Quad: India To Focus On ECTA With Australia, Strategic Bond With Japan, And Discussions On Trade With US

Even as national elections in Australia voted in a new Labour Government to be led by Anthony Albanese as the new Prime Minister, India is confident that the change in regime would not affect the momentum in the economic cooperation and trade agreement (ECTA), which was signed in the presence of Prime Minister Narendra Modi and Scott Morrison in March.

“In so far as India-Australia Strategic Partnership is concerned, there is a pretty much complete bipartisan support in Australia for India-Australia relations,” Vinay Kwatra, Foreign Secretary told Swarajya during a media briefing.

“The India Australia Free Trade Agreement was concluded between the two countries during the virtual summit in March this year. We are quite confident that the discussions between the Australian leader and the Indian Prime Minister in Tokyo, when they take place, would be forward leaning in terms of not just taking the stock of how the relationship will progress, but also how to build on it further and expand the dimensions of various cooperative efforts that India and Australia make. I don't see anything other than positive, constructive and a forward leaning agenda of discussion and cooperation insofar as India and Australia are concerned,” Kwatra said.

The Australia chapter is part of the itinerary of a diplomatic blitzkrieg which takes PM Modi to Japan on 23-24 May to attend the Quad Leaders’ Summit, following an invitation to participate by his Japanese counterpart Fumio Kishida.

Signalling a continuity, Australia’s High Commissioner to India, Barry O’Farrell tweeted that Australia’s new Prime Minister-elect Anthony Albanese is “no stranger to India” having travelled the country as a backpacker in 1991 and led a parliamentary delegation in 2018. “During the campaign he committed to deepen economic, strategic and people-to-people links,” O’Farrell said.

This is important as the trade agreement is India’s biggest breakthrough deal with a major power this year and envisages elimination of tariffs on more than 85 per cent of Australian goods to India, liberalised visa norms for students and professionals and cheaper raw materials for India in steel, aluminium and textile industries.

As part of the deal, 97 per cent of Indian goods will immediately gain preferential access to Australia after the agreement is operationalised – expectedly in about four months -- and the rest will happen over the next five years. India is looking to take bilateral trade between the two nations to USD 100 billion by 2030 with the ECTA in place.

Equally important in Modi’s packed agenda of 23 meetings in the space of 40 hours of the Japan tour is the bilateral with Fumio Kishida and meeting with Japanese business leaders.

Modi has stated his intent to move the dialogue ahead and strengthen the strategic and global partnership, especially in key economic areas. To realise the Japanese investment, India can find opportunities arising from the other key outcomes of Kishida’s recent India visit, like the India-Japan industrial competitiveness partnership roadmap, clean energy partnership, sustainable development initiative for the Northeast, agreements on sustainable urban development and cybersecurity.

With deeper trade and investment linkages also on the agenda, Modi’s meeting with Japanese business leaders will be significant in pursuit of this objective. India’s total trade with Japan reached USD15.3 billion in 2020-2021 and Japan has been the fifth largest investor in India pouring in FDI of USD 36.36 billion between April 2000 and December 2021.

India could be looking at joint infrastructure projects in North Pacific islands, investment in local semiconductor manufacturing units, EV charging infrastructure and in battery storage and hydrogen.

The bilateral with US President on 24 May would be the first in-person meeting after the outbreak of the Russia-Ukraine conflict with India walking a fine balance between its economic imperatives dictating purchase of crude from Russia amid global sanctions and calling for peaceful interventions to end the crisis while staying away from resolutions against the Russian action.

The start of 2022 has seen trade in goods and services jumping 45 per cent to a high of USD113 billion from the USD 78 billion recorded at the end of 2020. The Biden administration plans to collaborate with India on building resilient supply chains and India's oil imports from the United States are set to rise by 11 per cent this year as India looks to secure supplies from producers around the world.

Moreover, the US also proposes to increase developmental assistance to India in clean energy, digital economy from USD 25 million in 2021 to USD 66 million for the fiscal 2023.

The meeting also assumes importance in the wake of these positive dynamics and reports of US interest in bringing in India as partner in an Indo-Pacific Economic Framework.

The IPEF, reportedly, is not a traditional trade agreement. It would include different modules and include digital, labour, and environment issues, with some binding commitments. The IPEF will not include market access commitments such as lowering tariff barriers and Congressional approval, which is a must for trade agreements, is not mandatory for this.

Asked if India would join such an initiative with no headway even on a limited trade deal with the US, Kwatra told Swarajya that this is a matter which is still under discussions and will be known only as things unfold going forward. According to Kwatra, this has to be seen in the perspective of the economic segment of the Indo-Pacific region which is a very important one, in terms of harnessing the opportunities of economic partnership that are, including those related to capacity building.

In this context, Prime Minister Modi may draw the Quad summit's attention economic cooperation in the Indo-Pacific to tap the opportunities.

Of key Indian interest is collaboration on climate action which involves creating a decarbonized green shipping network in the Indo-Pacific, making use of clean hydrogen and making it more accessible as well as pooling capacities to assist Indo-Pacific countries in climate monitoring and information sharing.

The Quad’s Infrastructure Coordination Group has also been deliberating on supporting sustainable and demand driven infrastructure in the region in a manner that doesn't burden countries of the region with unsustainable debt.

Other key priority areas of India’s cooperative measures in the Quad are critical and emerging technologies, biotechnology, diversification of semiconductor supply chain, and security of critical cyber infrastructure.

India is also interested in continuing cooperation on COVID response, post COVID management of economy and health infrastructure which includes last mile delivery, health security, genomic surveillance, clinical trials, and pandemic preparedness as their important elements.