both) have been continually adapting growth plans to better align with the opportunities these strategies identify, strategically positioning themselves for the long-awaited arrival of more accessible market entry pathways.
AI-ECTA: the new trade deal
The Australia-India bilateral architecture has been enhanced with the signing of the historic Australia-India Economic Cooperation Trade Agreement (AI-ECTA) on 2 April 2022. Though it is an interim trade deal, AI-ECTA is substantive and far reaching, facilitating greater and more liberal trade and investment between Australia and India.
The agreement spans across trade in goods and services, people movement (including measures to increase the level of skilled migration – an ongoing issue in Australia) and other regulatory and non-regulatory modifications, as captured in KPMG’s placemat information guide on the agreement.
Signed at a uniquely accelerated pace, the AI-ECTA comes at a critical time for both countries’ economies.
In the face of an uncertain geopolitical climate, global supply chain disruption and insatiable demand, countries around the world are making concerted efforts to mitigate risk by acquiring sure supply pathways and reinforcing diplomatic security. Ensuring Australian and Indian businesses are taking every measure to capitalise on the newfound strength of the bilateral relationship and the technical market access advantages it entails, will be a key to success.
The benefits of increased trade, investment and capital flows, and the development of new supply chains, will benefit not just Australia and India alone, but offers potentially much wider benefits to support the broader Indo-Pacific region for years to come.
Leverage opportunities today
While there has been no official announcement on when both Australian and Indian parliaments are expected to approve the agreement, the expectation is that this will occur before the end of the 2022 calendar year. With the upcoming ratification of AI-ECTA, Australian boards and business leaders should recognise the power of newfound growth and diversification offered by the Indian market.
How organisations can better access the rich flow of goods, services and people between the two nations should be front and centre of every board room. Core to this growth will be discussing with internal management and stakeholders:
- What is our current India strategy, and does it need to be refreshed given recent developments?
- Do we have a solid understanding of the new arrangements under AI-ECTA, and are we leveraging them to their full potential?
- Given Government initiatives and the opening of the world’s second largest market by population (set to have 900 million internet users by 2025), what are the business models and opportunities that we can explore over the next 12-18 months?
- What is our present level of engagement with India? Why not start locally with your Indian counterparts across corporates, businesses, other networks and individuals within Australia’s large Indian diaspora?
KPMG placemat information guide
Our placemat elaborates on the opportunities the AI-ECTA creates for Australian and Indian businesses, with a succinct overview of the key regulatory changes to be expected and how KPMG can help companies to leverage them strategically.