As India gears up for the 2014 parliamentary elections, Gateway House
recommends a priority economic agenda for the next government – an
agenda which puts economics at the heart of our foreign policy
Among the many priorities of the new government in Delhi is setting a new Foreign Policy agenda for India – an urgent initiative that can help revive our economy and place us at a geopolitical advantage in a world that has changed almost beyond recognition over the last five years.
Foreign policy as an instrument for benefit has lain almost unused since 2008, when the India-U.S. Civil Nuclear Cooperation was signed, and right through the massive upheavals and peoples’ movements from Brazil to Bahrain and Ukraine. Its management has also been lax, judging from the neglect of our neighbourhood, the Chinese incursions and the Khobragade affair.
How then, can India gain ground most immediately, and in the next five years? By actively pursuing economic diplomacy.
Gateway House recommends a priority economic agenda, comprising external and internal strategic spheres, in which the various tools of our foreign policy – our diplomatic corps, our business, our media and our diaspora – are pressed into optimum service. The Corridors of Development and the Circles of Influence accommodate non-alignment, multi-alignment, mis-alignment, and all that is in between. The key difference from past policy is to use economics to resolve issues, be ambitious and ratchet up activity levels.
Internally, we must attract foreign and domestic investment in the development of corridors of activity – industrial, riverine and coastal. Externally, we must build circles of economic influence – first in our neighbourhood, then in the Indian Ocean and with ASEAN, further out to include the BRICS grouping, and separately, build strong ties with the U.S., Japan and Taiwan by jointly developing new technologies.
There are four Circles of Economic Influence:
1. South Asia: Critical in importance as the U.S. troops withdraw from Afghanistan, and extremist elements in Pakistan activate. We must protect our existing $2 billion of assets in Afghanistan, and press Pakistan to include India in the Afghanistan-Pakistan Transit Trade Agreement which will open up trade with our western neighbour especially through the respective private sectors. To our east, we must develop the border posts with Myanmar, enhancing trade with that country and our north eastern states.
2. ASEAN: Deepening trade linkages with this prosperous region is critical for Indian business, which already has billions invested in ASEAN nations. In 2014, we must work on simplifying and codifying the web of bilateral FTAs and PTAs already signed with several ASEAN countries, as a precursor to a business take-off.
3. BRICS: Creating a full-fledged alternate financial architecture within the BRICS to counter the western-dominated structures that have the ability to strangle our economies by the imposition of sanctions. Already a BRICS Development Bank is being created. India can also lead the intellectual effort for an alternate framework for pricing commodities, trading in non-dollar currencies and providing insurance for maritime trade.
4. Indian Ocean Region: The new geo-strategic playground for great and emerging powers is now the Indian Ocean – stretching from the Malacca Straits in the east to the Bay of Bengal and the Arabian Sea in the west. This is where China is executing its string of pearls strategy – critical for its trade routes and access to natural resources. India must strengthen its own ports to accelerate trade, and deepen its cooperation on disaster management planning and patrolling, already in place with the U.S., Japan and Australia. Indian public sector investment in Africa, especially in natural resources, is picking up, but so should popular government programmes like Indian Technical and Economic Cooperation (ITEC), which are currently quite small.
Within India, we must accelerate and expand the buildout of the Corridors of Economic Development, productively activating existing FDI and attracting new foreign investments.
These are our versions of China’s Special Economic Zones, which accommodate the compulsions of our diverse democracy where major issues like land acquisition and securing of resources like power and minerals are not controlled by the state alone. Local cooperation and consent is essential.
The first corridor was initiated by Japan to create a conducive environment for the small and medium enterprises which support the major Japanese companies. The resultant Delhi-Mumbai Industrial Corridor has now become the template for similar corridors across India.
Gateway House recommends five major corridors, each of which partner with a country with appropriate experience, and investment and financing expertise, through the deadline-driven build-out.
The Corridors are five:
Delhi-Mumbai Industrial Corridor (with Japan), Seven Sisters Corridor of the North East, Bangalore-Mumbai Economic Corridor (with the UK), Amritsar-Kolkata Rail and Riverine corridor (Gangetic Corridor) and East Coast Corridor, from Kolkata to Tuticorin
1. The Delhi-Mumbai Industrial Corridor: The pioneering, $90 billion, 10-year industrial corridor developed jointly between India and Japan, has run into the usual hurdles of land acquisition and financing. We recommend fasttracking the recently signed Phase I of the Maharashtra section of the corridor (building out Aurangabad and Karnad as part of the Shendra Bidkin Industrial City – the Maharashtra Government signed the relevant agreements for it in early March) for this year, accelerating the rollout and making it the template for foreign investors looking for meaningful projects in India.
2. The Seven Sisters Corridor, connecting the capitals of north east India to Myanmar and Thailand, and developing agri-business and resources along the corridor. The project partner can be Thailand, which has expertise in both construction and the food industry, and has direct access to ASEAN.
3. Bengaluru-Mumbai Economic Corridor: Inspired by DMIC, in 2013 the UK government proposed to link India’s financial centre of Mumbai with its IT capital, Bengaluru. En route, will be new urban centres and new transport links. The new government can activate this by immediately signing the agreement and assigning the feasibility study this year.
4. The Gangetic Corridor (Amritsar-Delhi-Kolkata Industrial Corridor): A three-year old, Rs.100 crore government plan is already in place to build a rail freight corridor from Amritsar to Kolkata. The Agreement was signed on January 20 this year. Gateway House recommends adding a riverine freight corridor along the Ganges, helping to develop agri-business along the fertile plain. For the rail corridor, we recommend partnering with China for building a high-speed railway network, and with Germany for a riverine transport. In 2014, the new government can assign and begin the feasibility study and identify foreign partners for the project.
5. The East Coast Corridor: With the Bay of Bengal in strategic play and Myanmar opening up for business, India will do well to develop a coastal corridor of ports along our eastern coast from Kolkata to Tutikorin. Existing ports must first be upgraded, and later, new ones can be built. The ideal partner can be Korea, with its huge ship-building capacity and experience, and its efficient ports like Busan. Gateway House recommends empowering the Port Authority of India to create the blueprint for such a coastal corridor, with inputs from the Indian Navy which is already securing the Bay.
In addition to these, Gateway House recommends two more corridors, to secure two critical bilaterals. An India-U.S. Technology Corridor, will help rebuild the bridges from Bengaluru to Silicon Valley through a robust private-sector engagement. Already, Indian IT firms are plugged into the guts of U.S. corporations – enhancing this will correct the imbalance created by soured government-to-government relations. A second technology corridor to our east will marry the software prowess of India with the hardware manufacturing of Taiwan – an ideal partnership that can create creative, affordable products and services for emerging as also developed markets – and send a signal to China.
Developing these Corridors and Circles will help revive the Indian economy and entrepreneurship. The sinews of this strategy will come from expanding the lending of our Exim Bank from the current $10 billion to $30 billion and augmenting the talent of the Indian Foreign Service with a commercial corp drawn from the public and private sector, with its vast foreign experience and expertise in challenging conditions.
Among the many priorities of the new government in Delhi is setting a new Foreign Policy agenda for India – an urgent initiative that can help revive our economy and place us at a geopolitical advantage in a world that has changed almost beyond recognition over the last five years.
Foreign policy as an instrument for benefit has lain almost unused since 2008, when the India-U.S. Civil Nuclear Cooperation was signed, and right through the massive upheavals and peoples’ movements from Brazil to Bahrain and Ukraine. Its management has also been lax, judging from the neglect of our neighbourhood, the Chinese incursions and the Khobragade affair.
How then, can India gain ground most immediately, and in the next five years? By actively pursuing economic diplomacy.
Gateway House recommends a priority economic agenda, comprising external and internal strategic spheres, in which the various tools of our foreign policy – our diplomatic corps, our business, our media and our diaspora – are pressed into optimum service. The Corridors of Development and the Circles of Influence accommodate non-alignment, multi-alignment, mis-alignment, and all that is in between. The key difference from past policy is to use economics to resolve issues, be ambitious and ratchet up activity levels.
Internally, we must attract foreign and domestic investment in the development of corridors of activity – industrial, riverine and coastal. Externally, we must build circles of economic influence – first in our neighbourhood, then in the Indian Ocean and with ASEAN, further out to include the BRICS grouping, and separately, build strong ties with the U.S., Japan and Taiwan by jointly developing new technologies.
There are four Circles of Economic Influence:
1. South Asia: Critical in importance as the U.S. troops withdraw from Afghanistan, and extremist elements in Pakistan activate. We must protect our existing $2 billion of assets in Afghanistan, and press Pakistan to include India in the Afghanistan-Pakistan Transit Trade Agreement which will open up trade with our western neighbour especially through the respective private sectors. To our east, we must develop the border posts with Myanmar, enhancing trade with that country and our north eastern states.
2. ASEAN: Deepening trade linkages with this prosperous region is critical for Indian business, which already has billions invested in ASEAN nations. In 2014, we must work on simplifying and codifying the web of bilateral FTAs and PTAs already signed with several ASEAN countries, as a precursor to a business take-off.
3. BRICS: Creating a full-fledged alternate financial architecture within the BRICS to counter the western-dominated structures that have the ability to strangle our economies by the imposition of sanctions. Already a BRICS Development Bank is being created. India can also lead the intellectual effort for an alternate framework for pricing commodities, trading in non-dollar currencies and providing insurance for maritime trade.
4. Indian Ocean Region: The new geo-strategic playground for great and emerging powers is now the Indian Ocean – stretching from the Malacca Straits in the east to the Bay of Bengal and the Arabian Sea in the west. This is where China is executing its string of pearls strategy – critical for its trade routes and access to natural resources. India must strengthen its own ports to accelerate trade, and deepen its cooperation on disaster management planning and patrolling, already in place with the U.S., Japan and Australia. Indian public sector investment in Africa, especially in natural resources, is picking up, but so should popular government programmes like Indian Technical and Economic Cooperation (ITEC), which are currently quite small.
Within India, we must accelerate and expand the buildout of the Corridors of Economic Development, productively activating existing FDI and attracting new foreign investments.
These are our versions of China’s Special Economic Zones, which accommodate the compulsions of our diverse democracy where major issues like land acquisition and securing of resources like power and minerals are not controlled by the state alone. Local cooperation and consent is essential.
The first corridor was initiated by Japan to create a conducive environment for the small and medium enterprises which support the major Japanese companies. The resultant Delhi-Mumbai Industrial Corridor has now become the template for similar corridors across India.
Gateway House recommends five major corridors, each of which partner with a country with appropriate experience, and investment and financing expertise, through the deadline-driven build-out.
The Corridors are five:
Delhi-Mumbai Industrial Corridor (with Japan), Seven Sisters Corridor of the North East, Bangalore-Mumbai Economic Corridor (with the UK), Amritsar-Kolkata Rail and Riverine corridor (Gangetic Corridor) and East Coast Corridor, from Kolkata to Tuticorin
1. The Delhi-Mumbai Industrial Corridor: The pioneering, $90 billion, 10-year industrial corridor developed jointly between India and Japan, has run into the usual hurdles of land acquisition and financing. We recommend fasttracking the recently signed Phase I of the Maharashtra section of the corridor (building out Aurangabad and Karnad as part of the Shendra Bidkin Industrial City – the Maharashtra Government signed the relevant agreements for it in early March) for this year, accelerating the rollout and making it the template for foreign investors looking for meaningful projects in India.
2. The Seven Sisters Corridor, connecting the capitals of north east India to Myanmar and Thailand, and developing agri-business and resources along the corridor. The project partner can be Thailand, which has expertise in both construction and the food industry, and has direct access to ASEAN.
3. Bengaluru-Mumbai Economic Corridor: Inspired by DMIC, in 2013 the UK government proposed to link India’s financial centre of Mumbai with its IT capital, Bengaluru. En route, will be new urban centres and new transport links. The new government can activate this by immediately signing the agreement and assigning the feasibility study this year.
4. The Gangetic Corridor (Amritsar-Delhi-Kolkata Industrial Corridor): A three-year old, Rs.100 crore government plan is already in place to build a rail freight corridor from Amritsar to Kolkata. The Agreement was signed on January 20 this year. Gateway House recommends adding a riverine freight corridor along the Ganges, helping to develop agri-business along the fertile plain. For the rail corridor, we recommend partnering with China for building a high-speed railway network, and with Germany for a riverine transport. In 2014, the new government can assign and begin the feasibility study and identify foreign partners for the project.
5. The East Coast Corridor: With the Bay of Bengal in strategic play and Myanmar opening up for business, India will do well to develop a coastal corridor of ports along our eastern coast from Kolkata to Tutikorin. Existing ports must first be upgraded, and later, new ones can be built. The ideal partner can be Korea, with its huge ship-building capacity and experience, and its efficient ports like Busan. Gateway House recommends empowering the Port Authority of India to create the blueprint for such a coastal corridor, with inputs from the Indian Navy which is already securing the Bay.
In addition to these, Gateway House recommends two more corridors, to secure two critical bilaterals. An India-U.S. Technology Corridor, will help rebuild the bridges from Bengaluru to Silicon Valley through a robust private-sector engagement. Already, Indian IT firms are plugged into the guts of U.S. corporations – enhancing this will correct the imbalance created by soured government-to-government relations. A second technology corridor to our east will marry the software prowess of India with the hardware manufacturing of Taiwan – an ideal partnership that can create creative, affordable products and services for emerging as also developed markets – and send a signal to China.
Developing these Corridors and Circles will help revive the Indian economy and entrepreneurship. The sinews of this strategy will come from expanding the lending of our Exim Bank from the current $10 billion to $30 billion and augmenting the talent of the Indian Foreign Service with a commercial corp drawn from the public and private sector, with its vast foreign experience and expertise in challenging conditions.
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