"I want to stress that Australia remains committed to concluding a high-quality FTA with India. However, the bandwidth for contemplating a three-dimensional economic relationship between Australia and India has often been overtaken by the intense focus on FTA negotiations," the envoy said.
"This strategy (stated in the report) takes a deliberately long-term approach out to 2035," she added.
Sidhu said ties between the two countries are doing well, but it will need a significant step change to get closer to its full potential.
India still represents only 3.6 per cent (AUD 27.4 billion two-way) of Australia's global trade, while China, by comparison, is at 24 per cent (AUD 183 bn), she said.
"It is worth asking why we went to the trouble of commissioning a study such as this. The short answer is simple, it's because India matters to Australia. A key conclusion of the strategy is that there is no market over the next 20 years that offers more opportunity to Australia," Sidhu said.
India's economy is already the world's third largest in PPP terms and if the strategy's assumption is used, that India will grow at between 6-8 per cent annually over the next 20 years, then the potential is enormous, she said.
In June, India and Australia agreed on a high quality and balanced FTA between the two nations.
The negotiation for the pact, officially dubbed as Comprehensive Economic Cooperation Agreement (CECA) between India and Australia was started in 2011 to provide fillip to trade and investment between the two countries.
Several rounds of negotiations have been completed for liberalising trade and services regime, besides removing non-tariff barriers and encouraging investments.
But both the sides are yet to resolve issues pertaining to goods and services.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)