Interview originally published here.
In an exclusive interview with The Australia Today, Mr Saran outlined the importance of the Australia-India bilateral relationship and how crucial this relationship is going to be from a strategic and economic point of view.
Q1) How important is the India-Australia relationship going to be globally and for the Indo-Pacific region from a security point of view?
Mr Saran: India views Australia as one of its most important partners in the world. The relationship has transformed in less than a decade. Today, the two countries are exploring opportunities to work shoulder-to-shoulder on new opportunities to tackle challenges that confront Asia and the world. The partnership has been catalysed by shared concerns about China and a shared responsibility to ensure a peaceful and inclusive Indo-Pacific by partnering closely with like-minded countries in the region.
Q2) How do you see bilateral trade between the two countries going forward, is it likely to substantially increase after the trade agreement?
Mr Saran: The signing of the interim agreement has come at a time when the trade momentum between both the countries is on a high. The latest data by the Ministry of Commerce and Industry of India, released in April 2022, show 104.8% year-on-year growth in Indian exports to Australia and 99.5% year-on-year growth in Australian imports to India. The completion of the FTA would definitely boost volumes of trade between the two countries—both expect trade in goods to double in five years to the US $50 billion. Australia’s aim is to make India the third-largest destination in Asia for Australian investment and also one of its top three export markets by 2035.
Q3) How important is it for Australia to diversify its international trade and reduce its exposure to China?
Mr Saran: It is extremely important. As one of the developed world’s most China-dependent economies, Australia will always be vulnerable in case of deterioration in bilateral ties. By pushing for answers on the origin of the pandemic, Australia has already angered Beijing. After being at the receiving end of Beijing’s trade weaponisation, it is extremely significant for Australia to reduce its perverse dependence on China by diversifying its export markets. Australia and others also need to invest more in trade diversification, and supply chain resilience and are conscious of the geopolitical risks.
Q4) How important is it for Australia to increase its economic engagement with India specifically given the implications not just for geoeconomics but also geopolitics?
Mr Saran: The broader trade and technology agenda is closely linked to and implicated by politics. This geopolitical convergence in the Indo-Pacific is also driving the current upward trajectory in the economic relations between India and Australia. Australia realises that even as it seeks to respond to the increase in Chinese influence within Pacific Island countries, India is staving off the overbearing presence of the dragon in South Asia. Instead of relying solely on the United States, it is time for India and Australia to increase their economic engagement and build their own capabilities to push back against Chinese expansiveness. They have obvious overlapping interests in the region and a clear motivation to make this happen.
Q5) How important is Australia going to be for India from a trade and security point of view?
Mr Saran: As the first bilateral trade agreement of India with a developed country in the last decade, this FTA with Australia is extremely important. as India is not part of any significant regional or free-trade bloc. Apart from eliminating or lowering tariffs on both sides, this FTA positively influences other ongoing bilateral trade negotiations that India has with Canada, the EU and the UK.
As mentioned earlier, due to an overlap in the Indo-Pacific regional visions of the two countries and the escalating competition between US-China, India sees it important for Australia to bolster its security capacities through enhanced defence acquisitions and spending, as well as by strengthening existing defence cooperation. India and Australia, by investing in their own security and economy, are offering the other greater ability to manage and negotiate the changing political and economic landscape in Asia.
Q6) Are there any specific areas where you see the potential for increased engagement that require more attention?
Mr Saran: There are four areas where there’s potential for increased engagement. First is political – both India’s and Australia’s neighbouring island countries are facing excessive inducements by the CCP to follow the Chinese way of life. We need to realise that dialogue with these island countries is not enough, we need to put money where our mouth is. India and Australia can create an islands initiative, wherein we invest in their technology futures and climate resilience, and offer them better, safer money than what is on offer from the Chinese.
The second is climate – as India transitions to a green economy, Australia can vigorously partner with us. As a country with sophisticated financial institutions, Australia can offer significant inputs in the technology, R&D and innovation space. Australia’s financial institutions can also service the significant Indian appetite for green finance and infrastructure projects.
Third is technology – instead of becoming the B-teams of Silicon Valley, the India-Australia technology partnership could create tech for development, fit for our neighbourhood. This would not only help the ASEAN and island countries, but also the emerging world. India and Australia have the potential to be the A-team of the tech for a development paradigm that serves the next 6 billion that silicon valley does not innovate for.
And finally, diaspora – we need to scale up Australia’s educational and knowledge partnership with India. We need to take Australian institutions to India and offshore the education industry, wherein the former is able to increase its presence and build to-scale education and skilling institutions in India.
7) Do you see Quad as having substance or is it more a symbolic grouping at this stage?
Mr Saran: Quad, as of today, is a limited-purpose partnership that was born out of common concern about Chinese activities. At this stage, the Quad is beginning to become more ambitious and is seeking to shape the development and technology pathways the region treads on.
A quad must consider building more substance through institutionalisation and by delivering on specific projects in the Indo-Pacific region.
Over the years, India earned the epithet of a reluctant power in Asia — exuberant in its aspirations, yet guarded in its strategy. However, as the challenges in its immediate neighbourhood and beyond continue to evolve, India is today gearing up to embrace a larger role in the far wider theatre of the Indo-Pacific.
Forming the core of the ongoing global economic and strategic transitions are a rising and assertive China, an eastward shifting economic locus, and the faltering of Western-led multilateral institutions. These converge with domestic development and national security objectives to demand that India strive to expand its presence, reach, and voice both on land and in the sea in its extended neighbourhood. Today, New Delhi is actively seeking to create opportunities for mutual development in the Indo-Pacific, in the Arabian Sea and in Africa even as it engages like-minded nations in the pursuit and preservation of a rules-based order that promotes transparency, respect for sovereignty and international law, stability, and free and fair trade. In both these endeavours, the United States is an appropriate and willing partner. As Indian Prime Minister Narendra Modi stated in his address to the US Congress in 2016, “[a] strong India-US partnership can anchor peace, prosperity, and stability from Asia to Africa and from the Indian Ocean to the Pacific.”
The US has been a principal architect and the traditional guarantor of a liberal economic and maritime order in the Indo-Pacific. While the commentariat in the US and India might express apprehension at the idea of US President Donald Trump’s ‘America First’ strategy, this moment must be seen as an opportunity to rebalance the Indo-US relationship to reflect a real convergence of strategic interests, as opposed to an abstract engagement based on values alone and one that has disregarded the core interests of both countries.
Even as the phrase ‘free and open Indo-Pacific’ replaces ‘Pivot to Asia’, it is clear that the US will continue to play an important role in the region.
The US is acutely aware that disengagement is not an option when the contests of the region are, in fact, irrevocably moving both westwards and eastwards, and ever closer to its own spheres of influence. Thus, maintaining an influential presence and assets in the region effectively responds to its agenda. The US continues to retain an unequivocally large military presence in the Indo-Pacific. Moreover, Washington appears intent on finding ways to address shortfalls in its defence budget. The most recent defence bill specifically authorises the establishment of the new Indo-Pacific Stability Initiative to increase US military presence and enhance its readiness in the Western Pacific. As it remains an invested actor across the Middle East and in Afghanistan, and as it confronts an unrelenting North Korea, it must seek to empower regional like-minded nations such as India, which it recognises as having an “indispensable role in maintaining stability in the Indian Ocean region.”
US Secretary of State Rex Tillerson’s remarks at the Center for Strategic and International Studies a few days before his visit to India in the fall of 2017 is a testament to the continuity of the relationship: “The increasing convergence of US and Indian interests and values offers the Indo-Pacific the best opportunity to defend the rules-based global system that has benefited so much of humanity over the past several decades.” In a way, the title of his speech, “Defining Our Relationship with India for the Next Century”, should set the tone for the Indo-US relationship; and this new direction must not be influenced even by changes in leadership in the two capitals. It must first be imagined and then crafted as a multi–decade relationship that engages with the disruptions that abound in a multipolar world. This 21st century partnership must take into account each country’s economic trajectory, political values and strategic posture. The Indo-Pacific region will be the theatre in which this partnership will truly be realised. Both President Trump and Prime Minister Modi seem cognizant of this reality, and are intent on creating a new blueprint for this long-term engagement.
The terms of this bilateral cannot be limited to maintaining the regional balance of power. Rather, both countries, in concert with other likeminded powers, have a stake in enabling and incubating a peaceful, prosperous, and free Indo-Pacific. As these countries align in their desire to see a new regional architecture emerge, the following present themselves as the most crucial domains where a strengthened India-US The New India-US relationship can have deep and influential impact in a region that matters to the whole world:
Defence trade and technology
India’s designation as a ‘major defense partner’ of the US, and the Defense Technology and Trade Initiative provide a bilateral platform for defence trade and technology sharing with greater ambitions and at a faster pace. The ‘Make in India’ initiative strengthens scope for coproduction and co-development. The new appetite for business reforms is catalysing the largest volumes of foreign direct investment ever received by the country.
As India undertakes broader defence transformation initiatives, US defence companies can collaborate with New Delhi in its USD 150 billion military modernisation project. They can do this by jointly identifying the gaps and working together to equip Indian forces in the short run. This must be followed by cooperation on advanced technologies to help build up the country’s defence manufacturing base in the longer term.
Continuous progress on these fronts will enhance Indian capabilities, enable greater readiness of Indian forces, and level the playing field. Specifically, priority military hardware, technologies and areas for joint production need to be identified. Pending sales, such as that of the Guardian RPVs, need to be expedited, along with the micro unmanned aerial vehicle project. Further, the matter of quality and subsequent liability of equipment made in India through joint Indian-US ventures needs immediate attention. Additionally, the hesitation of US companies in sharing proprietary and sensitive technology is a concern that will need to be taken up on a case-by-case basis.
Maritime freedom and security
There is a rare moment of clarity in US and Indian policy circles on the importance of each other in this region. This is important if the countries are to act as “anchor of stability” in the Indo-Pacific.
It is time to begin conversations on new arenas of military cooperation, intelligence sharing, and strategic planning, to include advanced platforms like fifth-generation fighters, nuclear submarines, and aircraft carriers. Already, the two countries share a maritime security dialogue, which was instituted in 2016, as well as working groups on aircraft carrier technology and jet engine technology. They should be strengthened further and complemented by new working groups.
The annual Malabar exercise, which now formally includes a third partner, Japan, is another key feature of military cooperation, improving coordination and interoperability. Adding to these efforts are the Logistics Exchange Memorandum of Agreement, which will create maritime logistic links, and a white shipping agreement which promotes regional maritime domain awareness.
India-US maritime security cooperation is critical because it supports efforts that prioritise joint stewardship for ensuring freedom of navigation and unimpeded trade across a maritime common that is a major conduit for commercial and energy supplies, and is rich in natural resources, ecosystems, and biodiversity. Moreover, the Indian Ocean Region is extremely vulnerable to extreme weather events that are likely to increase significantly in the coming years. To address these developments, the US and India can cooperate to provide humanitarian assistance and disaster relief missions in the region.
Further, the two sides are committed to resisting the aggression that China has displayed in the South China Sea and elsewhere in the Indo-Pacific. Indo-US cooperation in the Indo-Pacific must also serve to affirm the principles of freedom of navigation and peaceful settlement of maritime disputes.
An expanded bilateral maritime partnership that involves transfer of technology to build India’s capacity in the Indian Ocean Region will help create a more stable and balanced security architecture there. This same partnership should explore new forms and formats of joint exercises and naval drills, such as anti-submarine warfare and maritime domain awareness missions, and encourage support for Indian leadership as “force for stability” in the IOR.
India and the US must also collaborate to promote a market-driven blue economy as a framework for growth and prosperity in the Indo-Pacific — home to bountiful hydrocarbon, mineral, and food resources, as well as burgeoning coastal populations.
India and the US can further elevate cooperation in marine research and development to create common knowledge hubs and share best practices. They can collaborate to develop mechanisms and foster norms that ensure respect for international law. The US can support regional collaboration in the Indo-Pacific to explore new and environmentally conscious investment opportunities in maritime economic activities and industries, such as food production and coastal tourism. Direct investments in Indian efforts, such as in identified coastal economic zones and the Sagarmala initiative, and participation in regional groupings like the Indian Ocean Rim Association, are two ways in which it can do so.
Effectively, the US can support India in creating a resilient regional architecture in the Indo-Pacific that places an emphasis on stability, economic freedom, growth and maritime security.
Today, states in the Indo-Pacific are in dire need of funds and expertise to improve infrastructure development and regional connectivity. Beijing has introduced its own project — the Belt and Road Initiative — through which it is investing in infrastructure initiatives across Eurasia and the Indo-Pacific. While connectivity is undoubtedly the primary aim of the project, it is increasingly clear that China seeks to expand its political and military influence in the region under the aegis of the BRI. To prevent the emergence of an Asian order inimical to the rules-based order, states must work together to forge a more inclusive approach towards an emerging regional architecture. This framework must be willing to accommodate everyone, including China, in connectivity projects from Ankara to Saigon, or the sea lanes seeking to link ASEAN with Africa.
For this to occur, pragmatic, democratic, and normative powers need to first create a political narrative within which Asia’s connectivity will take place. This narrative must underscore the importance of good governance, transparency, rule of law, and respect for sovereignty and territorial integrity. This can then be posited against strictly bilateral projects such as the BRI, which burden participating countries with debt and environmentally unsound projects. This alternative proposition to China’s BRI can then become the blueprint for connectivity and integration from Palo Alto to Taipei, Bengaluru to Nairobi, and Tel Aviv to Addis Ababa. The possibilities are endless and straddle hard infrastructure, digital connectivity, knowledge clusters, and value chains in
the Indo-Pacific space.
The India-US partnership has an important role to play in this respect. The American vision of the Indo-Pacific Economic Corridor supplements India’s Act East policy, and India-US cooperation in physical and soft infrastructure can link cross-border transport corridors; help create regional energy connections; and facilitate people-to-people interactions. Further, India and the US can cooperate as “global partners”, with US investment in Indian projects in Africa. Accordingly, the Asia-Africa Growth Corridor proposed by Japan and India can provide a common platform to all three states. Further, the US can nurture burgeoning regional partnerships between Japan, South Korea, Australia, and India, as these countries work towards building a consultative and collective Asian framework.
Digital connectivity, trade, and technology
Digital connectivity merits particular attention. After all, in the next decade, the largest cohort of internet users will emerge from the Indo-Pacific region. China is working aggressively to ensure that digital platforms in the region will be influenced by its own model for cyberspace premised on sovereignty. A major part of China’s BRI is the new “information silk road”, which facilitates investments by Chinese companies in South Asia’s internet architecture.
Accordingly, the US and India must cooperate to ensure that digital platforms, trade, connectivity and norms are shaped according to the democratic and open nature of the internet. To do so, they must create a framework that responds to developing-country imperatives such as affordable access, local content generation and cybersecurity. Already, Prime Minister Modi’s ‘Digital India’ programme provides a model for other states in the region to use internet-enabled technology to spur economic growth. India’s Aadhaar initiative, a unique digital identity programme, has already generated significant interest amongst South Asian states. American companies have increasingly sought to adopt standards and technologies to leverage this platform and build new markets in India. For example, WhatsApp has integrated with India’s unified payments interface to provide digital payments. Examples of other development initiatives are also abundant. Elsewhere, the Google RailTel initiative aims to provide WiFi at 400 railway stations across India by 2018.
India-US bilateral cooperation in using the digital as a tool for economic development and empowerment can be the template to connect the three billion emerging users in other developing countries in the Indo-Pacific and across Africa. As digital norms are institutionalised — whether pertinent to data flows and e-commerce, or related to critical infrastructure, defence, and public services — there is a real opportunity for India and the US to build and subsequently provide a model working relationship for the digital economy. Effectively, the US and India can propose a set of ‘Digital Norms for the Indo-Pacific’ that can be operationalised under their various dialogues and mechanisms for cooperation in the region.