Australia’s India strategy needs to get beyond New Delhi

Indian Prime Minister Narendra Modi’s visit to Australia this week should give the bilateral relationship fresh momentum. But it should also force a harder question: if Australia wants to engage India seriously, does it have a strategy that reaches beyond New Delhi?

India is not one market. It is many Indias: a continental-scale economy in which power, policy, regulation, industrial capability and opportunity are distributed across states. For Australian business, universities and policymakers, this matters. The India opportunity is not simply “India”. It is Maharashtra, Gujarat, Karnataka, Tamil Nadu, Telangana, Uttar Pradesh, Andhra Pradesh and other state-level networks with different institutions, priorities, capabilities and political economies.

Australia has recognised this before. Peter Varghese’s 2018 India Economic Strategy to 2035 (Opens in new window) made the point clearly through its focus on “ten sectors and ten states”. The logic was simple but compelling: Australia cannot engage India effectively by treating it as a single, uniform market. It must focus on where specific Australian capabilities match specific Indian state-level opportunities.

That insight carries even greater force today.

India’s economy is changing rapidly, but unevenly. Technology and global capability centres are concentrated in cities such as Bengaluru, Hyderabad, Pune and Gurugram. Manufacturing opportunities differ across Gujarat, Tamil Nadu, Maharashtra and Uttar Pradesh. Clean energy, critical minerals, infrastructure, agribusiness, health and education all require different state-level strategies. Regulations, incentives, land availability, labour markets and partnership opportunities vary widely.

This means Australian firms cannot simply develop an “India strategy” from Sydney, Canberra or New Delhi. They need India capability: knowledge of particular states, sectors, business networks, regulatory environments and local partners.

Australia has not been standing still. The 2025 roadmap for economic engagement with India (Opens in new window) builds on the Varghese report and focuses on clean energy, education and skills, agribusiness and tourism. It also recognises the role of state and territory governments and Indian-Australian communities. This is welcome. The recent decision to establish a whole-of-nation working group on India (Opens in new window) through Australia’s trade and investment ministerial processes also points in the right direction.

But the next phase needs to be more operational.

A state-level India strategy should not be a slogan. It should shape how Australia deploys people, knowledge and institutions. It should identify which Australian sectors are best matched to which Indian states. It should help firms understand not only national policy, but state-level incentives and implementation. It should link universities, TAFEs, start-ups, industry bodies and diaspora communities to specific Indian networks.

For example, technology engagement with India cannot be understood only through national digital policy. It requires deeper relationships with Karnataka and Telangana, where many of India’s technology services, start-ups and global capability centres are located. Clean energy and critical minerals partnerships require attention to states with industrial demand, renewable energy ambitions and manufacturing capacity. Education and skills partnerships need to move beyond student recruitment and connect Australian institutions with Indian states seeking workforce development.

This is also a diplomatic challenge. Australia’s national relationship with India is strong, but national diplomacy alone will not deliver business outcomes. State governments, trade offices, universities and business chambers need to be better coordinated. The Indian diaspora in Australia should be treated as a strategic bridge to state-level knowledge, not only as a symbol of people-to-people ties.

The risk is that Australia continues to celebrate the India relationship at a high level while firms remain hesitant at the operational level. India then remains admired, but under-engaged.

This has been a recurring problem. Australian businesses often describe India as important, but difficult. They see the scale, but not always the pathways. They recognise the opportunity, but struggle to build the patience, relationships and local understanding required to act on it. A sharper state-level approach would help convert diplomatic warmth into commercial and institutional depth.

There is also a strategic reason to get this right. As I argued recently in Asialink Insights (Opens in new window), Australia needs to see India as more than a market. India is becoming a capability platform across technology, services, digital infrastructure, clean energy, education and talent. But capabilities are built in places. They are embedded in cities, institutions, firms, universities and state-level networks. If Australia wants to benefit from India’s rise, it must learn to engage those networks more effectively.

The question is no longer whether India matters to Australia. It clearly does. The better question is whether Australia has built the institutional capability to engage the many Indias where much of the economic action now takes place.

That level is not only New Delhi. It is India’s states.

The states are where Australia's India strategy has to start.