Australian Spotlight - April 2024

For many, India is the new China, and Australia has a head start. Two years ago, on April 2, 2022,  Australia and India signed the India-Australia Economic Cooperation and Trade Agreement (ECTA). This was India’s first trade agreement with a developed country in over a decade. A more comprehensive agreement will follow.

Australia has already enjoyed over 20 years of economic prosperity thanks to the rise of China. Now, along comes India. India is already the fifth largest economy in the world and is expected to overtake Germany and Japan by 2030. It has grown rapidly over the last decade and a potential demographic dividend promises a burgeoning middle class.

But for Australia, India is not just a new China. The relationship is built on more than just economic interest..

Cucumber sandwiches

Australia and India have a lot in common. From ancient cultures with deep spirituality to the influence of British colonisation. For example, they both have parliamentary democracies, a common law system, and most importantly a love of tea and cricket.

Along with Bollywood movies, cricket is India's favourite pastime. Cricket is also Australia’s favourite sport and the cultural links this creates between the two countries is embraced by both countries and should not be underestimated. In 2024, Australians were the largest group of foreigners playing in India’s top cricket competition, the Indian Premier League. Australianns also comprise 3 of the top 6 highest-paid players in the IPL, including the top 2 highest-paid players: Mitchell Starc and Pat Cummins. Test match cricket matches between the two nations are national events.

Family ties

There are also strong personal ties between the two countries, something which Indian prime minister Narendra Modi called out in his visit to Australia last year:

“Our positive cooperation is growing … It hasn't grown through diplomacy. The real strength is the Indians living in Australia,".

India is the leading source of migrants for Australia (see chart below). As a result, the percentage of Australians who were born in India has increased from 1.6% in 2012 to 2.9% in 2022. India has now overtaken China and is second only to the UK in terms of Australians born overseas.

Australia ranked tenth by the size of its Indian diaspora in 2020. Suburbs like Parramatta in Sydney actively promote Indian festivals such as Diwali and Australian television shows feature Indian characters. India now has the largest diaspora in the world.

Indian students have also become an important part of Australia’s educational industry. Over the last 20 years, the annual number of Indian students studying in Australia has increased by nearly six-fold and is now only second to Chinese students. Both countries now dominate international student numbers in Australia (see chart below).

These numbers will only continue to grow in the future with a new two-way migration deal signed by the countries in 2023. It allows students, graduates, researchers, and business people to move more easily move between the two countries.

Indians are also the fifth-largest source country for overseas short-term visitors to Australia with around 400,000 in 2023. Going in the other direction, Australia ranked fourth as a source country for overseas tourists to India.

Tension in the water

The relationship, however, goes beyond cricket and personal ties with Australia and India aligned on key strategic interests in the Indian Ocean. China is the watchword here. 

While anti-authoritarian Australia bristles against Chinese “bullying”, disagreements have only resulted in trade spats and a ratcheting up of rhetoric. For India however, there is direct conflict in the Himalayas and encroaching naval bases and ports in the Indian Ocean (see chart below).  

It is thus no surprise that as Australia has pulled closer to the strategic embrace of the US, both countries have also welcomed warming interest from India. Japan also recognises a natural friend.

This growing alignment in strategic interests has been formalised in recent years through several agreements and bodies. This includes the “Quad” (the Quadrilateral Security Dialogue) in 2021 (Australia, India, Japan, and the US), the 2021 Supply Chain Resilience Initiative Australia, India, and Japan), and the 2022 Indo-Pacific Economic Framework for Prosperity (IPEF) (14 countries including Australia, India, Japan, and the US).

Both countries are also increasing their naval presence in the Indian Ocean, Australia is upgrading the airport in the Cocos (Keeling) Islands (midway between Australia and Sri Lanka) to handle new surveillance aircraft. It also wants to base the majority of its planned nuclear submarine fleet in Perth. India is upgrading its facilities, ships, and aircrafts throughout the Andaman and Nicobar Islands. It has also established new bases on North Andaman Island and Agalega Island in Mauritius.   

“The geography of Australia and India makes us stewards of the Indian Ocean region,” Richard Marles, deputy prime minister of Australia.