Australia and India in the ASIAN CENTURY
By: K.G. SREENIVAS Dated: January 27, 2015
India has emerged as a frontline market for Australia. In an interview with Creative Brands, Nicola Watkinson, Minister Commercial and Senior Trade & Investment Commissioner, South Asia, Australian Trade Commission, outlines how India is central to Australia’s engagement with Asia and beyond. “We have looked at a strategy that runs over an extended period of time. We are looking at a long-term engagement in India that stretches across all aspects of the bilateral relationship,” says Nicola.
As Australia looks to deepen and widen its business ties with India, there is increasing recognition on both sides about how one can ably complement the other. In fact, as Nicola notes, whilst energy and resources will be the bulwark of the India-Australia bilateral relationship future ties will ride the wave of “technology and innovation”. Collaborative research, design, and innovative solutions, especially for the manufacturing sector, will create “new opportunities for our companies and deliver business growth and export success for both countries”, says Nicola.
You have often spoken about Australia’s future in Asia. How do you see India’s role in Australia’s future?
One area that is already strong is the investment (FDI) relationship and we will continue to have growing links around energy security as Indian companies invest in Australian coal anad iron ore to secure raw material supplies for the power and steel sector. There is an opportunity is grow this further across the resources space and into liquefied natural gas (LNG). Australia is soon expected to become one of the top LNG producers in the world. So, energy and resources will remain a key platform in our bilateral relationship and we will get mutual benefit by working together. But where I see the next wave of interest starting to develop is technology and innovation. This is particularly apparent in the manufacturing sector where Indian companies are looking to globalise. They’ve had strong growth domestically and many of them are now looking at looking at taking their brand into the international marketplace. And in order to do that, and to compete effectively against imports that are coming into the marketplace here, they need to adopt new technologies, new designs, and innovations. Australia has excellent research and technology, but what we don’t have is a large marketplace. Indian companies can access the design, engineering, and project management capabilities in Australia while offering their Australian counterparts a global path to market by integrating them into their value chains. In collaboration they can then target new third markets as well.
What do you mean by the ‘Asian Century’?
It’s interesting because in my previous posting I was looking after our European operations based in Germany. What is apparent from whether you’re sitting in Germany or Australia or here in Delhi is that the weight of economic movement is towards the East, towards Asia. If you look at Australia’s trade figures, you’ll see that the top trading partners are all Asian countries. Australia is already integrated into the Asian marketplace and this trend will continue as Asia increases in economic strength. The ‘Asian Century’ terminology is a way of acknowledging the importance of the Indo Pacific as an economic powerhouse and the way in which this is changing the dynamics of global trade and investment.
How deeply is Australia culturally aligned with the rest of Asia?
Many readers would be surprised to learn that Chinese is the second most-widely spoken language in Australia, after English. The challenge is we don’t necessarily have the most up-to-date image of one another’s countries. After coming here I found that Indians have quite an old-fashioned view of Australia and when I go back to Australia, I’m surprised by how outdated some people’s images of India are. Part of the work that we do here is to try and create a modern and sophisticated understanding of each other’s economies. Part of that is to understand that Australia is very much a part of the Indo-Pacific region. Our trading practices are largely Asian-focused these days. In the last 20 years, there has been a significant growth in the Indian population in Australia (about half a million now). All of that helps in a much better understanding of our cultures.
What are the challenges that Australian business faces when investing in India?
The main challenge has been the complexity of the market — understanding the regulatory environment and the approval processes. There has been a lot of interest from the Australian side, but it has been difficult to realise that interest. We have seen a lot more success in the services sector. We have achieved this by breaking India into much more manageable pieces. People make the mistake of trying to see India as one huge market, but when you live here you realise that India is made up of a set of regional markets with distinct approaches to doing business — their own sets of standards and regulations. Some state governments are really pro-business. Being able to help Australian companies to understand how to navigate India to find the right location for their business is where we see our value-add. That’s why I think we may be the only organisation of our kind with 11 offices spread across India. We recognise that we can’t sit here in Delhi and try and help someone do business in Kerala. You need an office in Kochi. And you need local Indian people with a first rate understanding of the market and strong networks to help Australians do business here. I am lucky to have a fantastic team with great industry knowledge to act as a bridge for Australian companies coming to India.
With regard to India’s legislative and regulatory climate, you talk about the chaotic way of doing business in India, yet how things still get done...
There are a couple of tips I give to our companies looking to establish in the Indian market — think local and be willing to adapt to find the right business model. Luckily Australians are relatively flexible people. Having been isolated in our early history we had to develop the ability to solve problems and find a way to get something done. A couple of hundred years ago, getting someone to just pop over from England wasn’t very easy. So, I think Australians, by nature, have an adaptive way of doing business. And that works well in India. Transplanting a business model from Europe or U.S. to India hasn’t been effective. Australian companies need to work with local partners to understand how to come up with a successful business model. My view is that you need to come to the market, have your feet on the ground and be prepared to make a long-term commitment so you can learn what works and how to satisfy Indian customers.
What are Austrade’s long-term strategic plans for India?
We have created a strategy that runs over an extended period of time and is not just focused on short-term gains. We have four overarching areas of focus. The first of them is giving India energy security by being a reliable and trustworthy supplier of resources. The second is around education and skills, particularly the delivery of in-market training for India’s young and fast growing workforce. The third focus is on improving productivity and nutritional outcomes by introducing agricultural technology in areas such as dairy management, grain storage, and sustainable fisheries. This is an area where Australia has a lot to learn and a lot to give. We have similar climatic conditions and similar geographies in terms of the challenges of making infrastructure work for a much dispersed population. The fourth area is infrastructure — road safety, heavy freight rail, and waste water management.
As an economic diplomat, how do you communicate Australia in India?
It is an interesting challenge because most people in India don’t wake up every morning and think about Australia as a place to do business. Indians generally have a positive impression of Australia. They see it as a great place to go on holiday or to study. Many of them are interested to work there. But if you look at how Indians rank us in terms of our scientific excellence, levels of innovation, our financial services sector, then this awareness of Australia drops rapidly. So the challenge is to present stories that effectively communicate what the Australian economy is all about. It could be through case studies or through an initiative called Australia Innovation Showcase (held 15 September to 15 October 2014) where we bring experts who are thought leaders in life sciences, advanced materials, and digital media to do business round-tables, media briefings, lectures at universities, and partner programmes with groups such as FICCI, ASSOCHAM and CII. We also have premium food and wine events in partnership with major hotels and retailers like Nature’s Basket and we work closely with our colleagues from Tourism Australia on their Restaurant Australia strategy. Readers who are interested in the work we do can find out more at www.austrade.gov.au/india