The Hindu Business Line : Australian business wakes up to India

The Australian Prime Minister, Mr John Howard, arrives in New Delhi Sunday night in the slipstream of the visit of the US President, Mr George Bush, that saw a deal signed on opening up the Indian nuclear energy market.

Yet Mr Howard and his country, which has 40 per cent of the world's uranium reserves, are not inclined to take commercial advantage of that simply because of their policy on non-proliferation. As the Minister for Foreign Affairs, Mr Alexander Downer, explained in an interview to Business Line last week, Australia will not supply uranium to any country that has not signed the nuclear non-proliferation treaty. India has not.

But Mr Howard, who is bringing along a large team of corporate executives from Australia, has plenty of business up his sleeve. After finding India remote and unfriendly to do business with for the past few decades, Australia is suddenly finding the need to engage more closely. Among the fields corporate Australia seems keen to set its feet on are mining, financial services and education.

MANY deals on cards

On the cards are a number of deals, especially in the education sector. Education is big business in Australia, and international students bring in $5.5 billon in revenues. Currently 27,000 Indian students are studying in Australia, all but a few of them paying the full fees and living expenses. This number is 30 per cent higher than it was in the previous year. Yet they represent just 8 per cent of the total number of international students in Australia. China has three times as many students. Mr Howard is expected to announce initiatives that will make it easier and attractive for more Indian students to choose a university Down Under.

"We are determined to deepen our relationship with India," says Professor John Ingleson, Deputy Vice-Chancellor, The University of New South Wales in Sydney, which has 40,000 students. The Australian Defence Force Academy, which the UNSW operates for the Australian Government, is slated to tie up with the Indian Institute of Technology, Mumbai, for joint research projects and student exchanges.

Potential untapped

Trade between the two countries added up to about $5.2 billion in 2004-05, which many concede is far less than the potential. India's import basket consists principally of primary goods such as coal, gold (a quarter of India's imports), copper and wool.

That is an embarrassment for a country that is developed and boasts of high technology and management skills.

"We do not want to be just a quarry," says an Australian Foreign Affairs official defensively.

Mr Sujan Chinoy, India's Consul General in Sydney, agrees there is great potential for promoting Australia's technologies in India.

Solar energy, water purification, banking, insurance and auditing are areas where Australia can logically promote its interests in India, he says, for it has great experience in dealing with other parts of Asia.

"In the manufacturing sector there may be limitations on what Australia can do in India, for even in Australia manufacturing has eroded because of China's entry and dominance," says Mr Chinoy. "But there may still be merit in Australian manufacturers looking at India as an alternative to China."

Incursions made in the recent past by Australian firms have yielded only patchy results.

Telstra, the Australian telecom giant, pulled out fairly early on in the game, so did AMP from its insurance venture with Sanmar.

Yet others have continued to move in. Maqaurie Bank acquired ING Vysya's broking business; AXA has joined with Bharti in insurance and recently the retail giant, Woolworths, tied up with the Tatas to set up a wholesale distribution network.

More deals are said to be in the pipeline.

India can be disillusioning: Jeffrey

Despite the new-found enthusiasm among many businessmen and academics in Australia, Professor Robin Jeffrey, Director, Research School of Pacific and Asian Studies, Australian National University and a long-time India watcher, sounds a note of caution.

"India so disillusions Australian businessmen," he says. "They see people in India talk English and talk cricket. So Australians think they ought to behave like Australians. But they don't and therefore there is a lot of disillusionment that they did not do (business) this way or they went off to a marriage party instead of signing the agreement."

Professor Jeffrey recalls how Kerry Packer lost heavily in his deal with Himachal Futuristic (telecom).

"It is difficult to see a lot of Australian investment happening in India except in resource-based industries," he ventures to predict. "There is not going to be a lot of value-added investment."

"The big stuff is easy: digging things (like coal) up and putting them on a ship. But the more elaborate things, such as waste management or water management, take time to get working," he says.

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