Indian foreign policy – a success story
The demise of Soviet Union in early 90s was a watershed event for Indian foreign policy makers.
From Independence till early nineties
India started as a Non Aligned country after independence. India was neither a fully capitalist nor communist country and did not wish to be caught between the power games of the two blocs. Most Non Aligned countries were poor and India though economically weak yearned for the leadership of the poor countries by virtue of her size. Non Aligned movement allowed India to speak to the former colonial powers and USA from a position of strength.
However in practice India was effectively a Soviet camp follower. Soviet Union helped India build her public sector industries through supply of raw materials, capital and technology. India’s five year plans depended upon the aid of Soviet Union. The trade with the Soviet Union was based on a clearing account in rupees and hence reduced the need of hard currencies. Soviet Union also significantly contributed to India’s defense sector. To mitigate the hostility of Pakistan and China, India signed Indo–Soviet Treaty of Peace, Friendship and Cooperation in 1971 with Soviet Union.
Two other factors have shaped Indian foreign policy since. First, faced with balance of payment crisis in 1991, India grudgingly embraced economic reforms. Despite a lack of political consensus the reforms moved at a slow yet steady pace. Today India is world’s third large largest economy by PPP (Purchasing Power Parity) basis and yearns to be treated as a global political and economic power. Externally the rise and rise of China has changed the global economic and political order. Today China is world’s largest economy by PPP basis and will dethrone USA as largest economy by nominal basis in 30s.
With changing global power equations, India changed the contours of foreign policy and has been fairly successful in its execution
The litmus test of Indian foreign policy is success of her engagement with China.
China has a bigger economy and carries stronger leverage with rest of the world by virtue of its trade position. China’s economy at $10 trillion is 5 times that of India’s. China is world’s largest exporter and second largest importer. India is in not in top 5 slots in either of the lists. China is among the 5 trading partner of many of its neighbouring and western countries. As per World Bank’s data for 2014, total FDI in China including Hongkong and Macau was $289 billion. Corresponding figure for India was around $34 billion. That implies other countries have bigger economic stakes in China as compared to in India.
However India’s growth rate is picking up and will she will grow faster than China in the coming years. India is democratic and hence more stable, besides being closer to West in her political set up. India has a better implementation of rule of law due to her independent judiciary, press, fundamental rights.
India’s posturing towards China involves speaking on issues on national interests but avoiding unnecessary aggression. Chinese ruling elite faces challenge to power due to growing inequalities and that has allowed its military a bigger say in its foreign policy matters. India does not want to strengthen the hands on hard liners with Chinese communist party or military.
China – Strategic
Strategically the two countries are vying for a position in the emerging global order where hold of West is weakening. China is a permanent member of UN’s security council, NSG (Nuclear Supplier Group) which regulates trade in nuclear materials , a recognized nuclear weapon state of NPT (Non-Proliferation Treaty) and carries about a quarter of votes at AIIB(Asian Infrastructure Investment Bank). India has been trying to gain entry in UN’s security council and NSG. In her efforts, India has support of most of major countries in the World but has often found lack of support from China or sometimes even outright blockage.
In recent years India has been strongly reacting to Chinese attempts to stymie India’s influence at global fora. Recently India objected to the Chinese government veto to a UN resolution to declare Azhar Masood a terrorist. China had to woo India to join AIIB as a founding member. In 2008 India issued a demarche to China over its attempts to scuttle a waiver to India at NSG.
Elsewhere too, India has been engaging with China as an equal partner where her national interests are at stake. Since 2010 India is trying to equate her agreement of Tibet being part of China to China’s agreeing to Arunachal Pradesh being integral part of India. ‘one China’ policy for China must equate to ‘one India’ policy for India.
India has also shown some interest in the on going tensions due to Chinese aggressive posturing in the South China Sea. India has been sending messages that freedom of navigation and right to exploit economic assets must be preserved. India herself wants to go ahead with Oil exploration in the region. After being at the receiving end of China Pakistan partnership for decades, India wants to leverage China’s problems in South China Sea to Chinese support to Pakistan.
China – Border dispute
Off course the biggest thorn in the relationship of the two countries is the border dispute. India suffered a humiliating defeat in 1962 during the war that was partly triggered by tensions at the border.
To start with the line of actual control can be considered as baseline with minor alterations. That will imply India agreeing to cede a big chunk of Kashmir including Aksai Chin to China. India never governed most of this area. This will also include a part of land that Pakistan ceded to China but is shown as ours in Indian maps. However Indian public has been fed with the idea that this area was forcibly taken away by China and that India was a victim of Chinese betrayal in 1962. Solution will trigger a debate on 1962 war and raise uncomfortable questions whether India’s policy to create posts beyond line of control gave an excuse to China to invade India or should India have protested annexation of Tibet.
India must take an assurance from China that it will not help Pakistan in case of conflict with India. The rest of the border would be settled as per Indian view including Macmohan line in Arunachal and areas like Tawang. China must also agree to maintain transparency on issues e.g. Dam on Brahmaputra etc and not indulge in such activities unilaterally. India should avoid getting into a discussion that involves Pakistan as a third party or that discusses future of Dalai Lama or his successor. That will make the issue more convoluted and difficult to solve.
China – Economic
China is India’s biggest trading partner.
But the trade balance is skewed. According to Ministry of Commerce and Industry’s website, in 2014-15, India’s exports to China stood at $12 billion while imports were around $ 51 billion. According to Ministry of Commerce and Industry, Chinese companies are also planning to invest in India, say between $5 billion to $10 billion between 2015-18. So far India has been slow to give permission due to security concerns. While India should try to improve her export competitiveness through policy issues, she must try to get greater market access for pharmaceuticals, agricultural produce and IT services. India should also use the trade imbalance and interests of Chinese investors to influence Chinese policies towards India. China used and has been using this as an effective non aggressive tool against the West as their companies try to access Chinese markets.
Other neighbouring countries
In general, India’s relations with other neighbouring countries have been cordial.
Other neighbouring countries – Pakistan
India continues to face hostility from Pakistan though it is no more an overt exporter of terror against India as in the past. India must help Pakistan economically via continuing the Most Favoured Nation status, investments, loans and aid. This must be done regardless of reciprocity of Pakistan’s response and will increase the stakes of Pakistan in relationship with India. The biggest issue in India Pakistan relationship is Kashmir. India gloated over her victory in 1971 war. However dismemberment of Pakistan left a permanent scar in its psyche and it tries to get even with Kashmir.
To start with the line of actual control can be considered as baseline with minor alterations. This issue was discussed though unsuccessfully during the Shimla Agreement in 1972. But India may need to make more concessions to undo the damage to 1971 war has done to Pakistani establishment. India may ask for full cap to terror related activities in return. India must avoid her foreign policy towards Pakistan be dictated by domestic politics e.g. demands for cancellations of sporting, cultural or singing events in India.
Other neighbouring countries – Nepal and Sri Lanka
India’s relations with the two countries are cordial. India is one of their major trading partners and hence their economies have dependency on India. Off late they have started taking a more balanced foreign policy approach towards India and China. This follows as Chine increases economics stake in these countries via building roads, airports etc in Nepal and sea port etc in Sri Lanka. India must be sensitive in her foreign policy towards these two countries lest it re inforces India’s image as Big Brother. In 2012 and 2013 India voted against Sri Lanka in UN Human Rights Council’s resolution due to the influence of Tamil Nadu’s political parties. In 2015 Nepal accused India of economic blockage during Madheshi agitation.
Other neighbouring countries – Bangladesh
India’s relationship with Bangladesh is calm. India has settled Farakka and land issue related to border enclaves. Influx from Bangladesh continues but the magnitude is small and is not a political issue.
India has started reaching out to the countries on the Pacific rim of Asia including Japan. Japan and India are increasing the depth of their relationship as they see mutual benefits in doing so. During PM Modi’s visit in 2014, Japan promised investments worth $35 billion in India. During PM Abe’s visit in 2015, agreements on bullet trains and nuclear technology were signed. India can gain from Japanese investment, technology and aid. The two countries also have mutual interests in containing China. Countries on Pacific rim are more developed than India and have similar fears on growing Chinese military presence in South China Sea.
Gulf countries and Israel
India has been maintaining a balanced relationship with the Gulf countries and the Israel. India depends upon the former for oil imports and remittances from Indians who are working there. India has economic and military ties with Israel. India has moved away from her earlier tilt in favour of Arab countries.
Africa is land with rich natural resources especially oil and minerals e.g. uranium, cobalt, platinum etc. Being underdeveloped, it offers many investment opportunities. Contrary to popular opinion, its growth rate exceeded 5% in the period 2000 to 2010. In 2008 India began a structured engagement with Africa through the India Africa Forum Summit process, the third of which was held in 2015. Indian government has been trying to engage Africa through financial credit, development of human resources etc. In 2015-15 India’s trade with Africa was $ 71 billion. Indian companies have been making many investments in Africa especially in the field of telecommunications, information technology, hydrocarbons and agriculture. India and Africa also share common concerns on terrorism and maritime security.
Europe and USA
Since the Soviet era, India has reduced the anti West shrill in her foreign policy. She has tried to mend her relationship as she comes out of the shadow of colonialism. India has been finding political support from these countries in global fora e.g. UN, NSG etc. The rise of global terrorism has further brought them together as terror has struck US in 09/11 attacks and Europe recently. That has removed an earlier irritant of human rights violation that constricted India’s fight against terrorism. West also has abandoned its view of looking countries from Cold war prism. These countries and India share common bonds of democracy, fundamental rights and secularism. They are India’s major trading partners. USA is the India’s second largest trading partner after China. If considered as blocs, then European Union is India’s second largest trading partner after Gulf. India’s famed IT industry would perish without these countries. Their FDI in India has been an anchor to India’s economic reforms. As per US Bureau of Economic Analysis, USA FDI in India is estimated to be $28 billion in 2014. Indian companies has also been investing in these countries.
To sum up, away from media glare India created and executed a successful foreign policy in the post Soviet era. She changed the foreign policy as her national interests and the external environment changed. Today India is more Non Aligned than ever and has a more benign external environment than ever. Though there remain many gaps to be fill, this is one almost unnoticed Indian success story.