DARE - Because Entrepreneurs Do

Peter Linford Senior Trade Commissioner – South Asia, Australian Trade Commission

In view of the current global financial turmoil, should Indian entrepreneurs wanting to invest in Australia be worried?
If I look at the comparison of economies and how they would be affected by the current economic crisis, I think Australia is the least affected because of the fundamentals of the economy there. That does not say that Australia is unaffected. The share market has dropped along with other markets. There the banking system is not exposed to the same degree with the sub-prime and therefore major banks still maintain AA ratings. The government acted quite quickly to guarantee deposits. Australia is a net exporter and India is a net importer. A lot of what we have is what India needs. For the bigger guys, opportunities in Australia have enhanced. [For] everyone who is cash-rich at the moment, there are some good things to be had in Australia. We will not go into recession as forecast by global economists.

What sectors do you think would be attractive to Indian entrepreneurs?
If I look at the Indian economy, it is predominantly driven by the services sector. There is a degree of expertise already in India in services but it’s domestic expertise. There is a great opportunity to invest in international services.

In the health and medical fields, Australia is quite advanced, but sometimes quite short in funds to develop as commercially. Investment into that in Australia would develop product and service delivery. Then there is the IT sector. India has done wonderful things in IT already. There is some very rich R&D concept and product development in Australia that would benefit to link up with Indian commercialization power. Tourism too. Here is a real opportunity that comes out of the economic downturn, apart from the fact that people will have less money; they still want to go somewhere. We will see more tourists. So investments into the tourism sector in Australia will see rewards coming from that.

Sports is another area. India should invest some of the expertise that Australia has in sports medicine, sports management, sports performance, logistics, and bring in more money.

What are the R&D facilities in Australia?
There are tax benefits for R&D. Most of our universities have R&D facilities attached at their campuses. Depending on the sector where the R&D is happening, there are tax refunds of up to 100% of the R&D investment amount. Something in biotech, for example, is a 100% tax rebate. So if a company like Tata or Reliance invested into that type of campus, they get a 150% tax rebate on that expense. Different states in Australia have different incentives for investments. They can be from taxation point of view or they can be contribution in cost development of projects.

How do you think a Free Trade Agreement could help both countries?
The feasibility study will be completed by the end of this year. The negotiations will start in the New Year. One of the things that is very pleasing is the genuine positive intent on both sides. For the most part we see benefits for both countries in a number of sectors. Some sectors will still be difficult. But through an FTA, if we can gain some degree of access into the agriculture sector, it would be a big positive.

If an Indian company decides to set up a greenfield project in Australia. How long does it take?
It is very easy to start a business in Australia. I think once the research and due diligence has been done, a business can be set up in 48 hours in Australia. Getting bank accounts, telephone lines, real estate promises, accommodation for staff, getting kids into school – this is quite easy.

When we measure the value of an investment into Australia, we measure it on job creation. So, if an Indian company buys an existing company in Australia that employs a 100 people and tomorrow it employs a 100 people, there is no net gain for us. It is just a transfer of ownership. If someone starts a company from zero and employs a 100 people, that is wonderful. If they buy an existing concern and increase it to 150 people, it is very good. So, these type of projects, we are very keen to support across all sectors.

"opportunities in Australia have enhanced. [For] everyone who is cash-rich at the moment, there are some good things to be had there"