What India’s rising star means to Australia
Australia’s recent economic growth owes a great deal to the contribution of Indian migrants, one of the largest migrant groups, and our relationship with India, one of the world’s largest economies.
Going forward, both will be important for our post COVID-19 recovery and future prosperity.
The property industry is well-aware of the impact of Indian migration. For most of the last decade robust population growth, driven by skilled immigration especially from India, has been one of the defining trends in the Australian real estate market.There are many reasons why Indian migrants have been attracted to Australia. These include employment and career development (especially for skilled migrants), lifestyle and liveability considerations, education opportunities (especially in the higher education sector), similar time zones and common institutions (legal systems and parliamentary democracy).
Indian-born migrants have been a major source of demand in greenfield land markets and have played an important role in reshaping the market.
The impact of India and Indian-born migrants on the local real estate market is part of a broader global trend that began some decades ago as the country emerged from its outdated, largely centrally-planned and inward-looking socialist economic model, to one that is more open, internationalised and focused on innovation.
When this process of transformation began few could have foreseen where India would be today. Where India might be in the coming decades is an increasingly important question.
The answer is of vital importance at a range of levels for Australia as a whole and, specifically, the Australian property market.
While most political leaders are focused on managing the immediate and short-term health and economic implications of the COVID-19 pandemic, this focus will need to move quickly once again to the long-term and maximising opportunities in the global economy, especially those afforded to us by the growth of developing nations.
In a post-COVID-19 world, we will also need to ensure we minimise our economic and other risks. This includes, for example, diversifying our trading relationships in the sourcing and supply of critical health and related equipment, medicines and pharmaceuticals.
Given Australia’s strategic partnership with India, this key relationship seems to offer a recipe for future development.
The Australia India Relationship – Opportunities for Collaboration
Australia and India have a growing and significant economic, trade and cultural bilateral relationship.
India is Australia’s eighth-largest trading partner and fifth-largest export market. Bilateral trade with India was over $30 billion while bilateral investment was also over $30 billion in 2018.
Over the next few decades and beyond a growing India will require an increasing share of Australia’s exports (goods and services). Australian agriculture, education and skills training, professional services and healthcare, to name a few industries, will be critical to the continued evolution and success of India.
Although the Australia-India relationship continues to evolve it has remained below its potential. As a result, the last few years have seen an acceleration of efforts from both countries to renew and grow economic, cultural and other links.
The India Economic Strategy (IES) – a landmark report released in July 2018 and endorsed by the Australian Government – was one of the few times a major economic strategy was prepared in Australia focusing on bilateral relations with another country.
The IES places India at the forefront of Australia’s many international partnerships and aims to upgrade the Indian and Australian bilateral relationship consistent with India’s strong growth.
The IES identifies ten key industries as best matching Australia’s competitive advantages with Indian priorities.
The IES proposes ten key Indian states to focus on and forwards a range of economic targets including lifting India into Australia’s top three export markets and increasing Australian investment to India significantly.
Non-business links between India and Australia are also important. The extensive and important people to people links between Australia and India and some of our shared values and institutions are important and solid foundations for a growing relationship.
A key element of these people to people links (and indeed economic links) is the large and growing Indian community in Australia. Of the over 7.5 million migrants living in Australia it is estimated that around 660,000 were born in India (2.6%).
Importantly, India remains Australia’s largest source of skilled migrants.
The Australian information and communication technologies, health and social services and professional services industries are amongst the key domestic sector beneficiaries of Indian migration to Australia.
India’s skilled migration to Australia has helped address key skills shortages in specific sectors.
It is noteworthy that many Indian students who studied in Australia and who returned to India have achieved great success in their home country. This group represents another important and growing link between the two countries.
In terms of our shared values and institutions India and Australia share democratic and judicial systems.
We also have a shared history and membership of the Commonwealth. And there is also, of course, our shared love of sports, especially cricket.
India Today and in the Future
India is a success story on many levels. The rate and scale of change in recent decades has been extraordinary and continues.
India is the second most populous country in the world with an estimated population of over 1.3 billion people.
This represents around 17% of the global population (7.8 billion people) or one in six people. Within a decade, however, India is expected to be the most populous country in the world and have the largest workforce.
Moreover, India is a very young country with around half of the population under 25 years and around two thirds under 35 years.
It is the largest democracy in the world with more than 900 million eligible voters.
India is already one of the largest economies in the world. When ranked by nominal output (Gross Domestic Product) India is the fifth largest economy. Over the last two decades India’s economy has increased seven times and now exceeds $US3 trillion.
As in the case of China and many other developing economies, India’s economic growth has been driven by a range of factors including economic reforms (liberalising markets and increasing competition) and urbanisation.
However, although hundreds of millions of people have seen dramatic shifts in their standard of living and many millions have escaped poverty, India’s economic growth remains uneven and the country’s potential continues to remain untapped.
The Indian Government is pursuing an ambitious economic reform agenda and aims for India to become a $US5 trillion economy by 2024.
Although COVID-19 might impact the timing of this goal, it will not diminish the will or ambition of Indians to join the ranks of the world’s leading economies.
A key factor will be India’s relentless focus on innovation, technology and knowledge-driven economic growth.
This is critically important given the “global shift towards knowledge-based forms of competitiveness” and efforts by nations to move up the value-chain (Kulkarni, 2019).
This focus on innovation has led to India becoming globally renowned as an outsourcing destination, especially for technology firms, and for software development.
India increasingly excels in many other innovation and technology areas including the number of graduates in science and engineering, quality of innovation, information and communication technology exports, elite education and training institutions in the engineering and physical sciences fields and grass roots innovation.
There is also a growing start-up culture, an increasing focus on overall exports (including higher value manufacturing) and increasing participation in global value chains. Bangalore (officially known as Bengaluru), the information technology capital of India, has been called the next Silicon Valley.
In addition to Bangalore, Mumbai and New Delhi have been ranked in the world’s top science and technology clusters.
A considerable driver of India’s economic success and innovation leadership is the reach of India’s diaspora – the largest in the world – with around 18 million of India’s citizens living in other countries.
Many of the global Indian diaspora are amongst the most successful migrants.
For example, in the United States Indian migrants are amongst the most successful and wealthiest immigrants.
An increasing number of CEOs of Silicon Valley and big tech firms are Indian born.
While discussing India’s success, it is also important to recognise the challenges which will have to be overcome. These include sustainability, infrastructure, a sizeable proportion of people living below the poverty line, education, natural environment challenges, job creation and labour force participation.
The global economy continues to transform and change.
India will continue to grow and prosper and its immense scale and focus on innovation, to name but two factors, should ensure India becomes an increasingly important nation on the global stage.
As the world emerges from COVID-19 we have a renewed opportunity to grow our global relationships.
Re-thinking India’s place in our future and further expanding our deep economic, social and other ties has the potential to accelerate the recovery and growth for both countries.
The property industry is just one sector of many that has seen first-hand the great benefits that can be created by a strong and mutually beneficial relationship with India and the Indian diaspora.
My hope and expectation are that we will capitalise on the current and emerging opportunities and that both India and Australia will be better for it.
I am greatly indebted to Dr Anand Kulkarni for reviewing this contribution. Any errors, omissions or transgressions are those of the author.
Australian Bureau of Statistics, 2020, Migration, Australia, 2018-19, cat. no. 3412.0, viewed 5 May 2020, https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3412.0Main%20Features12018-19?opendocument&tabname=Summary&prodno=3412.0&issue=2018-19&num=&view=
Kulkarni, A. (2019). India and the Knowledge Economy: Performance, Perils, and Prospects (India Studies in Business and Economics) 1st ed. 2019 Edition. Melbourne: Springer.
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