Trade Connectivity & India – OBOR impact on India’s Foreign Trade

OBOR - India as a functional Democracy with its resultant constraints do to fuel its own economic growth?

OBOR - One Belt One Road Initiative
OBOR - One Belt One Road Initiative

Trade Connectivity & India – OBOR impact on India’s Foreign Trade

China and India have two of the world’s four largest modernising militaries and also remain among the fastest growing major economies: China’s is second behind the United States and India could well be the third largest by 2030.

All countries have a grand strategy & Chinese government under Xi Jinping and Indian government under Narendra Modi have been bolder than many of their predecessors in articulating what they would like to achieve nationally, regionally and globally.

China’s leadership has adopted three big concepts. The first is the Chinese Dream to be “fully developed nation” as part of the “great rejuvenation of the Chinese nation”. The second is One Belt One Road Initiative (also known as OBOR), an ambitious Logistical effort to export excess industrial capacity and thereby extend Chinese strategic influence to Central and Southeast Asia, South and West Asia, and onto Africa and Europe.

It is still necessary to remember China’s GDP figures was 5 times bigger than India’s GDP & India has to consistently grow at 9-10% for the next decade and more to make up this deficit.

The third is a ‘New Type of Great Power Relationship’, the idea that China and the United States can recognise one another as peers and respect each other’s spheres of influence.

Now India has to create and implement its own equivalents as the growing Security & Economic competition between China and India in Asia is intensifying, although Southeast Asia offers some avenues for mutually beneficial economic cooperation.

Sino-India relations have been on a downward spiral over the past couple of years after Modi Govt swept to Power and the recent refusal by India thus far to send any representative to attend the OBOR Summit is sure to further strain the Sino-Indian diplomatic ties.

It is still necessary to remember China’s GDP figures was 5 times bigger than India’s GDP & India has to consistently grow at 9-10% for the next decade and more to make up this deficit.

Given the geopolitical and economic security dimensions in Sino-Indian diplomatic relations, the Modi Govt has to find other ways to deal with China and perhaps with the rest of the World too.

Here could be some alternatives for the Govt of India to fine-tune its Trade & Diplomatic Strategy:

  1. Foreign Policies in India have been largely driven by the personality of its Prime Ministers from Pandit Nehru to Mrs Gandhi to Mr AB Vajpayee and now Mr Modi. India has not developed institutional think-tank establishments with Constitutional mandates to independently steer Indian Security & Trade Policy initiatives in a consistent manner irrespective of the Govt in Power befitting its National interests of attaining the ultimate Trade & Security goals of India. India needs a Centralised Pentagon like Institution based in New Delhi with the best professional experts in the fields of International Relations/Finance, Economic, Intelligence & Military brain trust with statutory mission to strategise and advise the Govt in Power to prepare and implement necessary integrated Policy frameworks to formulate a grand strategy to deter war and to protect the Trade, Commerce and Security goals of the Country.

  2. India needs to re-structure its External Affairs Department to manage ever changing modern geo-political scenarios. India needs to have Full Time integrated Cabinet Rank Trade/Commerce & External Affairs Minister with Junior Ministers for South & S.East Asia / Middle East & Africa , C.Asia & Europe / Africa and Americas. If as per IR experts the USA under Donald Trump pivots away from Asia, then there is urgent need for India to forge closer co-operation with South East Asian neighbours to boost its Trade, Commerce and Security Ties. The 21st Century saw the onset of new trends in geopolitical system shaping the World Order as we witnessed several transformations from Bipolar to Unipolar and now finally a shift towards a Multipolar World all of which puts huge strain on Indian Foreign Policy Planners to judiciously balance its Trade & Diplomatic Ties say between Iran & Israel , USA & Russia , China & Japan to name a few and ensure the Supreme Indian National interests are not jeoparidised or diluted while keeping the larger long term Policy goals in sight.
    By investing in strengthening Trade, Cultural & Diplomatic missions and allocating equal attention to each of these geographies around the Globe would allow India to leverage its Trade and Diplomatic ties to achieve its geo-political and economic goals. PM Modi’s whirlwind World tours may have created the warmest atmospherics globally but yet India has not managed to move swiftly enough to take advantage of the immense possibilities inherent in its strategic relationships with the World at large.

  3. India’s Foreign Policy should be an amalgamation of both its Hard and Soft Power combining its Economic, Military powers with its rich ancient Cultural Prestige, influence and traditions across a vast geography to shape its geo-political rise as a World Power. For that to happen first and foremost Reforming India’s Foreign Policy apparatus is an urgent need as recent reports clearly shows the numbers and skill sets of India’s foreign service are woefully out of sync with the global role that the political leadership envisages for the country. There are News reports of serious disconnect between the foreign policy requirements and the language skills of India’s diplomatic corps at a time when geopolitical and geo-economic shifts have created simultaneous opportunities and challenges for India and such shortcomings will, doubtlessly, adversely impact India’s ability to advance its interests. A recent report of the parliamentary standing committee on external affairs offers a series of practical and evolutionary steps to remedy the existing situation and GOI should examine the recommendations and implement urgently to rectify the situation on the ground.

  4. Modi Govt should strategise the art of appointing right people at the right places in Foreign Policy & Trade missions as with changing times and growing profile of India in the international geopolitical system, there is also an urgent need for radical changes in the structure and process of recruitment and deployments of Indian Foreign & Trade Service missions both within India & abroad, allowing recruitments from academic, Private Sectors and non IFS members into the policy planning process would only help sharpen the Foreign Policy & Trade initiatives of Govt of India. It’s believed the World at large is both wary and amazed at the Size, Strategic ambition and speed of OBOR project by PRC and once this Multi-continent project of creating massive economic Corridors is signed up with some 60 Countries it will be huge Foreign Policy success culminating in enhanced economic growth for China and there are lessons for India on how to integrate its Trade and Foreign Policies in this current complex Global scenario. Allowing multiple Ministries and Members of Indian Govt bureaucracy to function as usual in Silos and enclosed in Departmental cocoons could derail the best of Foreign & Trade policy initiatives by Modi Administration.

  5. The SAARC comprising of Eight Countries, India, Bangladesh, Bhutan, Sri Lanka, Maldives, Nepal, Afghanistan and Pakistan as a regional grouping has been in existence for almost 30 years and is still only attempting to bring about closer integration between the member countries with limited success. It would only help if Modi Govt speed tracks its own regional connectivity projects within South Asia mired by delays and also find smart ways to circumvent Domestic Political pressures to forge the Economic Union in South Asia asap.
    Eventually, to sum up, the whole scenario, the new Global Trade Wars is all about Flight of Capital to fund Jobs led economic growth.

  6. China has headstart utilising its Excess Capital and production capacities and superior infrastructure build up to establish massive projects on Scale and Size of OBOR to fuel its Export-Led economic growth but moot question is can India as a functional Democracy with its resultant constraints do to fuel its own economic growth ???
    Yet India’s great strength lies in utilising its Democracy and Demography to tilt scales in its favour especially if Modi Govt. can swiftly reform India’s Financial systems to create transparent healthy flow of Capital to fund investment led Economic growth / Legal reforms for swift fair enforcement of Business Contracts / IPR protection / Data & Cyber Security laws /Arbitration & Disputes Hub (why should India in spite of its functional status as Free Democracy remain the largest overseas jurisdiction to adjudicate in Singapore, even way ahead of China ) and finally if India can fix its Primary/Higher Education & Human Skills Development programmes to ensure its teeming young millions are ready to contribute positively to a growing economy.

    Undoubtedly the task ahead is very tough for the Modi Govt but it’s well within the realms of possibility for India to still emerge as a stable able Economic counterweight to China and both can together contribute as twin engines of World Economic growth in the 21st century.


    Note:

    1. Text in Blue points to additional data on the topic.
    2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.

1 COMMENT

  1. Hare Krishna Hare Rama – no offense intended
    Trade is done on the basis of a currency. OBOR is part of the initiative to launch the yuan to replace the dollar in the near future. The Chinese are not fools. The yuan will be given some asset backing in gold unlike the totally fiat US$ ( which is on it’s lasts legs ) for it to become acceptable. OBOR is also a means to utilize the present cache of US$.
    Make in India is way too late. Make India Hindutva cannot be forced on people . Corruption eats into the very core of the human. Gobbles up values, ethics, honesty, destroys families etc. Modi has done zilch on this. So nothing will change in India. Events likely to be exacerbated in Kashmir and Pakistan will further deter any progress. And no please- this is not what i wish but what i visualize, seeing what is happening around me.

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