The Hon Warren Truss MP  MINISTER FOR TRADE  DEPUTY LEADER OF THE NATIONALS

Speech

1 August, 2007

Breaking new ground

Australia India Business Council ACCOR-Qantas, India Independence Day Luncheon

22 August 2007, Adelaide

Introduction

Thank you very much Brian Hayes, National Chairman of the Australia India Business Council;  Neville Roach, National Chairman Emeritus of the AIBC - last year in Brisbane I called him the  AIBC’s “patron saint” but to borrow from management-speak, let me refer to him as the AIBC’s  “chief mentor”;  Distinguished guests;  Ladies and Gentlemen

I’m very pleased to be invited back to speak to the Australia India Business Council. I can see a few  familiar faces here this afternoon—including some who joined me on that very successful trip to  India earlier this year.

That trip was very important to me. As I said to several audiences in India, it’s no longer enough to  hear about India’s progress; you have to see it for yourself.

So I was very happy indeed to see for myself the results of our growing trade with India; and to  experience personally the optimism that many feel about the future of India’s economy.

We are fortunate to live at a time of great optimism about India’s future. And I think we are all  looking at ways to participate in India’s bright future by deepening our economic and commercial  links.

Before I look forward to what’s happening in our trade and commercial relationship, allow me go  back briefly over our history—because this year marks the 60th anniversary of India’s  independence—and I know the AIBC is celebrating this anniversary all around the country.

If we look at the history of our relations since India’s independence, I think it’s fair to say that  relations were marked by long periods of unmet hopes and expectations.

More than a hundred years ago, Alfred Deakin, one of the great statesmen of the Federation era and  Australia’s second Prime Minister, became one of the first Australian leaders to recognise the  relevance of India to Australia.

Deakin visited India in 1890. He wrote two books about India in 1893. He declared that “Southern  Asia”—as he called it—would shape Australian society and the Australian economy. In that  prediction, he was certainly ahead of his time.

In the years after India’s independence at the stroke of midnight on the 15th of August 1947,  Australia strongly supported Indian independence; and we also strongly supported India’s  membership of the Commonwealth.

But for many years, our relationship was constrained by the realities of the Cold War; our different  strategic alignments and interests; and our very different approaches to international economic  engagement.

Today, however, our relationship is breaking new ground and giving substance to Deakin’s vision.

It’s a very positive and a dynamic relationship. Australia is committing significant resources to  strengthening the relationship because we see a future of great dynamism and ambition.

And I certainly think it is in both our interests to deepen our commercial and business links.

This is where the work of the AIBC and its members comes into its own. As you build business  opportunities with India, you are also promoting Australia’s commercial engagement with India and  complementing the broader relationship.

Now, I’m told that AIBC membership has doubled in the past year. This is a remarkable  achievement and it certainly shows that more and more Australian companies want to know about  opportunities in the Indian market.

On the government side, our links are strengthening all the time. I have an annual meeting with my  counterpart.  And our Foreign Ministers do the same. The tempo of meetings between our senior  foreign affairs is also increasing markedly.

These arrangements are in place to promote the various government-to-government aspects of the  relationship.

But I want to make this point: the success of our long-term engagement with India will rely heavily  on the commercial links built up by Australian businesses.

So in government we aim to support the kinds of things you’re doing as you take advantage of the  opportunities arising in the Indian market.

And we are always looking at what more we can do, as a government, to help Australian business  take greater advantage of India's significant potential. One very important development is that we  are finalising discussions with India about a possible joint feasibility study for a bilateral Free Trade  Agreement (FTA). Any such study would, as a matter of course, provide for wide consultation with  industry groups and other stakeholders.

Opportunity knocking

We are doing all we can, so more business can flow.

Multilaterally, India is one of the key players in the World Trade Organization and we’ve been  actively engaged with them to work towards a successful conclusion to the Doha Round.

They’re tough negotiations and we don’t agree on some key issues. But for our part, we’ll keep  trying to find a consensus which delivers real commercial opportunities for our businesses.

Bilaterally, we’ve set up a Trade and Economic Framework to focus our cooperation with India. I  think that the very healthy state of our trade performance shows we’re right on track. And  Australian businesses are capitalising on the new opportunities in India.

Let me start with some of the trade statistics in the 2007 financial year because they tell a  remarkable story:

Ã¢ÂÂ¢ India is now Australia’s fourth-largest goods export market - now only Japan, China and  Korea are more significant;

Ã¢ÂÂ¢ India continues to be Australia’s fastest-growing major merchandise export market  recording annual average growth of over 34 per cent in the past five years;   Ã¢ÂÂ¢ and the value of Australia’s merchandise exports to India nearly quadrupled from 2002-03 to around $10 billion at the end of June 2007.

The major driver of this trade performance is of course India’s booming economy. With growth  rates of around 8 to 9 per cent a year, India’s economy is demanding the kinds of goods and  services that Australia produces well.

In 2006-07, India was our largest market for gold, our second-largest market for coal and copper  ore, and our third-largest market for wool. Education is also a big export—which I’ll come back to  in a moment.

And of course, the Prime Minister announced last week that Australia has agreed to allow the  export of uranium to India, subject to several strict conditions.

Some of these conditions include:

Ã¢ÂÂ¢ conclusion of a suitable safeguards agreement between India and the Atomic Energy  Agency covering all of India’s designated civil nuclear power facilities   Ã¢ÂÂ¢ conclusion of a bilateral civil nuclear cooperation agreement between India and the United  States   Ã¢ÂÂ¢ a consensus decision by the Nuclear Suppliers Group to make an exception to its guidelines

enabling international civil nuclear supply to India; and   Ã¢ÂÂ¢ conclusion of a bilateral Australia-India safeguards agreement that provides assurances that  our uranium would be used exclusively for peaceful uses at all times.

For us, this would be supported by arrangements to verify that no Australian nuclear materials  would contribute to any military purpose.

India needs reliable low emission energy sources like nuclear power to fuel its economic progress  while addressing environmental challenges.

And Australia’s decision to supply uranium assists India to meet these ambitions and it reinforces  the trade and strategic measures we are taking to strengthen our relationship.

In Australia the decision to supply uranium to India will create increased exports and jobs over the  longer term.  The industry already generates $658 million annually in exports, and India will be a  large and growing market.

We are constantly working to build on our trade achievements. And I’m confident that we will  succeed because the growth outlook for India is very positive.

By some forecasts, India’s growing economy could become the world’s second-largest economy— in purchasing power parity terms—by the middle of this century.

This kind of growth is creating a new middle class of an estimated 100 to 300 million people. Now,  to be sure, India’s not yet a big market for many international consumer goods.

But on the streets you can see the effect of rising consumer spending.

India’s mobile phone market nearly doubled last year to around 150 million users—that’s seven  times Australia’s population. And in the 2006-07 financial year, automotive sales crossed the 10  million mark.

Another product the Indian middle class could start consuming more is wine. At the moment, it’s  fair to say that western foods and wine only cater to an elite slice of Indian consumers.

It’s why the current level of wine consumption in India is equivalent to just two teaspoonfuls per  person a year. It’s not enough to raise a toast!

But the Australian wine industry wants to turn this micro market into a mass market. For example,  South Australia’s Bleasdale Wines has reportedly predicted that India will one day be its largest  wine market.

Let’s hope they succeed.

Raising your profile

Now, I appreciate that part of the challenge with doing business in India is establishing a profile.  And I can appreciate how difficult it is when your competitors are also trying to raise their profile in  a market as complex as India’s.

But for many Australian companies that offer unique and often specialist products, the first step  may be as simple as getting noticed.

That’s why, during my visit to India in March, I launched a three year promotional and marketing  campaign called Utsav Australia, which means “celebrate Australia”.

The campaign aims to raise awareness of Australian business and industry among the Indian  business community.

And this afternoon I take great pleasure in launching a new website, www.utsavaustralia.in.

Here, Indian enterprises can find valuable information about:

Ã¢ÂÂ¢ Australian industry, expertise and capabilities;   Ã¢ÂÂ¢ the new and innovative products and services that Australia can provide; and   Ã¢ÂÂ¢ value added opportunities for Indian businesses.

At a click, Indian companies can access:

Ã¢ÂÂ¢ offers from Australian companies seeking partners, customers and markets in India;   Ã¢ÂÂ¢ details of events and exhibitions in Australia; and   Ã¢ÂÂ¢ information on the Australian Trade Commission’s (Austrade’s) events in India.

That, and much more.

Via the new website, Indian business representatives can even arrange meetings with Australian  companies visiting India.

This new website is an important showcase of what Australia has on offer to Indian businesses. It’s  a window on the mutual advantages to be gained by both Indian and Australian business  communities working together. It’s an initiative that, in a very modern way will enhance Australia’s  commercial ties with India.

Another part of the campaign has involved widening Austrade’s network on the ground in India  with a new Consulate-General in the southern city of Chennai that I was very pleased to open  earlier this year.

For Indian businesses that see our Consulate-General in Chennai, it shows that Australia is open for  business.

And it shows that Australia and Australian businesses are serious about building our relationship  with Southern India—a region of great opportunity.

The Utsav campaign will run promotions in sectors ranging from our staples like mining and  resources to emerging areas like consumer retail, food and beverage and infrastructure—including  infrastructure as part of the 2010 Commonwealth Games in New Delhi.

Let me take as an example, promoting our sporting expertise. And I don’t mean the performance of  our athletes and our cricketers - they often speak for themselves - what I mean is that Australian  companies that are now contracted to next year’s Beijing Olympics are well positioned to bring  their expertise to the Delhi Commonwealth Games in 2010.

Some have already succeeded. For example, Daryl Jackson Architects and an Indian partner have  won the design consultancy for the 2010 Commonwealth Games village. And a consortium led by  Melbourne’s Peddle Thorp Architects has won the contract to design two games venues—a  badminton-squash stadium and a table tennis venue in Delhi.

Promotions also work here at home. For example, Austrade and the consultancy group KPMG  recently gave a series of seminars in Australia to outline opportunities in India’s financial services  sector.

Currently, only around one in 10 Indian workers have formal retirement savings. And there are  hundreds of millions of employees working in India’s so-called formal sector. Many of these  employees aspire to some form of retirement savings—so the scope for developing products to  satisfy that need is enormous.

I’ve mentioned these examples because they show how the Australian government, through  Austrade, brings to bear its market intelligence and its contacts on the ground in India to help  Australian businesses expand into the Indian market.

Look for opportunities

There’s some advice that I shared with you last year that’s worth repeating today.

Our people on the ground in India say that you can’t just wander in and look people up in the  Yellow Pages. Contacts must be personal. And contacts won’t respond to calls or emails as readily  if they don’t know who they’re dealing with.

So this relies very much on Australian business people being prepared to go out themselves and  look for the opportunities and see if there’s a need to be met or a new service to provide.

Some of this commerce happens because the right combination falls into place.

Take, for example, exports of Australian education. As wealthy and middle class Indian families  looked outside their country for quality tertiary education, they saw Australian institutions  providing world class education.

As a result, Australia is now the second-largest foreign provider of education to India. We had  40,000 Indian students enrolled in educational programmes in Australia last year.

But it’s worth looking further than the usual fields. I’m confident there are plenty of under-developed opportunities in India’s IT industry: financial services, as I mentioned; retail; processed  food and beverages; consumer products; and in interior design and lifestyle goods.

For example—and this might sound hard to believe—but Australians are selling tandoori ovens to  India. Beech Ovens, located in Brisbane, manufactures and supplies advanced tandoori ovens to  hotels and restaurants around the world. And if you’ve ever dined at the Oberoi Hotel in New Delhi  you probably didn’t know that they’re using an Australian-made oven for their tandoori chicken and  naan bread.

And finally, in the media sector, you all know that Bollywood film makers are interested in  Australia because of our locations, our skilled film crews and our sophisticated production  capability. This has raised the profile of Australian businesses involved in advertising, multimedia  and digital content creation.

For example, Sydney’s Studio NUVU won a contract to make TV commercials for India’s largest  juice company. That led to another contract producing commercials for Pepsi’s Indian market.

Conclusion

Ladies and Gentlemen, in conclusion, I believe the examples I’ve outlined today show that our trade  and commercial relations with India are very dynamic indeed.  We’re breaking new ground.

In government, we’re doing all we can to smooth the way for more business to flow and help  Australian business deepen links with the Indian market. Our trade is booming and Australian  businesses are raising their profile and looking for new opportunities.

What this adds up to is a stronger and deeper commercial engagement with India.

After sixty years of Indian Independence I think we can look ahead and see a future of great  dynamism and ambition in our commercial relationship that will truly justify Alfred Deakin’s early  optimism.

India offers enormous opportunity, so let’s keep working to make the most of it.

I wish you well in your celebrations.

Thank you.

Ends



