India country brief

Overview

India, the world's largest democracy, is a major regional power and one that is rising globally. In 2009, the Australia-India bilateral relationship was elevated to a strategic partnership and 2014 saw reciprocal visits with then Australian Prime Minister Tony Abbott visiting India in September and Indian Prime Minister Narendra Modi visiting Australia in November. Prime Minister Turnbull met Prime Minister Modi in the margins of the 2015 and 2016 G20 Summits.

India is Australia's fifth largest export market, and tenth largest trading partner overall. Investment has grown significantly over the past decade, as have tourist flows between both countries. Complementarity between economies, India's size and growth trajectory, and strong diaspora links all present opportunities for a closer economic partnership.

Political overview

Indian government

The Republic of India is a constitutional democracy made up of 29 states and seven union and national territories. The President of India is obliged to act on the advice of the Council of Ministers, chosen by the Prime Minister.

The Indian Parliament is bicameral, comprising the 545-member Lok Sabha ('people's' or lower house) and the 245-member Rajya Sabha ('states' or upper house). Lok Sabha members are elected by universal adult suffrage every five years (except for two nominated Anglo-Indian members) using the 'first past the post' voting system. The Rajya Sabha is not subject to dissolution; one third of its members retire every second year. One third of Rajya Sabha members are elected every two years by the legislative assemblies of the Indian states.

The 2014 Indian national election for the Lok Sabha  saw the Bharatiya Janata Party (BJP) and its National Democratic Alliance (NDA) partners form a new government. The BJP won 282 seats in its own right in the 545-member Lok Sabha, the first time a single party had obtained a parliamentary majority since 1984.

Foreign relations

India has sought to position itself as a major international player since independence in 1947. It has been at the forefront of developing country activism and was a founding member of the Non-Aligned Movement (NAM). India has also been an active member of the United Nations and the Commonwealth, and has expanded its cooperation with East Asia, including with Association of South East Asian Nations (ASEAN) countries and as a member of the East Asia Summit (EAS).

India was granted full dialogue partner status with ASEAN in 1995 and was admitted as a member of the ASEAN Regional Forum in July 1996. India plays a prominent role in fora such as the World Trade Organization and the G20. India is also lobbying for membership of the Asia Pacific Economic Cooperation (APEC) grouping and for a permanent seat on the United Nations Security Council, both of which Australia supports.

India is the major power in South Asia and its relations with its neighbours set the tenor of foreign relations in the region. India's strategic focus has traditionally been on its neighbourhood although it has sought to broaden this focus, notably towards East and South East Asia. It is active within regional groupings such as the South Asian Association for Regional Cooperation (SAARC), the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and within the Brazil, Russia, India, China and South Africa (BRICS) group.

'Act East' is the centerpiece of the Indian Government's foreign policy. Announced by Prime Minister Modi in 2014, the policy seeks to strengthen India's 'Look East' policy through intensified engagement with South East Asia and expanded geographic focus, including to countries such as Australia, Japan and Pacific Island nations. Since 1991, the 'Look East' policy had been a major strand of Indian foreign policy, initially signalling India's desire for economic and diplomatic engagement with South East Asia.

Relations with other key countries

As major partners, India and the United States engage in a strategic dialogue. The development of the India-United States relationship in recent years has been driven by increasing recognition, in both India and the United States, of each country's strategic and economic importance to the other. The importance of India to the United States was underscored in June 2016 with the US designation of India as a 'Major Defense Partner'. The US is India's second largest trading partner and largest export market. Two way merchandise trade totalled US$63 billion in 2016.

India has extensive land borders and strong memories of the short 1962 border war with China. Despite this, India has sought to develop friendly and pragmatic relations with China in recent years. The two countries have made progress in addressing border disputes, although the issue remains sensitive, particularly in relation to the north-eastern Indian state of Arunachal Pradesh. China is India's largest trading partner, and its largest import market with bilateral merchandise trade totalling US$70 billion in 2016.

India's relationship with Pakistan has been problematic since the time of partition at the end of British rule in 1947. Their ongoing territorial dispute over Kashmir, in India's north-west, is a serious obstacle to normal relations between the two neighbours.

Following then Prime Minister Vajpayee's 'hand of friendship' overture to Pakistan in 2003, both countries normalised diplomatic relations, implemented a ceasefire along the Line of Control (LOC) and re-established some transport links. (The LOC is the military control line between the Indian and Pakistani-controlled parts of the former princely state of Jammu and Kashmir.)  In 2004, the two sides agreed a process for discussions to resolve key issues, called the Composite Dialogue. Most recently, in December 2015, Prime Minister Modi met Pakistan Prime Minister Nawaz Sharif. This was the first visit to Pakistan by an Indian prime minister since 2004. Despite the peace process, tensions continue in Kashmir.

Economic overview

India is the world's fastest growing major economy, with forecasted growth of 7.2 per cent in 2017, and between 7.5 and 7.8 per cent growth to 2020. By 2030, India is projected to be the world's third largest economy. Growth prospects are underpinned by the Indian Government's reform agenda aimed at creating jobs and improving the business environment; productivity catch-up due to urbanisation and a growing, young working-age population; and a continued structural shift from agriculture to services and industry.

India's post-independence economy (1947-1991) was characterised by a planned approach to development, with extensive regulation and protectionism. From 1991, India underwent a process of economic liberalisation that helped India move towards a market-based economy. For a decade from the late 1990s, the Indian economy had an annual average growth rate above seven per cent. Tens of millions of Indians have been lifted out of poverty since the 1990s. India remains home to around 300 million people in acute poverty living on less than US$2 a day.

Prime Minister Modi is prosecuting an ambitious economic reform agenda. India is seeking to position itself in the top 50 of the World Bank's Ease of Doing Business Index by 2018. Efforts to replace 17 state and central taxes with a nationwide GST are underway and would remove significant internal barriers to commerce and reduce tax distortions. Financial inclusion reforms have brought a further 200 million people into the banking system.

Macroeconomic policy stability has supported growth and made the economy more resilient against external shocks. Inflation is under control, the current account deficit is low and the fiscal deficit is on the right track following the February 2017 budget. In November 2016, India withdrew its largest banknotes to combat corruption, counterfeiting and terror financing, bring untaxed income into the tax system and encourage greater use of digital payment systems. The initiative dampened short-term growth but is expected to improve long-term growth prospects.

India's states are playing a key role in India's growth story. Using a form of competitive federalism, Prime Minister Modi has encouraged states to increase levels of foreign investment, institute business friendly reforms and improve regulatory certainty. The GDP of some Indian states alone is higher than the GDP of many individual countries – Maharashtra (US$330 billion), Tamil Nadu (US$170 billion) and Uttar Pradesh (US$150 billion).

While India's economy is expected to continue growing strongly, it will require ongoing focus on delivering economic reform. Challenges remain in doing business in India, including protectionist policies and inadequate infrastructure. The Australian Government provides advice on doing business in India through the Austrade website.The bi-monthly Business Envoy publication offers perspectives and insights on the economic and market impacts of geopolitical events and trends from Australia's global diplomatic network. A special edition on India was released in March 2017.

See the latest economic facts on our economic relationship with India here.

Bilateral relationship

Australia and India established diplomatic relations in the pre-Independence period, when the Consulate General of India was first opened as a Trade Office in Sydney in 1941. India's first High Commissioner to Australia arrived in Canberra in 1945. In March 1944, Lieutenant-General Iven Mackay was appointed Australia's first High Commissioner to India.

Australia has placed India at the forefront of its international partnerships. Two-way Prime Ministerial visits in 2014 have been followed by regular leaders' meetings, most recently during the G20 Summit in September 2016.

Bilateral economic relationship

Two-way goods and services trade between Australia and India totalled $19.4 billion in 2015-16. Major Australian exports to India in 2015-16 included coal, education-related travel, vegetables and gold. Major imports from India were refined petroleum, personal travel excluding education services, business services, medicaments, and pearls and gems. Australian investment in India totalled $10.6 billion at the end of 2015, and Indian investment in Australia $11.6 billion. This represents significant growth on investment levels a decade ago.

Australian business is well placed to realise opportunities as India modernises its economy. This is both in areas of traditional strength like resources, agriculture and education, as well as in innovation, skills and technology transfer. In 2014-15, 1,946 Australian businesses were exporting to India according to the Australian Bureau of Statistics.

Australia and India are involved in the Regional Comprehensive Economic Partnership (RCEP) negotiations. The proposed free trade area includes the ten ASEAN member states as well as Australia, China, India, Japan, Republic of Korea and New Zealand. RCEP has the potential to deliver significant opportunities for Australian businesses given the significance of RCEP negotiating states to Australia's two-way trade. Australia is committed to concluding a high-quality, commercially meaningful Comprehensive Economic Cooperation Agreement with India, and engagement is ongoing. The Australia India Bilateral Investment Treaty was terminated in March 2017 – see the DFAT page on Australia's bilateral investment treaties.

There is Indian interest in investing in the Australian energy and resources sector and advanced manufacturing, services and technology (AMST) capability. India's infrastructure and energy needs provide opportunities to grow trade and investment in resources. Demand for Australian energy commodities, including LNG, coal and uranium, and Australian expertise in mining equipment, technology and services (METS) is expected to increase.

Education is the second largest export to India. Over 60,000 Indians studied in Australia in 2016 – an increase of 12.4 per cent from 2015 –  recognising the high quality and cost competitiveness of Australian education services. Governmental and institutional cooperation is helping forge new opportunities, for example through the Australia-India Ministerial Dialogue on Education Cooperation and the Australia India Education Council. The Indian Government's Skills India program, aiming to upskill 400 million people by 2022, may offer further opportunities for Australia.

A growing knowledge-based partnership between Australia and India offers opportunities in areas like science and innovation, health, water management and sport. The Australia India Strategic Research Fund (AISRF) is a tangible demonstration of this. Since its establishment ten years ago, over $100 million from the AISRF has supported some 300 joint projects, delivering real gains, from improving agricultural productivity to fighting diseases.

Tourist flows between Australia and India continue to grow. India is Australia's ninth largest market for inbound visitor arrivals with nearly 260,000 Indians visiting Australia in 2016, up 11.3 per cent on 2015 figures. This is forecast to reach 488,000 by 2024-25. Australians are also increasingly visiting India. The number of Australian tourists in India has increased by almost 10 per cent annually over the last three years. The Australia-India Memorandum of Understanding in Tourism encourages cooperation between tourism stakeholders in both countries.

The Australia–India CEO Forum and the Australia Business Week in India are mechanisms for business from both countries to engage directly on ways to build the bilateral trade and investment relationship. Businesses can express interest in participating in ministerial-led business missions here.

Australia provides support to India through our regional aid investments, including supporting increased regional connectivity and increased water, food and energy security in South Asia. More information on the regional aid program is available here.

Bilateral architecture and high-level visits

In addition to regular leaders' meetings, Australian and Indian Foreign Ministers meet annually for the Foreign Ministers' Framework Dialogue, alternately held in Australia and India. The Dialogue is an important mechanism for advancing the ambitious bilateral agenda.

Australia–India Joint Ministerial Commission meetings provide a forum for Trade Ministers to identify opportunities and address challenges in the economic relationship. This is complemented by ministerial engagement in sector-focused working groups, including on energy and education. Australian and Defence Ministers also meet regularly.

High-level visits since 2014 include:

  • Prime Minister Turnbull first met Indian Prime Minister Narendra Modi in November 2015 on the margins of the G20 meeting in Turkey, at which they had a wide ranging discussion on bilateral and global issues. The two leaders met again in September 2016 at the G20 Summit in China, during which the Indian Prime Minister invited Mr Turnbull to India in 2017.
  • Prime Minister Modi paid an official visit to Australia in November 2014. He held wide-ranging talks with then Prime Minister Abbott and addressed a joint sitting of both houses of the Parliament (the first time an Indian prime minister had done so). He also visited Brisbane, Sydney and Melbourne, where he met political leaders, academics, business people and sporting figures, and addressed members of the Australian Indian community.
  • Former Prime Minister Abbott visited India in September 2014, the first foreign leader to conduct a bilateral state visit to India since the election of the Modi government.Resources and Northern Australian Minister, Matt Canavan, visited India in March 2017. Minister Canavan met with Indian ministerial counterparts and advanced collaborative projects in mine safety and clean coal technology.
  • In October 2016, the Indian Minister for Power, Coal and New and Renewable Energy and Mines, Mr Piyush Goyal visited Australia where he met with Minister for Resources and Northern Australia, Matt Canavan, in Brisbane. In February 2016, Australia hosted Minister Goyal for the annual Ministerial Energy Security Dialogue. Ministers discussed a range of priority energy issues, including clean coal technology, smart grids and smart meters, energy efficiency, renewable energy, petroleum and natural gas.
  • The Indian Minister of State for Culture and Tourism, Dr Mahesh Sharma, visited Australia in September 2016. He attended the opening of Confluence - Festival of India in Sydney, and was present for the official return of Indian artefacts from the National Gallery of Australia to the Indian Government.
  • The Indian Minister for Finance, Corporate Affairs and Information and Broadcasting, Arun Jaitley, visited Australia from 28 March to 2 April 2016. Minister Jaitley delivered the Narayanan Oration and met with Prime Minister Turnbull, Foreign Minister Bishop, Minister for Trade, Tourism and Investment, Steve Ciobo, as well as several other federal and state ministers and business leaders. His visit focused on attracting Australian investment and highlighting commercial opportunities in India
  • The Indian Minister for Tribal Affairs, Jual Oram, visited Australia in January 2016 to examine Australia's approaches to Aboriginal and Torres Strait Islander education.
  • Attorney-General George Brandis visited India in October 2015, attending the Australia-India Leadership Dialogue and advancing mutual legal assistance and other areas of legal cooperation, such as legal services.
  • Then Minister for Trade and Investment, Andrew Robb, visited India four times in 2015, reflecting the high priority of developing trade and investment ties with India. Mr Robb's January 2015 visit, accompanied by then Parliamentary Secretary Colbeck, promoted Australia Business Week in India – involving 120 events and 14 industry sectors in eight cities. Mr Robb visited India in April, June and October 2015 for talks on bilateral trade and investment, including the Comprehensive Economic Partnership Agreement.
  • Former Australian Defence Minister, Kevin Andrews, visited India in September 2015. Recognising the growing defence links between Australia and India, Australian Defence Minister Payne has invited the Indian Defence Minister to visit Australia in 2017.
  • Former Education Minister Christopher Pyne visited India in August 2015, leading a delegation of university vice-chancellors and education providers. The visit resulted in a revised high-level memorandum of understanding (MOU) and nine institutional-level MOUs.
  • Then Parliamentary Secretary to the Minister for Foreign Affairs and Minister for Trade and Investment, Steven Ciobo, visited India in June 2015, meeting with two Indian Chief Ministers and business leaders to advance Australian commercial interests and promote people-to-people links. Mr Ciobo was also accompanied by a business delegation.
  • Foreign Minister Julie Bishop visited India in April 2015 for the Foreign Ministers' Framework Dialogue. During her visit, Ms Bishop delivered the inaugural Indo-Pacific Oration at a leading Indian strategic think-tank.
  • Former Environment Minister Greg Hunt visited India in March 2015 for discussions on environmental issues.

Dialogues

The annual Maritime Dialogue was agreed in November 2014 under the Framework for Security Cooperation. It was held for the first time in November 2015 in New Delhi and again in Canberra in October 2016. The Maritime Dialogue provides an opportunity to draw together the various strands of our maritime engagement.

Inaugural Cyber Policy Talks between DFAT and India's Ministry of External Affairs took place in New Delhi on 24 August 2015. The purpose of the talks is to create a forum for strategic-level discussion of cyberspace policy issues including bilateral, regional and international dimensions and to promote practical cooperation on cyber policy and cyber security issues, including common cyber threats.

A senior officials-level Joint Working Group covering both counter-terrorism and transnational crime met in New Delhi on 27 August 2015. The participants discussed ways to combat terrorism and transnational crime in the Indo-Pacific. The Joint Working Group on Counter-Terrorism met again in Canberra on 8 December 2016.

The East Asia Talks, which discuss developments in East Asia, are held at senior officiallevel. Five rounds have been held to date, most recently in Canberra in October 2016.

DFAT inaugurated policy-planning talks with India's Ministry of External Affairs (MEA) in New Delhi in September 2016. The Australian delegates met with think tanks and Indian MEA geographic divisions to discuss key themes, including foreign policy priorities of both countries, key bilateral relationships and strategic issues in the Indian Ocean.

Australia, India and Japan hold regular Trilateral Dialogues at Secretary level, which allow for a discussion of a wide range of issues of common interest. Two dialogues have been held (in 2015 and 2016), with the third scheduled to be held in 2017.

Australia and India agreed in 2015 to hold meetings of foreign and defence secretaries (2+2 meeting) to enhance foreign policy and security cooperation.

In April 2016, Indonesia hosted the Third Indian Ocean Dialogue in Padang. The Dialogue brought together officials, academics and strategic thinkers from 26 countries, including Australia and India, to identify and discuss policy approaches to key challenges and opportunities facing the Indian Ocean region, particularly in the maritime domain and on pathways for enhancing regional identity. Australia hosted the second Indian Ocean Dialogue in Perth in September 2015, in close collaboration with India which had hosted the inaugural Dialogue in 2014.

Australia and India hold a well-established annual non-proliferation dialogue. The most recent talks were held in October 2016.

People-to-people links

Our professional, student and community connections are building strong relations between Australia and India. More than 450,000 people of Indian descent live in Australia – a number that continues to increase. By sharing experiences and working side-by-side, whether professionally, through study or in the community, we continue to gain a much richer appreciation of each other.

India is the largest source of skilled migration to Australia, and the second largest source of international students. In 2016, over 60,000 Indians enrolled to study in Australia. Over 200,000 Indians travel to Australia each year. Under the New Colombo Plan, 1800 Australian undergraduates are being supported to live, study and undertake work-based learning activities in India during the 2015-17 period.

The Australia-India Council is also advancing Australia's foreign and trade policy interests with India. Board members are appointed by the Australian Government to strengthen the connections between Australia and India, and provide advice to government on the opportunities and vulnerabilities in the relationship. The board recommends projects to DFAT that will create new sustainable collaborations and break down perceived barriers to engagement between our two countries. Find the Australia-India Council on Facebook here.

In December 2016, Prime Minister Turnbull addressed the Australia India Leadership Dialogue (AILD) in Melbourne, an annual high-level forum for Australian and Indian leaders in business, government and civil society. The next AILD is scheduled to be held in December 2017 in New Delhi.

Treaties and memoranda of understanding

Cooperation between India and Australia spans a range of areas. Notable areas of cooperation include: Treaties and Memoranda of Understanding (MoUs) on Air Services; Civil Space Science, Technology, and Education; Combating International Terrorism; Customs; Defence Cooperation; Extradition and Mutual Legal Assistance in Criminal Matters; Intellectual Property; Civil Nuclear Cooperation; Skills Training Cooperation and Technical Vocational Education and Training (TVET); Social Security; Student Mobility and Welfare; Transfer of Sentenced Persons; Arts and Culture; Counter-narcotics; Water Resource Management; Sports; Tourism; and Wool and Woollen Products.


Last Updated: 4 April 2017