Assessments of the first year of the Narendra Modi-led NDA government have credited its foreign policy with more achievements than its efforts to turn around the economy. Whether or not expectations from the new government were unrealistic, the official spin doctors find it difficult to claim that investments have picked up to boost overall GDP growth. RBI’s governor has praised the government for being “sensitive” to investor concerns. But the so-called animal spirits of entrepreneurs remained dampened during the first year in office. The high growth that is being talked about is only a statistical illusion.
What is so distinctive about the Modi government’s foreign policy? Has the PM blazed a different trail from his predecessor, Dr Manmohan Singh? Economic diplomacy is a forte of both PM Modi and Dr Singh. Both liked their foreign travels immensely. PM Modi visited 18 countries and spent 53 days abroad. This is not very different from the frequent flyer miles earned by Dr Singh: during UPA-11, he visited 12 countries and spent 47 days outside during his first year. What indeed did PM Modi do differently to earn accolades for his foreign policy than, say, the UPA government?
Perhaps the strong neighbourhood focus is the most important foreign policy achievement of the NDA than the UPA. To secure India’s sphere of influence in South Asia and counter China’s growing role, PM Modi struck all the right notes in this regard right from his swearing-in ceremony when he invited heads of state of South Asian countries. His first visit was to Bhutan. During UPA-1, Dr Singh’s first foreign trip was for a meeting of countries that rim the Bay of Bengal called BIMSTEC. During UPA-11, he went for a BRICs and Shanghai Cooperation Organisation summit.
PM Modi later participated in a SAARC summit in Kathmandu. He visited the Seychelles, Mauritius and Sri Lanka to forcefully underscore the importance of the Indian Ocean for the country’s geo-strategic interests. Plans have accordingly been firmed up to develop infrastructural assets in these two island nations. The recent border agreement with Bangladesh was long overdue. India also promptly responded in rushing supplies by air and sea to meet a drinking water crisis in the Maldives and extending aid to quake-devastated Nepal. This neighbourhood focus thus is a clear differentiator between the NDA and UPA regimes in their first years in office.
PM Modi hasn’t articulated any foreign policy vision statement unlike his predecessor. But he used his travels to Japan, US, China, South Korea, among others, to attract big-ticket foreign direct investments (FDI) to help build high-speed railways, power, ports, roads and highways. This exemplifies how the external is being leveraged for internal development. In contrast, Dr Singh relished ASEAN, BRICs or IBSA summitry. He had a vision of an integrated Asian market from the Himalayas to the Pacific. But he never went as far as Mongolia (as PM Modi did) to preach the gospel of looking eastwards!
Another foreign policy achievement of the Modi government has been the purposive outreach out to the Indian Diaspora to enlist their participation in India’s development. The rock-star welcome to the PM on his tours indicates that a connection has been made. China has attracted billions of dollars from its overseas businessmen to help build its infrastructure. That sort of help may not be a prospect in India. But as NRIs in developed countries like the US, UK, Canada and Australia acquire greater political influence, they can be a powerful lobby to push for India’s closer engagement with these countries.
What could have been done better? For all the priority that PM Modi has accorded the neighbourhood, India’s integration in South Asia is not working to our advantage. Pakistan still hasn’t extended MFN trading status to India. India must exert all its influence to rebalance Sri Lanka away from China’s embrace. A game changer could be inking a comprehensive economic partnership agreement with the island nation to clear the decks for burgeoning bilateral trade. South Asian integration will be truly successful only with bolder and unilateral trade liberalization than rising trade surpluses.
PM Modi has boldly redefined India’s Look East with an Act East policy. During the last year, more could have done to make India’s free trade agreement with ASEAN work to our advantage by leveraging services trade in a bigger way. The attitude of the Modi government remains defensive on FTA as there is a perception that there are no gains for India on goods trade. More can certainly be done to conclude mutual recognition agreements to ensure that our professionals have freer access to the ASEAN. This could be the template for a more successful engagement with South Korea and Japan.
In the year ahead, the biggest foreign policy challenge will be to ensure that all the strategic partnerships with major powers like the US and Japan are implemented in spirit. Restoring the dialogue with the US and addressing the issues over the civil nuclear energy liability law itself is a major foreign policy plus for the NDA over the UPA. Foreign investors from these countries need to be assured that their proposals have indeed been fast-tracked. Not a single dollar of FDI will come in unless the business environment improves. The immediate priority must be to ensure that the FDI that has been committed does flow in to help build infrastructure.
The daunting challenge for PM Modi’s diplomacy is to assure the world that conditions for doing business in India have changed on the ground. It’s only then that the external can be truly leveraged for India’s internal development. India’s low rank of 142 out of 189 countries tracked by the World Bank must radically improve. The NDA government is no doubt trying to simplify processes online to enable starting a business in a day! The focus should also be on enforcing the sanctity of contracts and rule of law. There is a need to dispel the growing perception regarding delays in the economic reform agenda.
(N Chandra Mohan is an economics and business commentator based in New Delhi)
