Is India the New China?

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This week Laura Gunnis the miningoilandgasjobs.com spokesperson on international business commented in a media interview that Australian and Indian business leaders need to get behind both the Australian and Indian government to develop an ambitious and forward looking free-trade agreement by the end of the year. Gunnis said the Australian government should be applauded for signing its bilateral trade deal with China this year in a deal that will benefit both countries into the next century.

This year the Australian Trade Minister Andrew Robb is in New Delhi for the third time for discussions on the Comprehensive Economic Co-operation Agreement. This agreement had in principle agreement between Australian Prime Minister Tony Abbott and Indian Prime Minister Narendra Modi last November and the agreement itself was to be finalised before 2016.

Mr Robb met with his counterpart, Nirmala Sitharaman, on Monday and yesterday attended the “reinvigorated” Australia India CEO Forum, co-chaired by Rio Tinto chief Sam Walsh and Gautam Adani, the Indian industrialist best known in Australia for his controversial $14 billion Queensland Galillee Basin coalmine, rail and port project. Mr Walsh said both countries’ business communities recognised the importance of a strong free-trade agreement that delivered tangible benefits and removed roadblocks to greater two-way investment.

Sam Walsh said “There is a lot of work to do but in the coming months we need both governments to remain bold and ambitious in their approach to the CECA” He added “We want to do this properly and comprehensively. It’s a tight time frame but Minister Robb has proven he is up to the challenge and the Indian government is sending all the right signals under Prime Minister Modi.”

Minister Robb led a 450 member Australian business delegation to India in the first quarter of this year. Mr Walsh warned the delegation in January that business success in India did not come easily or quickly.

Rio Tinto has encountered many bureaucratic hurdles over the last twenty years in India negotiating to bring on line a $2 billion iron ore mining project in Orissa and a $500 million diamond mine in Madhya Pradesh.

Yesterday, an upbeat Mr Walsh said “I am confident the stars are aligned between the governments'
key negotiating focus and what business leaders wanted to see from the agreement. The deal between the two countries will focus primarily on services — a sector which Minister Andrew Robb said represented 75 per cent of Australia’s GDP. “The next growth area for our economy is for our businesses to take their services and become a part of other economies.”

The resources sector will also figure prominently in the free-trade agreement — a fact reflected in the make-up of the forum that includes Australian resource majors Rio, BHP, Woodside and Toro as well as the Adani group and Jindal Steel and Power. India needs energy security to fuel its economy and pull hundreds of millions more Indians out of poverty, while Australia needs new markets for its natural resources.

“We recognise that the resources sector remains central to development in both countries, and that competitively priced, stable supplies of Australian minerals and resources contribute to India’s energy security,” Mr Adani said at yesterday’s meeting.

Mr Walsh added “Australia can also offer project financing through banks and public private partnerships as well as skills development and technical innovation in exchange for an environment that offered greater legal certainty for Australian operators and a consistent regulatory process for new projects.”