Australia eyes trade with India to cut China reliance amid mounting tensions

Australia’s escalating tensions with Beijing have shown up its reliance on China trade and propelled a push to increase links with Asia’s other giant economy, India.

New enrolments of international students from India expanded 32 per cent in 2019 from a year earlier and it’s the fastest growing major market for Australian services. India has overtaken China as the largest source of net migration to Australia, and the Indian diaspora is the third-largest in the country, just behind China and Britain.

The need to switch things up has accelerated as ties sank to their lowest ebb in 30 years after Canberra’s calls for an international inquiry into Covid-19’s origins was taken by Beijing as a political attack, with China imposing barriers on Australian barley, beef and wine.

This has Australia looking to its democratic, cricket-loving ally in Asia to fill the void. Prime Minister Scott Morrison held a virtual summit with his Indian counterpart Narendra Modi in June and the two signed a defence agreement and upgraded ties to a Comprehensive Strategic Partnership.

The trade ministers of Japan, India and Australia recently agreed to work toward achieving supply chain resilience in the Indo-Pacific region.