The Hindu Business Line : Australia-India Trade — Gold that's put to use more gold begets

For Australia, India is becoming increasingly important primarily because it has become its sixth largest export market. Gold is a critical element in this trade and is now Australia's main export to India.

Gold exports to India in 2000 were valued at less than $50 million. By 2005, they had risen to over $2,500 million. Australia now supplies approximately 20 per cent of India's gold market

Foul cankering rust the hidden treasure frets,

But gold that's put to use more gold begets.

— William Shakespeare, Venus and Adonis, 1593

India's emergence as an economic and strategic powerhouse in Asia is proving to be one of the most significant forces for change in the 21st century. India has seized opportunities presented by the modern globalised economy, and is increasingly seen as a hub of global trade and commerce. It is, therefore, timely for it to explore how it can maximise the benefit it accrues from its critical role in the world gold market.

For Australia, India is becoming increasingly important. This is not only because of its strategic role in Asia-Pacific, but also because India has moved up to become Australia's sixth largest export market. Gold is a critical element in this export trade. It is now Australia's main export to India. And the expansion in trade has been extraordinary. In 2000, gold exports to India were valued at less than $50 million. By 2005, they increased to over $2,500 million. Australia now supplies approximately 20 per cent of India's gold market.

Market liberalisation

Because of the importance of Australia-India gold trade, we monitor the on-going debate in India about further liberalisation with interest. India's record, since opening up its economy in the early 1990s, is worth a mention . As a result of freeing up import access, India now accounts for around 20 per cent of global gold offtake in any one year. Further reform of India's domestic market will also have a significant impact on the country's ability to take on a greater role in the world gold market. India's regulatory structures are, of course, a sovereign issue. Australia continues to encourage India's liberalisation efforts in a general sense. Fostering and encouraging entrepreneurial talents in India is good for the regional and global economy. In other sectors, such as knowledge industries, including information technology and biotechnology, Indian companies are examples of world best-practice. Telecommunications and civil aviation are success stories and promise more. The prowess of Indian entrepreneurs in the global market is becoming legendary. India is already well on its way to becoming the global leader in export jewellery manufacturing. I have no doubt that, given the opportunity, India's entrepreneurs can play a leadership role in the world gold market more generally.

Our major gold companies have made the point that they enjoy good relations with their main clients in India and our gold trade is forecast to remain steady in the next year or so, regardless of whether the Indian market is further liberalised. Our position on liberalisation is based simply on the principle of mutual benefit. A robust and responsible Indian gold market is good for regional and international trade. This, in turn, benefits us all over time.

Australia strongly supports policy measures that promote high industry standards and consumer protection. We note the recommendation by the Ministry of Commerce and Industry concerning the hallmarking of gold. Promotion of these types of standards is good for the reputation of the industry, and provides greater certainty in trade.

Gold mining and investment

Australia is the world's third largest gold producer behind South Africa and the US, and the second largest exporter. Australia supplies more that 11 per cent of the world's gold each year and the production is expected to hit 345 tonnes in 2008-09. We have approximately 70 operating mines. Our miners demonstrate world best practice in technology and sustainable development. This includes community engagement and development, mine rehabilitation, mine closure and environmental stewardship.

Australia wants international investment in its resources industry, including gold mining. This is because it makes commercial sense. Overseas control of Australia's gold production is estimated to be around 70 per cent. Investment opportunities can be found in a number of gold exploration projects in Australia, and I invite you to look further into this promising area of mutual benefit.

A number of Australian companies are active in the Indian gold mining sector or keen to enter — either on their own or as joint venture partners. Further liberalisation of the mining sector is one of the issues being grappled with in India, including through the Hoda Commission report. I would commend to you Australian gold mining and exploration companies. Quite simply, they are good at what they do. In one or two cases, Australian juniors are already involved in what might emerge as world-class gold discoveries in India. India has the potential to supply a significantly larger percentage of its gold needs from domestic supply than it does at present, and we can help with the technical skills needed to develop a world-class industry.

Two-way trade and investment in resources was high on the agenda when the Australian Prime Minister, Mr John Howard, visited India in March 2006 with a senior business delegation. These issues will again be in focus when Australia's Minister of Industry, Tourism and Resources is expected to lead a delegation of around 70 senior industry representatives to the International Mining and Machinery Exhibition in Kolkata in November. Australia is partner country at the IMME this year in recognition of the growth of bilateral cooperation between our respective resources industries.

The scope of Australia's bilateral relationship with India has increased rapidly in line with India's economic and strategic growth. Trade and investment in the resources sector, including our main export gold, underpins this economic relationship.

Continuing with this engagement can help ensure that Indo-Australian relations achieve its full potential.

(The author is the Australian High Commissioner to India.)

(Address by the Australian High Commissioner to India, Mr John McCarthy, to the Associated Chambers of Commerce and Industry of India-organised Second International Gold Summit in New Delhi on September 1 and 2.)

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