MNI RBA Bulletin: Scope For Expansion of Trade With India

By Sophia Rodrigues

     SYDNEY (MNI) - The Indian economy is in a better position today than it was

several years ago, and growth in their imports means there is scope for trade

between Australia and India to expand further in coming years, a bulletin

article published by the Reserve Bank of Australia Thursday said.

     The article noted that the Indian government has initiated policies and

reforms aimed at encouraging investment, strengthening productivity and ensuring

fiscal sustainability. 

     "Stronger growth in domestic demand has led to a recovery in India's

imports, including from Australia," it said.

     While the recent volatility in foreign exchange markets and the recovery in

oil prices pose upside risks to inflation and the current account deficit,

India's strong long-term potential for growth, driven by demographics,

urbanisation and productivity-enhancing reforms, suggests there is scope for

trade between Australia and India to expand further in coming years, the article

said.

     The total goods and services trade between India and Australia was around

A$27 billion in 2017, up from A$2.7 billion in 1999. India is Australia's fourth

largest destination for exports, with coal the largest item of export, and

services, mainly education, the second largest.

     Further expansion of resource trade with India will take time, the article

said, because the pattern of urbanization there has been quite different with

China. India also has a policy goal of self-sufficiency in coal production.

     But the demand for Australian education is expected to continue increasing,

and there is also increased opportunities for agricultural trade.

     "In the future, domestic policies in India such as a focus on

self-sufficiency in coal production may limit the scope for growth in certain

types of bilateral trade. However, the potential for future growth, and the

existing trade relationship in areas such as education services and agricultural

products, suggest that Australia could benefit from expanded trade in goods and

services with India in coming years," the article said.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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