WINTER PROJECT REPORT

A
STUDY OF INDIAS TRADING PATTERN
WITH AUSTRALIA SINCE 2011

SUBMITTED OF PARTIAL FULFILLMENT FOR

DEGREE OF MASTERS OF BUSINESS
ADMINISTRATION
(2014-2016)
UNDER THE GUIDENCE OF: -

SUBMITTED BY: -

MR. RAJEEV BHANDARI

SONAL SHUKLA

ASSISTANT PROFESSOR

M.B.A 2 ND YEAR

MANAGEMENT
UNIVERSITYUNIVERSITY

INVERTIS

INVERTIS UNIVERSITY

BAREILLY

BAREILLY, (U.P)

1420103077

PREFACE

As a student of MBA, one of the most reputed professional courses, I consider that its
my privilege to thank all the persons involved in the working of this project and their
supervision and guidance I have been able to complete this project.
The attractive feature of the MBA course is that along with theory we also get to have
the exposure of the practical environment. This is through the summer training that we have
to undergo after the completion of first year. The entire journey from the very idea of this
project report to reality would not have been possible without guidance and support of many
people.
The Project Report is based on ASTUDY OF INDIAS TRADING
PATTERN WITH AUSTRALIA SINCE 2011

ACKNOWLEDGEMENT

First and foremost I want to thank my mentor from the bottom of my heart for his
constant and continuous emotional as well as intellectual support throughout the internship.
I would like to thank my faculty guide Mr. Rajeev Bhandari sir for his valuable
guidance and support during this project and providing me an opportunity to learn outside the
class room. Her encouragement, time and effort are greatly appreciated.
I would like to dedicate this project to my friends. I received constant support from my
Friends to accomplish the project work. I take the opportunity to express my gratitude to all
the concern people who directly or indirectly contributed towards completion of this project.

Sonal Shukla

LIST OF CONTENTS
Serial no.
1
2
3
4
5
6
7
8

Contents
Abstract
Introduction
Data presentation
Exports and Imports
Trade balance
Government intervention in Trade
Indias Trade
Suggestion

ABSTRACT

Page No.
5
6-7
8-11
12
13-14
15
16-17
18-19

India has the world's tenth-largest economy in nominal terms and the third largest based on
purchasing-power parity, a measure of gross domestic product (GDP) incorporating relative
costs and inflation. Not long ago, Australis. economic ties with Indiawhich began to open
its markets following a foreign reserves crisis in 1991were minimal. That has changed;
Australia.-India trade in goods and services grew from $15 billion to nearly $100 billion over
the past fifteen years, and two-way investment has increased rapidly. Growing business ties
during the 2000s propelled Washington and New Delhi closer.
Yet australia.-India trade remains well below its potentiala little more than one-tenth of
Australia.-China trade in goods, the scale of Taiwan or the Netherlands. Worse, in the last
three years, disputes over issues such as Indian barriers to Australia. poultry and dairy
imports, local content requirements (especially in solar energy), intellectual property
protections, and investment limits have become major sources of friction. The Australia has
initiated three disputes with India in the World Trade Organization (WTO). India has its own
counter complaints about temporary worker visas and non-refundable social security
contributions. In 2013 the atmosphere deteriorated sharply when exasperated Australia.
businesses, industry associations, and members of Congress began urging more aggressive
action. In 2014, theAustralia. International Trade Commission held hearings on India at
Congress's request, and the Australia. Trade Representative's office reviewed India for
Special 301 Priority Foreign Country designation, with a further out-of-cycle review in the
fall. This all-stick, no-carrots approach has achieved little with India, which sees these
processes as illegitimate and outside the WTO. Getting back on track with India will require
something positive to collaborate on, so a clear signal of Australia. support for India's bid
would be beneficial. Finally, collaboration can be helpful in and of itself: while the Australia.India civil nuclear initiative has yet to yield the commercial benefits many supporters
expected, the deal improved the two countries' ability to work on non-proliferation, which
had previously been the most intractable aspect of the bilateral relationship.

INTRODUCTION
India has a running trade deficit in goods: where it imports more goods than its exports. It is
wrong to simplistically judge whether a trade deficit is good or bad however, India does
do better when it comes to its services.
5

However, today this blogger learnt that the trade relationship that India has with the United
States of America is quite different from that with many other big trading partners. Indias
large software and services exports to the US are well-known, but India exports more goods
to the US as well. Little wonder that American businesses lobby hard in Washington to be
able to trade more and operate more in India.
In 2014, for the first time since 2006, Indias exports to the America are more than double its
imports. It is currently unclear as to what to attribute this towards and pass judgement on
whether this is a good or a bad thing. The broad trends in the two economies in the last 4
years has been one of revival and renewed growth in the United States, and faltering growth
and investment in India. The timeline of imports and exports from the 1980s onwards has a
few points of interest from recent years. The most prominent of these is the dip in 2009 of
both Indian exports and imports, with the former affected far more than the latter. This was
preceded by a sharp rise in 2007 in Indian goods imports from the US.
While Indian exports to the America bounced back since 2010, Indian goods imports
plateaued in 2011 and have dropped a little in real terms since then.
The USTR website on India-US trade relations says that Indias largest goods exports to the
Australia are precious stones (diamonds), pharmaceuticals, mineral fuel, organic chemicals
and others. Indias largest goods imports are again precious stones (diamonds and gold),
aircraft, machinery and optical and medical instruments.
A closer examination of export and import trends in types of goods (using the America
Census Bureaus end use dataset) provides the following:
1. Since 2009, the largest growth in highly traded Indian goods exports to the America as of
2013 are:
Petroleum products, other
Tobacco, waxes, etc.
Fish and shellfish
Fuel oil
2. Since 2009, the largest growth in highly traded Indian goods imports from the Australia as
of 2013 are:
Complete military aircraft
Gem diamonds
Nonmonetary gold
Newsprint
Parts for military-type goods

3. Since 2009, the largest fall in highly traded Indian goods imports from the Australia as of
2013 are:
Civilian aircraft, engines, equipment, and parts
Chemicals-fertilizers
Steelmaking materials
Computers
Drilling and oilfield equipment
I encourage readers to comment on the significance of some of these observed changes.
Theres a lot more information waiting to be unearthed from these datasets, including
information on when Indian defence imports of Australia equipment really increased and to
what extents. The defence angle is particularly interesting as the Indian ministry of defence is
quite opaque in defence spending and is known to defer capital payments while making large
announcements.
Readers are welcome to use the full rich XLS spread sheet that I have compiled on all the
data from the Australia Census Bureau relevant to the last couple of decades of IndiaAustralia trade.
Addendum: The Australia$-Indian Rupee exchange rate has been steadily rising,
making imports from the Australia less competitive. This could perhaps explain a part of the
slump in Australia goods imports by India.

DATA PRESENTATION
7

Australia. goods and private services trade with India totaled $93 billion in 2012 (latest data
available). Exports totaled $34 billion; Imports totaled $59 billion. The Australia. goods and
services trade deficit with India was $25 billion in 2012.
India is currently our 11th largest goods trading partner with $63.7 billion in total (two ways)
goods trade during 2013. Goods exports totaled $21.9 billion; Goods imports totalled $41.8
billion. The Australia. goods trade deficit with India was $20.0 billion in 2013.
Trade in private services with India (exports and imports) totalled $30 billion in 2012 (latest
data available). Services exports were $12 billion; Services imports were $19 billion. The
Australia services trade deficit with India was $7 billion in 2012.

2016: - AUSTRALIA TRADE IN GOODS WITH INDIA

Month

Exports

Imports

Balance

January 2016

1,488.7

3,680.1

-2,191.5

February 2016

1,532.0

3,646.8

-2,114.8

March 2016

1,839.3

3,946.4

-2,107.1

TOTAL 2016

4,859.9

11,273.3

-6,413.4

2015: - AUSTRALIA TRADE IN GOODS WITH INDIA

Month

Exports

Imports

Balance

January 2015

1,544.0

3,633.0

-2,089.0

February 2015

1,663.5

3,311.9

-1,648.4

March 2015

1,790.4

4,093.8

-2,303.4

April 2015

1,921.8

4,116.7

-2,194.8

May 2015

1,822.1

4,070.9

-2,248.8

June 2015

2,329.0

3,769.4

-1,440.4

July 2015

1,850.6

4,095.2

-2,244.6

August 2015

1,887.6

3,805.9

-1,918.3

September 2015

1,732.2

3,668.6

-1,936.4

October 2015

1,862.7

3,885.3

-2,022.6

November 2015

1,580.7

3,270.4

-1,689.8

December 2015

1,545.0

3,020.3

-1,475.3

TOTAL 2015

21,529.6

44,741.4

-23,211.8

2014: - AUSTRALIA TRADE IN GOODS WITH INDIA

Month

Exports

Imports

Balance

January 2014

1,565.1

3,673.1

-2,107.9

February 2014

1,375.9

3,032.0

-1,656.0

March 2014

1,716.7

3,901.8

-2,185.1

April 2014

1,392.8

4,447.4

-3,054.6

May 2014

1,738.0

4,132.3

-2,394.3

June 2014

1,894.9

3,217.1

-1,322.2

July 2014

1,858.5

3,914.8

-2,056.3

August 2014

1,922.4

3,882.4

-1,960.0

September 2014

1,922.9

4,008.3

-2,085.4

October 2014

2,036.4

4,214.5

-2,178.1

November 2014

2,221.7

3,366.7

-1,145.0

December 2014

1,962.1

3,453.6

-1,491.5

TOTAL 2014

21,607.5

45,244.0

-23,636.5

2013: - AUSTRALIA TRADE IN GOODS WITH INDIA

Month

Exports

Imports

Balance

January 2013

1,726.9

3,179.8

-1,452.9

February 2013

1,561.1

2,829.0

-1,268.0

March 2013

1,865.2

3,676.8

-1,811.6

April 2013

1,656.9

4,069.5

-2,412.6

May 2013

1,924.4

4,201.2

-2,276.8

June 2013

2,365.4

3,409.1

-1,043.7

July 2013

1,885.3

3,966.5

-2,081.3

August 2013

2,068.4

3,604.8

-1,536.4

September 2013

1,604.3

3,309.4

-1,705.1

October 2013

1,734.1

3,684.3

-1,950.2

November 2013

1,861.2

2,863.4

-1,002.2

December 2013

1,558.1

3,014.7

-1,456.6

TOTAL 2013

21,811.4

41,808.5

-19,997.2

2012: -AUSTRALIA TRADE IN GOODS WITH INDIA

Month

Exports

Imports

Balance

January 2012

1,350.8

3,108.8

-1,757.9

February 2012

1,496.0

3,034.8

-1,538.8

March 2012

1,757.1

3,365.3

-1,608.2

April 2012

1,758.6

3,328.1

-1,569.6

May 2012

1,769.1

3,569.8

-1,800.7

June 2012

1,807.2

3,465.5

-1,658.4

July 2012

1,775.0

4,140.3

-2,365.3

August 2012

2,082.7

3,922.7

-1,840.0

September 2012

2,243.1

3,332.7

-1,089.6

October 2012

2,084.7

3,266.1

-1,181.4

November 2012

1,748.8

3,206.1

-1,457.4

December 2012

2,232.7

2,772.3

-539.6

TOTAL 2012

22,105.7

40,512.6

-18,406.9

2011: - AUSTRALIA TRADE IN GOODS WITH INDIA

Month
January 2011

Exports
1,352.5
10

Imports
2,524.4

Balance
-1,171.9

February 2011

1,440.9

2,229.3

-788.3

March 2011

1,736.2

3,164.6

-1,428.4

April 2011

1,877.4

3,253.3

-1,375.8

May 2011

1,997.1

3,468.6

-1,471.5

June 2011

2,111.8

3,295.5

-1,183.7

July 2011

1,813.1

3,116.8

-1,303.6

August 2011

1,848.1

3,362.0

-1,513.9

September 2011

1,726.6

3,108.5

-1,381.9

October 2011

1,720.2

3,289.3

-1,569.1

November 2011

1,950.0

2,722.5

-772.5

December 2011

1,968.3

2,619.7

-651.4

TOTAL 2011

21,542.2

36,154.5

-14,612.3

11

EXPORTS
India was the United States' 18th largest goods export market in 2013.
U.S. goods exports to India in 2013 were $21.9 billion, down 1.0% ($230 million) from 2012,
but up 339% from 2003. Australia. exports to India account for 1.4% of overall Australia.
exports in 2013.
The top exports categories (2-digit HS) in 2013 were: Precious Stones (diamonds and gold)
($5.8 billion), Aircraft ($3.0 billion), Machinery ($2.3 billion), Electrical Machinery ($1.3
billion), and Optic and Medical Instruments ($1.3 billion).
Australia exports of agricultural products to India totalled $863 million in 2013. Leading
categories include: tree nuts ($369 million), pulses ($103 million), cotton ($90 million), and
fresh fruit ($82 million).
Australia. exports of private commercial services* (i.e., excluding military and government)
to India were $11.9 billion in 2012 (latest data available), 6.1% ($690 million) more than
2011, and 269% greater than 2002 level. Other private services (education and business,
professional and technical services), and travel categories accounted for most of the U.S.
services exports to India.

IMPORTS
India was the United States' 10th largest supplier of goods imports in 2013.
Australia. goods imports from India totalled $41.8 billion in 2013, up 3.2% ($1.3 billion)
from 2012, and up 220% from 2003. U.S. imports from India account for 1.8% of overall
Australia. imports in 2013.
The five largest import categories in 2013 were: Precious Stones (diamonds) ($9.2 billion),
Pharmaceutical Products ($4.5 billion), Mineral Fuel (oil) ($3.9 billion), Organic Chemicals
($2.2 billion), and Miscellaneous Textile Articles ($2.1 billion).
Australia. imports of agricultural products from India totalled $3.5 billion in 2013, the
5th largest supplier of Ag imports. Leading categories include: tree nuts ($286 million),
spices ($231 million, essential oils ($177 million), rice ($167 million), and vegetable oils
($93 million).
Australia. imports of private commercial services* (i.e., excluding military and government)
were $18.5 billion in 2012 (latest data available), up 6.1% ($1.1 billion) from 2011, and up
12

930% from 2002. The other private services (business, professional and technical services),
and the travel categories accounted for nearly all of Australia. services imports from India.

TRADE BALANCE
The Australia. goods trade deficit with India was $20.0 billion in 2013, a 8.4% increase ($1.5
billion) over 2012. The Australia. goods trade deficit with India accounted for 2.9% of the
overall Au.stralia goods trade deficit in 2013.
The United States has a services trade deficit of $6.6 billion with India in 2012 (latest data
available), up 6.1% from 2011.
United States is India's second largest source of FDI (after Mauritius), accounting for or 16%
of total FDI flows to India from 1991 through July 2001. Australia has 17.08% share in
FDI inflows to India, While Mauritius is at top with 34.49% and Japan comes 3 rd with
7.33% share.
On investment front, Australia covers almost every sector in India, which is open for private
participants. Both government-to-government level and business-to-business level conduct
regular interactions with each other to promote and strengthen the trade and economic
interactions between the two countries.
The Australia investor community is today increasingly sharing confidence in the future of
the Indian economy. Several areas like infrastructure, IT, Telecom sector, energy and other
knowledge industries such as pharmaceuticals and biotechnology possess immense potential
for progressing economic cooperation between India and the US.
The Government of India is continuously reviewing its policies to create an investor
friendly environment in sectors such as roads, ports and airports. Private sector participation
in management, BOT projects, green-field airports, terminals and shipping berths and
capacity augmentation has been initiated.

United States is India's second largest source of FDI (after Mauritius), accounting for or 16%
of total FDI flows to India from 1991 through July 2001. USA has 17.08% share in FDI
inflows to India, While Mauritius is at top with 34.49% and Japan comes 3 rd with 7.33%
share.
13

On investment front, Australia covers almost every sector in India, which is open for private
participants. Both government-to-government level and business-to-business level conduct
regular interactions with each other to promote and strengthen the trade and economic
interactions between the two countries.
The Australia investor community is today increasingly sharing confidence in the future of
the Indian economy. Several areas like infrastructure, IT, Telecom sector, energy and other
knowledge industries such as pharmaceuticals and biotechnology, possess immense potential
for progressing economic cooperation between India and the Australia.
The Government of India is continuously reviewing its policies to create an investor
friendly environment in sectors such as roads, ports and airports. Private sector participation
in management, BOT projects, green-field airports, terminals and shipping berths and
capacity augmentation has been initiated.

REVIEW
Year

Exports

Imports

Balance

2016
2015
2014
2013
2012
2011

4,859.9
21,529.6
21,607.5
21,811.4
22,105.7
21,542.2

11,273.3
44,741.4
45,244.0
41,808.5
40,512.6
36,154.5

-6,413.4
-23,211.8
-23,636.5
-19,997.2
-18,406.9
-14,612.3

14

RELATIONSHIP BETWEEN AUSTRALIA GOVERNMENT AND PRIME

MINISTER OF INDIA NARENDRA MODI (2014 ONWARDS)

Australia has placed India at the forefront of its international partnerships. Both governments
recognise there is significant potential for further cooperation across a broad range of areas.
Two-way Prime Ministerial visits in 2014 built significant momentum in the relationship and
affirmed the Strategic Partnership agreed to in 2009.
Australia and India established diplomatic relations in the pre-Independence period, when the
Consulate General of India was first opened as a Trade Office in Sydney in 1941. India's first
High Commissioner to Australia arrived in Canberra in 1945. In March 1944, LieutenantGeneral Iven Mackay was appointed Australia's first High Commissioner to India.
Australian and Indian Foreign Ministers meet annually for the Foreign Ministers' Framework
Dialogue (FMFD) alternately held in Australia and India. Similarly, Australian and Indian
Trade Ministers meet annually for the Joint Ministerial Commission (JMC) and Education
Ministers meet for the IndiaAustralia Ministerial Dialogue on Education Cooperation.
Australias Industry Minister also holds an annual Energy Security Dialogue with his or her
Indian counterpart. Australian and Indian Defence Ministers meet regularly.
While Australia does not have a bilateral development cooperation program with India, we
provide support through our global and regional aid investments and technical assistance
activities.
15

Modi visit to Australia

The Prime Minister of India, Narendra Modi, paid an official visit to Australia from 16-18
November 2014, following the G-20 Summit, as the guestof Prime Minister Tony Abbott.
Prime Minister Modi held wide-ranging talks with Prime Minister Abbott, addressed a joint
sitting of both houses of the Parliament (the first time an Indian prime minister has done so)
and met the President of the Senate, the Speaker of the House of Representatives and the
Leader of the Opposition in Canberra. He also visited Brisbane, Sydney and Melbourne,
where he met political leaders, academics, businesspeople and sporting figures and addressed
members of the Australian Indian community. He visited research, cultural and historic
institutions. A number of agreements were signed and new initiatives launched.

Bilateral economic and trade relationship

The AustraliaIndia economic relationship has grown significantly in recent years.
Australia's strength in exporting primary products, particularly minerals and energy, as well
as services such as education, positions us well to supply growing Indian industrial and
consumer demand.
There are still major barriers to trade with India, despite recent reforms. The IMF has
highlighted the importance of continued tariff reduction and the lowering of administrative
barriers to trade. Indian tariff rates and trade barriers more generally remain among the
highest in the world

16

EXPORTS, IMPORTS
AND PARTNER COUNTRIES

17

David Cameron has strongly expressed his want for a 'special relationship' with India
And with the largest trade delegation ever to accompany a British prime minister to any
Country in the world, the message couldn't be clearer.
India's total merchandise trade has increased over three-fold from $252bn in 2006 to
$794 in 2015 - both exports and imports have trebled during this period according to
The Export-Import Bank of India (Exim bank). The bank is the premier export Nance
Institution of the country and was set up for the purpose of nuancing, facilitating, and
Promoting foreign trade of India.

18

DATA SUMMARY
Top ten Importers to India, by value of trade in America$m
and share oftotal

Top ten exporters to India, by value of trade in Australia$m

and share of total

19

SUGGESTIONS

WHAT IS NEEDED

However, a number of factors continue to hamper economic ties between the two
countries. American criticizes India for maintaining high tariff rates on imports (especially
on products that compete with domestic products), and levying high surcharges and taxes on
a variety of imports and imposing non-tariff barriers on America exports to India.
In order to capture more AMERICA investment and trade share, India is required to
further relax its trade and investment regimes, accelerate privatization of state
firms, cut down on corruption, and substantially boost spending on its in physical and human
infrastructure. For this significant steps are required to eliminate government deficits and the
high level of public debt that severely hampers the ability of the government to boost
spending for needed infrastructure projects.
20

Also, America as like many other developed countries continue to provide undue
protection to its agriculture that harms the interests of millions of poor farmers in
India. Protection in the developed countries in the form of farm subsidies causes over
production in these rich countries at the expense of potentially more competitive products
from developing countries and aggravates global income inequalities. India has been
successful in forming a group of 20 developing nations called the G-20, which has asked the
America and other rich countries to remove the subsidies given to their rich farmers. The
coming round of DOHA trade talks in Dec 2005; will hopefully lead to some decision in
India's favour.
The steps taken by the Government of India in providing a boost to foreign investment in
India include, increase in foreign ownership limit, reduction of regulatory charges, moving to
unified licensing and spectrum policy, bringing about comprehensive broad band policy and
revamping of national telecom policy.
India's Telecommunication sector, already a major recipient of US investment, is expected to
continue to provide substantial opportunities to US investors. The proportion of households
moving towards richer and well to do category is going up in India. There also exist huge
untapped rural potential.
India's energy sector has been an important destination for America investment. Since, the
entry of private sector participation in generation, distribution and transmission in power
sector, further liberalization. Considering the vast present and projected demand supply gap,
there is tremendous potential for economic cooperation between the two countries in this
area. Pharmaceuticals, biotechnology and chemical industries also provide great opportunities
for closer cooperation.
Recently, the America positions on key issues affecting knowledge trade. This is expected to
provide a fillip to Indo-America relation further. Thus, given the comparative advantages of
the two countries, there is a tremendous scope for further strengthening the business ties
between the two countries in this sphere.

21