Investing in India: An unparalleled opportunity for Australian businesses

Conditions are right for trade and investment between Australia and India to grow strongly in the coming years, with each nation’s economy poised to contribute to expanding the relationship.

Thought leaders outlined the potential in the relationship at a recent breakfast to mark the signing of a Memorandum of Understanding (MOU) between the Commonwealth Bank of Australia and ICICI Bank, one of India’s leading private sector banks.

Swati Dave, Chair, Centre for Australia-India Relations Advisory Board, an Australian government initiative, outlined the opportunities to grow trade and investment between the two nations. According to Dave, while there is momentum in the economic relationship between the two nations, the actual numbers are significantly below the potential.

Lucrative opportunities on the table

According to the Department of Foreign Affairs and Trade (DFAT), in 2023, India was Australia’s fourth largest export market and its fifth largest trading partner, with two-way trade totalling AU$49 billion. Australian exports to India totalled AU$32.4 billion.The International Monetary Fund says India’s growth projections were 6.5% for 2025 “because pent-up demand accumulated during the pandemic has been exhausted, as the economy reconnects with its potential”.

DFAT notes, “Over the longer-term, India's strong fundamentals – its youthful demographics, burgeoning consumer class, steady urbanisation, infrastructure investment demands, and the digitalisation and formalisation of its economy – are expected to drive sustained growth.”

There are favourable conditions for Australian and Indian businesses to engage more, including a shared language, with 88% of India’s urban population speaking English; shared democratic values and legal system; large improvements in the ease of doing business in India over the past decade; and significant Indian investment in infrastructure to reduce transport and logistics costs.

“We also have a highly educated and ambitious diaspora of one million people in Australia, which is critical to helping bridge the cultural and business divide. It's an incredibly valuable resource for Australian businesses that want to expand in India,” Dave said.

Expanding trade relations

In February 2025, the Australian Government launched A New Roadmap for Australia's Economic Engagement with India, to maximise Australia's trade opportunities from India’s growth. The Roadmap sets out a pathway to focus ongoing efforts, including to boost two-way investment, and work with Indian-Australian communities and businesses. It identifies four 'superhighways of growth' in sectors where Australia and India have natural strengths and a competitive edge: clean energy, education and skills, agribusiness, and tourism.

Additionally, there is the Australia-India Economic Cooperation and Trade Agreement, which came into effect in December 2022 and has significantly reduced tariffs on goods between the two countries, boosting bilateral trade. Further negotiations are underway for a Comprehensive Economic Cooperation Agreement to deepen economic relations.

“India's young and growing population is a significant driver of economic growth and consumption, which creates great opportunities for Australia's goods and services, including agricultural products, minerals, resources, education and skills training,” she said.

“India's young and growing population is a significant driver of economic growth and consumption, which creates great opportunities for Australia's goods and services, including agricultural products, minerals, resources, education and skills training.”
- Swati Dave, Chair, Centre for Australia-India Relations Advisory Board

India’s “massive need” to improve productivity in agriculture provides opportunities for Australia’s leading AgTech sector. India imports close to 80% of its medical devices, a figure that provides opportunities for Australian companies to invest and form partnerships in the way that Cochlear and Sirtex Medical have, Dave said.

The Indian Government’s long-running Made in India program aims to boost local manufacturing and provides opportunities for Australian businesses to partner to reshape global supply chains in clean energy and associated technologies.

The Memorandum of Understanding in action

The MOU between CommBank and ICICI Bank aims to enhance support for customers operating across the Australia-India corridor and to facilitate trade, investment, and cross-border banking services between the two nations.

Under the MOU, both banks will collaborate to introduce corporate and business customers to opportunities in the other’s home market, provide banking services for cross-border trade, assist customers migrating between Australia and India, and enhance cross-border payment solutions.

Gareth Aird, Head of Australian Economics Global Economics and Markets Research, CommBank, provided an outline of the Australian economy.

For the past few years, the economy has been going through a period of cyclical weakness after the Reserve Bank of Australia lifted interest rates to cool inflation. Per-capita gross domestic product had been contracting for the past seven quarters to the September quarter 2024, and growth has mostly been driven by private spending (note that GDP lifted per capita in the final quarter of 2024).

However, Aird said the economy looks fairly strong from a structural perspective. Unemployment is low and may drift a little higher, but not much. Wage pressures have also eased, and inflation is coming down. The RBA commenced cutting the cash rate in February 2025. Further rate cuts are anticipated this year, which will support a cyclical recovery in the economy.

“If you look at our budget position relative to other advanced economies, what you can see is it actually looks quite healthy,” he said.

“If you look at our [Australia’s] budget position relative to other advanced economies, what you can see is it actually looks quite healthy.”
- Gareth Aird, Head of Australian Economics, CommBank’s Global Economics and Markets Research division

Australia has run a budget surplus for the past couple of years, compared to the U.S., for example, which has been running deficits. Likewise, Australia's government debt is relatively low.

"What that means is when we get negative shocks coming through - as will always happen – the government's fiscal position here is in pretty good shape to respond to any negative shock," he said.

Growth potential in India

Aird pointed to the Education sector as being very important for Australia, not just as a source of export income but also because the Indians who come to Australia to study also come to work and are a valuable source of labour.

Like the Australian economy, the Indian economy is in good structural shape, said Sameer Narang, Head of the Economic Research Group, ICICI Bank.

A low corporate sector debt, robust household incomes, and a government that isn’t taking on more debt are all giving the economy room to grow.

Government spending on infrastructure and private-sector property spending are helping drive economic growth. “If you happen to travel to many cities in India, you'll see cities are completely dug up. A lot of public infrastructure work is happening. Real estate in India is booming,” according to Narang.

“A lot of public infrastructure work is happening. Real estate in India is booming.”
- Sameer Narang, Head of the Economic Research Group, ICICI Bank

In particular, the government is investing to bring down logistics costs. For instance, where it used to take 18 to 24 hours to transport goods from India’s heartland to the coast, a new expressway under construction will reduce the time to 12 hours. And the country’s port capacity has roughly tripled in the past decade.

The Indian government is also investing heavily in digital public infrastructure, Narang told the breakfast. For instance, digital payments are now equivalent to 65-to-70% of GDP, up from about 1% five years ago.

With rising profits and low corporate leverage, companies in India have significant scope to invest. In fact, corporates are investing only 50-to-60% of their cashflow, compared with more than 90% in 2013, according to Narang, who also flagged that the government had introduced a production-linked incentive scheme to lift manufacturing’s share of GDP from the current 17% to around 25%.