Published daily by the Lowy Institute

India's interests are aligning with Australia's; now Modi must grasp the opportunity

India's interests are aligning with Australia's; now Modi must grasp the opportunity

As the fastest growing economy in Asia, many countries are vying for India's attention. India's understaffed Ministry of External Affairs is constantly grappling with the demands of foreign governments for meetings with senior Indian leaders.

There is no doubt Australian leaders have to work harder to develop and maintain mutually beneficial relations with India. After all, when Prime Minister Narendra Modi visited Australia a year ago, he was the first Indian prime minister to come to this country in 28 years. Meanwhile, every Australian prime minister, with the exception of Paul Keating, had visited India at least once during that period. And recently, Andrew Robb made his fourth visit to India this year in an attempt to finalise a bilateral free trade agreement by the end of the year, as was agreed during Modi's Australia visit.

Robb also took part in the inaugural Australia India Leadership Dialogue, along with Attorney-General George Brandis, shadow ministers Chris Bowen and Penny Wong, and other MPs and senior bureaucrats from both sides. Based on the model of the Australian American Leadership Dialogue, the purpose of AILD is to regularly bring together senior politicians, business people, government officials and scholars from the two sides to foster mutual understanding and develop connections.

The Dialogue was organised by the Australia India Institute in New Delhi and supported by a grant from the Australian entrepreneur Anthony Pratt, who was among the participants. A good indicator of reciprocal support for the Dialogue would be a similar commitment by an Indian donor for this purpose in future years.

India figures more prominently in Australia's conception of Asia than ever before. This is for both strategic and economic reasons. [fold]

Australia and India inhabited different strategic universes during the Cold War. India, a founder and champion of the non-aligned movement, grew closer to the Soviet Union after its 1971 war with Pakistan, and saw Australia mainly as a junior member of the Western alliance.

Against the backdrop of China's growing strategic footprint in Asia, India's strategic interests are now more closely aligned with that of Australia, especially in the maritime domain. Despite Australia's failure to take part in the joint US-Indian Malabar naval exercises since 2007, Indian strategic planners increasingly see Australia as a friend.

The two nations also share a number of common strategic objectives. As an example, they both want to ensure that the freedom of navigation in the South China Sea is not impeded and both have issued statements to this effect along with the US.

Australia's primary interest in India, however, is economic. It wants to develop India as a lucrative market for Australian goods and services. Currently, Australia-India two-way trade is about one-tenth of Australia-China trade. There is clearly enormous potential for growth, especially if the Modi Government can build on last year's growth rate of 7.4%.

Prime Minister Modi ran for office in last year's general elections on a development platform. He promised to turbo-charge India's economic growth and turn the country into a land of opportunity for its youthful population. Since being elected to office last May, he has toured the world and invited global companies to invest in India and launched a glitzy marketing campaign under the slogan 'Make in India'.

Modi has also been lucky. A fall in global energy prices since his elevation to office has brought inflation down from 10% before the election to 4%. He has also focused on improving bureaucratic decision-making and policy implementation by regularly meeting with senior officials, often bypassing the relevant ministers.

But his government has so far failed to deliver on much-needed economic reforms in key areas such as taxation, labour laws and public sector enterprises. It has been long on launching a series of high-profile campaigns — from 'Clean India' to 'Digital India', each with its own logo and promotional strategy — but short on delivery.

More damagingly, a climate of intolerance towards minorities and secularists has developed in the country since Mr Modi's rise to power. The convincing election victory of his Bharatiya Janata Party (BJP) last year has emboldened communal elements in the country to promote their own Hindu nationalist agendas at the expense of rational thinking and freedom of expression. A spate of violent incidents over the past few months has brought these concerns to the fore. In a recent report, Moody's Analytics warned that India risked 'losing domestic and global credibility' if Mr Modi failed to keep the broader membership of the BJP and its associated family of organisations in check. If Mr Modi wants to achieve his ambitious economic goals, he should know that he cannot keep mum when innocent people are killed or attacked.

India has a tremendous economic potential. But to achieve that potential, it must create conditions in which all its people, regardless of race, religion gender or caste, can be equal participants in the country's economic and social progress. Then, and only then, will India command the respect of the international community. Countries like Australia will be among the enthusiastic supporters of India's economic journey.

Photo by Flickr user Al Jazeera English.

You may also be interested in