India-Australia ties soar, but geopolitical and economic divergences pose a challenge

The India-Australia relationship has long been characterised as natural but neglected. Natural because the two countries supposedly shared common democratic values and cultural pursuits which originate in a shared colonial history. Neglected because of diverging foreign policy interests dating to India’s Cold War stance of non-alignment and Australia’s alliance with the US. In truth, “cricket, curry, and Commonwealth” was a superficial basis on which to build a relationship. Australia was a sub-imperial upholder of Anglo-Saxon supremacy in Asia and the Pacific region for the British empire, and later, the US.

India critiqued and resisted these hierarchical political and economic orders and promoted notions of Indian civilisational exceptionalism drawn particularly from the secular nationalism of Jawaharlal Nehru. Australia remained committed to the US alliance and the Anglosphere in the post-Cold War period and India remained wedded to strategic autonomy. Though India liberalised its economy in the 1990s, its growth was driven by the expansion of the services sector, and Australia’s economy was dominated by the export of resources and educational services, especially to China, which meant there were few economic complementarities to deepen the relationship.

Over the last five years, however, circumstances have dramatically changed thanks mainly to increased tensions with China. Australia’s relationship with China began to rapidly deteriorate in 2017. Policy makers became increasingly preoccupied by the threat of Chinese “interference” in Australia and in the Pacific region, which it considers its “sphere of influence”. This has led to sweeping national security laws that have eroded Australian civil liberties in the name of preventing Chinese interference, curbs on Chinese investment in Australia, the strengthening of its alliance with the US, and a desire to build closer relationships with countries like Japan and India.

As the Australia-China relationship continued to decline, China instituted a diplomatic “freeze” against the previous Liberal-National Coalition government, began to restrict the importation of some Australian agricultural goods and commodities, and discouraged students from studying in Australia. This produced a push to diversify Australia’s markets away from China.

By 2020, India’s relationship with China had also deteriorated, following a confrontation between Chinese and Indian troops along their disputed border – the first since 1975 to lead to casualties. Less serious clashes ensued in 2021 and 2022 and talks have failed to resolve the dispute. India has sought to reduce its heavy economic dependence on China for consumer goods and components for manufacturing through incentive schemes for local industry, duties, non-tariff barriers, bans on some Chinese technology, and restrictions on Chinese investment in India.

The concurrent souring of Australia and India’s relationships with China has provided the impetus for a closer alignment. In 2020, the two countries announced a Comprehensive Strategic Partnership and Australia finally achieved its long-held desire to take part in the Malabar maritime exercise, which it is hosting this year. Australia has now elevated India to a “top tier” security partner and negotiations for a long-delayed economic agreement were accelerated, leading to the signing of an interim agreement last year. While Australia has always been the more enthusiastic proponent of a closer relationship, India is now more responsive, sending numerous Ministers to visit Australia in 2022 to match multiple Australian ministerial visits to India.

The Quad has become an important plurilateral cooperative mechanism for the two countries. The Quad coalition of India, Australia, Japan, and the U.S. previously avoided issuing joint statements and leaders met at the sidelines of major multilateral events. Long since the most cautious of Quad countries, India avoided alluding to security issues or China in its Quad press releases. Since 2021, however, the government began to release joint Quad statements outlining expansive agendas including in areas such as infrastructure building and critical technologies, but also expressing concerns about the South and East China seas which implicitly refer to China’s activities and ambitions.

On a bilateral level, as well, Australia has identified India as a partner for creating trusted and transparent supply chains for critical technologies such as semiconductors, shaping the global governance of technologies in emerging sectors like e-commerce and AI, and pursuing collaborative innovation in areas like medical devices and vaccines.

People-to-people links have also been strengthened. India is now the second-largest source of migrants and international students in Australia. Deakin University is set to become the first foreign university to establish a campus in India. A new Labour Mobility Accord seeks to facilitate the exchange of students, researchers, graduates, and business people. Moreover, there are now a significant number of political leaders who are critics of China and tout India as a like-minded partner with shared democratic values, which is committed to upholding a “rules-based order”.

Australian Foreign Minister Penny Wong has even adopted the Indian government’s rhetoric of India as a “civilisational power” with “deep history and civilisational knowledge” – rhetoric which is now inflected through a Hindu nationalist lens in which India is a Hindu civilisation and Muslims are an invasive, enslaving force. Visiting Delhi, the Prime Minister Anthony Albanese was given a hero’s reception by Modi, riding around in a chariot – a mode of transportation which has poignant significance in Hindu nationalist politics –at the Narendra Modi cricket stadium.

In Sydney, Albanese, wore an orange tie – the color associated with the ruling Bharatiya Janata Party and militant Hindu nationalism – to hail a visiting Modi as “the Boss” at an event staged to resemble an Indian political rally and organised by members of the diaspora, including leaders of the Overseas Friends of the BJP.

Yet significant challenges remain. India’s reliance on Russia for advanced weapons will limit the extent of security cooperation with Australia because of the latter’s distrust of Russia and the security risks posed by the interaction of Russian and Western weapons systems. India’s “special and privileged strategic partnership” with Russia has been strengthened since the beginning of the Ukraine war. India has refused to condemn Russia’s invasion, it has increased its purchase of Russian energy, it is negotiating a free trade deal with Russia which seeks to deepen technology and manufacturing supply chain linkages, and it is adopting Russia’s financial messaging system to facilitate bank payments and skirt Western sanctions on Russian banks.

The Australia-India economic relationship remains narrow and dominated by coal exports. Indian companies have been major investors in mining in Australia, with the aim of integrating Australia into an Indian-controlled global supply chain for expanding electricity generation in India. These plans have run aground due to the lack of investors and lenders in new coal projects. The Indian company GVK Hancock’s planned largescale mines in the Galilee Basin in Queensland now lie dormant and Adani’s Carmichael mine in the same area produces one-sixth the amount coal initially planned.

India’s reluctance to liberalise market access in agriculture and Australia’s unwillingness to allow significant labor mobility remain challenges in finalising a full free trade agreement. The rapid influx of Indian students to study in Australia may be curtailed following allegations of visa fraud and plans to overhaul the visa system.

While hopes have been pinned on technology collaboration, contrary to Australia and other Quad countries, which profess commitments to open markets and IP protection and concerns about digital authoritarianism, India’s technology policies are oriented toward techno-nationalism, through policies like data localization and techno-authoritarianism, through social media censorship and internet blackouts. Consequently, India has rejected plurilateral global technology governance initiatives such as the G20 Osaka Declaration on Digital Economy and the Declaration on the Future of the Internet which seek to ensure the free flow of data.

Cognitive dissonance characterises the promotion of India as a vibrant liberal democracy by Australian political leaders, given that there is extensive evidence of its democratic decline over the last decade. To reduce this dissonance, these supporters resort to strategies like trivialisation, minimisation, avoidance, and willful ignorance. When asked to comment on the conviction of the opposition leader Rahul Gandhi for defaming Modi, Albanese proclaimed India the world’s largest democracy and feigned ignorance of India’s domestic politics.

During Modi’s visit to Australia, Albanese refused to comment on India’s internal politics while Modi – referring to anti-India, pro-Khalistan graffiti on Hindu temples – demanded and said he received promises of “strict actions” from Albanese against “any elements that harm the friendly and warm ties between India and Australia by their actions or thoughts.” High Commissioner Barry O’Farrell trivialised the arrests of activists and students in India and hailed India’s pluralistic democracy and robust institutions, despite much evidence to the contrary.

Champions of India in Australia’s scholarly and policy communities profess confidence in India’s democracy to address violence against minorities despite evidence of widespread and increasing impunity and complicity by politicians and institutions. They claim that India’s diversity prevents one community from exercising long-term hegemony, even though one group – upper caste, upper middle class Hindu men – have long dominated Indian politics, media, higher education, the civil service, and courts. This group forms the core support base and leadership of the BJP, which is reshaping institutions and public culture in ways that entrench its power.

Some defense and security analysts supportive of closer Indo-Australian ties minimize the significance of Hindu nationalist ideology in driving middle class support for the BJP. To the contrary, survey data and scholarly studies show that many Indian voters accept the Hindu-centric and anti-Muslim worldview of the BJP and that the middle classes, including well-off university educated professionals, are now active participants in propagating these views in society.

The India-Australia relationship is no longer neglected, but significant divergences in their geopolitical and economic interests will remain challenging to overcome. As a disquieting development in the history of India-Australia relations, troubling trends within India’s democratic institutions go unchallenged by those promoting closer ties with New Delhi within Australia,

Priya Chacko is a Senior Lecturer in International Politics in the Department of Politics and International Studies at the University of Adelaide.

This article was first published on India in Transition, a publication of the Center for the Advanced Study of India, University of Pennsylvania.

Editor’s note: This article has been updated for clarity and accuracy.