CSM301 Construction Safety Report: History and Legislative Framework in Victoria and the Commonwealth

Slide 1 title: Implications for IBs of Australia-India relationship

Hello! Today Amir and I are presenting on the implications for international businesses of the growing Australia-India relationship.

Slide 2: Country overviews/current affairs

It is worthwhile to start by providing a brief overview on Australia and Indias level of development politically and economically.

The data presented here reflects Australia as a developed, democratic country with a market economy; a highly regulated economy experiencing low, but consistent growth, with low unemployment and prosperous living standards. India is portrayed as a developing, democratic country with a historically mixed economy a lesser regulated economy with higher growth rates, but more unemployment and lower living standards. Like much of the rest of the world, both countries are experiencing inflationary pressures and growing government debts whilst emerging from the COVID-19 pandemic.

• Add World Bank EoDB rank to slides

India continues to signal its intent to establish a more market-based economic system, however. Such a transition is reflected by the growing economic and diplomatic ties between Australia and India recently, encapsulated by the relaunching of the Comprehensive Economic Cooperation Agreement (AI-CECA) that has seen a new bilateral trade deal ratified in December 2022 and a leaders summit take place in early March of this year. Market liberalisation efforts on behalf of both Australia and India is sure to be taken into account by businesses in appraising the overall attractiveness of Australia and India as investment sites.

(90 secs)

Slide 3: Benefits/costs/risks of doing business in India (for Australian IBs)

Slide 4: Benefits/costs/risks of doing business in Australia (for Indian IBs)

Slide 5: Recommendations for IBs regarding their level/form of investment

Overall, the political economies of India and Australia represent attractive markets for IBs to operate. Whilst Australian and Indian businesses are directly benefited by the likes of the ECTA and ongoing CECA negotiations, the subsequent growth generated in both economies will incentivise IBs based in other countries to pursue greater investment in both Australia and India markets.

The obvious approaches to market entry for Australian and Indian businesses depending on the nature of their industry are exporting and FDI. However, in targeting Indian consumers especially, joint ventures and licensing may serve profitable due to cultural considerations and lingering logistical problems involved with operating in India.

Businesses looking to expand into either market should contact their governments international trade promotion and investment attraction agencies to assist with transitions into foreign markets.

Thank you for listening.

(60 sec)

Group Presentation

Business case/issue:

1. Implications for IBs of growing Australia-India relationship. (2021-present)

Presentation structure (see below research notes for theory pertaining to each slide):

Slide 1: Title slide w/ link to recording

Slide 2: Brief background on issue/country overviews (incl. key industries)

Slide 3/4: Implications for IBs (benefits, costs, risks - demand (consumption) & supply (production (capital, labour)) considerations)

Slide 5: Recommendations for IBs regarding their level/form of investment

Recording how to:

(Under resources wattle)

Referencing:

Harvard form

Slide 3/4 theory

• Think how issue affects benefits/costs/risks of doing IB


• Identify - if any - environmental (political, economic) risks of country relevant to issue


• Issues impact on innovation and entrepreneurial activity (as key engines of growth)
  
  
  
  • Regulation/deregulation
  
  
  
  

What do businesses look for in countries to gauge profit potential?

p.87: The political, economic, and legal environments (systems) of a country clearly influence the attractiveness of that country as a market or investment site. It follows that the benefits, costs, and risks associated with doing business in a country are a function of that countrys political, economic, and legal systems.

How do countries facilitate the growth generated from international businesses investment?

p.87: Countries with democratic regimes, market-based economic policies, and strong protection of property rights are more likely to attain high and sustained economic growth rates and are thus a more attractive location for international business.

SLIDE-BY-SLIDE CONTENT

Slide 2: Brief background on issue/country overviews (incl. key industries)

Economic indicators:

• Population/size of economy




• India: 1.41 billion, GDP:US$3.18 trillion (2021)


• Australia: 26.1 million, GDP:US$1.64 trillion (2021)




• Structure of economy




• India: mixed economy


• Australia: market economy




• Employment: Labour force participation rate, unemployment level




• India: 7.8% UE (October 2022), 47.5% PR (2022)


• Australia: 3.5% UE (February 2023), 66.6% PR (Feb 2023)




• Growth: GDP




• India: 9.1% annual GDP growth (2022)




• Massive rebound in activity witnessed after reopening




• Australia: 2.7% (2022), down from 4.2% (2021)




• Price level: CPI




• India: 6.5% increase (Dec 22)


• Australia: 7.8% increase (Dec 22)




• Creditworthiness: debt-GDP




• India: 89.3% of GDP (2021) - rising gradually


• Aus: 36.1% of GDP (2021) - big spike




• Income spread: per capita GNI PPP, poverty rate




• India: GNI PPP US$7,130 (2021)


• Australia: GNI PPP US$55,330 (2021)




• Key industries, imports, exports




• India: The most important and the fastest growing sector of Indian economy are services. Trade, hotels, transport and communication; financing, insurance, real estate and business services and community, social and personal services account for more than 60 percent of GDP. Agriculture, forestry and fishing constitute around 12 percent of the output, but employs more than 50 percent of the labor force. Manufacturing accounts for 15 percent of GDP, construction for another 8 percent and mining, quarrying, electricity, gas and water supply for the remaining 5 percent. (https://tradingeconomics.com/india/full-year-gdp-growth)


• Australia: services-driven economy as well (see composition of aus economy: https://www.rba.gov.au/education/resources/snapshots/economy-composition-snapshot/)




• Mining, health & education, finance, construction,




• Current trading relationship (from Aus perspective):

• Population demographics: education, access to tech/internet, composition of social classes

Political indicators:

• Political system




• India: democracy


• Australia: democracy




• Political leadership + stability




• India: Narendra Modi


• Australia: Anthony Albanese Labor government




• Security (business regulation, establishment of property rights)




• India: EODB (World Bank) ranking 63rd




• Moved up 71 places in 5-year period.




• Australia: EODB ranking 14th




• In general, business regulations and property rights are more established in Aus.

Current affairs re. Australia-India economic, diplomatic relationship

• CECA negotiations between Australia and India




• Australia-India Economic Cooperation and Trade Agreement (ECTA) signed 2nd April 2022 and came into force 29 Dec 2022




• 1st Australia-India Annual Summit (March 2023)




• Leaders summit in India attended by both countries PMs where they expressed intentions to further the economic partnership, and to coordinate efforts on other mutually relevant political issues.

https://www.dfat.gov.au/geo/india/india-country-brief

India is the worlds largest democracy and one of its fastest-growing economies.

The Australia-India relationship was upgraded to a Comprehensive Strategic Partnership (CSP) on 4 June 2020. Our CSP is based on mutual understanding, trust, common interests and shared democratic heritage. Through the CSP, both countries are committed to working together across a range of areas including science and technology, maritime cooperation, economy, defence, agriculture, education and tourism.

Australias Indian community is our second largest and fastest-growing overseas-born group. In the 2021 Census, the number of people reporting Indian heritage was 976,000. Of these, there were 673,000 Indian-born Australians.

[India] remains Australias largest source of skilled migrants and the second largest source of international students. These trends point to the importance of our people-to-people links in supporting strong two-way economic growth.

Over the next 20 years, a growing India will need many of Australia's goods and services, including agriculture, education and skills training, and healthcare.

In 2021, India was Australia's sixth-largest two-way goods and services trading partner (A$34.3 billion)

Education is Australia's largest service export to India

The Australia-India Economic Cooperation and Trade Agreement (ECTA) entered into force on 29 December 2022, and will deepen our economic ties and provide further opportunities for Australian and Indian businesses. (see: https://www.dfat.gov.au/sites/default/files/aiecta-benefits-for-australia-snapshot.pdf)

Australia and India are now engaging on a bilateral Comprehensive Economic Cooperation Agreement (CECA) and progressing cooperation in a range of areas, including critical minerals, health, critical technology, science and agriculture.

To support more Australian and Indian business partnerships, the Australian Government, through Austrade, has launched the Australia India Business Exchange (AIBX). AIBX provides a range of services to support Australian businesses to enter and establish operations in India, from industry specific insights to guidance on doing business with India and entering India's online retail market. (https://www.austrade.gov.au/australia-india-business-exchange)

Austrade provides tailored advice on doing business in India.

Importance of services trade to Australia (https://www.dfat.gov.au/trade/services-and-digital-trade/the-importance-of-services-trade-to-australia)

Services account for a significant amount of Australias trade with other countries. In 2019-20, services made up 19.4 per cent of Australia's total exports. When the value that Australian services add to goods exports is also taken into account, services represent around 45 per cent of export earnings.

Australia is a world-class provider of a range of services such as education and tourism, professional services, financial services, energy and mining-related services, and environmental services. Australia prioritises these sectors where it seeks to improve access to foreign markets.

In 2019-20, Australia's five-largest services exports were:

• Education-related travel services $39.7 billion


• Recreational travel services $16.4 billion


• Professional services $6.1 billion


• Telecom, computer and information services - $5.9 billion


• Financial Services $5.7 billion

Encouraging more trade in services through open markets can lead to higher employment levels, improved incomes and better standards of living in Australia.

Open markets strengthen Australias engagement with its trade partners and participation in global value chains. They also create competition that encourages businesses to be more efficient, putting downward pressure on prices, and gives Australian consumers access to a wider range of services and expertise.

The increased competition that open markets bring also encourages local service providers to become more innovative and efficient in the way they deliver their services. This has benefits for other areas of the Australian economy that rely on the services sector.

Benefits of FTAs
https://www.dfat.gov.au/trade/about-ftas/about-free-trade-agreements
https://www.dfat.gov.au/trade/about-ftas/Pages/the-benefits-of-free-trade-agreements

FTAs are treaties between two or more countries designed to reduce or eliminate certain barriers to trade and investment, and to facilitate stronger trade and commercial ties between participating countries.

Free trade agreements help boost economic and job growth in Australia, and deliver new growth opportunities to big and small Australian businesses through greater trade and investment. Australian consumers and businesses also benefit from improved access to a wider range of competitively priced imported goods and services.

Under WTO rules FTAs must:

• eliminate tariffs and other restrictions on 'substantially all the trade' in goods between its member countries, and


• eliminate substantially all discrimination against service suppliers from member countries (helping to increase trade in services).

This ensures Australia's FTA are comprehensive in their scope and result in the best possible outcomes for Australia.

Free trade agreements don't just reduce and eliminate tariffs, they also help address behind-the-border barriers that would otherwise impede the flow of goods and services; encourage investment; and improve the rules affecting such issues as intellectual property, e-commerce and government procurement.

Free trade agreements give Australian businesses and consumers improved access to a wider range of competitively priced goods and services, new technologies, and innovative practices.

Free trade agreements support stronger people-to-people and business-to-business links that enhance Australia's overall bilateral relationships with FTA partners.

Australia-India Economic Cooperation and Trade Agreement (ECTA)
https://www.dfat.gov.au/trade/agreements/in-force/australia-india-ecta
https://www.dfat.gov.au/trade/agreements/in-force/australia-india-ecta/using-ecta-do-business-india
https://www.dfat.gov.au/trade/agreements/in-force/australia-india-ecta/outcomes

The Australia-India Economic Cooperation and Trade Agreement (ECTA) entered into force on 29 December 2022. Over 85 per cent of Australian goods exports by value to India are now tariff free, rising to 90 per cent in six years, and high tariffs have been reduced on some additional products. In addition, 96 per cent of imports from India are now tariff free, rising to 100 per cent in four years.

ECTA helps secure access to the fast-growing Indian market of over 1.4 billion people and gives Australian businesses opportunities for trade diversification.

Resumed negotiations for a Comprehensive Economic Cooperation Agreement (CECA) will build upon ECTA outcomes to capitalise on the potential for closer economic ties between Australia and India.

The Australia-India Economic Cooperation and Trade Agreement (ECTA) helps secure Australia's foothold in one of the world's fastest growing major economies and enables Australian businesses to benefit through tariff elimination or reduction on a wide range of Australian goods in demand in India.

More on using ECTA to do business in India at second link.

• May prove useful for concluding recommendations

More on specific outcomes of ECTA at third link

Benefits of Foreign Investment
https://www.dfat.gov.au/trade/investment/about-foreign-investment
https://www.dfat.gov.au/trade/investment/the-benefits-of-foreign-investment

Australia welcomes foreign investment. It has helped build Australia's economy and will continue to enhance the wellbeing of Australians by supporting economic growth and innovation into the future. Foreign investment supplements domestic savings; without foreign investment, production, employment and income would all be lower.

Foreign investment has been a longstanding part of the development of Australia's economy, and it continues to benefit Australia, including by providing capital to finance new industries and enhance existing industries, boosting infrastructure and productivity, and creating employment opportunities.

Foreign direct investment (FDI) is when an individual or entity from outside Australia establishes a new business or acquires 10 per cent or more of an Australian enterprise, and so has some control over its operations. Common examples include the establishment of Australian branches of multinational companies or joint ventures between Australian and foreign companies.

• Foreign direct investment is building or purchasing businesses and their associated infrastructure in a foreign country.

Australia offers many advantages compared with other countries seeking foreign investment including:

• consistent economic growth


• highly skilled workforce


• strategic location


• strong governance and legal systems


• good infrastructure.

Foreign investment is integral to the Australian economy. As an open, well-regulated economy with a highly skilled workforce, Australia enjoys an international reputation for innovation. To make the most of these advantages, Australia uses international capital to supplement domestic savings.

Foreign investment has other benefits beyond injecting new capital. By bringing in new businesses with connections in different markets, it opens up additional export opportunities, boosting our overall export performance. It also encourages competition and increased innovation by bringing new technologies and services to the Australian market.

Australia-India Annual Leaders Summit
https://www.pm.gov.au/media/joint-statement-1st-australia-india-annual-summit

The Prime Ministers welcomed the entry into force of the landmark India-Australia Economic Cooperation and Trade Agreement (ECTA) on 29 December 2022 and emphasised the significant opportunities to diversify and expand two-way trade, stimulate business engagement.

The Prime Ministers welcomed progress in negotiations building on the foundation laid by the ECTA, including new areas of trade, investment and cooperation. The Prime Ministers looked forward to swift progress in negotiations and for an early conclusion of an ambitious Comprehensive Economic Cooperation Agreement (CECA), to realise the full potential of the bilateral economic relationship, thus creating new employment opportunities, raising living standards and improving the general welfare of the peoples of both countries.

The Prime Ministers welcomed the convening of the India-Australia CEO Forum and encouraged businesses on both sides to cultivate links; explore emerging economic and investment opportunities, including as an outcome of ECTA; and to leverage the significant complementarities of the two economies. They agreed that Australias comparative strength in raw materials, critical minerals and innovative research coupled with Indias scale, market size and low-cost manufacturing space can lead to fruitful and mutually beneficial outcomes through partnerships between Indian and Australian companies.

The Prime Ministers noted that future industrial security and decarbonisation efforts require access to critical minerals and their reliable processing and availability. They reiterated their shared commitment to building secure, resilient and sustainable critical minerals supply chains essential to, inter alia, clean energy, electric vehicles, semiconductors, aerospace and defence.

Noting the value Australia places on the sizeable Indian student community in Australia, Prime Minister Albanese conveyed to Prime Minister Modi that his Government would facilitate the efficient and timely processing of student visa applications for Indian nationals who are offered admission by Australian universities and

other

vocational training institutes. The Prime Ministers directed their concerned officials to operationalise the Work and Holiday Arrangement agreed between India and Australia under ECTA, including exploring opportunities in both directions. Prime Minister Albanese noted Australia is committed to expanding its visa processing capability in India to enhance the immigration relationship.