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Welcome to India’s new foreign economic policy

Muscular, multipolar, multimodal, multicultural, multimedia.

By Robinder Sachdev

Robinder SachdevNEW DELHI: At the end of a historic parliamentary election in India, where over 810 million voters are eligible to cast their vote, a new government will take office by end of May.

The new government will have its hand full with domestic issues from the word go. It will have to prepare and present the annual budget in June or July. Tackle inflation and price rise, take firm steps to curb corruption, and improve gender security as an immediate concern. It shall need to decide on the contentious issue of gas pricing, decide on coal linkages to old and new power plants, and fast track at least a few infrastructure projects that can be switched on ASAP, and much more – before it can even say, “Voila…I have arrived!”

Indian foreign policy

If as widely projected by opinion polls the next government is headed by Mr. Narendra Modi as the Prime Minister, the first few months may not see much visible change in Indian foreign policy due to domestic preoccupations. However, there is little doubt that a paradigm shift will set into motion from the very day Modi assumes office.

While it remains to be seen how a Modi government shall engage in the neighborhood, tackle the post-NATO withdrawal in Afghanistan, spar with China, and shape its self-image in the global theater – it also remains to be seen what will be some big-picture initiatives that India takes, either in bilateral or multilateral relation. Will India innovate a game-changer with some country, a la the U.S. – India nuclear accord, or push aggressively for reform of the UN Security Council, for example?

Some glimpses of strategic policy are already on offer. The manifesto of the Bharatiya Janata Party (BJP), the party of which Modi is the candidate, says that it will take a re-look at India’s NFU (“no first-use”) doctrine on strategic weapons. This will have range of implications – and shall be subject of a separate column.

In general, there seems to be an overall sentiment in India, which the BJP is also articulating, that India now needs a (more) muscular foreign policy. The contours of such an approach or doctrine shall emerge soon.

However, apart from the strategic components of traditional foreign policy, one thing is very clear. India will radically upgrade a component of foreign policy that has hitherto been languishing – economic diplomacy. There is little doubt that India will make economic diplomacy virtually a co-equal second pillar to strategic affairs in its foreign policy.

In the background of the Devyani episode, a growing clamor for reciprocity in conduct of foreign relations, that Modi is a strong personality, and that the BJP will assume power after a decade of wilderness and will want to bring a fresh imprint to foreign affairs, it is but obvious that India’s new foreign strategic policy will be muscular.

Just as in foreign strategic affairs, so would India’s new foreign economic policy be – muscular.

Multipolar

In a multipolar world, the bilateral economic opportunities lie in multiple locations. A Modi government will search out and engage with such centers – large or small. Though the “visa issue” harangued Modi for almost ten years, Modi is perhaps too pragmatic and realpolitikal a person to hold any grudge against the U.S. However here any proactive moves will have to come from the U.S., and may not be initiated by Modi, yet in all probability he will respond graciously to the signals from DC.

Of course the fact that Modi has built a good working relationship with China, Japan, and South Korea, and visited the first two in high profile visits, while the U.S. and Europe were ignoring him means that India’s Look East policy will now not be merely strategic – but have a stronger dose of economic diplomacy too.

Several companies from key Asian countries have set up large and small projects in Gujarat, the state of which Modi is the Chief Minister since over 12 years. Often such projects have been assisted or sponsored by the governments, financial institutions, or soft-lending agencies of these countries. This is unlike U.S. companies who may have set up base but did not have official encouragement from the U.S. government. That Asia is where money is, especially for infrastructure projects, and that Asian governments play an encouraging role for such investments, will not be lost on Modi.

Then of course we have Russia, the European countries, Africa, and even Latin America. A Modi government may take the energy relationship with Russia to higher levels, especially in the context of natural gas and defence since in a post-Crimea world Russia may offer better deal to India, and also given Russia’s historic links with India. Russia can be a good partner for India also at the UN for other geopolitical reasons.

Modi is also a proponent of the fact that economic diplomacy should not be the sole preserve of the central government but that Indian states too should foray into international relations. Thus we shall see Indian states also playing a growing role in foreign economic matters.

Under Modi’s leadership, the state of Gujarat itself went into overdrive to woo and engage foreign partners. Modi led business delegations to China and Japan, and made all efforts to invite foreign delegations to come to his state, often bypassing the central government.

Modi well understands the risks of putting all eggs in a single basket, and will grow India’s foreign economic engagements by creating a portfolio of varying assets – a multipolar approach.

Multimodal

A muscular and multipolar foreign economic policy under a Modi dispensation will utilize multiple methods to engage with partners. This means it shall not restrict itself to the usual G2G (government to government) mechanisms of traditional diplomacy to further the economic interests of India.

A multimodal foreign economic policy that engages and leverages multiple methods, formal and informal networks, think tanks, technology and entrepreneurship eco-systems, shall be vital to achieve the take-off and implementation of mega-projects – for which Modi seems to have a penchant.

As a Modi government settles down in Delhi, it will unveil massively large projects and a multimodal foreign economic policy will help it to bring the best and unique models, prototypes from across the world. These would range from infrastructure to glocalized innovations.

It is quite likely that Modi has observed the conduct of economic diplomacy by METI, the Ministry of Economy, Trade, and Industry of Japan. The painstaking research, market intelligence, and due diligence that METI does about any foreign market and opportunity, and the way it strategically helps Japanese industry to expand in new global markets, is legend. The lessons of working with the Japanese investors, and the mega Delhi-Mumbai Industrial Corridor project will not be lost on him.

The method of engaging with world and multilateral trade and economic platforms, of the likes of WTO, and the G-groupings, too will be under scrutiny in a Modi government. It may create, encourage, or participate in newer global economic and trade mechanisms that will emerge over the next five years of its tenure in office. An OPEC (Organization of Petroleum Exporting Countries) like organization for solar energy may be one of flagship the initiatives of a Modi government.

Multicultural

A BJP government at Delhi will pay more attention to culture – Indian, and of nations with which it engages. The over 30 million Indian Diasporas globally is an asset which Modi will try to leverage for economic development in India. The Indian American community, and other Indian-origin communities – ranging from Suriname, Caribbean to Australia, Singapore, and Hong Kong will find India to be an increasingly encouraging partner for their participation in the economic development of India.

The new Indian government may also make a push for better relations with countries that have large Buddhist populations. India, the birthplace of Lord Buddha, has long had an inert relationship with countries of East Asia. While there are “Buddhist Tour Circuits” in India where the devout from all over the world come to experience the tourist spots of Buddhism, a strategic economic engagement with countries in East Asia based upon India’s civilizational links with them has been lacking. This can be expected to change.

Not many may be aware that about 5-7% of the population of South Korea traces their blood-line to India. Legend in Korea has it that Heo Hwang-ok was an Indian Princess from the city of Ayodhya in India, who travelled all the way to Korea on a boat, arrived in the year 48 AD, and married the king of Korea’s biggest dynasty at that time, King Suro. This legend is taught in the elementary school books of Korea, and several Korean lineages consider her to be their ancestor. A Modi government can be expected to build on such multicultural relations.

Multimedia

To push and execute its foreign economic policy, the new Indian government will lay due emphasis on media, and multiple media to get its message across. Modi is acutely aware that the image of a nation is not a nebulous concept, and needs to be nurtured and projected conscientiously.

The image of India has taken a beating in last few years. Foreign investors and corporate board rooms sitting thousands of miles away from India make their impressions based upon the multiple media they consume to get their information. A Modi government will want to improve this media diet – to make it more nourishing for global audiences.

In order to implement a vibrant foreign economic policy a Modi government shall devise strategies so that it can best convey a positive image of India. As chief minister of the state of Gujarat, Modi has himself driven the image initiatives of Gujarat – and seen the benefits that accrued to the economic and social development of the state due to its image.

The advantage is that with a heavy appreciation of multimedia in its foreign economic policy, a Modi government will force itself to perform and deliver, so that it can claim the image and political benefits of such a strategy. Modi has adopted this strategy in growth of his political career, and shall now deploy a similar strategy to the growth of Indian foreign economic policy.

Thus under a Modi government, if it assumes office with a stable majority, we may see a new foreign economic policy that is muscular, mutlipolar, multimodal, multicultural, and multimedia savvy.

(Robinder Sachdev is a global thought leader in opto-politics. The author defines opto-politics as the phenomena beyond geo-politics. In addition to the reality of geo-political, and geo-economic, forces, world affairs are increasingly being shaped by the images, optics of these forces. Opto-politics is the interplay of images and geopolitics.)


  • Dave Makkar

    MODI: you don’t need a Govt to be POOR but you do need it to be RICH!
    For 1100 acres of land in Sanad in 2008 Tata Motors paid Rs 900/sqm
    to the Gujarat Government. The government acquired the land at Rs 1,200 per
    square meter.
    Tata Motors only invested Rs 2000 crores and got a government loan of Rs
    9,570 crore for 20 years at 0.1 per cent rate of interest. This loan was 23%
    of Gujarat’s budget for 2008. On top of other subsidizes;100 acres of land at a highly subsidized rate near Ahmedabad for Tata township.
    Modi has lured away Nano plant using huge amount of money directly from Gujarat government’s coffers. What has the state gained till now, Nano has failed, so have “cascading effects of the plant” Tata Motors’
    Sanand plant stays idle (April 2013 plant utilization was mere 4.5%).
    The attraction for corrupt Industrial Houses and MNC’s is not Modi but Free Money.
    Practically same story is for Ford, Suzuki, ADANI, Ambani etc. on top of this they all received various Incentives in other words poor Tax Payers are paying to the rich multi billion corporations.
    Total Subsidies to TATA Rs 30,000 Crore, Suzuki 20,000 Crore & Ford 20,000 Crore
    Under Modi Rule Adani GP revenue from $765 Million in 2002 rose to $8.8 Billion in March 2013 while net profits climbed even faster.
    Income Tax Incentives
    10 year corporate tax holiday on export profit – 100% for initial 5 years and
    50% Corporate Tax Holiday for the next 5 years
    Exemption from dividend distribution tax
    Indirect Tax Incentives
    Zero customs duty
    Zero excise duty
    Exemption from central sales tax
    Exemption from service tax
    Under Modi 60,000 small scale industries shut down
    Over 5,500 farmers in the last 10 years have committed
    suicide in the state but police have been instructed by Modi govt not to
    register cases.
    CAG reports from 2001-2012/13 show corruption to the tune of Rs 1.5 lakh crore. The state took nine years to appoint a Lok Ayukta.”
    Gujarat’s budget increased from Rs 28,000 crore in 2001 to
    Rs 1,20,000 crore in 2013-14, public debt during the same period increased from Rs 26,000 crore to Rs 1,76,000 crore.”

    • Snare

      Credible links please, or are you simply pulling this out of where the sun don’t shine.

    • udayrao

      Bullshit

  • Chitra Raman

    website administrator, please correct the typo in the last sentence: “multipolar”, not “mutlipolar.”

  • Simon Thomas

    hopefully this will be true. but this article does sound like a fluff piece for Modi, and a wishlist for what the author wishes Modi will do for India. and that does not an article make.