IND Submission 5 Recv'd 31/10/19 Submission to the Economics and Industry Standing Committee Inquiry into Western Australia’s Economic Relationship with India Legislative Assembly, Parliament of Western Australia Prepared by Hugo Seymour, Research Analyst, Perth USAsia Centre, October 2019 IND Submission 5 Recv'd 31/10/19 31 October 2019 Dear Ms. J.J. Shaw MLA Chair Economics and Industry Standing Committee [email protected] Sent Via: Ms Suzanne Valetta, Principal Research Officer The Perth USAsia Centre welcomes the opportunity to make a written submission to this important Inquiry into Western Australia’s Economic Relationship with India. Since its establishment in 2013 as a Perth-based foreign and strategic policy think tank, the Perth USAsia Centre has devoted significant energy and resources into enhancing its relationship with India, and commensurately the State’s relationship with India. In recent years, the Centre has developed considerable relationships with senior Indian policymakers and policy institutions, published consistently on the Australia-India (and WA-India) relationship, convened high- level programs in Perth and India highlighting the strategic and economic importance of the Australia-India (and WA-India) relationship, and brought senior Indian policy and defence leaders to WA. The Centre’s programs with senior Indian policy leaders have actively involved WA’s Ministers, business and industry leaders, Parliamentary members, scientific and academic heads, and emerging WA students. The Centre’s recent engagement with India includes: - Visits to New Delhi and Mumbai in September 2019 (Distinguished Fellow Peter Varghese AO, Board Director Hon Stephen Smith, Head of Programs Ms Erin Watson-Lynn and myself); New Delhi in January 2019 (Board Director Hon Stephen Smith and Research Analyst Hugo Seymour); New Delhi in August 2018 (Board Director Stephen Smith and myself); - Three programs in 2019 with Ambassador Anil Wadhwa (May 2019, September 2019, October 2019), author of the upcoming Australia Economic Strategy, including on Australia-India critical minerals partnerships at the Centre’s flagship In the Zone Conference (October 2019); - Recent public and private programs in Perth and India with: Director-General of India’s Institute for Defence and Analyses Ambassador Sujan R. Chinoy (October 2019); Former Chief of Naval Staff Admiral Robin Dhowan (Ret.) (August 2019); India’s former Foreign Secretary and National Security Adviser Ambassador Shivshankar Menon (October 2018); - Development of institutional relationships with leading Indian think tanks, including: Brookings India, Carnegie India, CUTS International, Gateway House, Institute for Defence and Analyses, Observer IND Submission 5 Recv'd 31/10/19 Research Foundation and Vivekananda International Foundation (e.g. Joint programs with Carnegie India, Gateway House and Observer Research Foundation, New Delhi and Mumbai, September 2019); - India-focused publications launched in 2019 in Perth and India: India in APEC: Views from the Indo- Pacific (Seymour, Perth, May 2019); and RCEP: An Economic Architecture for the Indo-Pacific? (Wilson, Seymour, New Delhi, January 2019). The Centre’s considerable engagement with India is designed to inform and enhance the State and the nation’s economic and strategic relationship with India. I trust the Centre’s submission to this Inquiry will assist the Committee in further understanding the State’s economic relationship with India, and in developing policies to strengthen the bilateral trade and investment relationship. Yours Sincerely, L. Gordon Flake, Chief Executive Officer, Perth USAsia Centre IND Submission 5 Recv'd 31/10/19 Executive Summary Over the last decade, as India’s economy has more than doubled in size, the value of Western Australia’s (WA’s) trade with India has more than halved. This is not due to a lack of economic complementary or trading opportunity; The structurally-driven growth of the Indian economy, which in a decade’s time will match the size of China’s today, provides WA with a premier opportunity to advance its market and sector economic diversification priorities; The increasing opportunities for WA-India economic engagement are arising as a result of India’s considerable growth in consumer and industry demand, as well as Indian Central and State Government policies to improve both the business climate and their delivery of essential services; WA has the private and public sector capacity to further participate in India’s economic rise, and a strengthened relationship will help ensure the State remains connected into the corridors of regional and global growth. And while an economic partnership between WA and India will have to be of a different kind to WA’s trading relationships with Northeast Asia, its development is both possible and necessary; A continued trend of divergence between India’s growth, its contribution to the global economy and its rising share of global outbound investment - and WA’s trade and investment levels with India - will likely further expose the WA economy to international risk over coming decades; The endorsement by the Commonwealth Government of the commissioned India Economic Strategy, which highlights the urgency of increased whole-of-nation engagement with India, outlines the criticality of intensified Australian State Government engagement. The Strategy asserts that India’s trajectory of liberalisation, trade openness and ease of doing business will continue to arc in favour of engagement – and the onus is on Australia to take advantage of the opportunities. IND Submission 5 Recv'd 31/10/19 Table of Contents Executive Summary ...................................................................................................................... 4 Table of Contents ......................................................................................................................... 5 Introduction ................................................................................................................................. 6 1. Economic developments in India over the last decade and their implications for the bilateral trading relationship ..................................................................................................................... 8 2. Current status of India’s trading relationship with Western Australia ................................... 10 3. Existing barriers or impediments to trade ............................................................................ 11 4. Opportunities to strengthen the trading relationship ........................................................... 13 a) The Sister State Relationship between the State Government of Western Australia and the State Government of Andhra Pradesh ........................................................................................ 20 b) The role of the Indian diaspora business and entrepreneur community ............................... 22 c) Strategies to attract inbound investment into Western Australia ......................................... 24 d) Developing existing and new export markets in India in target sectors ................................. 26 i. International Education ....................................................................................................... 27 ii. Tourism ............................................................................................................................... 31 iii. Minerals and energy ........................................................................................................ 34 iv. Advanced manufacturing ................................................................................................. 40 v. Agribusiness ........................................................................................................................ 42 vi. Further Opportunities in a Whole-Of-Government Approach ........................................... 45 Summary of Recommendations ................................................................................................. 48 About the Perth USAsia Centre................................................................................................... 51 Endnotes ................................................................................................................................... 52 IND Submission 5 Recv'd 31/10/19 Introduction The 21st century re-emergence of India as one of the global economy’s predominant powers will have defining consequences for the State of Western Australia (WA). The extent to which WA’s economy is able to further participate in India’s rise will be a critical element in the State’s economic diversification equation, and pursuit of economic and employment security. India is already the world’s third largest economy, and is predicted to be the fastest growing large economy in the world over coming years.1 By 2030, India will be larger than the United States and the European Union are today, and will be roughly on par with the China of today.2 The structural drivers of India’s growth have reputable economists forecasting that by the middle of this century, India will be the second largest economy in the world.3 WA’s ongoing economic prosperity requires the State being connected into the corridors of global growth, and the rise of India bears no exception. WA’s economy over the last half-century has successfully further integrated into global trade, investment and commodity markets.4 This