The Indo-Pacific region is populated by economies that are big players in the realm of digital trade. Singapore is one such player; Singapore Customs and GovTech curated an integrated digital platform for all information related to trade processes, such as permits and invoices.
Called the Networked Trade Platform (NTP), this is a one-stop solution for all logistics that concern stakeholders. In line with the Digital Silk Road subgoal of China’s Belt and Road Initiative (BRI), Singapore government-backed Global eTrade Services (GeTS) launched an open trade blockchain (OTB) with the purpose of foiling fraud by placing trade documentation on to the blockchain.
Malaysia’s Digital Free Trade Zone (DFTZ) – an Electronic World Trade Platform (e-WTP) devised with the help of China – connects Malaysian small and medium-sized enterprises (SMEs) to a larger market by alleviating financing and logistical hardships.
In addition to the internal developments by countries to consolidate and create a robust infrastructure for their domestic digital economy, regional groupings such as BIMSTEC in recent times have also undertaken a proactive role in promoting the inter-sectoral digital infrastructure and create an alternative sphere of influence in the global economy.
Sri Lanka’s National Enterprise Development Agency (NEDA) is developing a national digital databank for its small and medium-sized enterprises (SMEs) and entrepreneurs called InfoComm Digital Age.
India has a safe claim on outperforming its immediate neighbors. However, its immense potential in the digital space remains largely untapped. To rectify this, India could turn to its natural ally across the Indian Ocean, Australia.
India and Australia share a long history of cordiality ranging from cooperation in the First World War to impassioned interest in cricket. Australia set out its intent to explore this partnership with its India Economic Strategy to 2035, and India reasserted the same resolve by expanding its Look East Policy to Australia.
In fact, on December 18, India also released its reciprocal Australia Economic Strategy report focusing on a wide range of sectors (health care, IT-specific visas, etc), which are crucial for the economic recovery processes in the post-Covid world.
There is no doubt that Australia sees India as an attractive destination for investments because of the large human-capital base, robust input market catalysts and expansive product markets in the country.
Additionally, India’s and Australia’s strategic partnership is well established in the mining sector. As India is one of the world’s largest producers or coal, iron ore and bauxite, the large number of Australian mineral companies in India can capitalize on mining technology to deepen their partnerships with India in this sector.
Australia has proved its mettle in the digital space by emerging as a frontrunner in the UN Global Survey on Digital and Sustainable Trade Facilitation with a score of 94.6%; India, on the other hand, scored a mere 79.6%. The survey results identify paperless and cross-border paperless trade as areas for expansion in India, where Australia has already aced.
Digital trade goes beyond the sophistication of documentation, to the mitigation of trade costs by elimination of preventable data-face interaction. Seeing that a major deterrent to Indian exports is high logistics costs, which make up 15% of India’s gross domestic product as opposed to 8% in developed countries, India should get on the bandwagon of blockchain technology that is set to revolutionize international trade.
Such a development would feed into two of the government’s flagship programs, Make in India and Digital India. The realization of both these initiatives is a short-term goal that is instrumental in achieving future goals. Together, their realization could improve access to trade finance mechanisms such as letters of credit, which is a challenge that plagues smaller Indian enterprises.
Elimination of manual documentation in favor of a digital maintenance of SME profiles, e-commerce and cloud-based invoicing cuts costs. effectively incorporating SMEs in the fold would invariably improve the health of this sector.
Seeing that paperless collection of documentary letters of credit is a bone of contention in cross-border paperless trade, disruptive technology such as blockchain, artificial intelligence, machine learning and big data can be a salve for what’s hindering Indo-Australian trade.
Where a transaction financed through a letter of credit mandates paper-intensive, documentary transfers before the actual payment, taking five to 10 days to be transacted, blockchain platforms provide a shared, synchronized, immutable database for transactions between businesses across the globe, cutting time to about 24 hours.
In the same area, Australia has achieved complete implementation by pioneering efforts in blockchain-based platforms. In 2018, a shipment of almonds was successfully completed from the Australian state of Victoria to Hamburg, Germany, in a paperless blockhain-based collaboration between Commonwealth Bank and five Australian and international supply-chain leaders.
Australia’s willingness to share the fruits of such leaps towards digitization is further testified through the Mekong Business Initiative, which in association with the Asian Development Bank (ADB), focuses on improving alternative financing, fintech and conducting capacity-building initiatives in Cambodia, Laos, Myanmar and Vietnam.
The project supports a cloud-based business management platform that automates business processes and an artificial-intelligence-based credit scoring system to assuage constraints faced by SMEs. India could curate such partnerships with Australia to feed not only to SMEs under the Make in India initiative but to realize its aspirations under the Digital India initiative.
Digital India’s success cannot be without enhancement of trade competitiveness. India’s population is tech-savvy. The country is home to the eighth-largest population of science and engineering graduates. It has been ranked the world’s top exporter of information and communications technology (ICT) in the Global Innovation Index.
However, in the 2017 ICT Development Index, Australia ranked 14th while India was 134th; more specifically, in the “skills” sub-index, Australia topped the charts while India staggered at 121st.
Indian students have flocked in large numbers to Australia in the recent past, making it their second-most-preferred destination for education, behind only the US. Digital collaboration in the ambit of education, for example distant-learning courses offered by both Australian and India universities; establishment of affiliates in India and Australia exemplified by Cambridge Schools across India could serve the purpose of up-skilling education in both nations.
The opportunities for Australia include the potential for technology companies to form partnerships to access funds, scale up operations, accelerate operations, co-innovate and take part in research and development opportunities.
The areas that have the potential of being served through investments resulting in large dividends include cybersecurity, fintech, Internet of Things and related disruptive technologies, education and training, and up-skilling.
While India has made substantial progress in electronic documentation measures, as evidenced by e-Sanchit, an online platform for upload of trade related documents for customs clearance, blockchain could revolutionize paperless trade.
The Covid-19 situation has displayed the encumbrances pertaining to accessibility and dependence on brick-and-mortar infrastructure in our common parlance. Investing and being prepared for these unprecedented times is essential now.
The need of the hour is to shift the existing practices restricted to the physical setup to a digital sphere. These will our emergence out of troubling times, but all these measures must also address the digital divide, because if all stakeholders are not given access, half-hearted measures will rarely lead to fruition.
A collaborative approach between India and Australia could help them capitalize on existing assets and their tech-savvy people.
This article was co-authored with Nidhi Sharma of Azim Premji University, Bangalore.