Sectors

India’s financial services sector typifies the progress and opportunity of its economy. The sector will grow rapidly out to 2035, driven by rising incomes, heightened government focus on financial inclusion and digital adoption – India’s digital payments could pass $1 trillion by 2030. Out to 2035, technological change will have a transformational effect on this sector. India is set to benefit and could leapfrog Australia while our industry struggles with legacy systems. While the financial services sector and investment decisions are commercially-led, government can play a role in bridging knowledge and expectations gaps. Sharing Australia’s regulatory experience and work on setting standards with Indian policy makers could also facilitate commercial engagement.

Key focus areas include :

• Joint ventures
• Blockchain
• Cybersecurity
• Fintech start ups

Opportunities in India

In 2016–17, Australia exported $54 million in financial and insurance services to India and imported $31 million. The biggest opportunities in financial services will be in joint ventures and investment rather than exports. India is attuned to the need to develop a better understanding of blockchain if the technology is to be used for economic modernisation. Another important issue is around Financial services organisations facing some of the most challenging threats to their cybersecurity as the convenience of modern consumer banking – including ATMs, point-of-sale systems and mobile banking. Cybercrimes have vastly increased the number of endpoints that need to be protected. There is opportunities to provide support for Australian fintech start-ups to establish themselves in India.

Australia’s Competitive Advantage

There is scope for Australian capital and experience to partner with Indian talent to create world-class digital solutions .There are niche collaboration opportunities where target markets overlap, such as in personal financial information, tools, commodities trading, remittances, contract management and export financing. Both countries will also benefit from establishing robust international standards in the blockchain industry, which will provide market confidence and trust that proprietary information and money will remain safe and help provide a common language for industry, policy makers, regulators and technology developers, and the basis for interoperability, as the use of blockchain expands.
While cyber security is a nascent industry in Australia, Australia’s well-functioning and effective cyber security entities can tap into the cyber security segment in India in software, services and training.
Australian insurance firms looking to enter the Indian market may wish to consider joint ventures with Indian state-owned firms.

India’s urban populations will grow substantially out to 2035. Without significant investment, India’s urban infrastructure gap will continue to widen. India has major, nationwide programs underway and an appetite for investment and expertise. Australian service providers have competitive advantages in niche areas of Indian demand.

Key focus areas include :

• Urban water supply
• Affordable housing
• Waste
• Transport and Road safety

Opportunities in India

No Indian city receives piped water 24 hours a day, seven days a week. 47 % of households have individual water connections Average duration of water supply in urban areas is one to six hours per day Around 40 % of available water in India is unusable for any purpose. There are 65 million slum dwellers in India according to 2011 census data and at current rates 38 million urban housing units will be needed by 2030. Waste collection services cover 70–90 % of needs in major cities, but less than 50 % t in smaller cities less than 30 % of solid waste is segregated. Additionally, although India has about 1 % of the world’s vehicles it accounts for more than 10 % of global road fatalities. In essence , improved water resource management, waste management services and Intelligent transport systems for Road safety are required to set forth urban development.

Australia’s Competitive Advantage

Australia could provide strategy, planning, design and engineering for traffic management systems to help reduce congestion and improve road safety Provide road safety training to government authorities, emergency response teams and medical care in India. It is also competent to provide services to urban local bodies to control flooding, reuse storm- water, assess and clean up waste water and prevent water contamination. Australia can also provide specialised technology and services to the industrial and energy sectors in water resource management, water recycling and treatment systems and desalination. In order to combat the waste management issue in India,Australia can deliver end to end waste management to urban local bodies and industries in waste-to-energy, compost systems, carbon management and landfill management.

India is seen as a pioneer in making significant advances with relatively low funding levels. Investments in Science and Innovation will be crucial for India to sustain its economic growth through to 2035. Currently, several world -standard technology clusters and start -up ecosystems exists in India.Science and innovation will be crucial to India maintaining its economic growth out to 2035. Despite relatively low funding levels, India is making significant advances. It benefits from a large talent pool and several world-standard technology clusters and start-up ecosystems.

Opportunity in India

In 2015, the spend was 0.9 % of GDP, compared to 1.9 per cent in China, 2.7 % in the United States and 0.6 % in Australia but despite relatively low funding, India performs well on innovation relative to its GDP per capita. India has become a global research and development hub for sophisticated sectors like network equipment, medical equipment, aerospace, automotive, biotechnology and computation.

India has 25 innovation centres and has been ranked as the top innovation destination in Asia.
In 2017, India ranked 60 on the Global Innovation Index, up from 81 in 2015, driven by increased investment from private institutions and improvements in the capture and use of data – the 2017 Global Innovation Index ranked India second for innovation quality for middle income countries.

Close to 800 leading companies from around the world have set up research and development centres in India – Google Capital (a venture capital fund financed by Alphabet Inc) has announced it will establish its first office outside the United States in India – in 2015 Rio Tinto established its big data Analytics Excellence Centre in Pune .The research ecosystem in India presents a significant opportunity for multinational corporations across the globe due to access to technical talent , low wages , proximity to regional markets.India has a vibrant entrepreneurial scene that is producing numerous affordable innovations.

Australia’s Competitive Advantage

Like India, Australia aims to sustain a strong science and innovation agenda to remain competitive and keep pace with changes out to 2035. Australia ranked 23rd on the Global Innovation Index in 2017 , seventh in university rankings and sixth on intensity of local competition. However Australia is not a leader in the start-up world and has a mixed record of commercialisation.
The Australian Government’s National Innovation and Science Agenda aims to harness new sources of economic growth to deliver future prosperity for Australia. The Agenda focuses government efforts on four pillars:

• Culture and capital: Initiatives are intended to encourage investment into innovative, high‑risk, early‑stage Australian firms. They include new tax incentives for venture capital investors investing in early-stage innovation companies and co-investment funds to commercialise research into new products and services (the $500 million Biomedical Translation Fund and the $200 million CSIRO Innovation Fund).
• Talent and skills: Promote coding and computing in schools to develop problem solving and critical reasoning skills necessary for high-wage jobs. Link to other innovative economies to attract more entrepreneurial and research talent from overseas. An initial total of $36 million over four years (2016–20) has been allocated towards a Global Innovation Strategy to improve international science and research collaboration.

Research objectives and implementation   include working with industry to increase collaboration and commercialisation and improve international engagement capabilities . Potential areas of growth and knowledge transfer  are established across six industry sectors:

Advanced Manufacturing
Cyber Security
Food and Agribusiness
Medical Technologies and Pharmaceuticals
Mining, Equipment, Technology and Services
Oil, Gas and Energy Resources.

Out to 2035, India’s increasing urbanisation, rising household incomes and industrial activity will drive demand for greater volumes of key Australian resource commodities. Australian resource exports to India, particularly metallurgical coal, but also copper and gold, will continue to make up the bulk of our merchandise trade. India is one of the most important future markets for Australian METS companies. As India grows and seeks to modernise its mining sector, METS will increase across the board. Australian METS companies have a competitive edge, particularly in the coal value chain and beneficiation.

Key focus areas include :

• Metallurgical coal
• Iron Ore
• Copper
• Gold

Opportunity in India

A number of Australian METS companies have an established local presence, or use a local partner, in India. This investment, while modest in overall dollar terms, has the potential to grow and create Australian company clusters . To an extent, this is already taking place in Kolkata (West Bengal), a regional hub for METS and a gateway to the mineral-rich states of Jharkhand, Chhattisgarh and Odisha.

India’s National Steel Policy 2017 sets a highly aspirational steel consumption target of 255 million tonnes per annum by 2030 (India’s crude steel production is currently around 100 million tonnes). This would require around 196.4 million tonnes of metallurgical coal per annum – an expected growth in demand of 4–5 % per annum from 2016 to 2030. By 2030, over 90 % of India’s metallurgical coal demand is expected to be met by imports.

Indian demand for copper is being driven by urbanisation, increased rollout of electrical transmission networks, and the manufacturing sector. India has limited copper ore reserves, constituting just 2 % globally, and imports around 95 % of its copper requirements as concentrates.

Australia’s Competitive Advantage

Australia’s underground coal mining, geomechanics, ventilation, and safety expertise is particularly relevant and well regarded by Coal India. Beyond coal , there will be opportunities in advanced Indian mining projects for exporters of mining IT, planning software, safety, health and risk management technologies and methods, and training in all its forms partnering with Indian IT firms, with operations in Australia, such as Tata Consulting Services, Wipro and Infosys, might help Australian METS firms looking to enter the Indian market in the technology space. Collaboration between Australian and Indian mining technology research institutions can be the precursor to joint commercialisation and METS export.

Out to 2035, India can provide a new source of growth for Australia’s agribusiness sector. Despite India’s focus on domestic production, the gap between demand and supply will grow out to 2035.Growth potential for Australian exports remains in commodities that India needs due to shortfalls in production (pulses, grains, horticulture, oilseeds). Opportunities also exist, or will emerge, for value-added products sought by the growing middle class (wine, processed food) and for providing specialised services to Indian Governments, institutions and farmers.

Towards 2035, Australia should seek to pair exports of raw commodities with exports of value-added products, integrate into value chains, and export of services to work with India on productivity improvements and increasing farmer incomes.

Opportunity In India

India has set a target of producing 28 million tonnes of pulses by 2025 under its ‘Pulse Program’ but even if this is achieved India might need to import 5–10 million tonnes. Australia could potentially export 4 million tonnes by 2035.India’s textile industry (currently worth USD108 billion) is the second largest employer after agriculture, especially for women.India is the largest milk producing country in the world, with production of 156 million tonnes in 2015–16. Demand for milk is growing at an average 7 % per annum while milk production is growing at 4 % with strong demand for value-added milk products.

Australia’s Competitive Advantage

Australia can offer agricultural science expertise to improve Indian food security by increasing productivity, sustainability and food system resilience , is an efficient exporter of staple and high value products and has world-class expertise in agri-services and land and water resource management. These offerings are based on the following Australian food and agribusiness comparative strengths that promote clean and green – reputation – low prevalence of food-borne illness – with high safety standards.

New farming techniques – along with precision agriculture, concepts like hydroponics, enabled by research in bioengineering and biotechnology, could change how and where we grow food – modular refrigeration units could make cold chain storage more affordable – regional take up of innovative farm management platforms using data from multiple sources . There will be a sustained need for management skills, technologies and services: training, breeding, rearing, fertility and disease management, veterinary skills and services, milk quality and safety. The dairy industry in Australia can be complementary to the food industry in India. In addition, there is a vast opportunity to collaborate in Water Policy engagement Research and development projects involving Water information systems, Water use efficiency Water governance and Irrigation projects.

By 2035, the number of Indian tourists to Australia is expected to grow four-fold, from 300,000 in 2017 to nearly 1.2 million. This puts India on track to go from being Australia’s eighth largest tourism market today to our fourth. An estimated 70 million Indians will travel overseas annually by 2035 meaning Indian tourism could be worth over $9 billion each year to the Australian economy. Attracting a greater share of travellers and more high-value travellers from India will be important for sustaining the profile and scale of Australia’s tourism sector.

Opportunity in India

India is one of the world’s fastest growing outbound travel markets In 2017, 23 million Indians travelled overseas, with this figure expected to approach 70 million by 2035. Growth in India’s outbound tourism market is driven by , rising personal income levels and changing lifestyles for the burgeoning consumer classes , affordable airfares and diverse travel packages , India’s 30 million strong diaspora and international student base which serves as a pull factor for those visiting friends and relatives.Technology-led travel research and booking platforms are increasingly accessible to the average Indian consumer .

Australia’s Competitive Advantage

An ideal time to promote increased direct air services between Australia and India. Austrade should support film and production house familiarisation exchanges, as well as tours of prospective shooting sites and facilities. Develop ‘India ready’ training programs and digital toolkits aimed at raising awareness of cultural tastes, preferences and expectations of Indian leisure and business tourists. Opportunities exist for coordination between convention bureaus and government to accommodate business travel and events for the inbound Indian business community.