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Factba.se: Australia DFAT Country Briefs - India


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System of government

The Republic of India is a constitutional democracy made up of 28 states and seven union and national territories. The Constitution came into force on 26 January 1950 and lists the powers of the Federal Government (known as 'the Centre' or 'Union Government'), those of the states, and those which are shared responsibilities. The President of India is obliged to act on the advice of the Council of Ministers, chosen by the Prime Minister.

Parliament is bicameral, comprising the 545-member Lok Sabha ('people's' or lower house) and the 245-member Rajya Sabha ('states' or upper house). Lok Sabha members are elected by universal adult suffrage every five years (except for two nominated Anglo-Indian members) using the 'first past the post' voting system. The Rajya Sabha is not subject to dissolution; one-third of its members retire every second year.

Recent political developments

Following the 2009 Indian national election for the Lok Sabha (lower house) the Congress Party-led United Progressive Alliance (UPA formed the new government. The Congress Party itself won 206 seats, up from 153 in the 2004 national election. The main opposition party, the Hindu nationalist Bharatiya Janata Party (BJP), won 116 seats. Dr Manmohan Singh, Prime Minister from 2004, was reappointed Prime Minister on 20 May 2009. Dr Singh is the first Indian Prime Minister to be re-elected after serving a full first term of five years since Prime Minister Jawaharlal Nehru in 1961. Parliament reconvened on 1 June 2009.

Six million officials and security personnel were involved in delivering the elections, and close to one-and-a-half million electronic voting machines were used. Over 400 million Indians, almost 60 per cent of eligible voters, cast their votes, out of an estimated electorate of 714 million. 14 million young voters participated for the first time (one quarter of India's electorate is aged under 25). This was the biggest electoral exercise in the history of the democratic world.

Elections for the Rajya Sabha (upper-house) are not held concurrently with Lok Sabha elections. One-third of Rajya Sabha members are elected every two years by the legislative assemblies of the Indian states.

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India's foreign policy has traditionally reflected a broad national consensus on security and foreign relations. Since independence in 1947, India has sought to position itself as a major international player. It has been at the forefront of developing country activism and was a founding member of the Non-Aligned Movement (NAM). India has also been an active member of the United Nations and the Commonwealth and has expanded its cooperation with East Asia, including Association of South East Asian Nations (ASEAN) countries and as a member of the East Asia Summit (EAS).

As its economic power develops, India is seeking to consolidate further its international role and to increase its focus on 'economic diplomacy', particularly to secure energy supplies. In terms of its international role, India is lobbying for a permanent seat on the United Nations Security Council (a claim which Australia supports) and taking a more prominent role in fora such as the World Trade Organization.

India is the major power in South Asia and its relations with its neighbours govern the tenor of foreign relations in the region. India's major strategic focus has traditionally been on its neighbourhood although more recently it has sought to broaden this focus, notably towards East Asia.

A measure of India's growing importance is reflected in the visits by the leaders of all of the Permanent Five members of the Security Council in the second half of 2010.

'Look East' policy

Like Australia, India is pursuing a combined multilateral, regional and bilateral approach to trade policy through its 'Look East' policy with Asia.

In late 1995, India was granted full dialogue partner status with ASEAN and was admitted as a member of the ASEAN Regional Forum in July 1996. India, together with Australia and New Zealand, is also a member of the East Asia Summit.

Relations with the United States

The development of the India-United States relationship in recent years has been driven by increasing recognition, in both India and the United States, of each country's strategic and economic importance to the other. The importance of India to the United States was underscored in October 2008 with the signing of a bilateral nuclear agreement enabling civil nuclear trade between the two countries. The United States and India have also been expanding cooperation in a range of other areas, including through a CEO Forum, cooperation in agriculture, infrastructure, supply-chain management, and partnerships in public health.

Relations with China

India has extensive land borders with China, strong memories of the short border war with China in 1962, and is conscious of China's links with Burma and Pakistan. Despite this, in recent years India has sought to develop friendly and pragmatic relations with China. Mainland China is now India's largest trading partner. The two countries have also made progress in recent years in addressing border disputes, although the issue remains sensitive, particularly in relation to the north eastern Indian State of Arunachal Pradesh. In 2009 China was India's largest source of merchandise imports, and third largest destination for merchandise exports.

Relations with Pakistan

India's relationship with Pakistan has been problematic since the time of partition at the end of British rule in 1947. Their ongoing territorial dispute over Kashmir, in India's northwest is a serious obstacle to normal relations between the two neighbours.

Following the then Prime Minister Vajpayee's 'hand of friendship' overture to Pakistan in April 2003, both countries normalised diplomatic relations, implemented a ceasefire along the Line of Control (LOC), and re-established some transport links. (The LOC is the military control line between the Indian and Pakistani-controlled parts of the former princely state of Jammu and Kashmir.) In February 2004, the two sides agreed on a process for discussions to resolve key issues, called the Composite Dialogue, which has been continued by the current UPA Government.

Following this 2004 agreement, there have been several successful bilateral meetings designed to build confidence and make progress on negotiations. Despite the peace process, however, violence continues in Kashmir.

India's relations with Pakistan were again put under strain following the November 2008 Mumbai attacks in which over 160 were killed, including two Australians.

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The Indian economy comprises a wide spectrum of activity, ranging from high technology to subsistence agriculture. After decades of failing to realise its full economic potential, India has been one of the world's fastest growing large economies in recent decades. Indian economic engagement with the rest of the world has increased, particularly in the services sector.

While selective economic reform was attempted from as early as 1960, the reform process began in earnest in 1991 due to a balance of payments and foreign currency reserve crisis. This reform process has focused on liberalising the economy through increased openness to financial and technology transfers, reform of the financial sector, trade liberalisation and reduced government administrative controls. The structure of the economy has changed over the past decade, with services playing an increasingly important role. This demonstrates the difference between India's services-led economic growth and the manufacturing-led development model followed in much of East Asia, including China. However, the Indian Government recognises that India will have to generate stronger manufacturing growth and power generation to continue its current levels of economic performance.

Despite recent progress, significant challenges remain, including addressing the fiscal deficit, high inflation rates and government debt, and improving infrastructure and agricultural productivity. Another challenge is to ensure that the benefits of economic growth are experienced more widely. Despite the fact that tens of millions have been lifted out of poverty during the 1990s, average incomes and literacy levels remain low and India is one of the largest recipients of World Bank lending. While still low, India's score in the United Nations Human Development Index (HDI) has increased over recent decades. India's HDI ranking was 119th in 2010, a rise from 134th place in 2009.

While the impact of the global financial crisis on India was less than others, India has been affected by falls in global trade volumes.

Key economic indicators

Official economic data points to Indian economic growth recovering from the global financial crisis. In 2010, India recorded an estimated 10.1 per cent growth in GDP. The IMF forecasts India's economy to grow by 7.8 per in 2011 and 7.5 per cent in 2012.Rising domestic demand is increasingly driving economic growth; however it is also contributing to inflation. The IMF reports that consumer prices rose by 12 per cent in 2010, up from 10.9 per cent in 2009, with food prices being the main driver for inflation. Consumer prices are forecast to rise by 10.6 per cent in 2011 and 8.6 in 2012. India's current account deficit is expected to stay static at around -3.1 per cent of GDP in 2011.

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Australia has placed India in the front rank of its international partnerships. Both Governments recognise there is significant potential for further cooperation across a broad range of areas and in 2009 agreed to categorise the relationship as a strategic partnership.

Australia and India first established diplomatic relations in the pre-Independence period, when the Consulate General of India was first opened as a Trade Office in Sydney in 1941. India's first High Commissioner to Australia arrived in Canberra in 1945. In March 1944, Lieutenant-General Iven Mackay was appointed as Australia's first High Commissioner to India.

Strategic partnership

Then Prime Minister Kevin Rudd visited India on 11-13 November 2009. He and Indian Prime Minister, Dr Manmohan Singh, issued a joint statement that included agreement to upgrade relations between the two countries to the level of a "Strategic Partnership." As part of the Strategic Partnership, Australia and India issued a Joint Declaration on Security Cooperation that will see the two countries intensify their efforts to maintain peace, stability and prosperity and put in place mechanisms to ensure closer and more regular collaboration in security areas. Mr Rudd unveiled a major increase in the diplomatic resources Australia devotes to the India relationship, including new positions in Delhi, new DFAT positions in Mumbai and Chennai, and new Austrade offices across Indian regional cities. Mr Rudd also announced a major boost in funding over five years for joint science and technology research projects. This includes $65 million that will be matched by India for the Australia-India Strategic Research Fund to support joint research in some of the challenges facing the two countries, like energy, food and water security, and $20 million for the Australian Centre for International Agricultural Research (ACIAR) to undertake joint research in dry-land agriculture with India. The Australian Government also provided $1 million to support a joint solar cooling and mini-grids project being undertaken by India's The Energy and Resources Institute (TERI) and Australia's Commonwealth Scientific and Industrial Research Organisation (CSIRO).

In November 2011, India became Chair and Australia Vice-Chair of the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC). The two countries will work closely together to address challenges facing the Indian Ocean Region.

Official visits

Between January 2008 and November 2011 there have been an unprecedented number of two-way visits, with 24Indian Ministerial visits to Australia and 29 Australian Ministerial Visits to India, including a visit by then Prime Minister Rudd in 2009.Australian and Indian Foreign Ministers meet annually for the India-Australia Foreign Ministers' Framework Dialogue (FMFD) alternatively in Australia and India. Similarly, Australian and Indian Trade Ministers meet annually for the Joint Ministerial Commission (JMC) and Education Ministers for the India-Australia Ministerial Dialogue on Education Cooperation.

Memoranda of Understanding

Cooperation between India and Australia spans a range of areas. Notable areas of cooperation include Memoranda of Understanding (MoUs) on Defence Cooperation, Customs, Combating International Terrorism, Water Resource Management, and intellectual property Recent significant treaties signed between Australia and India include agreements on Air Services, Extradition and Mutual Legal Assistance in Criminal Matters.

Energy and minerals

A central element of India's foreign affairs agenda is 'energy diplomacy', which relates to the need to secure energy supplies to meet rapidly growing industrial and consumer demand. Australia is well positioned to partner with India in this regard, through exports of minerals and fuels, energy investment opportunities in Australia and collaboration on areas of joint interest, such as new mining technologies. The Joint Working Group on Energy and Minerals was established in 1999. Regular meetings have generated several initiatives designed to deepen the bilateral energy and resources relationship. In addition the inaugural Australia-India Energy and Minerals Forum, which took place in Perth in June 2010, brought together business representatives and government officials from both sides, with Indian Power Minister Sushil Kumar Shinde leading the Indian delegation.

During the visit of the Minister for Resources, Energy and Tourism (http://minister.ret.gov.au/MediaCentre/MediaReleases/Pages/MinisterFegusonVisittoIndia.aspx) in November 2008, five Action Plans were signed with the Indian Ministries of: Coal; Mines; New and Renewable Energy; Petroleum and Natural Gas; and Power. The Action Plans are designed to underpin our bilateral engagement and technical cooperation on minerals and energy including trade and investment facilitation. They were updated in May 2011, when Australia and India also launched a Resources and Energy Security Dialogue.


Education is an area of increasing importance to the bilateral relationship. Australia is a major destination for Indian students studying abroad, who recognise the high quality and cost competitiveness of Australian education services. There were 56,018 Indian student enrolments in Australia in 2010.

Australian Governments at all levels have taken action to ensure the safety of all international students studying in Australia.

Australia and India have also instituted a program of closer cooperation on education matters. Since 2009, education ministers have met annually for the India and Australia Ministerial Dialogue on Education Cooperation. At the last meeting on 1 August 2011, the Minister for Tertiary Education, Skills, Jobs and Workplace Relations, Senator Christopher Evans and Indian Minister of Human Resource Development, Kapil Sibal, agreed to negotiate a Memorandum of Cooperation (MoC) on student mobility and welfare to share initiatives which further enhance the international student experience and strengthen the monitoring of education agent activities. The Ministers also launched a new Australia-India education links website (http://www.australiaindiaeducation.com/). The website will act as a central information portal to support education and training collaboration between Australian and Indian institutions.

The Ministers also attended the inaugural meeting of the Australia India Education Council in New Delhi on 2 August 2011.

On 31 July 2011, the first Vice-chancellors and Senior University Executive workshop was held in New Delhi, hosted by the University Grants Commission. Eleven Vice-Chancellors from India and twelve Vice-Chancellors/Deputy Vice-Chancellors and Senior University Executives from Australia attended.

Australia-India Council

The Australia-India Council (AIC) (http://www.dfat.gov.au/aic/index.html) was established in 1992 by the Australian Government to broaden the bilateral relationship through increasing levels of knowledge and understanding between the peoples and institutions of Australia and India. The AIC comprises a board of members with interests in the Australia-India relationship, drawn from a cross-section of the Australian community. The AIC is serviced by a secretariat located in the Department of Foreign Affairs and Trade in Canberra. The Australian High Commission in New Delhi manages the AIC's activities in India with an in-country manager and support staff.

Further information (http://www.dfat.gov.au/aic/index.html)

Community presence in Australia

The most recent Australian Bureau of Statistics estimates indicate that as at 17 June 2011, there were 340,604 Indian-born people living in Australia. The Indian Ministry for Overseas Indian Affairs estimates the number of Indians in Australia at 448,430 people.

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The Australia-India economic relationship has grown steadily in recent years and has the potential to increase considerably as India's economic expansion continues. Australia's strength in exporting primary products, particularly minerals and fuels as well as services like education, positions us well to supply growing Indian industrial and consumer demand.

There are still major barriers to trade with India, despite recent reforms. The IMF highlighted the importance of continued tariff reduction and the lowering of administrative barriers to trade. Indian tariff rates and trade barriers more generally remain among the highest in the world. In addition to tariffs, India imposes various duties, such as safeguard and anti-dumping duties, and non-tariff restrictions such as import bans and standards or certification agreements.India has gazetted Australia as a reciprocating territory under its Arbitration and Conciliation Act. As a result, arbitral awards made in Australia will now be recognised by the Indian legal system.

Two-way goods and services trade totalled $21 billion in 2010-11. India was Australia's fourth largest export market in 2010-11.

Australian merchandise exports to India were $15,7billion in 2010, which represents 6.4 per cent of Australia's total merchandise exports. India was Australia's 4th largest merchandise export market and 5th largest merchandise trading partner in 2010-11.

Although the trade relationship is dominated by resources, the role of services is growing; Australia exported $2.5 billion worth of services to India in 2010-11. New prospects continue to emerge in sectors such as ICT, biotechnology, tourism, health, film and insurance. Education exports to India made up the bulk of our services trade, with India the second largest source of international students studying in Australia. Imports of Indian services totalled $660 million in 2010-11

Australian investment in India in 2010-11 totalled over $4.7 billion. This investment covers manufacturing, telecommunications, hotels, minerals processing, food processing, oil and gas, and the automotive sector.

There has been strong Indian interest in investing in Australian resource deposits.

The top Indian software firms - Tata Consultancy Services, Satyam, Infosys, Pentasoft and HCL - are represented in Australia and have a small but growing market presence.

Australia-India Comprehensive Economic Cooperation Agreement (CECA)

On 12 May 2011, Trade Minister Craig Emerson and Indian Minister for Commerce and Industry Anand Sharma formally launched negotiations to conclude a Comprehensive Economic Cooperation Agreement (CECA) between Australia and India.

Independent modelling conducted in 2008 for a preceding study indicates that an Australia-India CECA could result in a net increase in Australia's GDP by up to US$32 billion (A$45.5 billion) and India's GDP by up to US$34 billion (A$48.3 billion) over a period of 20 years.

Further information on the CECA (http://www.dfat.gov.au/fta/aifta/index.html)

Bilateral and regional FTAs

India has signed FTAs or similar bilateral agreements with a number of countries including Sri Lanka, Singapore, South Korea and Chile, as well as the Mercosur countries (Argentina, Paraguay, Uruguay and Brazil), ASEAN and the South Asian Association for Regional Cooperation (SAARC). India has also been actively pursuing a program of bilateral FTA negotiations and studies, including with China, Japan, the European Union, Malaysia, Indonesia, Thailand, New Zealand, Canada and the Gulf Cooperation Council.

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Institutional structures for trade promotion

Australia-India Joint Ministerial Commissions (JMC) are held regularly, enabling interaction at a government and business level on a range of issues. The JMC is held concurrently with a joint meeting of the India-Australia Business Council and the Australia-India Business Council (AIBC). The AIBC is a key Australian body for promoting business links between Australia and India. There are also working groups in specific areas, such as the Joint Working Group (JWG) on Energy and Minerals, and JWGs on Science and Technology, Education, and Tourism.

Export opportunities

Prospects for trade with India continue to improve as trade liberalisation progresses. The IMF, in its annual Article IV consultation on India in 2006, noted recent reductions in tariff rates and encouraged the Indian Government to accelerate the timeline for reducing tariffs to ASEAN levels.

Trade successes


Cochlear is the innovator and manufacturer of a unique hearing implant system designed to give customized hearing solutions. Cochlear first came to India in early 1990s. With Austrade assistance, Cochlear has now entered into marketing agreements in Bangalore and New Delhi.

FAT Systems Pty Ltd.

FAT Systems is involved in the blending of Ethanol with Diesel. The company has established an office in Bangalore and was recently awarded a CDM (Clean Development Mechanism) from the United Nations Framework for Climate Change. This is the first BioFuels project in the world to be awarded a Clean Development Mechanism.


GHD is a global Engineering Services company established in 1928 and is ranked in the world's top 30 engineering and architecture companies. GHD serves the global markets in the Infrastructure, Mining and Industry, Defence, Property and Buildings and the Environment sectors. GHD operates in 14 countries and has an integrated network of offices throughout Australia, New Zealand, the Middle East and the Americas. The India office was set up in January 2009 in Hyderabad as the South Asia HQ. This office markets its services to industry and government.

Leighton Contractors Pty Ltd

Leighton set up an office in Mumbai in 2004 and is having considerable success in winning offshore oil and gas projects. Leighton constructed a Nokia factory worth in excess of $200m and a Flextronics plant worth over $150m and are currently building a Motorola plant. Leighton opened new offices in New Delhi and Chennai during the former Prime Minister's visit in March 2006. Its most recent success is an offshore oil pipeline project in Vizag for the Hindustan Petroleum Corporation Limited. The company employs over 7,000 people in India

Macquarie Group

Macquarie Group have been operating in India since 2005 and has offices in Mumbai and Delhi. Their business activities include M&A advice and principal investing. Macquarie Group is bidding to finance over 20 infrastructure projects in India. It has established an infrastructure fund with the state Bank of India to invest in and manage infrastructure assets in India (such as roads, airports, ports and power projects). It has a 45 per cent stake in the fund which has an equity target size of $US3 billion.


ResMed is a leading manufacturer of sleep apnoea equipment. It has been marketing its range of sleep apnoea equipment through a distributor and has had an office in India since 2005. In 2009, ResMed concluded a strategic acquisition of a local medical sales distribution network to focus on sales while ResMed focuses on marketing and promotions.


Woolworths has established a joint venture with the Tata Group to operate a number of electronics stores in India under the brand name 'Croma', along the Dick Smith retail outlets model. The first store was opened by Roger Corbett, then Managing Director, Woolworths and Ratan Tata, Executive Chairman, Tata Group in Mumbai in October 2006. There are now over 61 stores across India.

For further information on commercial opportunities and a range of market profiles and business briefs on India, contact the Austrade Export and Investment Hotline on 13 28 78 or visit the Austrade website (http://www.austrade.gov.au/). Austrade, in addition to having offices in New Delhi, Mumbai and Chennai, maintains representation in Kolkata, Hyderabad, Ahmedabad, Chandigrarh, Jaipur, Kochi, Puneand Bangalore.

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Last Updated: February 2012

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