Tag: Export

Australia being a cute Rasgulla.

So due to increase tension between India and China and India and Australia there is a huge chances and probability that i the days to come India and Australia may become strongest of allies as by discovering some of the biggest potential they behold through trade and military presence in both Asia and Oceania if there is a mutual respect and support between each other. There is also an ambitious bilateral agenda that will add substance to the India-Australia summit. When it comes to defense, India and Australia share a common concern over China it is that aspect which informs a lot of the bilateral transactions between the two countries. While Australia is worried about China’s presence in the Pacific, India is worried about China’s increasing activities and influence in the Indian Ocean.

Earlier this year, the Australian and Indian navies concluded a two-week-long bilateral maritime exercise code-named AUSINDEX. A government release at the time said the exercise was conducted, “to strengthen and enhance mutual cooperation and interoperability between the IN (Indian Navy) and RAN (Royal Australian Navy), providing opportunities for interaction and exchange of professional views between the personnel of the two navies”. From 2016-18, the armies of the countries conducted a joint military exercise dubbed “AUSTRA HIND”. Significantly, for the first time in 2017, Australia’s Foreign Policy White Paper identified India as being at the “front rank” of Australia’s international partnerships, “on par with the US, Japan, Indonesia, and China”, Australian High Commissioner Harinder Sidhu said in her address at the National Defence College in May this year.

The informal strategic Quadrilateral Security Dialogue (QSD) that was initiated by Japan’s Prime Minister Shinzo Abe in 2007 was largely in response to China’s growing power and influence. Initially, the “Quad” members included India, Japan, the US, and Australia; however Australia chose to withdraw when Kevin Rudd was Prime Minister, since it did not want to be a part of an anti-China alliance at the time. In an article in the Nikkei Asian Review in March 2019, Rudd said, referring to his opposition to the Quad: “Japan said that the rationale for the QSD was to defend the international rules-based order, implying that China back in 2007 had already become a threat to the order.“For Australia in 2007 therefore, to begin embroiling itself in any emerging military alliance with Japan against China, in the absence of any formal reconciliation between Tokyo and Beijing over the events of the Second World War (Nanking Massacre), was incompatible with our long-term national interests.”However, Australia later rejoined the dialogue in 2017 on the sidelines of the ASEAN Summit, signalling a re-ignition in Australia’s interest in the dialogue.

However, it is the economic dimension that continues to lag. The summit provides Modi and Morrison with the opportunity to impart a fresh momentum to it. Bilateral trade is barely 30 billion dollars and even though Australia is a world leader in niche technologies, investment in India is relatively limited. ‘An India Economic Strategy to 2035’ by Peter Varghese, former Australian Foreign Secretary and High Commissioner to India, provides an excellent blueprint. It identifies 10 states and 10 sectors of the economy that can be of particular focus, and underscores the important role of investment in driving the economic relationship. But while Canberra sees the opportunity, private business groups have been shy to grab it. With the exception of the Macquarie Group and a couple of others, Australia’s large financial institutions, pension funds and even the sovereign Future Fund have shown reluctance to invest in India. From India, the Adani group’s multi-billion dollar investment into the Carmichael coal fields in Queensland also ran into a series of hurdles and dampened some of the initial ardor to invest in Australia. There are also a number of less glamorous areas that offer fertile ground for collaboration in sectors where Australia has proven expertise. Some projects are already underway in agriculture, animal husbandry, water conservation, mining technology and equipment and sports infrastructure, but there is ample scope for scaling these to become success stories that both countries can proudly showcase. Cyber security is of critical interest to both, as is the need to work together in tapping Australia’s huge deposits of lithium and rare earths.

Blacklist China!

Easier said than done

Economic retribution against China will have limited effect, constructing domestic potentials and leveraging the market is essential.
To begin with, boycotting Chinese products is easier said than done. India is dependent on China for a wide range of goods, lining-up from electronics to fertilisers — Made in China often helps Make in India too.
In the fallout of Monday night’s confrontation between India and China in the Galwan Valley, there has been a growing tumult for a boycott of Chinese products — in impact, a demand to use trade as a blunt instrument of retaliation against China. The Department of Telecommunications has reportedly conveyed to state-owned BSNL that it must not use Chinese made equipment in its network upgradation plans, even as the government is “actively considering” asking private mobile service providers to lessen their reliance on China-made equipment. Another Chinese engineering company is likely to forfeit a contract with the Indian railways, and there is reportedly talk of cutting down imports of products such as electronics from China. While the demand for boycotting Chinese goods may make for good optics, at this critical juncture, there is need to exert wariness, and for a deemed strategy. The harsh reality is that economic retaliation will have its own set of consequences. As India accounts for a nominal share of China’s export market, it will at best have limited impact on China. And the implications for India of such actions will play out at multiple levels.

Any endeavour to reduce imports from China, operationalized through tariffs or other non-tariff barriers, will put up the prices for Indian consumers. And as India also imports capital goods and intermediate products from China, such restrictions will affect domestic manufacturing competitiveness, and thus further worsen the country’s export competitiveness. Moreover, in the short-run, ensuring uninterrupted alternative supplies may not be a reasonable option. There is also the issue of Chinese investment in the Indian start-up space to contend with. Companies like Alibaba and Tencent have invested in “unicorns” such as Zomato, Paytm, Byju’s, Ola cabs and others. This relationship will be difficult to disentangle. The government will have to carefully think through the consequences of any policy action that it decides to pursue. The policy should flow from a careful cost-benefit analysis, not be driven by knee-jerk reactions.

This is not to deny the need to build up domestic capabilities, across sectors. The long-term objective should be to push through long-pending legislation that aims to address the structural bottlenecks that continue to plague and hinder domestic competitiveness. India’s strategy should be to boost manufacturing competitiveness, and increase its share in world trade. But this is a long-term proposition. The short-run costs of boycotting Chinese products will be heavy and may even be counter-productive.