Australia retailers flying to India for online business despite headwinds

Australian retail companies are readying to enter the Indian market through the online route at a time when international investors are facing problems owing to government’s changing policy on e-commerce.

Armed with research on India’s latest data legislation mandating local storage, many companies are also in the process of setting up background infrastructure in India to support online retail. “A 150-strong delegation is heading to India next week as part of the Australia-India Business Exchange (AIB-X) with investments figuring prominently in the plans of many companies. Trade Minister Simon Birmingham will also be present," said Mark Morley, trade commissioner of South Asia, Australian Trade and Investment Commission (Austrade).

Morley said premium quality of barley from Australia was ready to be shipped to India, after the country managed to get round India’s phytosanitary restrictions. In anticipation of the move, a contingent of wine producers is also headed to India. The AIB-X is a multi-month programme of the Australia government to generate business in India. It features two-way ministerial visits, and a range of trade shows focusing on four priority sectors — education, agribusiness, resources and tourism — as well as infrastructure as a sector with significant promise.

Despite major trade volumes in high value sectors like petrochemicals, India's trade with Australia ranks way behind that of other similar developed nations. The country is India’s 17th largest trading partner, with bilateral goods and services trade valued at $30.3 billion in 2018-19. The country is also the 25th biggest source of foreign direct investments into India. 

India’s yawning trade deficit has principally been due to Australian coal and natural gas exports worth over $5.6 billion in the first eight months of 2019-20. Total imports from Australia were pegged at $7.8 billion over this period, more than three times the $2.2 billion worth of exports to the country. 

On the other hand, India is Australia’s eighth-largest trading partner and fifth-largest export market. After concluding a free trade agreement with China, there is an understanding in Canberra that global trade linkages with other nations need to be reinforced to create a more diversified set of trade partners as well as goods.

An India Economic Strategy to 2035, penned by former Australian high commissioner to India Peter N Varghese, bats for more economic linkages between the nations at a time Indian businesses have been scouting for newer overseas markets, egged on by the government. “Australia's trade with Beijing is many multiples of our trade with New Delhi, so I’m not expecting India to overtake China. The vision in the report is to bring India up to the third position among Australia’s trade partners,” Verghese had said earlier.

Now, New Delhi has also confirmed to Australia that it will be repaying this attention from the Aussies by bring out its own trade report focusing on the oceanic nation. Morley also said agri majors such as Graincorp and Olam Australia are also expected to ramp up activity in India. Agri business, along with the associated sectors of logistics and food processing, is among the major sectors that can see economic ties jump according to Austrade.