US backs Aust joining regional naval drill

The US Air Force secretary has backed calls for Australia to participate in the Malabar naval exercises along with India, the United States and Japan.

It has been reported in Indian media that Australia will be invited to this year's war games.

Prime Minister Malcolm Turnbull has declined to confirm the report.

In 2007, Australia participated in Exercise Malabar but the Rudd Labor government withdrew after concerns were expressed by China.

However, talks with India to return to the exercises have been ongoing since 2015.

US Air Force Secretary Heather Wilson weighed in on the saga, during her visit to Manila on Friday.

"With respect to Australia's participation in other exercises, Australia is a sovereign country and we encourage its participation and recognise its importance in regional security throughout the region," Secretary Wilson told reporters on a phone hook up.

She declined to discuss whether there would be any changes to the size of the US military personnel and aircraft deployment rotation in Darwin this year.

"We never talk about that in advance," she said.

Meanwhile, the former head of Australia's foreign affairs and trade department is set to hand a report to the Turnbull government in March outlining a possible new economic strategy for India.

Peter Varghese will argue Australia needs to diversify its risk because China and Japan make up 40 per cent of exports, The Australian reports.