"Australia and India - Not Just Cricket"

Thank you very much Mr Mittal and can I also acknowledge Mr Sen, the Deputy Director General of the Confederation of Indian Industries, our High Commissioner John McCarthy, Mr Ramesh, Member of Parliament, and other distinguished guests and ladies and gentlemen.

One of the great Australian heroes who is well known here in India - Sir Donald Bradman - once said, "The game of cricket existed long before I was born. It will be played centuries after my death."

Now that the remark which is an understandable remark doesn't just apply to cricket

It could also apply to the trade and investment relationship between Australia and India.

Just as India and Australia have played together on the cricket field for generations and will continue to play for generations to come, economic interaction between our two economies has been going on for a long time and will become even stronger I think in the years ahead.

However, to understand the gr eat forces shaping our region and our world today - and particularly as they relate to trade and investment between our nations - it helps to have take an even longer view.

With their experience over millennia of the waxing and waning of political power, the great civilisations of South, West and East Asia, are very well equipped to do this.

Australia is a relatively new nation on the Asia-Pacific regional block, but its robust, original and rapidly evolving civilization contributes significantly to the dynamic of the region.

When Governor Phillip and the first European settlers landed at Sydney Cove on 26 January 1788 - 162 years to the day before the new Constitution of the Republic of India was promulgated - on the Subcontinent, the Moghal Empire was a shadow of its former self, Maratha power was in decline and a number of the regimes in the South and East were under direct or indirect foreign control.

In China, with the end of Ch'ien-lung's reign in 1795, the Qing Empire entered a period of dynastic decline.

So modern Australian history began during a phase of world history marked by a period of change for the great civilisations of Asia.

This phase of history concluded with the end of the colonial era and the rebirth of independent states on the Subcontinent and in China in the late 1940s.

The Cold War had its own effects on the region - for some, complicating the renaissance of political and economic reform power.

With the end of the Cold War, however, we can now see that we have truly entered a new phase of history.

And what is driving the revolution in our region?

The answer is economic growth.

Since Dr Singh began to liberalise the Indian economy in 1991, India has been among the fastest growing economies in the region and indeed globally.

India's economy has grown at an average rate of 6 per cent over the past decade which is pretty impressive.

Most economists believe that it will sustain high levels of economic growth for a good time to come.

No matter what the future rate of growth, however, the fact remains that the liberalisation of this great economy freed it to realise its great potential.

And it is the realisation of this potential that will help shape the global economic landscape in the generations to come.

Considerable progress has been made in opening up India's markets and vigorous economic diplomacy is creating new partnerships.

Since the early 1990s, the Indian Government has progressively removed quantitative restrictions on imports, lowered average import tariffs significantly, floated the exchange rate, and reduced controls on exports.

India has also significantly reduced its controls on foreign investment.

Foreign Direct Investment has increased substantially as a result.

Well, ladies and gentlemen, Napoleon famously - and contemptuously - dismissed the English as a nation of shopkeepers.

But the phrase wasn't original; it came from Adam Smith's The Wealth of Nation. And had Napoleon reflected more deeply on the wisdom of it, things might have been a little different today.

For what Smith actually wrote, and I quote, was: "to found a great empire for the sole purpose of raising up a people of customers, may at first sight appear a project fit only for a nation of shopkeepers."

In other words, Smith was saying that commerce is the very foundation of political power and influence.

More fundamentally still, as the complex interrelationships between the civilisations of Asia show, the cultural interaction generated by trade is in itself a potent force in shaping some of the world's great civilisations.

Adam Smith would have had great admiration for South Asians, for they have had a long history of being the region's foremost traders.

Before the wave of globalisation fuelled by European military, industrial and commercial power that swept the world in the late eighteenth and early nineteenth centuries, transforming age-old patterns of commerce in the Asian region, South Asia was the hub of a regional trading network that stretched from China to the Mediterranean.

In the first century of our era, South Asians traded simultaneously with the Roman Empire to the west and the Han Empire to the east.

When the Europeans arrived in the Indian Ocean at the end of the sixteenth century, they found a flourishing trade across the region.

South Asian merchants exchanged cotton cloth, spices, pearls and precious stones for gold and ivory from the East Coast of Africa, spices, rare timbers and gems from South-East Asia, and silk, ceramics and rice from China.

Industry and commerce made the old empires, kingdoms and princely states of India rich and powerful.

In the seventeenth century, India had a large and skilled industrial work force, whose products circulated throughout the region.

The Indian economy yielded a substantial surplus that supported rulers and courts of legendary splendour.

The annual revenues of the Moghal Emperor Aurangzeb are said to have amounted to more than ten times those of his French contemporary, Louis XIV.

Since the end of the Cold War, as a result of the continued growth of the Indian, Chinese and other Asian economies, we are seeing the industrial and commercial genius of the people of India and the wider Asian region, again reasserting itself.

Australia - India: Economically Complementary

So where does Australia fit into this emerging world of reinvigorated and increasingly powerful Asian nations and economies?

Indeed, we have more in common with the people of the great Asian economies to our northwest and northeast than many realise.

Like South Asians, we are for example, a nation of inveterate traders.

Australia's trade in goods and services was valued at over $300 billion in 2003-04, or 1 per cent of total world trade.

Moreover, Australia's exports of goods and services have grown in value terms on average over 7 per cent per year over the last ten years since 1993-94.

In a difficult global environment, Australia's exports of goods and services were valued at $143 billion last year, or about 18 per cent of our country's GDP.

And where to most of those exports go?

Our top six markets for goods and services in 2004 were Japan, the United States, China, New Zealand, the Republic of Korea and India.

In other words, Australia is an integral part of the modern trading network linking the major economies of the Indian and Pacific Oceans.

Our trade and investment links with India continue to grow and to grow substantially.

In 2004, India overtook the United Kingdom to become the sixth largest market for Australian merchandise exports.

The five-year trend in growth in exports is 24.6 per cent per annum, and in the year to the end of 2004, total trade with India grew by over 62 per cent.

So the trade relationship between Australia and India is in good shape - and it's poised to get better.

The natural complementarity between the Australian and the Indian economies gives the economic relationship between the two countries substantial room to grow further.

That's why the Australian Government launched the initiative of a Trade and Economic Framework (TEF) with India.

Our two Trade Ministers, Mr Vaile and Mr Nath, agreed to negotiate a Trade and Economic Framework agreement at the meeting of the Joint Ministerial Commission in Sydney just last month.

I would also like to note the critical part played by energy and resources in our economic relationship and acknowledge the important meeting of the Joint Working Group on energy and minerals which has taken place here in New Delhi over the past two days.

We should not under-estimate how important this sector is going to become in the years ahead - not just because of medium-term economic co-operation, but also to underpin a strategic linkage that builds our interdependence into the future.

Since regular communications between the subcontinent and the Australian continent were established at the end of the eighteenth century, trade between Australia and India has been a constant, if fluctuating, dimension of the relationship.

The logic of the Australia-India trading relationship has been so compelling that it tends inevitably to overcome the barriers that have sometimes been imposed by governments to restrict it.

At the outset of European settlement in Australia, for example, t he instructions the British Government gave to Governor Philip to found the colony of New South Wales in 1787 included a prohibition on the building of boats so as to prevent trade between New South Wales and the settlements of the East India Company as well as such trading by vessels arriving at the settlement.

After his voyage to New South Wales in 1803, Mathew Flinders found that this prohibition on trade between the new colony and India - on the grounds that it would constitute an infringement of the East India Company's charter - was an obstacle to the more rapid development of the colony.

But the ban on trade between India and New South Wales did not last long.

In 1796, Campbell, Clark and Company of Calcutta sent the Sydney Cove with a cargo of 7,000 gallons of spirits and general merchandise to Sydney Cove.

The ship the Sydney Cove unfortunately ran aground before reaching its destination, but undeterred, the company fitted out the Hunter another ship with an assortment of Indian goods which arrived in Sydney in June 1798.

The representative of the firm, Robert Campbell was so impressed by the trading prospects in Sydney that he invested in a house and land on the west side of Sydney Cove where he established a wharf and warehouses.

By the end of 1804, the Government of New South Wales had bought nearly £18,000 worth of grain, livestock, spirits and merchandise from Campbell.

On the proceeds of the Australia-India trade, Robert Campbell became one of the new colony's richest merchants.

So two centuries later, the profits to be made from the Australian and Indian trade and investment are potentially no less lucrative - as both Indian and Australian companies are discovering.

Some of the commodities are the same as those that have been traded across the Indian Ocean for centuries.

Gold is Australia's largest single export commodity to India, while pearls and gems, jewellery and textiles are amongst India's largest exports to Australia.

But the most scintillating prospects for future trade and investment between Australia and India are twentieth and twenty-first century commodities and services.

Energy resources such as coal and gas, and associated technology and infrastructure, copper and other resources to fuel India's growing economy are important and growing components of the bilateral economic relationship.

Australia can offer advanced technology and services to contribute to India's continued economic expansion.

India stands to benefit from Australian investment, particularly in the areas of energy and resources, infrastructure development, agriculture services and food processing.

Macquarie Bank, an investment bank in Australia, has formed a consortium with Sterlite Industries (India) Limited and Aeroports de Paris in a bid to redevelop and modernise the Delhi and Mumbai airports. This Consortium has a proven track record in delivering the key project requirements.

Greg Chappell's recent appointment as coach of the Indian cricket team and Greg comes from my own home town of Adelaide, is one indication that trade in services between Australia and India is in a healthy state.

Though I am not so sure it is very healthy for Australia because it's just not cricket!

IT, finance, telecommunications, health, education, environmental services, biotechnology and media and entertainment are other areas that offer great opportunities I think for cooperation.

Developments in traditional sectors such as mining, agriculture and infrastructure also offer prospects.

Tourism provides another promising area of expansion in the economic relationship with India, particularly in the context of the Commonwealth Games which will move from Melbourne in 2006 to New Delhi in 2010.

Australia has much to offer India in terms of its expertise in developing the infrastructure and services related to the staging and management of major sports events.

A great example of Indian-Australian economic co-operation is information technology, which has been a major contributor to India's economic resurgence.

India also has one of the fastest growing telecom markets in the world and is a hotspot for IT and R&D.

Education is another area of the services trade between Australia and India which has shown remarkable growth.

India is Australia's top off-shore source of post-graduate students, the top-ranked source of Computing Science and Engineering students, and the second-ranked source of higher education students.

The Indian entertainment industry is also becoming an important market for Australia, particularly film production and services.

Forty Indian films have now been shot on location in Australia since 1998.

And Australia has a competitive advantage in high-quality post-production services, such as editing and sound effects.

Conclusion

When they met in Sydney on 19 May 2005, our two trade ministers agreed to set a target and that was to lift the value of two-way trade to $8 billion within two years.

This is an ambitious goal.

My hope is that we can set our sights even higher.

For its part, the Australian Government is committed to upgrading the bilateral relationship with India in all its dimensions - economic, political, strategic and social.

As the Indian Government continues on the path of reforming the economy - reducing tariffs and other barriers to imports, making it easier for foreign businesses to invest in India, and modernising India's tax regimes - like their commercial ancestor, Robert Campbell, Australian traders and investors will be increasingly attracted to doing business with India.

What makes this a reasonable proposition is that many areas of complementarity in the Australian and Indian economies exist , our geographical proximity - Perth is closer to Chennai than Sydney or Melbourne are to any of the major cities of Northeast Asia - and our social and political proximity in terms of language, political and legal systems and sporting interests are there for all to see.

Put simply, there is a huge potential that we can jointly exploit in trade and economic terms - let's combine our resources to deliver the best for the Australia-India trade and investment relationship, as if we have with Steve Waugh, Sachin Tendulkar, Kapil Dev and Dennis Lillee as if they were all on the same team.

But on the cricket pitch, let our competition continue unabated! And between our two countries otherwise let us cooperate. Thank you very much

Question and Answer session:

Question: I am Jagdish Sharma, President of the Indian Entrepreneurs and Manufacturers' Association. Sir, our members have a lot of interest in the energy field, especially in solar energy. I believe that Australia has done a lot of work and we did hear about some big cross country rally in Australia. Do you think there are prospects in this field also?

Downer: Yes, we have a solar energy race that goes from Darwin in the north of Australia down to Adelaide where I live, in the very south of Australia. So, it covers a very vast distance, and the solar energy vehicles, which don't need to be refuelled simply demonstrates the accessibility of the technology. In an overall sense, there has been substantial investment over the years by Australia in solar energy and this has been technology, particularly photo-voltaic technology, which has been especially adaptable to rural communities in developing countries. So, for example, we had a number of projects in Indonesia using this technology, providing power to villages in Indonesia - in the eastern part, I think, of Indonesia. And we would certainly be interested in developing some of that technology in cooperation with Indian firms, given the nature of India and the significant village communities that you have here, the rural communities and the difficulty of traditional forms of electricity transmission. Those kinds of systems can be very good - you are probably involved in them. I just wanted to more broadly say that I don't think we need to, or that we should have any unrealistic expectations more broadly in terms of what we can achieve with solar energy. For example, powering cities like New Delhi or Adelaide or wherever it may be. I think the prospects for solar energy powering those cities - those prospects are very, very long way away. We need to do more work on these new technologies.

Question: I am A Pradhan representing National Research Development Cooperation. In your speech, you mentioned some possibility of business in biotechnology and IT. I want to know what kind of biotechnology business can take place?

Downer: Well, I think, as far as biotechnology is concerned we have been having discussions with your Department of Biotechnology and our department which is responsible for science and education. Our view is, without going into the specific areas - I leave that to the scientists - is that we could give a bit more energy to this relationship - between Australia and India - and perhaps even between us, put in a little bit of money - seed money - into joint research projects and try to bring together as efforts are being made to do this, bring together our respective research institutes, in the area of biotechnology. I know there is a tremendous amount of interest here in India in biotechnology. In Australia, as you will know yourself, an enormous amount of work is being done in that sector as well. Australia has world leadership in a number of areas of biotechnology as India does, and I think we might need to …(inaudible) on our respective government agencies to provide the seed funding to get some of these projects going, joint projects going, and that's something we are having a look at.

Question: This is Sajid from "Hindustan Daily" newspaper. I would like to know what special facilities your government will provide for higher education. Some months ago, the New Zealand education minister, when he was here, said that New Zealand would accord the same status to Indian students as New Zealanders. What do you have to say?

Downer: Well, we have of course, a very, very long experience of having foreigners more generally, not just Indians, but including Indians, participate in our higher education sector. We have about 21,000 Indian students studying in Australia at the moment. Depending on how you measure these figures, Australia is either the second or the third largest destination, off- shore destination for Indian students. We would say second - depends on how you measure British statistics and compare them with Australia. The United States is the largest - then Australia and the United Kingdom have very similar numbers, and then a number of other countries. Australian universities are of a very high standard. Foreign students pay to go to those universities, excepting for a number of what are called Australian development scholarships which are funded by our aid agency, Ausaid. And I think the costs of going to Australian universities are extraordinarily competitive. I don't want to badmouth American and British universities. Actually, I went to a British university -- so, we shouldn't say too much about that either, I suppose. I don't want to be advertising British universities in a positive way. But I just make the point to you that there has been an increase in the charges of British universities. I think you find that there are quite a lot more expensive than Australian universities, and the other thing is Australian universities are closer. And the environment is an environment that is more familiar to Indians - I think they find always Australians exceptionally warm and friendly people as you can see I am. And so, that is what we offer. Now, we have a large number of state-run universities - essentially our universities are state-run a bit like the British universities. There are some exceptions; we are now seeing the growth of private universities in Australia. For example, there is a private university in Queensland called Bond University; there is one in Perth called Notre Dam University and there is the Australian Catholic University which is developing in Sydney. And Carnegie Mellon University in the United States is opening a university in Adelaide, and that university will be underway from about March next year and it will be taking students in Masters' programs and Indian students, amongst others, will be enormously welcome to participate in those private universities - including Carnegie Mellon as well as in our traditional state universities. So, we are really very ambitious. I am glad you asked the question because we are really ambitious about bringing Indian students to Australia. To be frank with you, very much to our benefit to have that added diversity in the intellectual vigour of India injected into our universities and equally, it is also to our advantage that those students would typically return to India - go back with happy and warm memories of Australia as they work their way up the Indian system in business, in academia or even in politics. They remember kindly Australia and do all sorts of good things for Australia in the years ahead.

Question: Mr Downer, Harriet Richards. You referred to a young civilisation and Governor Philip - which sounds like you were referring to the very old civilisation on our continent, our indigenous Australians. As you rightly pointed out, Indians have a very strong sense of civilisations and of timelines. So, if you were not talking about indigenous Australians, as an Australian, can I make an appeal to you, to, in your future speeches, comment on the role of which peoples have a timeline and the culture that on our continent counts in the civilisation. And I am making this appeal because, I believe, that (inaudible)… whether or not Indians are ready to accept people like us into India to come and do business in the future.

Downer: Well, I mean, one of the points we often make about the indigenous Australians is that indigenous Australian culture is the world's oldest continuously operating culture and I don't think people in India would know that. There is no culture which has continuously operated and still exists today - that is older than the Aboriginal and the Torres Strait Islander cultures of Australia. And they make an enormous contribution to our society in all sorts of ways. Obviously, one of the great challenges for Australia historically, and it still a challenge, today is to find ways of successfully accommodating the range of different cultures we have in our society. And in the main, we have been quite successful but there is not doubt, we have a lot more work to do in terms of dealing with some of the problems we have with indigenous Australians and they themselves of course are enormously conscious of this and I think in the last couple of years there has been some very constructive progress in terms of how indigenous and non-indigenous Australia are working together to address some of the core problems that they have. I can't comment on how well-known these issues are; they are well known to you - presumably, you are Australian but I don't know how well known are Aborigines to the average Indian business person, I just couldn't comment on that … of course I was using the timelines of what was happening in the great transformations of Asian civilisations of that time and what happened in Australia - that was of course the point of comparison; it was the change that was taking place which was the issue.

Question: My name is Nalin Kohli, from Terrabyte Informatics. You mentioned about mining and energy. I just want to know, how do you see the scope for cooperation between small and medium enterprises here and in Australia, particularly in the knowledge-based industries like IT and biotech.

Downer: Well, we certainly… you are right to identify IT and biotech and communications, because in those areas there of course are large companies but the SME sector is extremely active and, you know, in a lot of those kinds of areas of economic activity you don't get the economies of scale; you don't need the economies of scale that you might need for example in substantial manufacturing. And so when we get our companies in Australia to think about interacting with the international community, we have a mechanism for doing that. The Government has an organisation called Austrade, the Australian Trade Commission, and it has a number of offices here in India, and I going to chance my arm at this, it obviously is based here in New Delhi; it has an office in Chennai because I visited it; it has an office in Mumbai - I visited that; it has an office..in: where else?

High Commissioner: it has got representation in Bangalore and representation in Kolkata.

Downer: Now the Australian SMEs will go to, for example, in the sectors you mentioned, but not necessarily, will go to Austrade and they will talk to Austrade about the possibilities of exporting in particular but working with counterpart companies in India. Austrade does a fantastic job in getting these companies in touch with each other and I am sure they do a certain amount of it the other way round as well - for Indian companies that want a working deal with Australia, Austrade can be helpful in that respect. Thank you for your question; it's a very good opportunity to advertise the services of the Australian Trade Commission.

Question: Hon Minister, I am Ramesh from the MMTC, a Government of India trading house. Now, in your speech you spoke about gold and coal as one of your major thrust areas for exports. Now, India can be a very major importer of coal provided you have some long-term policy; because right now we get a lot of coal from Indonesia - of course we buy from Australia also. What do you have to say about your long-term policy, because long-term planning is essential for sustainability? We are looking for long-term partners in the coal sector for imports.

Downer: Well, look, we have a very substantial, a very big coal industry and it is predominantly an export industry. And we have a lot of thoughts about this. First of all, our coal is a very high quality coal, and - well coal isn't the most greenhouse friendly of energy inputs. Our coal is more greenhouse friendly than most. And so it is relatively good coal in that respect and its high burning coal. It is cheap because coal prices are determined by the world market but it is relatively cheap to extract - not all but nearly all of our coal mines are open cut coal mines. So, it really is an enormous industry and the infrastructure of it is very sophisticated. There is so much demand for Australian coal at the moment. We are having real difficulties - just getting enough coal on to the trains, we have shortages of trains, (inaudible) queuing up in one or two of our ports just to get the coal out of Australia and Sydney - there is enormous demand at the moment. Of course, that will vary, that will go up and down if you take a 20-year period - that will go up and down to over a 20-year period. But I would make another point to you; I think this issue of climate change is going to move way beyond the very narrow debate about Kyoto. I mean, the Kyoto Protocol has been the focus of government activity on climate change but I suspect in the medium-term, governments are going to want much better outcomes than Kyoto offers. And they will be looking for technological solutions to greenhouse emission problems. And one of the technological solutions is clean coal technology - gasification of coal, and that is going to be a very important component of what I think Australia in time can contribute to a cleaner global environment. The development of that type of technology, and I mention that because otherwise people might sit here and think that coal - that is old technology, that is an old energy resource. There are going to be new and better ways of doing it in the future. There are going to be new ways of doing it in the future; we talked about solar energy; there is not doubt wind energy and so on - there are all going to make a contribution. But countries like India and Australia can work together on that technology, on research and development in that area of technology. Because after all you do produce your own coal here in India and I have just come to this meeting here this evening from a meeting with the Indian Environment Minister and we have had a very good talk about some initiatives of bringing India and Australia and a number of other countries closer together in terms of promoting some of the technological solutions to the greenhouse problem. So, I think there is more to the coal question than just the simple issue of the trading of coal. It is run by the private sector in our country. The government doesn't do a lot of central planning of that kind - I mean, we do not have a command economy; we have a private sector liberal economy. But we are very focused on the long-term for the coal industry and technological change that will affect the coal industry and I think that coal industry has a very bright future.

Question: I am Kaushik Maulik. On the IT sector (inaudible) and SMEs. Do you plan to showcase Australian (inaudible): How can Indian and Australian companies come together?

Downer: I think it is a fair question. I think Indian and Australian companies can work together a lot more - I mean one of the things that impresses me about the Australian IT sector is the work that goes on in software and of course that is a big Indian area too. There is tremendous creativity in the software sector in Australia right across the board; all kinds of software are produced. I think I am right in saying that although Australia is said to be a net importer of IT and India presumably is a net exporter of IT. The point of course is that you know statistics as measured you know - basic computers and so on, are much cheaper for us to import from other parts of the world but Australia is a net exporter of software and so I think that is an area where we can perhaps do more to bring the Indian SME software writers and producers together with their Australian counterparts. And we need to look at ways of doing that.

Question: Can you (inaudible) but do you also have plans to showcase this innovation?

High Commissioner: Not now but it sounds like a good idea. I would add though that two Indian delegations have been down there in the last six weeks - one looking inter alia at IT issues, products; and the other looking purely at IT products. I think it is time that some of ours came the other way. I agree with you. Thank you.

ENDS