One of the best pieces of news on the economy is the growing importance of India as an export customer, which means we’re less beholden to that sometimes ‘difficult’ customer called China! This news comes not long after BHP made the point that both India and countries in South-East Asia are becoming increasingly important to our big miner and export earner.

The Australian’s Charlie Peel reported that: “Australian farmers are making a big push into India as an alternative market to China, with a 50 per cent jump in agricultural exports since a new trade agreement came into force last year”.

Apart from being a big rival customer to China, why is this news so important. Try these facts:

1. India now has a bigger population than China.
2. There’s been a massive boom in the middle class in India, and they now number 28 million.
3. Since early 2023, agricultural exports have grown from $1.08 billion to $1.77 billion. That’s a 63% gain!
4. India is now the world’s fifth largest economy.
5. It provides a buffer if China and a potential US President Trump get into a trade war and Beijing decides to hit us with tariffs, like they did in 2020.

Revealing this potential of India is Mark Bennett, the ANZ head of agribusiness, who said: “The modern rise of India is an opportunity to leverage long held and valued trade and political relationships. We have seen the impacts and opportunities created by the rising middle class of China over the last 15 years, especially for Australia as a nearby, sophisticated production base.

“And as India surpasses China as the world’s largest population, all eyes are on this market as to its needs, its capacity, and where the opportunities might be”.

All this explains why there have been 23 ministerial visits to India since 2022 and 17 have come here from India.

ANZ underlined there is a social problem that over time will change, as the demands of the middle class result in new opportunities for our exports.

As Peel pointed out: “India retains its traditional subsistence agriculture sector on the outskirts of the cities, where farmers tend plots of about 2 hectares each, which can support a family.

However, as the middle class grows and has more political clout, there will be products that will have to be exported for both price and quality reasons and that’s the opportunity that lies ahead for our farmers.

The other important development is that this growing trade partner could soften the economic blow if a President Donald Trump forces us into choosing sides with his promised tariff battle with China.

In case you missed it, this is how CNN reported his promise on tariffs: “Trump has repeatedly said he plans to impose an across-the-board tariff of either 10% or 20% on every import coming into the US, as well as a tariff upward of 60% on all Chinese imports, in a bid to encourage American manufacturing”.

And this is what he told a town hall event in Michigan last month: “Tariffs are the greatest thing ever invented”.

We do have a free trade agreement with the US, but Donald can be an “ornery varmint” to deal with!

Finally, we do have to keep this in perspective, as this from our Department of Foreign Affairs and Trade (DFAT) reveals: “China is Australia's largest agriculture, forestry and fisheries export market, worth an estimated $11.8 billion in 2021, up from $6.6 billion in 2011. China's demand for high-quality agriculture and food products is growing rapidly”.

India is the future, but it could take a decade for it to really rival China as a key customer.

Our total exports to China were, wait for it, US$120 billion, which means Beijing will have some sway over us for quite a long time.