The Hindu Business Line : DOWN UNDER BECKONS

After visiting the MRF Pace Foundation in Chennai on the last leg of his second visit to India, the Australian Prime Minister, Mr John Howard, said he was watching with trepidation the way fast bowlers were being groomed in India, and hoped that Australians would be able to tackle them. It is to be hoped that the analogy will also apply to the business side of India-Australia relations with Canberra currently going all out to woo Indian capital and technical expertise to participate in the Australian economy.

Indeed, the central message of Mr Howard's visit is that India should involve itself more closely with the opportunities offered by the Australian economy, the current level of participation being quite inadequate vis-à-vis the potential. While in the past the Australians have found India remote and unfriendly to do business with, today there is a clear change in perception, with Canberra pulling out all the stops to expand and deepen the bilateral engagement in such fields as mining, financial services and education. In fact, the service sectors such as tourism and education have been in the forefront of Australian exports to India, and likely to receive a boost following Mr Howard's visit. But the bilateral trade figures suggest that a further increase in Australian exports will only add to the trade surplus that Canberra enjoys (of Australian $3.6 billion). New Delhi's main effort should be to reduce the trade gap which, of course, is easier said than done. According to an Assocham study, such is the structure of the bilateral trade exchange that even if Mr Howard's visit were to lead to the two-way trade increasing from $7.5 billion to the projected $16 billion by 2010, the trade balance would still remain in Australia's favour.

India exports mainly gems and jewellery, machinery and instruments, cotton yarn, fabrics and readymade garments, and imports gold, coal, diamonds, copper ore and wool. Since the potential for increasing the existing lines of exports is limited, New Delhi will have to push newer channels. Software is one, and is already being focussed on by Indian majors. Another is the setting up of manufacturing activity in Australia, not so much with an eye on tapping that market as reaching out more efficiently to South-East Asia. This will not be easy because of the healthy competition encouraged by Canberra, and the strong presence of Chinese and Western companies. Clearly, establishing a stronger economic presence in Australia will not be easy for Indian enterprises, but the effort will still need to be made because of the strong potential for success, as acknowledged by the Australian authorities and the Indian players alike.

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