Australia eyes India’s middle class to offset trade losses with China

Bilateral trade between Australia and India is expected to rise.

Australia is eyeing India’s burgeoning middle class to help offset the economic damage to some of its key exports from the twin headwinds of Covid-19 and severe restrictions imposed by top trading partner China.

Here, according to the Pew Research Center, some 85 million people with upper-middle incomes – about three times the population of Australia – are seen as prime targets for industries such as education, wine and tourism, all of which have been severely hit. hit. Pandemic and worsening relations with China.

Bilateral trade is expected to more than double to about A$60 billion over the next five years, after a deal to cut or remove tariffs on some goods and services and give greater recognition to professional qualifications came into effect on December 29. While this is still only a fraction of Australia’s A$280 billion two-way trade with China, India has been widely recognized as an important piece of the country’s diversification jigsaw.

Australia’s efforts are paying off, and relations with China are showing signs of thawing. India’s imports of Australian goods climbed to $12.3 billion in the April-October period, up 48% year-on-year. Ajay Sahai, director-general of the Federation of Indian Export Organizations, expects market sentiment to be upbeat, with further boosts in the coming years.

“Coal, copper, aluminium, cobalt, we could see a considerable increase in all of these. Wine imports would also increase,” Sahai said in an interview, referring to the potential benefits of the deal.

Australia, where the Indian community makes up about 3 percent of the population, established the Center for Australia-India Relations in 2022 to facilitate policy dialogue and manage scholarship and fellowship programs, among other things. India and Australia are also part of a multi-year plan to help Australian businesses compete in India, and will host a leadership dialogue this year, with Indian Prime Minister Narendra Modi likely to attend.

Here are four industries poised to benefit from closer Australia-India ties:


Australia’s higher education sector faced the daunting task of rebuilding a lucrative international student market when international borders reopened earlier this year. The job has been made more difficult by the fact that China until recently stuck to its “zero outbreak” strategy, meaning students from the mainland were largely unable to return to Australian campuses.

University of Sydney vice-chancellor Mark Scott said 2022 saw a record high number of international student enrollments from outside China, with a surge in Indian students. All departments and schools saw growth. After a recruiting trip to India in September, he hopes to make further progress in 2023.


As of the end of October, 121,868 Indian students were enrolled in the country, about 13,300 fewer than in 2019. By contrast, enrollments from China are far from their pre-pandemic highs.

Universities are expecting a further surge in demand from India, as Indian graduates from certain streams will be eligible to work longer in Australia under a new trade agreement, which promises mutual recognition of educational qualifications.



Tourism is another industry in which Australia is eager to appeal to India’s burgeoning middle class. Its efforts appear to be working, with the latest figures for December showing India as the second-biggest source of tourists after New Zealand, displacing China into the top five.

Earlier this year, Tourism Australia organized a trip for some Indian social media influencers to watch the ICC Men’s T20 Cricket World Cup in Melbourne in October. A spokesperson for the tourism body said the move was part of a wider $125 million global campaign.


One of the influencers is Barkha Singh, whose video of the popular Bollywood show with Australian food critic and TV presenter Matt Preston has 1.3 million views. Singh’s other posts include a helicopter ride on Rottnest Island, diving in the Great Barrier Reef and an Instagram video of the India v Pakistan match.

Still, Indian holidaymakers are not as lucrative for Australian businesses as Chinese tourists, as their spending power remains relatively weak compared to China.

According to economists at Australia and New Zealand Banking Group, the tourism industry needs almost twice as many tourists from India as tourists from China to earn the same revenue.

key minerals

India is Australia’s second-largest coal export market in 2020-21, according to government data. Australia’s coal trade with India vastly exceeds other exports and is growing.

But Raghbendra Jha, emeritus professor at the Australian National University’s Crawford School of Public Policy, said Australia should not trust its coal trade with India to remain strong as the world moves away from fossil fuels.

“The energy mix in India and Australia will now change very sharply and unpredictably,” he said.

Still, there are opportunities in the resource space. Lisa Singh, chief executive and vice-chairman of the Melbourne-based Australia-India Institute, said Australia has 21 of the 49 minerals identified in India’s Critical Minerals Strategy, so “they’re trying to achieve economic A perfect combination in terms of decarbonization” Member of the Australian Government’s Australia-India Council.


wine wins

Australia was India’s largest source of wine in the 12 months to September 2022, with imports worth A$16.2 million, up 81% from the same period last year, according to government figures.

Austrade said its emerging wine market was expected to grow by 8% a year to 2024, from a low base, as changing attitudes towards alcohol led to an increase in wine drinkers. A bilateral trade agreement will cut tariffs on Australian wine, giving it a further boost.

Trade Minister Don Farrell said in a statement the trade deal was also expected to improve access for other industries in Australia, including pharmaceuticals, cosmetics, lentil, lamb and horticultural exporters.

Still, while some industries are thriving, others hit by China’s trade concerns are expected to miss out.

Patricia Ranald from the University of Sydney said Australian agricultural exports such as barley were unlikely to find a home in India because of the large rural population whose livelihoods depended on subsistence farming.

(Aside from the title, this story is unedited by NDTV staff and published via a syndicated feed.)

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