Tourism, education key to India-Aust trade
As Australia looks to hitch itself to another rising Asian superpower, economists warn it needs to look beyond its traditional strengths in the mining sector.
After successfully reaching trade deals with China, Japan and Korea, the federal government is hoping to secure a free trade agreement with India by the end of 2015.
A deal with India could have major implications for the Australian economy down the track, especially given the International Monetary Fund expects India to grow at a faster rate than China in 2015.
But if Australia wants to take full advantage of India’s widely expected transition into a global economic powerhouse, education and tourism may well be the key, rather than iron ore.
The country should focus on making its services sector, in particular tourism and education, as competitive as possible, Credit Suisse Australia chief investment strategist David McDonald said.
“We have to focus more on some of these future growth industries … because that’s where a lot of the jobs growth is going to be,” he told AAP.
The resources sector would still likely benefit from rapid growth in India, though energy companies stand to be the major winners as India itself is a major iron ore producer.
“There are some things India has plenty of but there are some things they will need,’ he said.
University of NSW economist Tim Harcourt said India was already a huge market for education providers, but universities needed to brace themselves for increasingly tough competition.
“I think India will be a lot more competent with education, they’ll be trying to forge relationships with Harvard and Caltech, so we’ll have to be a bit more aggressive because they’ve got choice,” he said.
Mr Harcourt talks up the prospects for Australian and Indian trade in his book Trading Places, arguing common links – such cricket and a shared British history – could give Australia an advantage over other countries.
“They will be a superpower, but they will be one that’s friendly to Australia and that’s probably good for us,” he said.
But he says India still lags a long way behind the likes of China and Japan as an export market for Australia, and even with rapid growth it will take a long time to catch up.
According to bureau of statistics figures, Australia exported more than $8 billion worth of goods and services in india in 2013/14, which is less than one tenth of that exported to China.
But India is Australia’s sixth largest export market and Mr Harcourt says local businesses looking to expand overseas shouldn’t overlook the country.
“Any Australian company looking to expand into Asia should have a China Strategy, an India Strategy and an ASEAN strategy,” he said
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