11.06.2014 Author: Vladimir Terehov

India’s foreign policy under Narendra Modi

0_12d841_91248573_XLA change of power in one of the world’s leading superpowers, as India will undoubtedly become, begs pertinent questions about whether it’s possible to adjust the course of its foreign policy. If we can expect any changes at all in Indian foreign policy, what will they entail? However, before wrestling with questions about the future, we must understand the recent past and present.

India’s position in the foreign policy arena in the last 2-3 decades has evolved due to a variety of internal and external factors of a fundamental and inter-connected nature. Of them, the main ones were brought about by the destruction at the end of the cold war of India’s previous foreign (and partly economic) policy mainstay, namely the USSR, as well as the beginning of the formation of a new geopolitical game in the mid-90’s, the “center of gravity” of which began to shift from Europe to Asia. The process of the PRC becoming a new world superpower has significantly affected this change.

At the same time, as socialism was purposely and steadfastly discredited in the 90’s in Russia, a sharp decline in the volume of economic connections with a former key ally couldn’t help but disrupt the “quasi-socialist” status of India’s economy and stimulate the process of its turning to Western countries.

It was in these conditions that Realpolitik supporters in India began to actively speak about the exhaustiveness of quasi-neutral politics at a time of cold war, as well as “the Non-Aligned Movement,” the unofficial leader of which remains India, and about the need to find new crucial partners. An ever-growing drift away from “unfounded idealism,” professed under the 1971 India-Russia Friendship Treaty Hindi-Russi Bhai Bhai, toward the establishment of India as a modern political-military pole has become the main ingredient in the country’s foreign policy evolution the past 20 years.

The increasing rapport between India and the US has become a principal component of this drift. The strengthened relations began during Bill Clinton’s visit to New Delhi in 2000, at the end of his 8-year presidency. G. Bush the younger’s republican administration, which took over from the democrats in 2001, successfully continued down the path to all-around closer ties to India.

The democratic party, which came to power again in 2008, at first showed a certain “laxness” in its policies towards India; however during Barack Obama’s second term as president they had begun once again take on their former dynamic. This has been stimulated by the undoubted fact of China’s increased role in international business, which the US and India alike consider a threat to national interests.

For India, the objective nature of this strengthening of ties is shown as well in the fact that it does not depend on the party affiliation of the country’s leadership. Begun during Atal Bihari Vajpayee’s administration, (1998-2004), who represented the “Bharatiya Janata” party, it was continued for the next 10 years by the “congress” government of Manmohan Singh.

It is noteworthy that the process of increasing rapport between India and the US has been flowing by no means 100% smoothly. Serious problems continue between the two sides in both political and economic spheres. Indians are unhappy, for example, with American limits on the purchase of Indian IT-technology and the fact that all of India’s programmers are moving to the US. They’re not thrilled with Washington’s non-committal stance on the Kashmir conflict and the possible (purported) US military withdrawal from Afghanistan. The US meanwhile complains about India’s “lack of transparency” in economics for foreign investment.

As recent events have shown, vestiges of anti-American sentiment that have lasted in India since the cold war can still be seen in events of little import that can, with the help of cunning propagandists, be served up to the Indian population as “offenses to national sentiment.”

Such is the well-known December 2013 incident involving Indian diplomat Devyani Khobragade. The fact that a “tiny” incident almost brought catastrophic effects to the entire system of bilateral relations, so much time and effort in the making, was an absolute shock to both countries.

With the start of the latest campaigns for parliamentary elections in India, when a Bharatiya Janata Party victory is completely realistic, another and very serious problem for American-Indian relations has come up. It’s possible that N. Modi may be charged “at least, for inaction” in the course of the so-called “Gujarat pogrom” of 2002. The US denied him entrance in 2005 based on these accusations.

But right after voting results were announced, B. Obama congratulated N. Modi over the phone on his party’s victory and reminded him about the strategic partnership that binds their countries. He stressed the significance in the modern world of the fact that the US and India are “the largest democracies.” The American president expressed hope that, “under the leadership of N. Modi, India will play an important role in the solving of global problems.”

After the inauguration on May 20th of that year, B. Obama suggested a bilateral summit with N. Modi in the end of September 2014, when the Indian prime minister will be in the US for the regular U.N. General Assembly meeting.

As for N. Modi himself, against the better judgment of some experts from his inner circle, he did not send disapproving signals to Washington about former “discriminatory” measures. Moreover, during his campaign he underscored his “lack of personal ill will towards the USA and intention to build lasting partner relations with Washington based on equality and mutual benefit.”

N. Modi has taken into consideration the undoubted fact that continuing to develop US relations this way can offer India much-needed room to maneuver in relations with other world leaders, namely China, Russia, the EU and Japan.

India’s new government’s foreign policy will be carried out in conjunction with “the 6 top priorities”, published by the country’s Ministry of Foreign Affairs at the end of May of this year. The first of these “priorities” indicates the need to “breathe life into India’s lagging relations with the USA.” The second point can be understood as the reason for this necessity, which is connected with “China’s growth and aggressive behavior, India’s main challenge.” For this same reason, India intends to develop all-around partnerships with Vietnam, Indonesia, Singapore and Australia.

Defense, which will increasingly become a supporting element of Indian foreign policy, will be reorganized in accordance with the “6 top priorities”. Their shared anti-China (and anti-Pakistan) bent cannot be doubted. In particular, the idea of increasing defense spending from 1.7% to 2.5% of the GDP is motivated by “the need for military modernization as well as a deterrent for China and Pakistan.”

Remarkably, N. Modi has decided to unite under one guiding body the ministries of defense and finance. One of the essential goals of this action is obvious. It is to enact a radical solution, under discussion for over 10 years now, to the problem of finding a comfortable level of “Foreign Direct Investment,” FDI, as well as making the process of engaging new investment in economics simpler, especially in the defense-industry sector.

Limits on FDI levels in defense companies (along with corruption in an extremely complicated bureaucratic apparatus) are where the fact of a 20-30 year delay in realizing a crucial program in the defense sector meets the fact of the 65% interest rate on tech imports purchased by the ministry of defense for armed forces.

In accordance with the ministry of finance’s plans, the process of attracting different companies up to 49% FDI will take place, side-stepping certain government structures. Compliance with government organs will only require an increase in the companies’ capital stake.

It’s not clear in what companies the foreign capital stake could reach 100%, but Indian experts believe that defense companies could end up among the main “beneficiaries” of such novations.

Who, then, can actually purchase Indian defense companies? As it seems, only financial-technological-managerial legally capable defense-industry giants could possibly be buyers. If Russian companies get the desire to participate in the slicing-up of the Indian defense-industry pie, they’ll have to tangle with such global monsters as American firms Boing and Lockheed Martin, the European EADS, and Japan’s Mitsubishi. Each one has a yearly turnover of no less than 60-70 billion dollars.

Japan, (and Russia too, by the way,) don’t come up in conversations about India’s “top priorities” for future foreign policy. But Japanese press has already called N. Modi “an Indian Shinzo Abe” for his firmness and decisiveness in attaining his stated goals. 

Here they write about N. Modi’s 2007 and 2012 visits to Japan, (when he was on the US’s “no fly list”), during which they signed a partnership agreement on the state of Gujarat, lead by them, with one of the world’s leading economists. N. Modi was one of the first to congratulate Shinzo Abe at the end of 2012 and welcome him back to the position of Prime Minister of Japan. After he was inaugurated as Prime Minister, N. Modi announced that he has had “an excellent experience working with Japan … I’m sure we’ll raise Japanese-Indian relation to never-before-reached heights.”

On the whole N. Modi has been characterized as a prudent pragmatic. His foreign policy will apparently be such as well, based on the well-known principle “strictly business.” Those who can offer India that mutually beneficial “business” in international politics, economics and defense will succeed in developing partnerships with the country under the new Prime Minister.

Vladimir Terekhov, leading research fellow at the Russian Institute of Strategic Research’s Center for Asia and the Middle East, especially for the online magazine “New Eastern Outlook”.