strategic mistake for ANZ," Smith told PTI at Australia India Business Council -Victoria meet held on Tuesday night.
ANZ, which had wound up India operations in 2000 after selling its Grindlays Bank unit to Standard Chartered for USD 1.34 billion, has opened a new branch in Mumbai in 2011.
Smith said India was one of the ANZ's priority markets even after the sale of the Grindlay business there.
"We have to start again. We will obviously invest more and build our business there. But at the same time we see to maintain the presence in India with our operations in IT hub. ANZ employed 5000 people in Bangalore, delivering IT and back-office support for companies in 32 countries," Smith said.
"We have a long history with India and we have not exited the country," he added.
ANZ plans to focus on opening subsidiaries because that seems to be the global pattern.
Commenting on the Australia India Institute report which criticised Australian Business houses including ANZ for lacking the staying power in India, Smith said, "I can understand the criticism. If you look at number of historical events, you could probably say thats probably justified."
However, he added, there were many successful stories as well and there would always be two sides - those who will make it and some who will not.
While talking to Indian business community here, Smith said India remains a country of vast economic potential and has very strong growth fundamentals in the long term.
He also lauded the two government's role in creating Australia-India Strategic Research Fund which he said was bringing scientists together in areas such as environmental science and medicine.
"There are many reasons to continue the optimism at macro level. There has also been significant progress in bilateral relations," Smith noted.
Citing 2009 - when Indian students were attacked here in a spate on incidents - as the year that took the relations of the two sides at the lowest ebb, Smith said the relations between the two countries were now bouncing back.
He said Australia was now also well placed to assist India to meet his energy requirements.
The lifting of the ban on uranium sales to India was a positive step, with about 8% of India's energy expected to come from nuclear sources by 2030, he said.
India was now Australia's fourth-largest export market, with exports totalling more than USD 15 billion last year, driven by significant opportunities in resources, construction, transport and capital goods, he added.
Smith also lauded India, which, he said, "overcome a bureaucratic and low-growth past and had created a new future based on the dynamism of its entrepreneurs and a new global mindset".
Smith added, "Today the global economic outlook has seen India's growth trend reduce from almost 10 % down to around 6%. Inflationary pressures persist.
"Infrastructure remains a national challenge, as we saw with the power failures last month. And there is general frustration within India at the nation's politics."