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The 457 visa ruling will impact India-Australia relations

With the 457 Visa phase-out hitting India’s labour mobility demand, Australia is staking its education and professional services trade ambitions with India

opinion Updated: Apr 20, 2017 12:27 IST
457 Visa
Prime Minister Narendra Modi with his Australian counterpart Malcolm Turnbull in Gurgaon, Haryana, New Delhi, April 10(PTI)

Adopting an ‘Australian First’ approach, Prime Minister Malcolm Turnbull announced the scrapping of the 457 Visa, which allows employment of temporary foreign workers for a period of four years. The move - dubbed as a measure to check Australia’s growing unemployment woes - impacts over 95,000 temporary foreign workers, mostly Indians. A new two-tier visa system replaces the 457 Visa. It includes a short-term two-year visa and a second visa class focused on strategic, long-term skills with a four-year limit.

The move is a direct hit on India’s long-standing demand for labour mobility - easing of temporary foreign workers’ entry into Australian projects and relaxing of Australian rules for skilled foreign workers.

This might impact the Australian ambition of stepping up education and professional services trade with India - two of the top items during the recent Turnbull-Modi summit.

At present Indian students contribute more than $2.3 billion to the Australian economy. What Canberra is eying is a space in PM Modi’s drive to skill up India and rise in the value chain of services and skills India offers to the world.

Australia views itself optimally placed in India’s education aspirations of “upskilling 400 million people by 2022.”

It is exploring means to penetrate to segment in India which lacks resources to study abroad. However foreign educators can set up campuses in India only in partnership with an Indian entity. To be able to make inroads into this segment, Canberra must ensure that the current decision doesn’t hurt New Delhi’s interests significantly.

Australia also hopes to supply a range of professional services to India to support its drive to build new infrastructure - roads, rail facilities, ports, hospitals, schools and universities.

However, India has maintained stiff trade barriers in the form of import tariffs. New Delhi might use this as a bargaining point.

Responding to the ruling India’s ministry of external affairs stated, “The government is examining consequences of the new policy in consultation with all stakeholders. This is also a matter we will be looking at in the context of Comprehensive Economic Cooperation Agreement (CECA) negotiations.”

This could be a veiled warning that the already stalled Free Trade Agreement (FTA) between the two nations might further get delayed. Interestingly, many feel the reason why Indo-Australian trade hasn’t moved forward is because New Delhi prefers pursuing the multilateral China-led RCEP over a unilateral FTA with Canberra.

Some Australian experts have also hinted on the need to diversify their trade relations to avoid “over-reliance on any one nation,” like China - its biggest partner with a trading volume of $150 billion today.

Beijing’s recent aggressive postures in the South China Sea, tacit support to North Korea - has drawn skepticism from many Australians. India, by contrast with a trade of less than $20 billion, and a “stable democracy” with no external territorial ambitions - comes with a huge growth potential.

Back home, Australia’s technology business sector hasn’t reacted favourably to this decision.

Tech entrepreneurs have said there is an acute shortage of homegrown skilled workers.

The infant tech industry of Australia doesn’t have enough number of senior tech skills and India is a key destination for such expertise.

They say this skills shortage may lead start-ups to open up shop outside the country in the US or Europe.

That’s something Canberra, with an economy struggling to get over three per cent growth, certainly, cannot afford. So it needs to calibrate all its moves with a good consideration of the impact those have on potential growth partners like India

Jhinuk Chowdhury is an independent journalist who writes on South Asian affairs

@jhinuk28