Despite an increase in trade missions, Australian trade with India has not reached anywhere near its potential, suggesting a review and new approach is long overdue, according to the new President of the Australia India Business Council (Vic), Stephen Manallack.
Mr Manallack pointed to two areas that are holding the trade and investment relationship back—first, Australia’s short term focus on making sales and second, our lack of understanding of cultural differences.
“Our trade mission model is like arrive and scatter approach, with lots of individual businesses racing around India trying to make a sale or appointing agents to make sales.
“But what India is often looking for is collaboration, a longer term model where both sides grow together. This takes patience and coordination.
“It takes five years to really get inside opportunities in India, but few Australian business leaders understand the need for patience,” Mr Manallack said.
Two-way trade in goods and services has grown in value from AU$9.7 in 2005 to nearly AU$20 billion in 2015. Two-way investment is also significant, especially in resources and energy, engineering and construction, and financial services. Australian investment in India was valued at AU$10.6 billion in 2015 while Indian investment in Australia was valued at AU$11.6 billion in 2015—up from just $322 million in 2005. India is now Australia’s 9th largest trading partner, and our 5th largest export market.
But Australia’s economic partnership with India is relatively under-developed. In contrast, Australia’s two-way trade with our largest trading partner, China, is worth more than AU$156 billion. This underscores the enormous growth potential in Australia’s economic relationship with India.
Mr Manallack claimed lack of cultural understanding was a related point, leading to confusion and sometimes even offence on the Indian side.
“Australians on business missions are in a hurry, so each appointment is seen as a quick hit and then on to the next. This leaves their Indian host confused about our intentions. The Indian model is to focus on building the connection, even if your one visit to their company takes three or four hours and you follow up with another visit a few months later.
“The focus on sales combined with ignorance of cultural differences has led to poor outcomes which is why trade is declining,” he said.
Mr Manallack also claimed this has happened to our international education sector with universities and training institutions focusing on getting the maximum number of students instead of on the longer term.
“Australian education is vulnerable to the shifts in international education and because of a sales focus we lack the depth of relationship that can provide stability for the longer term,” he concluded.