Few people are as qualified as Peter Varghese to draw up a timely, sound, and realistic blueprint to build a dynamic yet sustainable economic partnership between India and Australia.

Unlike the case with China, an expanded trade and investment relationship with India will enhance Australia’s room for manoeuvre rather than diminish it.

Varghese has been Australia’s High Commissioner to India, and later Secretary in the Department of Foreign Affairs and Trade. That he has maintained his impressive network of friends and colleagues in India is evident in the familiarity he displays with the complexities of the Indian political and economic landscape, as well in his nuanced understanding of both the risks and opportunities in pursuing a more substantial economic and commercial partnership.

His report, An Economic Strategy for India to 2035, has now been presented to the Australian Government, which I am certain will give it the careful attention it deserves. But much of what Varghese says in the report could well be an excellent reference point for a counterpart Indian strategy for Australia.  

Varghese identifies three pillars on which his strategy rests: geopolitical convergence, economic relations, and people-to-people links.

There is a strong geopolitical convergence between the two countries anchored in their security partnership in the Indo-Pacific. They face a common challenge in the expanding and often unilateral assertion of Chinese power in our shared region. The US still maintains a formidable forward military presence in the region, but its relative predominance has diminished, and this devolves more responsibility on other major powers, including India, Japan, and Australia.

Both India and Australia attach value to the role of ASEAN and would like to see the strengthening of other regional institutions, such as the East Asia Summit process, and the early conclusion of the Regional Comprehensive Economic Partnership (RCEP) in which both countries are partners.

But this strategic convergence is not matched by a strong and vibrant economic and commercial relationship, nor is there broad-based civil society engagement. And this asymmetry puts at risk further strengthening of the security partnership between the India and Australia, which will have to play a critical role in shaping a new open, inclusive, transparent, and rules-based security architecture in the Indo-Pacific.

Varghese does a great job in drafting a practical blueprint for enhancing the India–Australia economic and commercial partnership by setting realistic targets and implementation plans. He envisages Australian exports rising by five times and investment by ten times in 20 years, putting India in the first tier of Australia’s economic partners. To maximise results, he recommends focus on ten sectors of the Indian economy and ten of India’s populous states.

The sectors he has chosen take into account Australia’s strengths, such as in education services, mining, energy, and water. The Indian states identified are predictably those which have had a better record in economic management and governance capability. These are mostly in the south and the west, although the study also includes India’s most populous state, Uttar Pradesh, and the eastern state of West Bengal.

While conscious of the many frustrations of doing business in India, Varghese conveys strong optimism about the country’s prospects. The balance sheet, he says, “overwhelmingly favours opportunities over constraints”.

An important element in the study is recognition of the role that the growing Indian diaspora in Australia could play in bringing the two countries closer together. This fits in well with Indian Prime Minister Narendra Modi’s own focus on the Indian diaspora across the world as part of its foreign policy priority.

However, there is a risk that the diaspora may become entangled in domestic politics in both countries. This may sometimes complicate rather than promote bilateral relations.

In any study of this nature, comparisons between India and China are inevitable. They are the world’s fastest-growing large emerging economies. However, India is not China and is unlikely to replicate its growth story. Its development trajectory will be different.

Varghese does well to put the India–China comparison in perspective, and rightly points out that such comparisons “only get in the way of understanding the nature of the opportunities in the Indian market”. India’s growth drivers will be services and personal consumption rather than manufacturing and investment. But even with a 6–8% GDP growth over the next several years, India will emerge as the third largest economy in the world, with substantial economic and security capabilities.

From an Australian perspective, the report points out, India offers scale, complementarity, and the opportunity to spread risks. And these are not only commercial risks but also, importantly, geopolitical risks.

Unlike the case with China, an expanded trade and investment relationship with India will enhance Australia’s room for manoeuvre rather than diminish it. As we head into uncharted waters both in our region and across the world, India–Australia relations have the potential to serve as a reliable anchor of stability and security. Peter Varghese’s study shows the way forward.