New Delhi and Canberra have stopped considering their trade ties as a sideline. In a speech at a chartered accountants' association in Australia this week, Commerce and Industry Minister Piyush Goyal confirmed that the two countries are taking the next step in their relationship, beyond the current framework, to a new, more comprehensive Comprehensive Economic Cooperation Agreement, and a new Bilateral Investment Treaty that would provide concrete legal protection for the first time to capital invested in the other country.

Goyal said that the next step is to achieve a "balanced, fair and equitable" agreement, which would "take the relationship to greater heights" when addressing the first Oceania International Conference, which will be held in 2026, by the ICAI. But it's diplomatic-speak, and what lies behind it is no trivial matter. The current agreement, the 2022 Economic Cooperation and Trade Agreement, was always supposed to be a "starter" deal, India's first trade agreement with a developed economy in more than a decade, with more difficult chapters to be resolved at a later stage. The more difficult ones services mobility, investment safeguards, procurement, digital trade are the ones that negotiators are now aiming to fill.

The numbers tell the urgency. Merchandise trade has increased from approximately $12 billion in FY2021 to approximately $24 billion in FY2024-25, with India's exports to Australia more than doubling during the period from $4 billion to $8.5 billion. The total value of Australian government data for the two-way trade in goods and services is over 50 billion Australian dollars for calendar 2025.

Remarkably, Indian trade deficit with Australia is now narrowing significantly, to around 6.5 billion dollars for FY2026, due to faster growth in commodity exports than in imports of minerals and coal from Australia, a source of great irritation to Delhi. It is not a cosmetic change as Indian manufacturers, especially in textiles, pharmaceuticals, chemicals and agri-processing, are making actual gains in the market by converting tariff preferences into market share.

But it's not the trade of goods that's drawing both capitals together and that's driving deeper integration; it's minerals and money. From lithium to cobalt, rare earth elements to titanium and zirconium, Australia has 21 of the 49 minerals that India has officially identified as critical to its economic security. It's not a convenient overlap for a country, with a plan to expand its battery manufacturing, to also be developing an electric-mobility supply chain almost entirely free of Chinese processing capacity it's almost existential.

The current trade agreement already eliminates tariffs on some of these inputs and a permanent Critical Minerals Investment Partnership between the two governments is intended to provide support for joint mining and processing operations. However, Australian mining money and Indian downstream manufacturers have not been forthcoming if an investment treaty doesn't include the type of dispute-resolution provisions that are binding. That's where a BIT changes the calculus. It reassures an Australian lithium producer, or an Indian battery cell manufacturer considering a co-investment in a processing plant in Queensland, that neither their capital is tied up to a change of government or a policy about-face from either side.

The economics is also underpinned by a geopolitical logic. They both sit within the Quad with the U.S. and Japan, and both have seen how Beijing can use its dominance of rare-earth processing to weaponise its components periodic Chinese export restrictions on gallium, germanium and rare-earth magnets have shaken manufacturers outside China.

It is as much about who's in control of tomorrow's supply chains as it is about boosting bilateral trade numbers, and a tighter India-Australia economic architecture supported by treaty level investment protection would more complex than tariff level protection. Goyal's idea of dual degrees, with students from India spending six months or a year studying in Australia, and vice versa, is another such initiative aimed at enhancing P2P and institutional relations beyond the numbers of customs statistics.

All of this is not likely to happen in a hurry. The negotiations for the comprehensive pact have been underway since at least mid-2025, with the parties remaining split on aspects such as the rules of origin, labour and gender rules, and digital trade rules. Investment treaties, in particular, have a tendency to bog down in dispute resolution processes, India having had run-ins with foreign investors in the past which could make it harder to get a BIT text that both parliaments are willing to ratify quickly.

Nonetheless, the trend is clearly there. It's now four years later and a relatively small early harvest tariff agreement has become the ladder to unlock a true strategic economic partnership, where minerals, capital, education and geopolitics are all starting to grow into a single whole. With both deals signed, India-Australia looks like a commodities-for-manufactured-goods deal and less like a partnership with Japan and South Korea, which can exist for decades, not just for the next trade cycle.