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.
