The global trade conflict presents an opportunity to strengthen the India-Australia Trade Relationship. Australia has a vast landmass with abundant minerals and top-notch human resources, while India is the most populous country. India is the world’s fifth-largest economy in nominal terms and third largest in purchasing power parity. By 2030, it is expected to become the third-largest economy in the world (IMF).
India is Australia's fourth-largest export market and fifth-largest trading partner, with two-way trade totaling $49 billion. The Australia-India Economic Cooperation and Trade Agreement (ECTA), signed in December 2022, facilitates business growth between the two countries. A more comprehensive trade agreement is under discussion.
India-Australia Trade: Geostrategic Basis
Agricultural exports increased by 60 percent in the first 12 months after the ECTA took effect. Australia, India, the United States, and Japan are members of the geostrategic grouping known as the Quad. This brings a strategic dimension to this business relationship.
Leveraging the Business Opportunity of India-Australia Trade
The potential for business between the two countries is indeed huge. Leveraging this potential will require an understanding of the complexities of both societies, including their cultures, regulations, aspirations, and needs. It will require collaboration between institutions, companies, experts, and people.
A systematic review of trade and business between the two countries is needed. This series of papers on India-Australia business opportunities is the first step in building an understanding and defining a pathway to enhance these opportunities.
Based on available resources, the sectors with the highest potential for business growth are minerals, agriculture, education, renewable energy, technology, and tourism.
Australia - Agricultural Sector Snapshot
According to the National Farmers Federation, Australia has approximately 85,483 agricultural businesses with an estimated Value of Agricultural Operations (EVAO) of $40,000 or greater (as of June 2018). 421,000 people are employed in the sector. Sheep, beef cattle, and cattle farming are the largest employers, followed by fruit and tree nut growth, nursery, and floriculture production.
Fifty-five percent of Australia's land is used for agriculture, accounting for 74 percent of water consumption, 2.4 percent of value-added GDP in 2023-24, 5.9 percent of rural employment, and 2.2 percent of national employment.
Seventy percent of the total value of agricultural and allied products are exported. China, the Republic of Korea, Japan, the United States, and Indonesia are the largest importers of agricultural products from Australia.
Several Australian universities and research institutions support agricultural education and innovation, including CSIRO, ACIAR, and ABARES.
Indian Agriculture and Food Sector Snapshot
According to World Bank statistics from 2022, 42.86 percent of India's population of 1.4 billion is engaged in agriculture, with an average landholding of just 1.08 hectares.
Approximately 50% of India's agriculture is rain-fed. It is dependent on climate and weather events and is affected by the overuse of chemical fertilizers and excessive groundwater extraction. Very high post-harvest losses (30-40 percent) are noted due to inadequate storage, poor logistics, and underdeveloped processing facilities.
The sector is politically sensitive, with 29 states each having complex regulations. Business-to-business collaboration in food and agriculture is growing, supported by both the state and private sectors. Major corporations include Adani Wilmar, BL Agro Industries, Britannia, Nestle, ITC, and PepsiCo, among others.
Current Collaboration Status of India-Australia Trade
Australian institutions have achieved some initial breakthroughs in the Indian market. Here is a summary of existing initiatives:
- FTI Consulting's Agribusiness practice - Enhancing productivity and profitability in both countries.
- University of Southern Queensland & Tamil Nadu State Agricultural University - Climate change adaptation research supported by AISRF.
- University of Adelaide - Establishing five agricultural vocational training centers in India.
- Pulses Australia - Running the Indian Grain Storage Project to optimize grain storage.
- Rubicon Water - Modernizing the canal system in Karnataka.
- Western Sydney University & Indian Council of Agricultural Research - Collaborating to establish an agricultural campus.
- Australia SciTech4Climate - Training Indian farmers in climate-smart technologies.
- Marquis Macadamias - Exporting Australian macadamias to India.
Approach to Australia-India Agriculture and Food Collaboration
Despite the initial collaborations, there is no major India-Australia business-to-business partnership at scale in the sector. While multinational corporations are capitalizing on Indian opportunities, Australian companies cannot export commodities to India as easily as they do to China, Indonesia, and East Asian countries due to India's protective policies.
A new approach and strategy are necessary to capitalize on this opportunity. Business strategies must define competitive advantages, appropriate business models, and an understanding of social and political dynamics. Large corporations such as Starbucks, PepsiCo, and Cargill Foods have successfully navigated the Indian market, offering valuable lessons.
India Business Opportunity Areas
Strategic approaches that alleviate rural distress, identify appropriate partners, and focus on select states and regions are key to seeding a new business in India.
Key Opportunities:
- Agri-tech innovations
- Sustainable farming practices
- Agricultural research, development, and skilling
- Market access solutions
- Knowledge exchange in agricultural trade
- Collaboration with startups
- Technology and commercialization collaboration
- Digital, AI, and machine learning in agriculture
- Post-harvest management
- Protected cultivation techniques (greenhouse, hydroponics, precision fertigation)
- Small farm mechanization
- Precision agriculture equipment
- Water-efficient agriculture
- Climate-smart agriculture
Conclusion
The potential for India-Australia agricultural collaboration is immense. While the Indian market presents complexities, a well-structured and strategic approach can unlock significant opportunities. Understanding regulatory frameworks, leveraging local expertise, and adopting innovative business models will be essential for success.
Sudhirahluwalia, Inc. (https://bit.ly/4kS1Pg1) is an Indian business advisory work company.