The future of Australia India Relations
Date: 21 August 2025
Let me begin by thanking Namrata and the AIBC for its invitation to speak about the future of the Australia India relationship.
As Yogi Berra famously said “It is tough to make predictions, especially about the future”.
I want to place my comments in the broader context of the arc of the Australia-India relationship. That arc spans a story of a gradual, sometimes haphazard and still incomplete convergence of interests.
We have come a long way since 1947. For the first four decades after India’s independence, we lived in separate strategic and economic universes, divided by different strategic postures, rarely intersecting economic interests and shallow people to people links.
From the 1990s, when India began its historic economic opening, this began to change. And as India moved from non-alignment to multi alignment, and put behind it the hesitations of the past, we began to contemplate a future of shared economic and strategic interests.
In 2018 when I finalised the India Economic Strategy out to 2035, I noted that the future relationship would rest on three pillars: strategic, economic and people to people. In short, we had the makings of a relationship of real substance.
That has happened at a pace that few of us could have anticipated. To the point where today across all three pillars we are in a sweet spot. A strategic relationship which is getting ever closer, an economic relationship which is expanding and a people-to-people relationship which is growing even faster than the other two pillars.
In strictly bilateral terms there is every reason to believe that the momentum of the relationship will continue to build. But the reality is that the Australia India relationship does not swim in its own undisturbed lane. It will inevitably be influenced by what is happening in the broader region and globally.
So the first question we must address is how the bonfire of certainties which we currently face internationally will affect our bilateral relationship?
Australia brings its own interests and ambitions to the relationship. But the space we have to pursue those interest and ambitions is determined by broader considerations, including the state of US-India relations.
Strong US-India relations are not a pre-requisite for strong Australia-India relations. But there is no question that the uplift in US-India relations we saw from the time of the US-India nuclear deal led by President George W Bush made the uplift in our own relationship with India easier, including the change in Australia’s position on exporting uranium to India which removed a serious obstacle in the bilateral relationship.
So, the current tensions in the US-India relationship is not something we can ignore. Are we seeing a reframing of the strategic rationale of US-India relations or is this a dispute over trade and market access which will in time be resolved. Is applying 50% tariffs an exercise in trade leverage or does it signal a strategic shift in US thinking, or at least in the thinking of President Trump?
To pose that question invites an even bigger question. Is President Trump walking away from the idea of a collective push back against China; away from the creation of a new strategic equilibrium in the Indo Pacific designed to constrain China’s ambition to become the regional hegemon.
This is not just a question for the US-India relationship. It goes to the heart of the strategic congruence which have defined Australia-India relations.
Up to now, Australia saw India as a key element in the balancing of China, and we saw that balancing as led by the US and including certain other countries which for their own reasons were uncomfortable with a Chinese hegemony.
That was the clear but rarely publicly articulated objective of the Quad. Does it remain so and will Quad leaders meet in India later this year? We know that the State department and the Pentagon are Quad enthusiasts but is President Trump?
Nor do we know what Mr Trump’s broader view of China is. All the signs point to him wanting a big deal with China. But what kind of deal and where would it leave India and Australia?
Will it be confined to trade and tariffs or will it also be a strategic accommodation. And if so will that extend all the way to a G2 arrangement where the US essentially acknowledges a Chinese sphere of influence? That would be a very different world for Australia and India.
I raise this issue to underline that the trajectory of the Australia-India comprehensive strategic partnership will partly turn on the answer to these questions. If we are dealing with a continuity of US strategic policy under President Trump, an increasingly unlikely development, the Australia-India strategic relationship will largely retain its current focus and get bigger and deeper over time.
But if US policy on China shifts, we will need to reframe the Australia-India strategic relationship to accommodate the new reality. Just what that reframing will entail will depend on how both Australia and India recalibrate their own strategic settings.
If it pushes India even further down the path of strategic autonomy the strategic relationship with Australia could diminish. But equally it could go in the other direction, if both Australia and India decide that a shift in US policy requires even deeper compensating relationships in the region. I think this is the more likely outcome.
So, I remain positive about the longer term strategic relationship because both of our countries have reached a point where each of us see value in a deeper partnership irrespective of the trajectory of the US-India strategic relationship.
The economic pillar of the relationship is also not insulated from broader trends in the global economy. Many of these trends are negative, reflecting deeper structural changes in the global economy.
The Trump tariff impact is likely to result in slower growth in global trade flows and could also have consequences for global investment. This will inevitably have implications for global economic growth and consumer consumption trends.
Our bilateral economic relationship with India still however holds much promise. The key sectors identified in the India Economic Strategy remain in my view current.
Education will likely continue as the flagship sector. Indian student numbers are increasing and now account for almost half of the growth in the Indian diaspora. Within a decade or so India may overtake China as our largest international student cohort.
Some seven Australian universities have secured approvals to open a campus in India, the most from any country.
An underdeveloped element of the bilateral education relationship is research collaboration. For The University of Queensland, this is the primary focus of our India strategy with our flagship joint PhD program with IIT Delhi now comprising some 140 students with some two dozen having already graduated with joint doctorates from each university with time spent in both Delhi and Brisbane. As India moves towards becoming the third largest economy it will need to deepen its investment in research and development, and Australia should position itself as a crucial research partner.
Our vocational education partnership also needs to expand. We have yet to succeed in providing the low-cost high-volume model delivered in India which India needs to fill the very large gap in its vocational education skills.
The other key sectors in the bilateral economic relationship will be resources and energy, now expanding into a critical minerals partnership and into the renewable energy space, agribusiness and tourism.
Technology is becoming a larger part of our collaboration with India. India has a talent for the application of technology. It will in my view become a world leader in the business applications of AI and we should be thinking hard about how we partner with India in this area.
In all of this India is also beginning to rethink its policy on market access with a stronger interest in concluding substantive free trade agreements and a greater emphasis on exports as a pathway to economic growth.
This should make the conclusion of the so far elusive Comprehensive Economic Cooperation Agreement a more realistic prospect. We will however need to be alert to the risks which any India-US FTA might present to our access to the Indian market, especially in agriculture.
The third pillar of our bilateral relationship, the Indian diaspora, is going from strength to strength. Already a million strong and the fastest growing large diaspora it is becoming a key link between our countries.
The diaspora acts as cultural navigators, business pathfinders, especially in the SME sector, and an advertisement in India for a modern multicultural Australia. It is a successful community, measured by education and income levels, and will play an increasingly important role in Australian politics and society. As I noted in the IES, it is likely to be the most politically influential diaspora in our history since the Irish. This will help Australia keep a focus on India.
But we still have a way to go in developing a comprehensive strategy for how best to deploy the Indian diaspora to advance the bilateral relationship. We need to make the shift from thinking about the diaspora in multicultural terms to thinking about them in foreign policy and trade terms. In this we have much to learn from India which has long recognized its diaspora as a strategic asset. The truth is that this is very much a shared asset and it should be deployed as such. The diaspora does not belong exclusively to any one side of the bilateral relationship.
This is an exciting time in the Australia India relationship. I am a long-term optimist about its future trajectory, no matter what the short term challenges. Its growth tissue remains strong. The Indian market still offers more growth opportunities than any single market globally. Investment still lags in both directions, and this is a challenge we must address if we are to realise the potential of the economic relationship.
The future is never a straight line but ours is a relationship anchored in hard strategic and economic interests and leavened with close people to people ties. That is a strong foundation.
When I called on Hamid Ansari, the then Vice President of India when I was on posting in Delhi, he shared an anecdote about his time as India’s High Commissioner to Australia in the eighties. He arrived to a note from his predecessor pithily stating that the bilateral relationship had no substance and no prospects. How things have changed. I have every confidence that when High Commissioner Baglay writes his handover letter, it will convey a very different message: that this is a relationship of real substance and large prospects.