Ag focus shifts to India

Helpfully, Indians already share Australia's obsession with cricket, about 90 million of them speak English every day as a second language, and their economy is now growing faster than China's.

The federal government is also pulling out all stops to nail down a free trade agreement (FTA) with India by late this year which is hoped to be a major breakthrough in dismantling import tariffs and duties which currently frustrate Australian farm commodity exports to the sub-continent.

International business executive director with global accounting and advisory network BDO, Cameron MacMillan said India's 1.2 billion population represents a huge market ripe for Australian agricultural export attention, including the area of farm services and infrastructure.

He said not only was India's big spending middle class set to double in number to 250m in the next five years, last year's election of new Prime Minister Narendra Modi had injected a mood of positive growth into the economy.

The Modi administration's pro-business agenda had also enhanced international business confidence in India.

"Prime Minister Modi is known for his pro-business sentiment and willingness to further open the gates to international trade," Mr MacMillan said.

"While India still has a lot of structural and complex business issues which exporters must take time to understand, Australian agribusiness is already, and is likely to continue being, one of the key beneficiaries of this increased economic momentum."

Mr MacMillan said India's appetite for dairy, cereals, grain legumes and fruit and vegetables was well-known, but there was also demand for grain storage and handling facilities and processed food.

"India is already a big grain crop producer, but it has annual losses equivalent to around 10 per cent of its cereal production due to a lack of modern storage and handling infrastructure."

It a recently launched grain silo construction initiative aimed to boost its storage capacity by 2m tonnes.

"Australia has the runs on the board as an efficient global-scale grain producer, but we've also learnt a lot about how to store and manage grain in the supply chain over long distances - expertise which will be increasingly valuable to trading partners such as India," Mr MacMillan said.

"In fact, a lot of our agricultural management and technology skills will be valuable exports in their own right and we shouldn't continue hiding that experience under a bush back in Australia."

Last week Federal Parliamentary Secretary to the Agriculture Minister, Senator Richard Colbeck, told a Melbourne agribusiness forum he believed services, not primary production, would become the main agribusiness beneficiaries of an India-Australia FTA.

He felt Australia needed to export ag services rather than commodities, partly because India was very different market to Australia's traditional export destinations and it badly required support such as livestock husbandry advice to agronomic help.

An India FTA would also strategically reduce Australia's farm export reliance on China and Japan.

Mr MacMillan agreed while China frequently rated high on Australia's trade radar, as did new FTA partners like Korea and Japan, emerging India deserved to be "front of mind for exporters" given its gross domestic product (GDP) rose by 7.5pc in 2014 - a shade faster than China's economy managed in the same period.

Although India's retail sector was "very fragmented" it was on course for rapid modernisation and structural change which in turn would open up new markets for processed and refrigerated foods and beverages as was happening across Asia.

Producers and exporters of canola oil, malting barley, oats could look to the subcontinent as a new export market as processing and changing dietary opportunities emerged.

India now rates as the brightest of emerging Asia's economic bright spots, but getting to know the Indian marketplace early in its current development phase will be important to Australian agribusiness success in the sub-continent, says Mr MacMillan.

Ideally exporters looking to India should already have some trade sector experience - it's no place for novices - said Mr MacMillan, a former Austrade trade commissioner in Asia before joining BDO five years ago as its Australian international business boss.

He urged a focus on business partnerships, and recommended exporters start their homework by going direct to Australian financial institutions with a presence in India, such as ANZ or National Australia Bank, and business advisory groups like BDO and Austrade.

It was critical to have insight into how India's business sector really worked.

Doing business in India was "different", littered with "some antiquated procurement practices" and "in some cases the rule of law is still very grey".

"Be prepared, India can still require some complex navigation. I can't emphasise enough the importance of getting to know a local partner or investigating types of assistance that may be available to you from Australia," he said.

Yet despite differences in business negotiation practices and cultural considerations, India's sporting and Commonwealth "family" associations with Australia provided useful common ground to kick-start valuable trading ties.