A new agreement with the world’s largest democracy will turbocharge trade if Australian businesses are ready to seize potential opportunities, says Harish Rao GAICD, executive director and board member of the Australia India Chamber of Commerce.
Harish Rao GAICD is tired of talking about cricket. The global head of business development for Sundaram Business Services (a subsidiary of the Chennai-based US$4b financial services conglomerate Sundaram Finance Group) and executive director and board member of the Australia India Chamber of Commerce (AICC), says conversations about sporting rivalry can distract from what he regards as a “natural partnership” between the country where he was born, and the one where he was raised.
But when the AICC hosted an event in April this year to celebrate the freshly inked interim free-trade deal between India and Australia, Rao put his frustrations aside. After all, the event was held at the hallowed Melbourne Cricket Ground.
Around 200 business leaders and government officials attended the event, including Indian minister of commerce and industry Piyush Goyal, and Australian minister for trade, tourism and investment Dan Tehan, who spoke of their shared desire to see the countries’ two-way trade grow to more than $130b by 2030.
That may sound like an ambitious target. In 2020, India was Australia’s seventh-largest trading partner, with two-way trade valued at $24.3b. It was also the sixth-largest goods and services export market, valued at just under $17b and led by coal and education-related travel.
But Rao sees the wide-ranging interim free trade agreement as an opportunity to “turbocharge” trade between the two countries. With the International Monetary Fund (IMF) tipping India to be the world’s fastest-growing major economy in 2022, he says that boards must seize its potential.
“Boards really need to change the way they approach new markets like India,” he says. “Instead of asking ‘Why should we be in India?’ they should be asking ‘Can we afford not to be in India?’.”
India on the rise
A free-trade deal between Australia and India has been on the boil for more than a decade. The interim agreement, signed in April this year, will see 96 per cent of Indian goods entering Australia become duty-free. Tariffs on more than 85 per cent of Australian goods exports to India — including sheep meat, wool, coal and certain critical minerals — will also be lifted. It’s a cut valued at more than $12.6b a year and is expected to rise to $13.4b over the next 10 years.
“India is not a replacement for China, but it is certainly a significant market with a growing middle class that is worth exploring,” says Rao. “Hopefully, this new agreement will provide companies with the impetus to explore it.”
India is recovering from COVID-19, rapid mass vaccination is restoring confidence and the IMF predicts the Indian economy will grow 8.5 per cent this year. The country’s overall market potential is driven by factors such a young demographic — half of its population of 1.3 billion is below the age of 25 — and the rise of its formal economy. India’s burgeoning consumer class is predicted to be the biggest in the world by 2030 and a mass uptake of technology will see an estimated 700 million smartphone users and 840 million internet users by 2023.
Bureaucratic burden is also easing. In the latest World Bank “Ease of doing business” index, which compares business regulation across economies, India ranked 63 out of 190 countries, up from 131 in 2016. Since coming to power in 2014, Prime Minister Narendra Modi’s government has sought to cut red tape to encourage foreign investment and introduced reforms, including a goods and services tax and significant investment in infrastructure.
“People have always seen the potential that India presents, but India has been put in the too- hard basket, rightly or wrongly, for many reasons,” says Rao. “People talk about the bureaucracy and corruption, which still exists to an extent, and that’s kept Australian businesses away. Some companies have had bad experiences in India, but you can have bad experiences in many countries. It’s just approaching the market in the right way and taking the time to understand the market.”
Coming to Australia
Australia’s Indian diaspora numbers approximately 700,000. They are the second-highest taxpaying diaspora, behind the British — and Indian-born Australians are expected to outnumber Chinese- born Australians during the next decade.
It was a vastly different story when Rao moved to Melbourne from Chennai, the capital of the southern Indian state of Tamil Nadu, in 1968, at the age of two. The infamous White Australia Policy was being dismantled and, as Rao’s father was a surgeon, the family was granted a migration exemption.
“My father says that when they landed in Australia, there were probably less than 50 families of Indian origin in Melbourne,” says Rao. “So, if you saw someone of Indian origin in the street, you’d invite them home for dinner.”
Rao attended Melbourne Grammar School and says playing a lot of sport helped him to assimilate. While more than 100,000 Indian students now pursue education in Australia each year, Rao says there were very few of South Asian descent when he was at school.
He went on to study a double degree in commerce and science at the Australian National University in Canberra before completing an MBA at Monash. After establishing a Chennai-based outsourcing company servicing accountants and bookkeepers in Australia, Rao was approached by the Sundaram Group and has been the face of the company’s Australian operations for the past 18 years.
His various Australian board roles also have close ties to India. In addition to his AICC directorship, he is chair of the Australian World Orchestra, which brings together the finest Australian classical musicians from around the world. To mark India’s 75th year of independence from the British empire in 2022, celebrated Indian maestro Zubin Mehta will conduct the orchestra in Melbourne and Sydney in August–September.
Rao is also a member of the philanthropic advisory board of the World Mosquito Program, which is dedicated to the elimination of airborne viruses such as dengue fever, and is currently working to expand its program to India. He is a board member of the Australia India Institute, which promotes the broader bilateral relationship, and also of the Australian Friends of ASHA, a charity that helps to educate children from the slums of Delhi.
“We’ve had some great success,” says Rao. “One of our first students studied computer science at Melbourne University and now he’s working with Macquarie Bank. It’s tremendous. And we have students that have come to Sydney University, and to Queensland, as well. We can’t do this for every student, but what we’re trying to do is to give them an education, even in India, because education changes lives.”
Breaking down barriers
India is a county of extremes. The richest 10 per cent controls 80 per cent of the country’s wealth while more than half of the population lives on less than US$3.10 a day. It’s also one of the most diverse countries in the world — Rao likens India more to a continent than a country and says the best way to understand it is to visit.
“Every state in India is actually quite different — from the language and the food, to the way of doing business,” he says. “These are things that Australian companies need to understand. You’ve got to feel it, touch it and see it.
The countries also have much in common. Rao cites similarities such as Westminster system of law, methods of contract negotiation, strong financial market regulations and corporate governance principles.
“People keep talking about how we have cricket in common,” says Rao. “Sometimes that gets a bit frustrating when you’re trying to showcase India as a serious business opportunity for Australian companies. Having said that, it is an extremely good initial conversation to have with people in India.”
Rao says getting Australian delegations to India will help build relationships. “During his recent trip to Melbourne, Piyush Goyal told the audience that boards should consider having a board meeting in India and the Indian government would set up a body that would make all the arrangements to ensure they had the best experience, and that India was showcased in the best possible way.”
He adds that leveraging Australia’s vast Indian diaspora can help companies break into the Indian market. “If there are diaspora working in a company in senior roles, they can lead discussions in the boardroom with a board who may otherwise have never thought of India or even been to India, for that matter. If you look at how the US and UK started investing and doing business with India, it was actually driven by the Indian diaspora who may have been in these executive positions. Being from India, they understand the country a little bit better, so they’re more willing to take that step and bring their company along.”
Despite the opportunities presented by the interim FTA, Rao says success in India is a long- term game. It takes time to build relationships and he stresses that interactions should not be “transactional-based”.
“Spend the time to understand and embrace India,” he says. “Hopefully the FTA will help to open people’s eyes to what opportunities there are with India, because if you’re a company that’s exporting, or which has invested in any other Asian country, then you’ve already experienced international markets. Boards should not be hesitant to look at India. Use the diaspora as much as possible — and use the Australian government, a local representative or bodies like the Australia India Chamber of Commerce to help break down some of the barriers. People in India are looking to do business, so the opportunity is certainly there.”
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