Anil Wadhwa could be reviving Australia-India trade relations – Lowy Institute – but health, agri and sport could be the key

So good to read on the Lowy Institute daily publication “The Interpreter” that India is doing something unusual in response to Australia’s Peter Varghese report – it is responding with an Australian Economic Strategy (AES). By the way, well done Lowy Institute for powering this and other national discussions.

The AES is led by former Ambassador and Secretary (East) in the Ministry of External Affairs in India, Anil Wadhwa (pictured).

Let’s not get bogged down on the failed Free Trade Agreement with India – let’s not wait forever, and, by the way, trade is progressing without it. We would prefer to have one, but we can make mutual gains without it.

The key is that the AES from India means for the first time we will have a blueprint for economic engagement with another nation – this is the view of Mukund Narayanamurthy and Danielle Rajendram writing for Lowy Institute. Well done to you both!

They point out that unlike India’s engagement with the US, Canada, UK, and Japan, our relative size means that it is highly unlikely that Australia will have a similar scale of engagement with India. So, they say the crux of the relationship, certainly from a materiality perspective for both sides, will lie in mining, energy, infrastructure, education, and tourism.

This where I differ. They see healthcare, agribusiness, and sport having relevance but “may not be as material in absolute dollar terms” – my view is that these could be the areas that unlock the “India code” and get Australia into the big game with India.

The “India growth story” is a long-term one for investors and business

India remains a compelling long-term investment and business story – despite a lot of negative talk about the Indian economy (mostly politically motivated but also buoyed by a slow down in growth).

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Most commentators expect the slowing to be temporary.

Take a look at the MSCI India index which has comfortably outperformed the MSCI Emerging Markets index (697.7 per cent vs. 485.1 per cent). Not too bad.

Favourable demographics is another driver with India having the world’s largest population of millennials – those aged between 21 and 38 – India has 450 million and these people will transform India. What it eats, drinks, how and where it travels, fashion, what it watches and listens to – life will change fundamentally.

More than 50 per cent of the population is under 25 years of age – a total of 600 million – with 1 million new people entering the workforce each month. Contrast this with China, which is ageing faster than any other country, with the over 60’s expected to account for 35 per cent of the population by 2050. Europe, the US and Japan face similar demographic challenges.

Urbanisation is another driver of growth – a third (34 per cent) of India’s population is urban, but it’s rising fast. Compare this to China (58 per cent) and Japan (92 per cent) – you can see the long-term growth story of India.

Then there is structural and economic change, with pro-business Prime Minister Narendra Modi – let’s steer clear of short-term politics but acknowledge that change has happened, and more is to come.

Visitors to India notice rapid improvement in infrastructure – road construction, plus 27 km of railway built per day, while India’s metro system is growing again, new airports and more.

Investors and businesses should be finding a way to participate in and benefit from the long-term India growth story.

Macquarie on a winner with toll road investments in India

In March 2018, an Australian institutional investor walked away with some prized toll-road assets in India – on the Golden Quadrilateral in the first auction for toll-operate-transfer (TOT) bundles.

MIRA – Macquarie Infrastructure and Real Assets – had bid aggressively, almost 55% over the base price, and many thought it was a flawed decision. But not anymore.

MIRA’s portfolio is relied on by more than 100 million people every day. Their team of over 800 people invests in businesses that underpin economies and communities – aiming to add real and lasting value for our clients and the people these assets serve. MIRA manages $US129 billion in assets, including: 155 portfolio businesses, approximately 600 properties and 4.7 million hectares of farmland.

MIRA is part of Macquarie Asset Management (MAM) – the asset management arm of Macquarie Group.  As at 31 March 2019, MAM had more than $US385 billion of assets under management.

It may just have picked up some of National Highways Authority of India’s best assets. Toll collections are likely to exceed expectations, reveals an analysis of FY19 figures.

In India, MIRA has found a way to participate in the “growth story”.

IKEA plans 3 stores for Mumbai and broader India expansion

IKEA, the Swedish home furnishing retailer, intends to open three stores in Mumbai. This would consist of a flagship store in Navi Mumbai along with two smaller outlets. The company plans to recruit around 1,000 people, mainly for the Navi Mumbai store, which is planned to open within a year.

Ms. Jaxa Gohil, Store Manager, IKEA India, said India is massively significant for IKEA globally, adding that it is witnessing the company’s biggest expansion plans among new markets. IKEA is investing €1.5 billion (Rs 117.96 billion) in India.

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IKEA has identified Mumbai, Delhi and Bengaluru as cities that have potential and opportunities.

It also intends to expand through e-commerce channels for Bengaluru and Delhi soon and has started a pilot for e-commerce in Pune.

In August, IKEA started its e-commerce channel for Mumbai and has garnered 2 million visits so far, said Ms. Gohil. E-commerce for Hyderabad was also started, where it opened its only physical store in India in 2018.

IKEA is definite about 50% of employees being women, as well as adapting the offering for India with a focus on affordability and sustainability.

As a global iconic brand, IKEA has chosen the right cities to launch into India, but could focus more on tier two cities too.

Dalai Lama provides another insight into how India is very different

How is India different?

Last week the Tibetan spiritual leader the Dalai Lama delivering the 24th Dr Sarvepalli Radhakrishnan memorial lecture on “universal ethics” organised by the Indian Institute of Advanced Study, said India’s message of “ahimsa, kindness, love and compassion” spread even during religious conflicts and World Wars.

So, there is one guide to India’s difference – in my own words – despite having some internal conflicts of its own, the Indian starting point is non-violence, kindness, love and compassion. Not saying it always works out that way, but…

How many other cultures can we say this for? Think how strongly the concept of “revenge” has taken hold in the west – someone does wrong by us, we will “track them down”. Just one example of a different mindset.

The Dalai Lama has lived in India since 1959, and he also called for a “revolution” in India’s education system by combining its 3,000-year-old ancient tradition of high moral teachings with the modern education. This would be a good thing everywhere.

“Those mental quality subjects like non-violence, love, kindness and compassion should be included as an academic subject instead of religious teachings,” the 84-year-old said.

What do you think?

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Indian education market and Australia’s leading universities talking the same language

While I was in India working on the Genesis India Horticultural Collaboration Project 2019, our top universities (The Group of Eight) were in India with Federal Education Minister Hon Dan Tehan.

(Pictured above are, from left, Hon Dan Tehan, Australian Education Minister, Vicki Thomson Go8 Chief Executive and Dr Craig Jeffrey, Director, Australia India Institute).

This is an important mission – if we can get a deep understanding of what India is driving for, we will develop collaboration that will be for the good of both countries.

The concept of just taking in fee paying Indian students without some sense of balance and collaboration could have a short shelf life.

The visit was timely and served to reinforce Go8 commitment to supporting and assisting with India’s ambitious higher education policy priorities which were recently announced.

Go8 represents Australia’s leading research-intensive universities with seven of its eight members ranked in the world’s top 100 universities.

I was impressed with this summary from Vicki Thomson Go8 Chief Executive: “We understand that by working cooperatively we can best assist where we can, developing opportunities for quality students, graduates and researchers, and, critically the future academics who will lead the vital train-the-trainer work India requires.”

“There is potential for research intensive universities like the Go8 to partner with Indian institutions and Indian industry on projects with potential to be nation building on both sides. Success in these areas can capture public imagination and support and encourage further investment and commitment from both the Australian and Indian Government’s,” Ms Thomson said.

Three Go8 universities are already engaged in Indian partnerships at PhD level. Since 2008 the Monash-IITB Research Academy has been providing joint PhD training, the University of Queensland/IIT-Delhi collaboration uses a similar model and more recently the University of Melbourne has entered into a collaboration with three of the prestigious Indian Institutes of Technology to deliver a joint doctoral degree program.

I like the language of the Go8 – “Expanding this collaboration is key to our ongoing partnership with India.”

Now, that is the pathway to the future in education.

India’s “richer, younger urbanites” will demand more food choices

India is self-sufficient in wheat, rice, corn and milk.

But – it is becoming “richer, younger and more urban” which inevitably means consumption patterns will shift.

Just a very broad approach here – but after over two weeks in India these are the “big 6 food imports” of the next decade:

  • Nuts (almonds and walnuts)
  • Pulses (peas, chickpeas, lentils)
  • Apples, grapes and pears
  • Chocolate
  • Beverages (juice and wine)
  • Processed fruit (dried apricots, raisins, prunes and jam)

Be great to see the “Aussie Hamper” enter the gift giving market in India.