NonAlignment 2.0: A Foreign and Strategic Policy for India in the 21st Century (3 page)

India has a long history of political, cultural and economic influence radiating across a vast expanse of contiguous land and oceanic space. Towards the west, its footprint ranged across West Asia and along the eastern coast of Africa. Towards the east, the imprint of India may be found in South-East Asia, China and as far as Japan. Central Asia is the third corner of this triangle, where ancient trade caravans from and to India carried Indian goods, religious thought, culture and ideas, whose traces remain prominent till today. It should come as no surprise therefore that as India’s global imprint expands in the contemporary era, these regions of historical interaction gain prominence in India’s engagement with the outside world. One of the first diplomatic initiatives of independent India’s leaders was to convene the Asian Relations Conference in New Delhi in 1947, followed by the Afro-Asian Conference in Bandung in 1955. The Asian resurgence that Jawaharlal Nehru passionately believed in and championed has now
become a reality. The Asian theatre has emerged as one of the key components of India’s foreign and strategic policy.

In recent times, the economies of Asia have displayed extraordinary dynamism. Asian markets will be important for India; Indian markets in turn will be important for other Asian economies. Asia is likely to remain a significant source of investment in India. Intensifying economic engagement with Asia, at all levels of economic activity, will remain vital for India’s interests. India’s Look East Policy and its pursuit of free trade agreements (FTAs) in Asia are important steps in this direction. India must look upon Asia as the principal zone of economic opportunity.

Asia is also likely to be a theatre where a range of new institutional innovations take root. These institutions will seek to regulate and coordinate both economic activity and political relationships in Asia. They will necessarily have a variable geometry in terms of their composition, purpose and scope. Much of the competition for influence will be played out on the terrain of access and who gets membership in which institutions. Some institutions like a potential Asian monetary fund will be economic; others like the East Asian Summit will also have strategic and political importance. It is in India’s interest to remain engaged with these institutions in their variety with full diplomatic attention.

Asia is also likely to be the theatre of many strategic rivalries. Asia has several outstanding territorial disputes, many of which involve China. While these disputes have, for the most part, been managed for several decades, they now have the potential to become flashpoints for military assertion and conflict in areas ranging from Taiwan and the South China Sea to India’s own borders. China’s economic and strategic footprint in Asia is enormous. At the same time, many Asian powers are looking to hedge their bets against excessive dependence on a major power. There is considerable interest in the United States to retain a significant role in Asia—and the United States is itself reweighting its Asian presence. The shifting contours of the Sino-US competition in Asia will need analytic and practical vigilance. Many countries are also looking to India to assume a more active strategic and economic role in Asia. So far, India has not often fully responded to the opportunities provided by the hedging strategies of various Asian powers.

Asia, with its vast oceans, its dynamic economies and its diverse political formations, is also likely to be the theatre of intense maritime competition. This is an area of serious concern, but also potentially of comparative advantage for India. India’s maritime strategy, if pursued with vigour, could give it considerable strategic advantage in Asia.

Finally, Asia is likely to be a theatre of competition in ideological hegemony as well. It is a region with a wide range of successful developmental models, jostling for supremacy. It is a region with enormous cultural vitality and flows of ideas and people. And it is also a region where battles over democracy, rights and the rule of law are likely to continue. India will gain enormously by an enhanced cultural and ideational engagement with the rest of Asia. If there is to be a common Asian century, the flow of ideas from India will be vital to it. We need to invest intellectual capital in Asia.

China will, for the foreseeable future, remain a significant foreign policy and security challenge for India. It is the one major power which impinges directly on India’s geopolitical space. As its economic and military capabilities expand, its power differential with India is likely to widen further. China has just undergone a major leadership transition. It is still unclear in what direction the new leaders will steer their country and whether there will be any significant impact on India–China relations.

As is well known, India and China have long-standing disagreements on an agreeable border. Skirmishes and
incidents have occurred across the Line of Actual Control. Our strategy should be to ‘hold the line’ in the north on the Sino-Indian land frontier, but maintain and, if possible, enlarge India’s current edge in the maritime south. This strategy takes into account both the superiority of current Chinese deployments and posture on the land boundary and the unlikelihood of the border issue being resolved in the near future.

Given that China has managed to settle many of its border issues (at least for the time being) with other, smaller neighbours, the dispute on the Indian border stands out quite prominently. While we should press for an early and satisfactory settlement to the border issue, and should welcome any positive Chinese steps in this direction that the new leadership there may offer, we need also to be prepared for the matter remaining unresolved for some time to come. It is important that we accelerate the upgradation of our border infrastructure (especially in terms of habitation and supply lines) to reduce the asymmetry in our capabilities and deployments. At the same time we must put in place operational concepts and capabilities to deter any significant incursions from the Chinese side (these are dealt with in
Chapter Three
).

Currently India has the edge in terms of maritime capabilities but China is catching up rapidly. China’s
current focus is on acquiring dominance in the Yellow Sea, the Taiwan Straits, the East China Sea and the South China Sea. The Indian Ocean falls second in the present order of priority. It is in our interest that China remains preoccupied with its first-tier, more immediate maritime theatre. The retention of strong US maritime deployments in the Asia-Pacific theatre, a more proactive and assertive Japanese naval force projection and a build-up of the naval capabilities of such key littoral states as Indonesia, Australia and Vietnam, all may help delay, if not deter, the projection of Chinese naval power in the Indian Ocean. We need to use this window of opportunity to build up our own naval capabilities. Our regional diplomacy should support this approach by fostering closer relations with these ‘countervailing’ powers. This should include a network of security cooperation agreements with these states and regular naval exercises with them.

On the political side, our posture towards China must be carefully nuanced and constantly calibrated in response to changing global and regional developments. China’s threat perception vis-à-vis India has both a local and a global dimension. The local dimension involves Tibet. Our Tibet policy needs to be reassessed and readjusted. Persuading China to seek reconciliation with the Dalai Lama and the exiled Tibetan community may contribute
to easing India–China tensions. The initial soundings must be discreet and exploratory. And we must be mindful of the risk of hostile reaction, particularly from conservative sections of the People’s Liberation Army. The situation vis-à-vis Tibet has been complicated by the transition to a democratically elected Tibetan government-in-exile. The Chinese had, in part, expected that the Tibetan community would continue with its traditional method of selecting the Dalai Lama—a method that was amenable to manipulation by China. The Dalai Lama’s popular legitimacy among his own people is a fact that the Chinese government must acknowledge.

On the global canvas, China looks upon India not as a threat in itself, but as a ‘swing state’ whose association with potential adversaries could constrain China. The challenge for Indian diplomacy will be to develop a diversified network of relations with several major powers to compel China to exercise restraint in its dealings with India, while simultaneously avoiding relationships that go beyond conveying a certain threat threshold in Chinese perceptions. This will require a particularly nuanced handling and coordination of our foreign policy, both through diplomatic and military channels. If China perceives India as irrevocably committed to an anti-China containment ring, it may end up adopting overtly hostile
and negative policies towards India, rather than making an effort to keep India on a more independent path.

India–China economic relations also present a complex and somewhat ambiguous picture. Bilateral trade is rising rapidly but asymmetrically, with a growing trade surplus in favour of China. We could respond by trying to limit Chinese penetration of our market, particularly our infrastructure market. Or, we could allow access but with various conditions that safeguard and promote Indian interests in other areas. Given that India’s infrastructure market is likely to be in the region of a trillion dollars in the next few years, China would obviously have a keen interest in expanding access to it. We should see this Chinese economic interest as a point of leverage for tradeoffs favourable to us in other sectors, including political concessions in areas of interest to India.

One of the big concerns in our economic relations is the involvement of China’s state-owned and -supported enterprises. Chinese banks are often able to offer preferential financing to Chinese companies because of their scale and because they are not driven solely by market forces. Many of China’s premier manufacturing firms are also state-run, and thus have access to such financing. This means that when Chinese companies participate in competitive bidding for open tenders, they may actually
have a big advantage over other bidders, which allows them to place stronger (lower) bids. However, such preferential financing could also be a useful asset in terms of the volume of infrastructure financing, so we need to develop systematic and differentiated approaches to the various issues at stake, which can balance immediate requirements with the longer-term implications of certain choices. There is the additional problem of the potential for espionage and intelligence gathering through software means, which was evidenced by the banning of import of Chinese telecom equipment.

Given the asymmetry in the economic and trade relationship, we should not overestimate our bargaining power. It may be more realistic to link large orders to economic and trade concessions, including fixed investments in India-based facilities. It is also reasonable to expect that growing economic interdependence might help make the political relationship more manageable and less subject to oscillations (though we should also bear in mind Japan’s less than positive experience with China in this respect).

The growing trade surplus between India and China has been a cause for concern owing both to its degree and composition. Not only is the degree of dependence of Indian industries on Chinese imports on the rise, but
India’s main exports to China are in the form of natural resources, whereas its imports are largely higher-end manufactured goods. Given India’s large services sector, it should be pushing for greater market access and presence in China to correct this imbalance.

One area where India may be able to bargain effectively with China is the domain of technology transfer. The ability to leverage access to our markets in order to secure access to sophisticated technology, and so to develop domestic capacity, is something India has not been able to do as effectively as it must, especially with developed countries. By way of example, when an airline company like Indigo signs a $16 billion deal with Airbus, technology transfer should be a part of the terms of negotiation. Even India’s defence offsets have been quite disappointing in terms of technology transfer, with only the lowest value addition activities being sourced domestically.

China has managed to deal with these issues quite well, mainly because the government is able to coordinate the actions of various companies (many of which are state owned)—a luxury India does not have. It may in fact be easier to negotiate technology transfer deals with China itself than with other developed countries, which are intensely possessive about their intellectual property. China’s Huawei telecom company has recently agreed to
set up a research facility in Bangalore to ensure that none of its imported devices contain any kind of covert listening technologies.

India’s China strategy has to strike a careful balance between cooperation and competition, economic and political interests, bilateral and regional contexts. Given the current and future asymmetries in capabilities and influence between India and China, it is imperative that we get this balance right. This is perhaps the single most important challenge for Indian strategy in the years ahead.

Within the Asian theatre no region is more vital for India than South Asia. India cannot hope to arrive as a great power if it is unable to manage relationships within the subcontinent. South Asia is holding India back at many levels. India has to expend enormous resources managing a conflict-ridden neighbourhood. Interstate politics in South Asia has direct spillover effects into domestic and regional politics in India. India’s ability to command respect is considerably diminished by the resistance it meets in the region. South Asia also places fetters on India’s global ambitions. Our approaches to international law and international norms are sometimes overly inhibited
by anxieties about the potential implications that our commitment to certain global norms may have for our options in the neighbourhood. Overall, the opportunity costs of this unhappy regional situation are immense for both India and the region’s other states.