Bilateral trade between India and Australia stood at $20 billion during 2009-2010. India’s Commerce Minister Anand Sharma said they expect to make strong gains in the services sector and have greater market access for goods such as pharmaceuticals.

India is currently Australia’s fourth largest export market, as they are heavy importers of gold, coal, copper, fertilizers, manganese, wool and aluminum as well as large contributors to Australia’s foreign student market. Currently Australia has a larger proportion of trade between the two economies but Sharma expects India’s share to increase once the FTA is finalized.

India’s main exports to Australia are machinery & equipment, clothing, diamonds, iron & steel products and medicines.

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In terms of countries, India’s largest export destination is still the USA followed by the UK, Germany, South Africa and Russia. Composition-wise, generics account for 58% of the exports, active pharmaceutical ingredients (APIs) 40% and ayurvedic/herbal/neutracueticals 2%.

One of the major elements which is thought to have contributed to the growth, is the economic improvement of developed countries. The global crisis a few years ago had a significant impact on the pharmaceutical sector in India, but now the situation has improved and this has been reflected in the figures. In terms of future growth, it is expected that demand from Africa may increase this year, as exports to Africa also slowed down due to outside circumstances.

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The biotechnology industry in India is currently estimated to be around $4 billion. The south west state of Karnataka contributes to 40% of this value and the state capital Bangalore is home to 52% of the core biotechnology companies in India, including 5 top biotech countries.

Speaking after inaugurating Bangalore India Bio 2011, B S Yeddyurappa, the chief minister of Karnataka has suggested that the area has a favorable ecosystem for biotechnology. He also said that the state ‘will make further efforts to boost growth of the industry’. Yeddyurappa also said that the state is to open four biotechnology parks and is also promoting biotech finishing schools in order to create a skilled workforce.

The global biotechnology industry, which is estimated to be around $140 billion, will need emerging economies like India to further grow the industry.

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The Six core infrastructure industries – crude oil, petroleum refinery products, coal, electricity, cement and finished steel have a 26.7% weight in the index for industrial production. During 2010-2011 the output of these six infrastructure industries was at 5.9%, a 0.4% increase from the previous year. Steel output had one of the more significant increases from 9.9% in March from 7.7% last year.

The figures have been released the day before the Reserve Bank of India considers its monetary policy for the year. With the positive infrastructure figures, some experts are suggesting the RBI may not increase rates as sharply as previously predicted.

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The free trade agreement between India and the EU will include the removal of import duties on most industrial and agricultural goods, opening the services market and more liberal rules on investments. The EU, which consists of 27 members, is India’s largest trading partner as trade reached $75 billion during 2009-2010. If successful, the agreement may increase trade by a staggering 30%.

The remaining issues left to conclude are the automobiles and wind sector as well as visas to Indian professionals. If the next round of meetings is successful there is a very good chance that the free trade agreement will be signed in July.

The automobiles sector is likely to be a key issue, as India would like to keep this sector separate from any tariff reduction commitments, but there may be pressure from the EU to reduce duties on auto parts and cars.

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Indonesia has stressed their interest in moving talks along, but the country is still waiting to appoint a chief negotiator for the talks. The Indian commercial department has already emphasized the importance of signing comprehensive economic partnership agreements, for not only goods but services as well with members of Asean.

Once trade pacts have been signed with the two countries, it will allow India to compete with the like of Australia, New Zealand and to some extent China in the services mentioned above. The next round of meetings with the Asean is scheduled for May, where India is hoping pacts can be finalized at a quicker pace.

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Funds from companies such as Carlyle Group, Warburg Pincus, Zephyr Peacock and Reliance Asset Management are indicating that this may be the best time for them to invest in SMEs who have a turnover of less than 500 crore. (US $112 million)What is even more encouraging than the total PE investments, are the size of the average deal, as the average deal size had increased by 80% to $22 million. The majority of the investments were going to the financial sector, followed by utilities.

The money that SMEs are receiving is not only aiding expansion, but other key areas such as support in managing funds, accessing export markets, finding right employment, net-working and prepare for the future.

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Abhisit Vejjajiva will be in India for his visit commencing on April 5th. Between the two countries they have already removed the duties on 82 items under the ‘Early Harvest Scheme’, which was the first phase of the free trade agreement, launched in 2004. The ‘Early Harvest Scheme’ is to be upgraded into a comprehensive arrangement for the reduction and eventual elimination of 90% of goods traded.

In addition to this the free trade agreement will also open trade in services & investments by the end of the year. During the last year trade between the two countries was at US $4.5 billion, and it is hoped will reach US $6.5 billion this year.

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The money is aimed for small solar projects who are adding up to 200 mw of solar power, by companies like Sidbi, Nabard and the National Housing Bank. The funding will come through the Indian Renewable Energy Department Agency (IREDA), one of the branches of the renewable energy ministry. The agency will also provide money to state-run banks in urban areas at a rate of 2%.

Solar projects are commencing under Phase 1 of the national solar mission, and the money will allow the more cautious bankers to lend more money to renewable energy companies. The loans approved by the IREDA have improved from around Rs 1,800 crore in 2009-10 to Rs 2,300 crore this year.

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During talks between both ministers they discussed the necessity for early conclusions of the bilateral investment promotion and protection agreement. Sharma also added that Indian companies were keen to invest in Nigerian industries such as power and petroleum. Nigeria is currently India’s largest trading partner in Africa, and the largest market for Indian goods in the continent.

During Ajumogobia visit to India, a bilateral agreement was signed for pharmaceuticals between India’s Department of Pharmaceuticals and Nigeria’s National Agency for Food and Drug Administration and Control. This agreement is expected to help promote mutual trade in quality drugs, drug testing, analysis & detection and to stop the supply of fake drugs.

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