Other BriefingsQueensland and India Trade and Investment Scope: Key Growth Drivers
Queensland dominates Australia’s trade with India, with huge prospects available for business collaboration and commercial partnerships following the AI-ECTA. Given the state’s outsize contribution to India-Australia ties, its local government has put out a 5-year Queensland-India Trade and Investment Strategy to 2027. Queensland has two trade and investment offices in India, in Bengaluru and Mumbai.
The launch of the Australia – India Economic Cooperation and Trade Agreement (AI-ECTA) on December 29, 2022, has paved the way for growing commercial ties between the two countries. Under the AI-ECTA, over 85 percent of Australian goods exports by value to India became tariff free and high tariffs reduced on some agricultural products. On the other hand, 96 percent of imports from India became tariff free. By January 1, 2026, these concessions will see 100 percent tariffs eliminated for Australian imports from India and 90 percent for Indian imports from Australia.
A key expected beneficiary of this ECTA will be the northeast Australian state of Queensland, which dominates the country’s trade relations with India. In 2022, Queensland exports to India doubled to AU$21.8 billion, comprising 74.6 percent of Australia’s total goods exports to India. For additional context, Australia exported AU$19.3 billion worth of goods to India in 2021, representing 4.2 percent of Australia’s total exports.
India is Queensland’s second-biggest export market and fourth-largest commercial partner. In 2022, Queensland’s exports of commodities to India had increased by almost 80 percent compared to 2021.
Hence, given its outsized performance, Queensland state has established two trade and investment offices in India – first in Bengaluru (Karnataka state), and at the end of 2023, in Mumbai (Maharashtra state). Authorities from both sides hope to build upon strong interpersonal and institutional ties, to expand business partnerships.
Located in the northeast of the continent, Queensland is the third-largest state in Australia and its second most populous.
The relationship between Queensland and India is built on a “foundation of economic and institutional linkages, people-to-people ties, and a shared vision for a stable and prosperous Indo-Pacific”. There are over 90,000 Indian diaspora in the state – the second largest non-European diaspora in Australia and the third largest such cohort in the nation.
Consequently, the state government of Queensland recognizes India as a major market for commerce and investment, reflected in its emphasis under the 10-year state strategy to promote Queensland, boost its exports, grow investment and local jobs, and leverage opportunities aligned with Brisbane till 2032.
India-Queensland Trade and Investment Strategy 2023-2027
The Queensland-India Strategy 2023-2027 aims to enhance the partnership between Queensland and India, focusing on job creation, export growth, and investment opportunities. The strategy is funded under the AU$150 million Queensland Trade and Investment Strategy 2022–2032.
According to the Queensland-India Strategy 2023-2027, the key drivers of long-term economic growth are urbanization, digitization, electrification, and renewable energy integration. Key sectors for demand-led growth as India’s middle-class population expands will be education and training, high-quality food, and agriculture exports.
The Queensland-India Strategy outlines four strategic priorities to maximize opportunities with India while addressing past challenges:
- Growth of Queensland’s presence and profile
- Foster relationships and connections
- Develop India business capability
- Invest for growth
Challenges for Queensland businesses in the Indian market:
- Establishing a presence: At a commercial level, Australia’s visibility in India remains relatively modest. While there’s a growing awareness fueled by international students and tourists, more efforts are needed to enhance Queensland’s business visibility. Additionally, the Queensland business community is largely unaware of the vast opportunities presented by India.
- Understanding the business culture: Despite widespread English usage and apparent similarities in government and legal frameworks, differences in business culture and commercial norms exist. Building deeper and longer-lasting relationships between Indian and Queensland business and trade stakeholders coupled with regular communication can aid in grasping these nuances.
- Grasping market complexity: India’s immense size and diversity necessitate a nuanced approach. Economic conditions vary across its 36 states and union territories, with differences evident across industries, consumer preferences, and regulatory and investment environments.
- Managing competition and fostering connections: India’s market is densely populated and highly competitive. Deregulation and trade liberalization have intensified the presence of global players. Given India’s evolving economic trajectory, both domestic and international businesses vie for market dominance, necessitating adept competition management and effective networking.
India’s investment environment
In recent years, India has sought to facilitate greater trade and business partnerships through lowering market access barriers and liberalizing foreign direct investment (FDI) laws. India has also doubled down on negotiating international trade agreements like the AI-ECTA, which will eventually be followed by a full free trade agreement (FTA).
India’s future development heavily relies on foreign investment due to its abundant labor force but limited productive capital. To attract such investment, the government has enacted broad reforms, allowing foreign firms to invest in previously restricted sectors and raising foreign equity limits.
In 2024, FDI into India is expected to gain traction, driven by positive macroeconomic indicators, improved industrial output, and attractive Production-Linked Incentive (PLI) schemes.
Over the period from 2014 to 2023, FDI inflows totaled approximately INR 596 billion (US$7.9 billion). India remains a top choice for global investors, according to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report for 2023, which ranked India third in terms of FDI for new greenfield projects in 2022. By 2023, India’s total FDI inflows had reached US$70.97 billion.
Advantages for Queensland enterprises in the AI-ECTA
The Australia-India Economic Cooperation and Trade Agreement lowers and eliminates tariffs on a broad spectrum of Australian goods and services exports.
Goods exports
The AI-ECTA grants preferential access to Australian goods exporters into the Indian market. It will abolish tariffs on over 85 percent of Australia’s existing goods exports, many of which originate from crucial Queensland export sectors. Products that will now enter the Indian market duty-free include copper, alumina, coal, LNG, non-ferrous metals, metallic ores, railway equipment, certain critical minerals, as well as wool, barley, and oats. In the coming years, tariff elimination or reduction will extend to various nuts, fruits, vegetables, wine, seafood, and high-tariff items such as cosmetics, almonds, lentils, oranges, mandarins, and pears.
Services exports
India ranks as Australia’s third-largest services export destination. In addition to securing full or partial access to over 85 service sectors and sub-sectors, the AI-ECTA shall ensure Queensland service providers enjoy binding market access in alignment with existing commitments.
Moreover, India has pledged to extend any enhancements in market access granted in future FTAs to Australian service providers across 31 sectors and sub-sectors. Given India’s active involvement in ongoing trade negotiations, Australia stands to benefit from the export of services covered in these agreements, including vital Queensland sectors such as higher education, tourism, travel, and various professional services.
Opportunities for Queensland companies in the Indian market
New opportunities are emerging at the intersection of India’s development trajectory and Queensland’s strengths. We spotlight key sector opportunities below, including insights from the Queensland-India Strategy 2023-2027 report.
Thermal coal, while remaining India’s primary power source for the next two decades, is gradually diminishing in its share of the energy mix due to the expansion of renewables. This transition offers opportunities aligned with Queensland’s ambitious renewable energy objectives. Queensland businesses are strategically positioned to support India through the export of equipment, technology, and services, particularly in areas such as energy storage, efficiency, transmission, and management. Potential areas for expansion include smart grid technologies, energy systems optimization, and training and development initiatives.
Both Queensland and India are prioritizing the development of the hydrogen sector, leading to opportunities in green steel, green ammonia, and other collaborative ventures spanning industry, research, and government.
Mining and METS (mining equipment, technology, and services) form the cornerstone of the Queensland-India economic relationship. Metallurgical coal constitutes a significant portion of Queensland’s merchandise exports, and its sector has a positive track record of engagement with the Indian mining industry. India’s path to decarbonization will necessitate increased critical minerals imports and the modernization of India’s mining sector will require new equipment, technology, and services.
India’s biomedical sciences and healthcare sectors are experiencing rapid growth fueled by population expansion, urbanization, rising incomes, and increased health insurance coverage. The forecasted value of India’s bioeconomy is set to grow from AUD 116 billion in 2021 to AUD 435 billion by 2030, per TIQ. The Indian healthcare sector witnessed a compound annual growth rate (CAGR) of 22 percent between 2016 and 2022. Reductions in tariffs on medical devices under AI-ECTA shall grant Queensland manufacturers a competitive edge over the next decade. Collaboration opportunities with Indian enterprises can lead to mutual benefits and prospects for joint production. Additionally, the ECTA will facilitate greater market access for Indian generic pharmaceuticals, bolstering domestic stocks and enhancing supply chain resilience.
In March 2024, a partnership in the life sciences sector was announced between Queensland-based Southern RNA, a prominent Contract Development and Manufacturing Organization (CDMO) specializing in nucleic acid production (including DNA and mRNA) and DKSH, a leading Indian Market Expansion Services provider.
Facilitated by TIQ, the said partnership is expected to align seamlessly with Queensland’s initiatives to bolster local exporters and attract investment. Leveraging DKSH’s extensive network and expertise in the Asia Pacific region, Queensland intends to introduce Southern RNA’s state-of-the-art products and services to India’s dynamic pharmaceutical market.
India’s startup and innovation ecosystems rank among the most dynamic globally and the country hosts the third-largest share of unicorns (private companies valued over US$1 billion). Both countries boast dynamic scale-up enterprises eyeing international expansion. While these businesses hold significant growth potential, they require tailored support through accelerator programs and landing pads. Closer collaboration with the Indian innovation ecosystem can support the growth of Queensland startups and scale-ups by attracting capital, fostering research collaboration, and facilitating market access.
Queensland can engage with the Indian screen industry to identify prospects for Queensland-based productions. The bilateral Audiovisual Co-Production Agreement between Australia and India may also encourage collaboration and creative exchange. This agreement is expected to result in more Indian-Australian co-productions showcasing the best of both cultures, landscapes, and peoples.
Per TIQ, India is expected to continue being a major contributor to Queensland’s AUD 23 billion (2022) tourism industry. There will be 70 million overseas Indian travelers forecasted for 2035. Meanwhile, Australia is among the leading source of foreign tourist arrivals in India, which is keen to expand its international tourism sector exposure. There are thus opportunities for both Queensland and India to tap into outbound travel growth, as people-to-people exchanges increase, with the potential for two-way job creation and revenue generation in the medium to long term.
India has expressed interest in bidding for the 2036 Summer Olympic and Paralympic Games. Supporting India’s sporting agenda can aid Queensland in establishing and strengthening positive relationships with Indian governments and businesses. There is an opportunity to connect Queensland sporting associations and businesses to capitalize on the potential of the Indian market, including the increasing involvement of women in sports and support for India’s high-performance sporting aspirations.
Beyond trade, India presents additional opportunities. With outbound Indian investment on the rise, Queensland must position itself to capitalize on opportunities that drive employment and economic growth. This necessitates the establishment of a dedicated investment attraction program, including in-market representation and facilitation of deals based in Queensland.
Two specific opportunities in India warrant focused attention. The demand for international education and training is expected to surge in the coming decades. According to TIQ’s 5-year strategy report, the opportunities abound as India aims to be in the top five countries for research output by 2030 – interests include new energy, mining & METS, agriculture, biomedical science, and health.
Exploring commercial avenues: Recent Queensland business visits to India
In January this year, five Queensland businesses headed by the state’s Redland City Council participated in two major state-level investment summits in India – the Tamil Nadu Global Investors Meet and Vibrant Gujarat. The businesses hailed from diverse industries, including food and agriculture, trade services, consumer goods, freight and logistics, and social engineering and cybersecurity. Redland City Council is a local government body that facilitates enterprises participating in government tenders and offers business support and market insights.
Only a short time ago, there were about 50 Queensland companies that had serious engagements and operations with India. On the back of the [Australia-India ECTA] that is now 150 and counting. So, it has opened the minds of Australian companies [towards India], and also opened the minds of Indians looking at Australia and Queensland. In a short period of time there is an explosion of interest. It also coincides with the significant milestone of India becoming the most populous nation. – Stirling Hinchliffe, Queensland Minister for Tourism, Innovation, and Sport
Four delegations have visited India from Queensland in the last two years, following visits by Cameron Dick, Deputy Premier, Treasurer, and Minister for Trade and Investment; Stirling Hinchliffe, Minister for Tourism, Innovation, and Sport; and Grace Grace, Minister for Education, Industrial Relations and Racing. These Queensland Ministerial visits underscore the strategic importance of India for the Australian state.
Trade and Investment Queensland (TIQ), the dedicated business agency of the Queensland Government, has been instrumental in the success of the cooperation between firms in Queensland and their Indian counterparts. Senior Trade & Investment Commissioner for South Asia at TIQ, Abhinav Bhatia, stated that events like the Global Investors Meet give businesses in Queensland an ideal opportunity to showcase their capabilities and look at potential joint ventures in the Indian market.
Avocados [from Australia] were earlier not permitted in India but are now allowed under the ECTA. Similarly, cosmetics, which had a 20 per cent import tariff, are now allowed at zero tariffs. There were several sectors positively impacted and we built a strategy for the 2023-27 period based on that. It gives companies on both sides the business case of why they should invest their time and energy in India and Queensland. – Speaking to BusinessLine, Senior Trade & Investment Commissioner for South Asia at TIQ, Abhinav Bhatia
To address key challenges and tap into India’s market opportunities, the following activities were part of Year 1 of the Queensland-India Strategy 2023-2027:
- ICC Cricket World Cup – host clients across three locations
- Study in Queensland Roadshow
- IME (International Mining, Equipment and Minerals Exhibition) – Queensland Pavilion and business mission
- Annual Study Queensland program of inbound delegations and in-market events to support research partnerships
- Avocadoes-to-India initiative
- India-ready program to build India business capability
- India consumer initiative – skin and personal care companies
- Go Global Export Program – tailored to businesses looking to export to India
(US$1 = INR82.88)
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