Melbourne, Aug 7 - Australia will provide more than $8 million to fund a new Australia India Institute at the University of Melbourne that will work to strengthen bilateral ties between the two countries, Deputy Prime Minister Julia Gillard announced here Friday.

The Institute is a joint project of the University of Melbourne, La Trobe University and the University of New South Wales and they will invest around $2 million bringing the total investment in the project to more than $10 million over three years.

'As the world's largest democracy and a key emerging economy, India is redefining its role in international affairs. Its influence in our region and globally is growing. India is currently a top ten trading partner for Australia and the economic relationship between the two countries has grown strongly in recent years,' said Gillard.

'The Institute will work to increase Australians' understanding of India, its culture, its history and its place in the world by producing and promoting specialised knowledge about India.'

Gillard's announcement came during Indian External Affairs Minister S.M. Krishna's Australia visit.