In a typical Twitter tall tale, Syed Akbaruddin, India’s
Permanent Representative at the United Nations, informed the world that Prime
Minister Narendra Modi and his team had reached out to as many as 90 states in
the short span of September 23-30 at the United Nations during the 2019 edition
of the UN General Assembly in New York. And in what spin doctors called a
“watershed” moment in India’s foreign policy, 50,000 Indian Americans shouted
“Howdy Modi” at an event in Houston, Texas, on September 22. Modi’s
high-profile co-speaker was US President Donald Trump who praised both the PM
and India profusely, repeating his offer to mediate on Kashmir the next day
when he was to meet Pakistani Prime Minister Imran Khan in New York. This is
being touted as an unprecedented diplomatic feat by an Indian prime minister.
As the optics of the Modi-Trump bromance in front of a cheering crowd at the NRG arena in Houston were captured on the front pages of the Wall Street Journal and New York Times, foreign policy analysts competed to assess the utility and benefits of such jamborees. But if a public meeting is a show of assertion in foreign policy, it should be noted that Imran Khan addressed a similar rally at the Capital One Arena in Washington DC on July 23, a day after Trump startled the world by revealing that Modi wanted him to “mediate” on Kashmir. Although he did not refute the claim personally and left it to foreign minister S. Jaishankar to do the job in the Rajya Sabha a day later, Modi waited till August 26 to use the G-7 platform at the French seaside town of Biarritz to clear the air when Trump was sitting beside him.
Nowadays, Indian foreign policy increasingly resembles the famous barber’s paradox, with policy makers trying to untangle the contradictions finding themselves trapped by new ambiguities. In the paradox, the barber announced “I shave all those men in town, and only those men, who do not shave themselves.” If he shaves himself, he belongs to the set of men who shave themselves. Otherwise, he is a man who doesn’t shave himself. Although British mathematician Bertrand Russell said that he did not invent it, the American science writer Martin Gardner wrongly attributed the paradox to Russell. India’s foreign policy is entering into a sort of Pakistan paradox, where it refuses to deal with Pakistan because of its use of terrorism as state policy while increasingly being embedded in a Pakistan-India binary.
n August 5, the government revoked the 67-year-old constitutional provision called Article 370, devised as a temporary measure by Jawaharlal Nehru and Kashmiri leader Sheikh Abdullah on November 15, 1952. It was incorporated into the Constitution more than five years after the October 26, 1947, accession of Jammu and Kashmir to India and more than two years after India approached the UN. There were no strings attached during the accession and the document was a standard text, like what the other approximately 660 princely states signed. On May 14, 1954, the government further amended the Constitution by inserting Article-35-A, leaving it to the J&K assembly to restrict fundamental rights provided to other citizens of India.
There was plenty of bonhomie during Xi ’s visit to Mamallapuram to be photographed with Narendra Modi. But the informal summit took place just a few days after China forced a closed-door United Nations Security Council session on Kashmir at Pakistan’s behest.
Given this historical backdrop and that the insertion and removal of the special provision were after the 1948 UN resolution, the Kashmir move was an open-and-shut case. But even a cursory look at India’s relations with global powers in recent times gives the impression that the ghost of Indo-Pak tensions has revived to haunt them again.
From January to November 2019, Modi was like a whirlwind across the globe, touching 16 nations. At home, he received 17 heads of state in the same period. This year alone, he has been presented with the highest civilian awards by the United Arab Emirates, Russia, Maldives and the third highest civilian honour by Bahrain. This list does not include an award from the Bill and Melinda Gates Foundation. It’s now being claimed that such visits and awards are the cornerstones of India’s rise as an economic power and a rousing reiteration of foreign policy success.
How effective was this outreach? There was plenty of bonhomie during Chinese President Xi Jinping’s visit to Mamallapuram near Chennai to be photographed with Narendra Modi. But the informal summit took place just a few days after China forced a closed-door United Nations Security Council session on Kashmir at Pakistan’s behest. So the message was clear. No matter what the depth of India-China relations, Beijing would always stand with Pakistan on strategic issues.
The mere listing of Jaish-e-Muhammad head Maulana Masood Azhar in the Security Council sanctions list kept India on tenterhooks as the Chinese refused to remove the technical hold on behalf of JeM and Pakistan. Its March 13, 2019 veto of Masood Azhar’s sanctioning, the fourth since 2016, knocked some of the shine off Modi’s allegedly forceful foreign policy, especially in an election year. Modi later raised this issue at the highest levels with China, pointing out that its position on listing terrorists under the 1267 Sanctions regime should be in consonance with its stated position on terrorism. The listing finally became possible on May 1 and only after India agreed to keep quiet on China’s grandiose second Belt and Road Forum from April 25-27 in Beijing. Chinese media claimed the shift was made possible by a change of wording to avoid angering long-standing ally Pakistan.
on-formal summit meetings are in theory good for both India and China as their leaders get a chance to talk directly, frankly and extensively. They open a window to the resolution of long-standing mutual disagreements on strategic issues. Such meetings have often paved the way for future cooperation. That is the expectation when Chinese leaders meet heads of state from the United States or Russia. With India, on the other hand, there is little or no movement on critical issues like the boundary dispute, terrorism, regional security, trade and India’s membership in the Nuclear Suppliers Group. So, informal summits like the one in Mamallapuram are more of a photo opportunity that serve Chinese interests well enough. Nothing really changes. But India gets no real benefit.
The prime minister going abroad with large official delegations is becoming an all too familiar sight. He hugs foreign leaders, is photographed with them at exciting and exotic locations, providing non-resident Indians with a nice public spectacle. At the business end, however, his host is careful not to cede strategic space to India. This is becoming a trend, with Turkey, Malaysia and Germany the latest examples. Whether he visited these countries or played host to their leaders, the result was the same. On vital issues they followed their national interest and paid little attention to Indian sensitivities.
For instance, in a September meeting with Malaysian Prime Minister Mahathir Mohamad on the sidelines of the Eastern Economic Forum in Russia, Modi asked for the extradition of fugitive preacher Zakir Nayak, wanted on charges of money laundering and inciting extremism. Mahathir not only refused but even said no such request was made, though it was confirmed by foreign secretary Vijay Gokhale. In October, Modi cancelled his scheduled visit to Turkey after its President Recep Erdogan criticised the revocation of Article 370. These leaders recognise India’s mammoth market potential and are happy to close business deals but keep their own strategic interests front and centre.
he core of India’s limitation in pursuing an assertive and bold foreign policy is almost total dependence on foreign powers for defence hardware and weapon systems. Situated at the crossroads of two nuclear armed neighbours–China and Pakistan–and having been attacked four times, it would make sense to reduce that dependence in the context of threats to national security. So far, though, it hasn’t happened.
There are many challenges in India’s quest to resolve “the contradictions between its sense of self and self-importance in contrast with the way the rest of the world perceives us”.
The meaning of foreign policy ever since the phrase
“External Affairs” was given currency on August 20, 1947, by the Union Powers
Committee of the Constituent Assembly presided over by Jawaharlal Nehru has
changed drastically. “External Affairs” was held to imply the power of
controlling every aspect of a country’s relations with the outside world. But
what are the contents of “External Affairs”?
The Union Powers Committee defined it as 1) the external representation of the state by accredited agents; 2) the conduct of the business and promotion of the interests of the state in outside countries; and 3) extradition. But the reliance on other powers to provide defence hardware to secure the border from hostile countries placed India at a subordinate chessboard where it was forced to agree to conditions set by exporting countries.
As former foreign secretary and national security advisor J.N. Dixit said in India’s Foreign Policy: 1947-2003, there are many challenges in India’s quest to resolve “the contradictions between its sense of self and self-importance in contrast with the way the rest of the world perceives us in terms of our political cohesion, economic and military strengths and strategic motivations”.
Despite the ostentatious launch of the “Make in India” campaign five years ago, the quest for indigenous technology, especially in the field of defence, has remained elusive. The progress of the ambitious push to promote local industries in hitherto uncharted territory has been dismal. India remains dependent on major powers for critical defence products and hardware. This dependence places it at a disadvantage in foreign relations.
In July 2019, a month prior to the revocation of Article 370, India finalised defence deals worth around $10 billion with the US to purchase 10 Boeing-made Poseidon 81 long-range maritime patrol aircraft. It has also signed a deal with the United States and is in the process of acquiring 30 Sea Guardian (Predator-B) drones; 24 naval multi-role MH-60 ‘Romeo’ helicopters; and the National Advanced Surface to Air Missile System-II for the missile shield over Delhi. These are super-special items, advanced as well as essential defence hardware. The deal places the US at an advantage that might subvert national interest to the extent that it ties the hands of Indian negotiators in any defence deal. At times the exporting countries impose conditions on how the weapon systems are used, apart from dictating how India should conduct relations with other countries.
Ever since 2007 India, despite signing a whopping $17 billion defence deal with the US, has been continuously threatened with financial sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA), a US law, if it goes ahead with defence cooperation with Russia.
In October 2018, India inked a $5.2 billion deal with Russia to acquire the S-400 Triumf missile system during President Vladimir Putin’s visit to New Delhi. The US’ use of CAATSA to limit India’s ability to purchase Russian weapons gives the impression “as if Capitol Hill makes decisions on behalf of Indian Parliament”. So India’s treaty with Russia is subject to US sanctions and the Trump administration has openly opposed the Triumf contract and the $3 billion deal for the lease of an Akula-1 nuclear-powered attack submarine signed in March 2019. The foreign minister had to explain to the world from Washington DC in October 2019 that he was trying to convince the US to let India purchase the Triumf system.
This episode has not gone well with Russia, which is convinced India is getting too cosy with the United States on strategic issues and defence purchases. The Kremlin not only objected strongly to this policy shift but also began friendly overtures to arch rival Pakistan. This act of distancing by an extremely loyal ally has had the Prime Minister trying to leverage his personal rapport with Putin to the maximum. But the Russian bureaucracy views the Indian attempt to diversify defence acquisitions as a direct affront to mutual relations. In other words, India’s relations with the superpowers are being measured by the worth of its defence deals and punitive action could follow if Indian interests require it to cross any of them. Russia’s proximity with Pakistan is a display of Kremlin ire directed at the increasing warmth in Indo-US relations.
o far Russia’s position on Kashmir has not changed from “Kashmir is a bilateral issue and India holds inalienable rights over Kashmir.” But it preferred neutrality at the Security Council on the listing of Masood Azhar on the sanctions List, while three of the permanent five, the US, Britain and France sponsored a ban. Moscow decided not to co-sponsor the proposal although it did not support China against India either. But the message was clear.
The cold wind from Russia is a product of its reinvention in South Asia, especially Afghanistan—where Moscow is trying to change the narrative of a defeated-disoriented country to that of an assertive superpower.
Pakistan had China in its corner to muddy the waters and it
did a thorough job of it. The Russian decision to stay neutral despite the
Pulwama attack a month earlier was the first time in 72 years that it took no
note of India’s national security interest. This damage is hard to assess.
Suffice it to say that many seasoned Russian experts have admitted to
depression at this development. But the signs have been there for some time. In
December 2016, when Modi was in Ufa, Russia, its foreign office initiated the
first ever official consultation with Pakistan’s foreign office. While Russia
was listening to Indian concerns in Moscow, its foreign office was running a
parallel track with Pakistan.
Likewise, when Modi was receiving Russia’s highest civilian award and waxing lyrical about how “Russia is an integral friend & trustworthy partner of India” in Vladivostok on September 4, 2019, Islamabad and Moscow were settling a 39-year old Soviet-era trade dispute paving the way for Russia to invest over $8 billion in Pakistan. The dispute dated to 1980 when Soviet companies bought textiles and other material from Pakistan. Its trade bodies alleged that some exporters were never paid while others paid sea freight charges for unshipped goods. The case had been lingering at the Sindh High Court until now.
The cold wind from Russia is a product of its reinvention in South Asia, especially Afghanistan—where Moscow is trying to change the narrative of a defeated-disoriented country to that of an assertive superpower. Its rapprochement with Pakistan and China is a direct outcome of extreme bonhomie between India and successive US administrations. Zamir Kabulov, Russian envoy to Afghanistan, publicly claims that “If India can produce F-16s in its backyard and allow its sale to Pakistan to kill its own people, why should Russia observe inhibitions in strategic dealing with Pakistan?”
This was a reference to the proposal to manufacture Lockheed Martin’s F-16 at an Indian hub. Russia has taken umbrage to this proposal. As India is taking a calculated risk in foreign policy realignment, Russian overtures to the China-Pakistan axis should come as no surprise. If it wants to arrest this drift India needs to do a better job of exploiting its economic leverage.
India’s strategic proximity to France is proportional to its purchases from the French defence inventory. In 2016, it signed a deal for 36 Rafale jets for €7.87 billion replacing an earlier agreement of 2008 to import 126 multirole combat aircraft. As the Rafale delivery started in September, France was encouraged by the profit and readily offered another batch of 36 Rafale jets at a concessional price.
The Prime Minister’s foreign trips seem to be nothing but a series of well-choreographed photo ops, lacking a long-term vision or a plan to address the core deficiencies.
At the heart of the foreign policy puzzle is India’s
inability or reluctance to indigenise defence production. The country’s moral
vision—on the basis of which it wishes the international order to be
restructured—is given as the reason for lack of defence production capacity.
But it is realpolitik—amoral and an expression of compulsions rather
than lofty aspirations—that drives the global order. If India refuses to shed
its diffidence the current gimmickry of “hug and run” coupled with public
spectacles like “Howdy Modi” will degenerate into mere optics rather a strategy
with clearly defined goals.
To put the record straight, the Balakot strike and aftermath was more of a Russia (MiG-21/Sukhoi) US (F-16) clash than an India-Pakistan affair. So, even if India’s foreign outreach looks impressive, it seems to be underpinned by incoherence and a lack of focus in the past few years. Spectacle always wins over substance. The Prime Minister’s foreign trips seem to be nothing but a series of well-choreographed photo ops, lacking a long-term vision or a plan to address the core deficiencies.
ne major achievement of the Modi government’s foreign policy is that “India is no more pursuing highly loaded moral policies, which were patently against its own interests and only to get western approbation.” The abrogation of Article 370 shows a country that has outgrown the need for constant western approval at the cost of its own interests.
The October 10 statement seeking Turkish restraint in its unilateral military offensive against Syria and asking for a “peaceful settlement of issues through dialogue and discussion” was an audacious riposte to Turkish provocations. At the UN general assembly earlier, President Recep Tayyip Erdogan had invoked Kashmir and asked India to resolve the issue through “dialogue on the basis of justice, equity, and not through collision.” Statements by Modi to stop water flowing from India to Pakistan, on the other hand, with vague references to the Indus Water Treaty of 1960 are meant for the gallery. He first made this threat during elections in Punjab in November 2016, after the Pulwama attack in February 2019, and again during elections in Haryana in October.
At a rally in November 2016 in Bhatinda, Punjab, he stated, “Sutlej, Beas, Ravi—the waters in these rivers belong to India and our farmers. It is not being used in the fields of Pakistan but flowing into the sea through Pakistan.” After Pulwama in February, the government immediately announced steps to breach the Indus Water Treaty. In March, Union minister of state for water resources, Arjun Meghwal, announced the stoppage of “0.53 million acre-feet of eastern rivers flowing into Pakistan.”
Again, in October, at an election rally in Charkhi Dadri, Haryana, Modi, in a flourish of misleading rhetoric, said “the water flowing to Pakistan for the past 70 years will be stopped and supplied to the farmers of Haryana”. Such outbursts bewilder even the experienced foreign policy observer. In reality, these bizarre statements are within the ambit of adherence to the Indus Water Treaty.
The provision regarding eastern rivers in Article II (1) of the Indus Water Treaty clarifies that: “All the waters of the Eastern Rivers shall be available for the unrestricted use of India”. Likewise, as per Article III (1) of Indus Water Treaty, “Pakistan shall receive for unrestricted use all those waters of the Western Rivers”. The treaty defines the term “Eastern Rivers” as ”the Sutlej, Beas and Ravi taken together” and as per the treaty the term “Western Rivers” means “The Indus, the Jhelum and the Chenab taken together”. So though it is only campaign rhetoric the Modi government’s threats never violated the treaty.
A similar mirage was created by the UPA government in 2007, when construction began for the ambitious Kishenganga hydel project on the Neelum, a tributary of the Jhelum, in the Gurez valley near Bandipora. Pakistan objected and as the bilateral conflict resolution mechanism failed, through a “Request for Arbitration” on May 17, 2010, the Islamic Republic of Pakistan initiated arbitration proceedings against the Republic of India.
The government’s refusal to sign the Regional Comprehensive Economic Partnership (RCEP) agreement “cements India’s growing stature as a country that is rock solid in its resolve to not only protect its interests, but also to ward off attempts to being arm-twisted”.
Ace constitutional lawyers from India Fali S. Nariman and
R.K.P. Shankardass along with international experts Prof. Stephen C. McCaffrey
from the University of the Pacific, US and Prof. Daniel B. Magraw from Johns
Hopkins University represented India.
In the interim order dated September 23, 2011, The Hague-based Permanent Court of Arbitration ruled in favour of India. “It is open to India to continue with all works relating to the Kishenganga hydro-electric project”. Two years later, on December 20, 2013, when the final order was pronounced, it allowed India to construct the dam subject to “India shall release a minimum flow of 9 cumecs (cubic metre per second) into the Kishenganga/Neelum River below the Kishenganga hydel project at all times at which the daily average flow in the Kishenganga/Neelum River immediately upstream of the KHEP meets or exceeds 9 cumecs.” On May 19, 2018, Modi flamboyantly inaugurated the Kishenganga project.
he government’s refusal to sign the Regional Comprehensive Economic Partnership (RCEP) agreement is being projected as an example of its muscular foreign policy. But until the Bangkok edition of RCEP (November 2019), none of the 16 participant countries had signed anything. Except for India, the 15 countries merely concluded “text-based negotiations”. The signing ceremony will be only in 2020. India raised issues that remain unresolved and all RCEP parties are working to resolve them.
Flaunted as a mutually beneficial high-quality free trade agreement, RCEP had its genesis in the 19th ASEAN Summit in Bali, Indonesia, 2011. The ten ASEAN nations, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam agreed to engage ASEAN Free Trade Agreement (FTA) partners and other external economic partners to establish comprehensive economic partnership agreements.
Neither China nor India was part of the earliest declaration about RCEP. ASEAN has signed five free trade agreements with six countries that include China (2004), Korea (2006), Japan (2008), India (2009) and Australia-New Zealand (2009). These countries have ratified the FTAs. During the 21st ASEAN summit in Phnom Penh, Cambodia in 2012, ASEAN heads of state/government and its FTA partners—Australia, China, India, Japan, Korea and New Zealand—formally announced the formation of RCEP as adopted by ASEAN Leaders at the in Bali summit.
Since then, China has gone out of its way to lend support. Its aim was to counter the US-led 12-member Trans-Pacific Partnership (TPP) which started negotiations in 2005 only to pick up the process in 2008. TPP was portrayed as the largest regional trade accord in history. With its 12 members (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US and Vietnam) TPP had cross membership with many of the RCEP participants. As was evident, it was a US trade initiative positioned to contain China. To offset that initiative, China unleashed its own trade battle and propelled the RCEP.
TPP was signed on February 4, 2016, at the fag-end of President Barack Obama’s tenure. A year later, President Donald Trump issued a presidential proclamation and directed his official “to withdraw the United States as a signatory to the TPP, to permanently withdraw the United States from TPP negotiations”, which made it a non-starter. After Trump’s veto, the remaining 11 parties signed a Comprehensive and Progressive Agreement on TPP (CPTPP), which became effective on December 30, 2018.
On November 4, 2019, standing on the corpse of TPP, China and partners announced what could become the world’s biggest trade pact, RCEP “to achieve a modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement”. Its framework allows an open accession clause for any of the ASEAN FTA partners not ready to participate at the outset. It means India could join RCEP at a later stage if not during the 2020 signing.
RCEP with its present 15 ready to sign comprises one-third of the world’s humanity and if India decides to join, it would include nearly half the world’s population. RCEP members represent one-third of global domestic product (GDP) and India’s departure may not affect the block on GDP account as it contributes only 7.98 per cent of total world GDP.
But Indian reluctance devalues the pact, given the size of the consumer market if it were a part of RCEP. Japan and Indonesia are lobbying hard for India, so it may join later but Modi is calling the rejection a victory for India. In an op-ed piece his deputy, home minister Amit Shah, said the decision “also cements India’s growing stature as a country that is rock solid in its resolve to not only protect its own interests, but also to boldly ward off any attempts to being arm-twisted”.
The chief sticking point is India’s concern about the “threat of circumvention of Rules of Origin due to tariff differential”. What it means is that apart from cheap Chinese goods making their way in directly, they could also be indirectly routed through a third country, which may flood the Indian market. India’s already massive trade deficit with China, which stand at $57.4 billion for the calendar year 2018, would further increase. The pact proposes to remove import duties on 90 per cent of goods and also seeks easier services and investment rules. India’s negotiators failed to get concessions on Most Favoured Nation obligations, as after the signing of the deal, it would be forced to give similar benefits to RCEP countries that it gave to others.
As the pact in its current form is not taking off, India is trying to mend fences with the US by signing a bilateral agreement. In the absence of a bilateral FTA, the two conduct trade on World Trade Organization (WTO) terms.
n October 2018, Trump slammed India for imposing tremendously high tariffs, up to 100 per cent on items like Harley Davidson motorcycles, making India a “tariff king”. Trump dramatically announced that when he raised this issue with Modi, he was told “nobody ever spoke to him (Modi)” on this issue. Trump termed the Indian interest in a FTA with the US as a means to keep him happy. A few months later, on May 31, 2019, the President announced he was stripping India of a special trade status that permits $5.6 billion worth of exports to enter duty free under the Generalized System of Preferences (GSP) programme. The US has accorded GSP benefits since 1975. While terminating the provision, effective June 5, 2019, the White House announced that unless there was “equitable and reasonable access to the markets”, which India has not assured the US, such benefit will cease to exist.
India and the US continued FTA negotiations but given the somewhat uncertain nature of relations under Trump, it is unlikely to happen any time soon. The retreat on RCEP is directly linked with the inability to reform domestic industry.
Despite the India-US Civil Nuclear 123 agreement, there was hardly any momentum in energy production or bilateral relations with other supplier countries. Owing to the liability clause, whereby operators will be solely responsible for any accident, investors have not shown enthusiasm. However, during the New Delhi visit of Obama, “the idea of the India Nuclear Insurance Pool as part of the overall risk management scheme for liability” was agreed.
In the past as well India-US deals like the Bilateral Investment Treaty (BIT) faltered after nine years of complex negotiations. President George W. Bush thought BIT would be a cakewalk after the intricate Civil Nuclear Technology agreement of 2008 and started it during the end of his administration. But in November 2017, negotiations on BIT formally collapsed owing to arbitration issues, the Obama administration’s 3-year-long review from 2008-2011 and then India’s three years review starting from 2012-2015.
The 11th Trade Policy Forum (TPF), set up in 2005 and reconstituted in 2014, is not meeting regularly as the last meeting was held in Washington D.C. on 26 October 2017 and the scheduled 2018 meeting was cancelled amidst trade tensions. Started in 2015, the India-US Strategic and Commercial Dialogue (S&CD) running successfully and New Delhi hosted the Fourth S&CD in February 2019. The India-US CEO Forum started in 2014 also running successfully and India hosted the sixty meeting in 2019 along with the S&CD.
The US is India’s second largest export market with a 16 per cent share compared to the European Union’s 17.8 per cent. The US supplies 6.3 per cent of India’s total imports, which is the third largest after China and EU. US foreign direct investment in India stood at $46.0 billion in 2018 while the figure for India’s FDI in the US was $9.6 billion in 2018.
Hoping to mend fences, India delayed punitive retaliatory tariffs against duties slapped by the US. However, after the ending of GSP eligibility, it raised tariffs on items such as nuts, apples, and chemicals. Both countries are now at loggerheads and have gone to WTO on these issues.
Against this background, India and the US continued FTA negotiations and expected it would be signed during Modi’s visit to the UN General Assembly in September. Many years have been consumed in finding a way through, but given the somewhat uncertain nature of relations under Trump, it is unlikely to happen any time soon. The retreat on RCEP is directly linked with the inability to reform domestic industry and a lack of the vision needed to guide economic policies to withstand global competition. Industry lobbies, bureaucratic inertia and a lack of political will have combined to force the government to adopt populist measures and ultimately succumbed to protectionism. While it was a wise move to say no to RCEP, it exposes a tendency to act without thought, opting for spectacle rather than strategy.
The government overlooked the need for systematic economic reform to compete internationally. Compliance with RCEP rules required planning. Joining the negotiation process was the equivalent of a rush of blood.
The fear of flooding by cheap Chinese manufactures either directly or through third countries, and Australian agri-dairy products, is real. The trade deficit with ASEAN countries plus China, is $79.86 billion (Asean $22+ China $57.86). So it ensured, perhaps rightly, the unceremonious demise of Modi’s rechristened “Act East” policy. But it does make nonsense of his government’s stated commitment to market economics and confuses both foreign investors and governments about India’s economic direction.
Protectionism is bound to hurt a growing economy if it is skittish about entering the world’s biggest trade block. It needs that block as much they need access to the Indian market. The real problem is the prospect of competing with China and its immensely diverse and sophisticated economy and its fundamentally authoritarian ideologies. But if democratic India considered it an impossible proposition it should have been more circumspect from the start. This failure to take the crucial factors into account is starting to look like a habit, given the experience with demonetisation and GST.
In its eagerness to show off its much touted dynamism, the government overlooked the need for real, systematic and sustained economic reform to compete internationally. Compliance with RCEP rules required well thought out, long-term planning. India is nowhere near that goal and joining the negotiation process was the equivalent of a rush of blood. While we may be better off for now, deal or no deal, India is destined to lose in this round.
It is time the Prime Minister and the government realised that running around the world and embracing everyone in sight is no substitute for strategy, patience and the long view in crafting foreign policy. Continuing along the present path risks making the country the laughing stock of the world.