As China continues a trade war with Australia, news from India would be a concern to those who see India as an alternative market to China.
In his India Independence Day speech, Prime Minister Narendra Modi launched “Atma Nirbhar Bharat Abhiyan” (Indian self-reliance). This would have set the alarm bells ringing in Austrade and the Government.
It sounds like protectionism, looks like protectionism and seems impossible to achieve without protectionism – but everyone in India is busy telling us it is not protectionism.
Even so, the speech by PM Modi gave a call for reducing imports and pushing exports of finished products in place of raw material, saying the country will have to move forward with the mantra of ‘Make in India’ as well as ‘Make for World’.
External Affairs Minister (EAM) S Jaishankar later clarified, saying that Atma Nirbhar Bharat merges domestic production and consumption with global supply chains. He added that it’s not about being self-contained or being closed to the world rather being self-sustaining and self-generating.
China has imposed an 80 percent tariff on barley imports from Australia in retaliation for Canberra’s demand for an independent investigation into the origins of the COVID-19 pandemic. This will cost Australian farmers AU$500 million annually. It has also hit imports of Australian wines.
Can Australia turn to India as an alternative? For wines, probably not – Australia is seen as a source of non-premium cheap wines in India so our premium sales to China would not appeal there – at least not without a lot of marketing.
Here’s what I think Atma Nirbhar Bharat means India will do:
- Reduce its over-dependence on other countries for trade by focusing on inward manufacturing.
- Promote Indian products, brands and services by becoming “VOCAL FOR LOCAL”; and
- Continue to trade with other countries but aim to eliminate trade imbalances and, where possible, adopt a mercantilist approach to international trade.
So, Australia and other potential trading partners with India will have to make up their own minds. For for now, Atma Nirbhar Bharat does not look like good news for them.