India hunts critical mineral investment in Australia to power EVs
New Delhi | India is scouting investments in Australian critical mineral mines to power its booming electric vehicles industry and reduce its dependence on China.
India’s Mining Minister Pralhad Joshi will lead a delegation to Australia in June, with the state-owned Kabil consortium tipped to take an equity stake in a critical minerals mine.
Australia’s High Commissioner to India Barry O’Farrell said the planned investment demonstrated the complementary nature of the Australian and Indian economies.
“The clear benefit for India is advancing its EV market,” he told The Australian Financial Review.
“It already has the biggest two- and three-wheel EV industry in the world, and it wants to challenge China in relation to battery storage. Australia, for its part, gets to lift the sale of new resources.
“China’s nascent but growing renewables sector also requires critical minerals as does its powerhouse tech industry, so we are pitching to some of their big markets,” Mr O’Farrell said.
The planned investment comes as Australian and Indian trade negotiators shift their focus from goods to services and investments, with both sides hoping a more comprehensive deal will replace the interim agreement.
The final agreement could be completed by the end of the year.
The interim Economic Cooperation And Trade Agreement slashed tariffs to increase imports of Australian commodities that can help power the manufacturing growth that India needs to provide jobs for its youthful population.
With 1 million Indians turning 18 every month, a shortfall in jobs is the most likely factor that could derail the country’s economic expansion.
However, the economy continues to boom: even after a downward adjustment due to the drag on global growth from the war in the Ukraine, the IMF expects the national economy to grow by 8.2 per cent this year.
A market of 1.4 billion people growing this fast is a standout among world economies and at least a dozen other trading partners including the UK, the US and the European Union are angling to land a trade deal. India is open to offers, using bilateral agreements to increase exports and investments after rejecting the multilateral RCEP.
India’s protectionist approach for “sensitive” areas in agriculture means there are still no-go zones for would-be trading partners.
In December, the World Trade Organisation ruled in Australia’s favour in a long-running dispute over India’s sugar subsidies. Australia, along with the Brazilian and Guatemalan governments, had claimed these distorted the global sugar price.
Dairy is another sector where India’s focus is firmly inward. Australian farmers didn’t get a break in that market in ECTA, and any gains in the final agreement are likely to be small. There’s a lot of work still to be done, said Lisa Singh, director and CEO of the Australia India Institute.
“There was a lot carved out in the agricultural sector to get the interim agreement over the line. There is still a lot to do before the two countries have a fully fledged trade agreement,” Ms Singh said.
“The interim agreement was not so much about its substance but the signal it sent in a very polarised and unstable region right now. It demonstrated the seriousness of our bilateral relationship, not just at a trade level but at a geopolitical level as well,” Ms Singh said.
One point the two countries agree on is an urgent need to diversify away from China.
“There is a lot of disillusionment with China here,” India’s Minister of Commerce Piyush Goyal said. “Our deficit has grown and grown, despite the fact that our political relationship is not good.
“There is no appetite left here for China,” Mr Goyal said. China has promised investment, but rather than the roads and infrastructure India wants, China has concentrated on startups and technology. “They promise a lot but do not deliver.”
While seasoned observers note there have been many false starts in the bilateral relationship, former prime minster Tony Abbott is confident the progress shown in the trade negotiations will bear fruit for years to come – as long as Australia puts in the work.
“We need to put at least as much effort into this relationship as we have in previous years with China,” said Mr Abbott, whose role as a special trade envoy to India last year was the latest development in his long history with the country. India is much more natural trading partner for Australia than China, he believes.
“I had three months roaming around India in 1981 and I kind of fell in love with the joint then. India is in some ways exotic, but it never feels strange,” said Mr Abbott , who was greeted with a hug by India’s Prime Minister Narendra Modi at the opening of the Raisina Dialogue in New Delhi on Monday.
“The fact we both have democracy, rule of law, to a considerable extent the English language, shared literary reference points and cultural reference points, and a considerable amount of history in common; all of that matters.
“It adds an instinctive familiarity which is quite important. So yes, I think this has vast potential if we give it anything like as much attention as we have given China over the last couple of decades,” Mr Abbott said.
Extracted from AFR