The Comprehensive Strategic Partnership between India and Australia rests on the pillars of trust and reliability. With a greater convergence of views on global issues,[1] and a shared commitment to rules-based order in the Indo-Pacific, the two countries have taken their cooperative partnership to new heights. Participation in the Quad, with the U.S. and Japan since its revival in 2017, has sealed a burgeoning strategic relationship.
Bilaterally, defense and space relationships have moved at a fast pace. So has mobility and migration. The Indian diaspora in Australia has reached the 976,000 mark, making it the second-largest group of overseas-born residents in Australia, and Indian students in Australia currently number close to 100,000. The diaspora is largely comprised of professionals in technology, healthcare, marketing, engineering and science.
Australia and India make for natural trading partners based on their respective factor endowments. Australia has a comparative wealth of mineral resources and agricultural commodities, while India’s strength is in services and labour-intensive manfacturing. However, while trade and investment between India and Australia saw a steady increase earlier in this century from a low base, business growth has not been spectacular and has always been considered to be below its potential.
Australian businesses had never fully explored the Indian market, and perceptions of India were stereotypical — a largely inward-oriented economy with a plethora of business regulations at national and state levels. With China a major commercial partner of several large Australian companies, especially those dealing in commodities and other traditional trading partners such as the UK, the U.S. and Japan, Australian investment in and understanding of, India has been less of a compulsion., a country they put in the “too hard” basket[2].
Indian businesses, in turn, have not viewed Australian markets with the same enthusiasm as they had for the U.S. or Europe. In fact, just a decade ago, Australia was not among India’s top 10 overseas direct-investment destinations. Rather surprisingly, the Australian market was seen as small, highly regulated and distant.
These perceptions have undergone a distinct change over the last 10 years. Bilateral trade in goods and services was $16 billion[3] in 2008-09, inched up to $18 billion in 2020, and is now at $25.9 billion.[4],[5] The 2018 report by former Australian Foreign Secretary Peter Varghese, An India Economic Strategy to 2035, laid it out when he said that “no market over the next 20 years offers more growth opportunities for Australian business than India”, setting out a 10-fold growth in Australian investment into India to $100 billion by 2035[6].
The rise of China as a global commercial player and Australia’s growing export concentration on that country, coupled with concerns over foreign interference, has made India more relevant to Canberra’s strategic aims, both politically and economically. By around 2010, the term Indo-Pacific had become popular in Australian political circles, including India in a new geographic consciousness.
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Amb. Anil Wadhawa is the Former Secretary (East), Ministry of External Affairs, Government of India.
Manjeet Kripalani is the Executive Director, Gateway House.
This publication is supported by the Australian Government Department of Foreign Affairs and Trade through the Australian Consulate General in Mumbai.
The views and opinions expressed in this paper are solely those of the authors. The view expressed in the paper do not necessarily reflect those of the Australian Government.
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[1]https://www.aph.gov.au/About_Parliament/Parliamentary_departments/Parliamentary_Library/Research/Briefing_Book_Articles/47th_Parliament/AustraliaIndia
[2] Peter N Varghese AO. “An India Economic Strategy to 2035: Navigating from Potential to Delivery,” Canberra: Department of Foreign Affairs and Trade, Government of Australia, 2018, p.4. https://www.dfat.gov.au/publications/trade-and-investment/india-economic-strategy/ies/index.html
[3] Department of Foreign Affairs and Trade, Australian Government. “Australia-India Joint Free Trade Agreement Feasibility Study,” Commonwealth of Australia, 2010. https://www.dfat.gov.au/sites/default/files/Australia-India-Joint-FTA-Feasibility-Study.pdf.
[4] “India-Australia Trade – India exported 5124 commodities to Australia in FY2024.” India Brand Equity Foundation, Ministry of Commerce, Government of India, January 2025. https://www.ibef.org/indian-exports/india-australia-trade#:~:text=The%20bilateral%20trade%20between%20India,US%24%2019.01%20billion%20in%20FY23.
[5] Confederation of Indian Industry, “India-Australia Economic Cooperation,” New Delhi: Confederation of Indian Industry, September 2024. https://cii.in/International_ResearchPDF/India-Australia%20Report.pdf.
[6] Peter N Varghese AO. “An India Economic Strategy to 2035: Navigating from Potential to Delivery,” Canberra: Department of Foreign Affairs and Trade, Government of Australia, 2018. https://www.dfat.gov.au/publications/trade-and-investment/india-economic-strategy/ies/introduction.html.