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Subject: Bilateral Relations

1. Major World Events
2. India’s Interests in neighbourhood
3. Effects of our Policies

  • Hype Trumps Hope

    Context

    US president’s visit comes when a mutually beneficial framework of bilateral relationship stands disrupted.

    Significance previous U.S. President’s visits

    • The Clinton visit:  The Clinton visit occurred against the backdrop of a new assessment within the American strategic community of India’s potential role in the post-Cold War era and against the backdrop of the rise of China.
      • Recognition of India’s nuclear power: He implicitly recognising India’s nuclear power status.
      • Kashmir issue: He suggested that the line of control (LoC) between India and Pakistan should be viewed as the international border so as to bury the “Kashmir issue” forever and-
      • Visas for Indians: increasing entry visas for Indians that has since contributed to the emergence of a sizeable community of Indian Americans.
      • As a counter to China: It was suggested that the rise of democratic India would be in the interests of the US and so the latter ought to be supportive of the former.
    • The Bush visit:
      • Political context: The rise of China and of radical Islam and jihadi terrorism provided the geopolitical context.
      • Economic context: The growth of an increasingly open Indian economy provided the economic context.
      • Cooperation in civil nuclear energy: Influenced by this new thinking, President George Bush took the next steps in strategic partnership and led the initiative to promote cooperation in the field of civil nuclear energy that also explicitly recognised India as a nuclear weapons power.
      • As heads of state, Clinton and Bush altered US-India bilateral relations in a fundamental way.
    • The Obama visit:
      • P2P relation: His second visit was more a recognition of the growing importance of people-to-people (P2P) relations and
      • Defence sales to India: The visit also aimed at promoting defence sales to India.
      • During the nuclear deal negotiations, US Congresspersons would often suggest that it was a “123 for 126” deal — that is, they would vote in favour of the 123 agreement in Congress in the hope that India would buy 126 fighter jets from the US.
      • That hope remains as yet unfulfilled, with the French getting the Rafale deal and no decision taken on the purchase of US fighter jets.

    America First policy of Trump

    • The credit for laying the foundation for a new and supportive post-Cold War relationship between the US and India goes singularly to President Bush.
    • Disruption with the arrival of Trump: The mutually beneficial framework that Bush helped create to promote the bilateral relationship has been rudely disrupted by the arrival of Donald Trump in Washington DC.
      • End of GSP: Trump’s “America First” policy offers no space for offering India “special and differential” treatment on any front, least of all trade.
      • Status of the Indian economy from the US perspective: With per capita annual national income of US $60,000, Trump’s America has no qualms declaring India, with a per capita annual average national income of US $2,000 a “developed economy” not deserving of any leniency in trade policy.
      • Clubbing together with China: To club China, a $15-trillion economy, with a $3-trillion India on the trade front is not just stupid but an affront to Indian sensibilities.

    What are the hopes and what could be the outcomes of the visit?

    • No bi-partisan support to India’s rise: It has to be recognised that neither Democratic liberals nor Republican conservatives are any longer willing to be supportive of the Bush-Rice paradigm that views India’s rise in benign and mutually beneficial terms.
      • Inward-orientation in both the countries: Today the relationship seems caught in the pincers between the inward-orientation of rightwing nationalists in both nations.
      • No hope of change: There is no reason as yet to believe that this unfortunate state of affairs will be altered by the Trump visit next week.
    • Stand on Pakistan or Kashmir: Trump has also moved away from the Clinton-Bush framework on India-Pakistan relations and moved closer to approach of wanting to insert the US into the equation on Kashmir.
      • Appeasement of Pakistan: Trump’s motives are no different from those that initially drove Obama-namely, to appease Pakistan in the hope of securing a peaceful exit from Afghanistan.
      • Expect differences to persist: At best, India can hope to limit the damage Trump may do to strategic stability in the region.
    • Visa and investment: There will be much talk about US investments in India and increased visas for Indians going to the US.
      • Corporate interests: Both are driven largely by US corporate interests.
      • Given the direction of the Modi government’s trade policy, one cannot expect any dramatic concessions being made.
      • Defence purchases: The best India can do for the US is to buy more defence equipment and ease up on some trade restrictions.
      • Defence sales to India are an essentially commercial activity and much of it can go on even in the absence of strategic convergence and shared geopolitical perspectives.
    • Brain-drain and need to focus on education: Much is made of Indian Americans heading US multinationals and the Great Indian Diaspora in the US.
      • Outmigration of talent: The continued neglect of education in India is increasing the outmigration of talent, offering the US a reservoir of talent.
      • Drain on national resources: While the Indian elite celebrates this out-migration, the fact is that it is a drain on national resources.

    Conclusion

    In sum,  with the supportive Bush-Rice doctrine defining the post-Cold War US-India partnership virtually abandoned, and the new Trump doctrine treating India as a “developed” economy, demanding parity on trade, bilateral relations have become uncertain and testy. To hide the lack of substance in the relationship the Trump visit will focus on the hype and Prime Minister Modi has perfected the art of diplomacy as mass entertainment.

     

     

  • USTR takes India off developing country list

     

    The Office of the United States Trade Representative (USTR) has published a notice, amending lists of developing and least-developed countries that are eligible for preferential treatment with respect to countervailing duties (CVD) investigations.

    New classification by US

    • To harmonise U.S. law with the World Trade Organization’s (WTO) Subsidies and Countervailing Measures (SCM) Agreement, the USTR had, in 1998, come up with lists of countries classified as per their level of development.
    • These lists were used to determine whether they were potentially subject to U.S. countervailing duties. The 1998 rule is now “obsolete” as per the USTR notice.
    • Countries not given special consideration have lower levels of protection against a CVD investigation.
    • A CVD investigation must be terminated if the offending subsidy is de minimis (too small to warrant concern) or if import volumes are negligible.
    • The de minimis thresholds and import volume allowance are more relaxed for developing and least-developed countries.

    Criteria set by US

    • The USTR used the following criteria to determine whether a country was eligible for the 2% de minimise standard:

    (1) Per capita Gross National Income or GNI

    (2) share of world trade

    (3) other factors such as Organisation for Economic Co-operation and Development (OECD) membership or application for membership, EU membership, and Group of Twenty (G20) membership.

    Delisting India

    • India was, until February 10, on the developing country list and therefore eligible for these more relaxed standards. It has now been taken off of that list.
    • India, along with Brazil, Indonesia, Malaysia, Thailand and Vietnam were taken off the list since they each have at least a 0.5% share of the global trade, despite having less than $12, 375 GNI (the World Bank threshold separating high-income countries from others).
    • India was taken off the list also because — like Argentina, Brazil, Indonesia and South Africa — it is part of the G20.
    • Given the global economic significance of the G20, and the collective economic weight of its membership (which accounts for large shares of global economic output and trade), G20 membership indicates that a country is developed a/c to USTR.

  • Keeping the southern neighbour engaged

    Context

    During Mahinda Rajapaksa’s India visit, New Delhi is likely to talk to Colombo on the Tamil issue and counterbalance Beijing’s influence in the Indian Ocean.

    Background of the current politics in Sri Lanka

    • Sri Lankan Prime Minister official visit to India is taking place a few months after he assumed office and his brother was sworn in as president
    • Nationalist wave after attacks: The brothers were voted to the office on a Sinhala nationalist wave, a sentiment that is a fallout of the Easter attacks on Christian shrines, including the Saint Anthony’s shrine, in April last year.
      • The attacks had killed more than 250 people, six months before the elections.
      • The polarisation worked in favour of the Rajapaksas vis-à-vis Sri Lanka’s 10 per cent Muslim population, mostly Tamils, who are especially numerous on the country’s east coast.

    Tamil issue in Sri Lanka

    • No engagement with Hindu Tamil: While Muslims have become the number one scapegoat for the Easter tragedy, the Rajapaksas have not tried to engage the Hindu Tamils
    • LTTE background: Hindu Tamils, who make about 11 per cent of Sri Lanka’s population, have had an acrimonious relationship with Mahinda Rajapaksa ever since he wiped out the LTTE in 2009.
      • Many members of the community became collateral victims in the process.
    • Implications for India-Sri Lanka relations: Gotabaya was the defence secretary at that time. The Hindu Tamil factor may complicate India-Sri Lanka relations.
    • No inclusion minorities from Sri Lanka in CAA: In the Citizenship Amendment Act the Indian Parliament passed in 2019, the persecuted minorities of Sri Lanka are not taken into account.
      • However, the Hindu Tamils of Sri Lanka are feeling insecure again.

    China-Sri Lanka axis

    • The China factor is likely to aggravate the complication: The Rajapaksas are known to be pro-Sri Lanka. Mahinda Rajapaksa was largely responsible for opening Sri Lanka to massive — and strategic -Chinese investments.
    • The Hambantota port issue: The Hambantota Port and 15,000 acres have been conceded to China on a 99-year lease, causing considerable consternation in New Delhi, which apprehends that this deep seaport could be used for military purposes, and not just trade.
      • The deal was put on a hold by former PM but the present dispensation wants it to be restored.
    • China’s growing clout in the Indian Ocean: India’s efforts were also designed to thwart China extending its influence in Sri Lanka at a time when the Narendra Modi administration is trying to counter Beijing’s clout in the Indian Ocean.
    • Modi’s visited on May 30, 2019, just after beginning his second tenure as PM.

    Past engagement events

    • New Delhi has tried to engage the new Sri Lankan government after the Rajapaksas assumed office.
      • India’s foreign minister S Jaishankar, landed in Sri Lanka on November 20, 2019, to invite Gotabaya for his first visit to India — rather than to China.
    • Gotabaya visited New Delhi for three days in late November last year.
    • Tamil issue discussed: Jaishankar is said to have told Gotabaya that India expects his government to treat Tamils with dignity in the process of reconciliation.
      • There is speculation that India might appoint an ambassador of Tamil origin to Colombo.
    • Cooperation against terrorism: The Indian PM went further when Gotabaya Rajapaksa visited New Delhi: He announced a $50 million line of credit for security and counter-terrorism
    • Line of credit for Infra: India also announced another $400 million for development and infrastructure projects in Sri Lanka.
      • That the counter-terror fund would further strengthen cooperation against terrorism.
    • Allaying the fears over China: Gotabaya allayed India’s fears on China by saying that Sri Lanka would not allow a third country to affect Sri Lanka-India ties.

    Conclusion

    While addressing the issue of minority and growing Chinese influence in Sri Lanka both countries need to focus on the other areas of cooperation like counter-terrorism, trade, security, development, technology etc.

  • [op-ed of the day] In defence of a shared vision

    Context

    Defence cooperation has been one of the fundamentals of the bilateral relationship between India and France, which developed a close and ambitious strategic partnership for over 20 years.

    Defence cooperation between France and India

    • A long history of cooperation: The defence cooperation between our two countries can be traced back to the first few years following India’s Independence.
      • As early as 1953, the Indian Air Force was equipped with a hundred Toofani fighter jets from Dassault, then the Mystère IV, which defended India in tough times.
    • This marked the first page in the history of cooperation in military aviation, which also recorded the supply of 60 Mirage 2000s in the 1980s.
    • Rafale deal: The ongoing delivery of 36 Rafales is being done as per the schedule.
      • The first batch of aircraft, currently being used to train Indian pilots, will land at Air Force Station Ambala within a few months.
    • Partnership in maritime domain: Today, the partnership has been deployed in the maritime domain, in support of our joint strategic vision for the maintenance of stability and security in the Indo-Pacific.
      • As far as naval equipment is concerned, the Indian Navy has already commissioned two of the six submarines built in Mumbai as part of an industrial partnership between Mazagon Dock Shipbuilders Limited (MDL) and Naval Group.

    Industrial cooperation between the two countries

    • Support to indigenous production: As for industrial cooperation, the French approach has always been, whenever possible, to offer partial indigenous production in India.
      • France was largely a precursor with regard to Make in India, with HAL manufacturing the light helicopters Cheetah and Chetak, and BDL’s Milan anti-tank missile in India in the 1960s.
      • It continues this policy today. The plant built under the Dassault Aviation and Reliance joint venture will enable, for example, the complete production of the Falcon 2000 business jet here in India by 2022.
    • Transfer of technology: After the delivery of the first two Scorpene submarines, transfers of technology provided by the Naval Group enabled MDL to be solely in charge of building the next four submarines.
      • The design of these submarines has thus become largely Indian knowhow.
      • Safran will soon inaugurate an aircraft wiring systems factory in Hyderabad and also build another major facility to manufacture LEAP turbofan engine components.
      • Thales is investing massively in engineering works in Bengaluru, MBDA is building a plant in Coimbatore and French aeronautical equipment manufacturer Latécoère recently inaugurated a factory in Belgaum.

    Opportunities for further cooperation

    • Developing the supply chain at all the levels: The French aerospace industries association, GIFAS, and GICAN, the French Marine Industry Group, are organising a seminar focused on this subject during DefExpo.
      • Along with the Society of Indian Defence Manufacturers (SIDM), they are exploring opportunities for developing Indo-French industrial partnerships at all stages of the production chain.
      • Promoting Make in India: India can count on France being by its side for its Make in India enterprise.

    Conclusion

    India and France both share the same vision for a new balanced multipolar world, which must be based on the rule of law. They also share the same vision on the main challenges of the times, be they security developments in Asia and the Indo-Pacific, or combating international terrorism. But it is by possessing the capability of ensuring national security and making strategic choices that most efficiently defend their shared principles and visions.

     

     

  • [pib] Exercise SAMPRITI-IX

    As part of the ongoing Indo-Bangladesh defence cooperation, a joint military training exercise SAMPRITI-IX is being conducted in Meghalaya.

    Exercise SAMPRITI

    • It is an important bilateral defence cooperation endeavour between India and Bangladesh and will be the ninth edition of the exercise which is hosted alternately by both countries.
    • During the joint military exercise SAMPRITI-IX, a Command Post Exercise (CPX) and a Field Training Exercise (FTX) will be conducted.
    • For both the CPX and FTX, a scenario where both nations are working together in a Counter-Terrorism environment will be simulated under the UN Charter.
    • The FTX curriculum is progressively planned where the participants will initially get familiar with each other’s organizational structure and tactical drills.
    • The training will culminate with a final validation exercise in which troops of both armies will jointly practice a Counter Terrorist Operation in a controlled and simulated environment.

  • Sagarmatha Sambaad

     

    Nepal has invited the PMs of India and Pakistan along with several other heads of government and heads of state for the Sagarmatha Sambaad.

    Sagarmatha Sambaad

    • Sagarmatha Sambaad is a multi-stakeholder, permanent global dialogue forum initiated by the Government of Nepal.
    • It is scheduled to be held biennially in Nepal.
    • The Sambaad (dialogue) is named after the world’s tallest mountain Sagarmatha (Mount Everest).
    • The Everest is also a symbol of friendship and is meant to promote the notions of common good and collective well-being of humanity.
    • The first episode of the Sambaad is scheduled to be held from 2 to 4 April 2020 by the Ministry of Foreign Affairs (Nepal).
    • The theme of the first Sambaad is “Climate Change, Mountains and the Future of Humanity.”

    Significance

    • This is the first ever multi-stakeholder dialogue and a biggest diplomatic initiative in Nepal’s recent history.
    • India and Pakistan have been caught up in a cycle of hostility, which had prevented Islamabad from hosting the SAARC Summit in 2016.
    • The Kathmandu event aims to draw all the SAARC leaders and provide an opportunity to break the ice.
    • India had accused Pakistan of cross border terrorism while boycotting the Islamabad summit leading to its cancellation.

  • [op-ed snap] It’s not yet Howdy, Modi!

    Context

    Persistent in their efforts to remake their countries and their engagement with the world, Mr Modi and Mr Trump are shaking up the bilateral ties between the two countries, and the resultant flux could outlive their tenures.

    The emergence of both the leaders on similar promises

    • Improvements over the legacy of their predecessors: Both leaders continuously reiterate that their predecessors were incapable of protecting national interest.
      • The compulsion to reframe the national interest: Such premises commits them both to reframe the national interest, and both have articulated it with clarity and force.
      • For instance, Mr Modi, in Houston in September 2019 and Mr Trump in Davos this week, went great lengths to lay out figures that presented their respective regimes as the most effective guardians.
    • Both have cultural and economic agenda: Both dispensations believe that “the people” had been given a raw deal by earlier regimes.
      • Both have a cultural and economic agenda.
      • National awakening: They are now leading a national reawakening, and working hard for the hard-working people.
      • Both believe that cultural nationalism is a force for the good.
      • Securing borders and entry barriers: Both believe that national borders need to be strengthened by stricter monitoring and setting new bars for entry.
      • Renegotiating the treaties: Both leaders try to renegotiate the contract between the union and the States, and between citizens and the state within their respective countries.
      • The supremacy of executive: They assert the supremacy of the executive over the legislature and the judiciary.
      • Shared values: The notion of shared values of India and the U.S. has acquired a whole new meaning under Mr Trump and Mr Modi.

    Politics and governance

    • Hopes of status-quo in bilateral relations shattered: It was hoped that the stronger U.S.-India ties- that have autonomous drivers of convergence-would not be impacted by the nationalist politics of these two leaders.
      • But both leaders have been remarkably true to their politics in their governance.
      • Current tumult in the India-US ties: Shared values notwithstanding, national interests as perceived by these leaders have several points of divergence and therein lies in the current tumult in India-U.S. ties.
      • Opposition to the “world order”: Mr Trump has been outspokenly confrontational with the “world order” that he says has worked against American interests.
      • Dismantling the treaties: America under Mr Trump has wrecked treaties such as the Paris climate agreement and institutions such as the World Trade Organization and the United Nations, disrupting the “rule-based order”.
      • India’s relations with Bangladesh: India’s spirited outreach in the neighbourhood is still playing out. India’s historically warm ties with Bangladesh have been frayed after CAA.
    • India’s ambitions on the global level
    • The seat at the UNSC: India under continues to push for more space for itself in global affairs by seeking a permanent seat in the UN Security Council and membership.
    • NSG membership: India is also pushing for the membership of the Nuclear Suppliers Group.
    • The US actions at global levels
      • Expansion of the principle of the pre-emptive strike: America expanded the principle of pre-emptive strike to include the assassination of a senior official of Iran.
      • Renegotiating the treaties: After dismantling the North American Free Trade Agreement, Mr Trump forced Mexico and Canada to accede to his demands in a new trade deal.
    • The India-US relations and impact of U.S. relations with other countries
      • Impact on India-US ties: India’s ties with the U.S. are impacted by America’s ties with India’s adversaries and neighbours, China and Pakistan.
      • Hopes of alignment in the Indo-US ties: Mr Trump’s bluster against both had lit hope that there would finally be a near-complete alignment between India and the U.S. on strategy.
      • US-Iran conflict: Despite Mr Trump’s avowed opposition to America’s endless wars in West Asia, the US is going against Iran headlong, which is not in India’s interest.
      • Relations with Gulf Countries: Trump and Mr Modi share a strong bonding with the Gulf Cooperation Council kings, but their courses in the region are diverging.
      • US-Pakistan coming closer once again: The American President’s impatience to get out of Afghanistan has already pushed his administration closer to Pakistan, which is now further necessitated by his adventurist Iran policy.
      • The US disregard for China’s expansionist policies: Mr Trump has been singularly focused on one question-trade. He cares little about China’s expansionism and at any rate that is not a factor in his ties with other Asian countries.

    India-US ties- Points of fission

    • On the trade front: Mr Trump has bracketed India and China as two countries that have duped his predecessors to gain undue advantage. Which is far from seeing India as deserving special concessions to counterbalance China as old wisdom demanded.
      • Ending GSP: The US ended India’s status under the World Trade Organization’s Generalized System of Preferences and took other punitive measures.
      • India trying to decrease the trade surplus: By increasing hydrocarbon imports from the U.S., the government is trying to reduce India’s trade surplus.
    • Restrictions on H1-B visa: The US has tightened the restrictions on the H1-B visa which is used by the Indian companies.
    • Decreasing bipartisan support in the US: The mobilisation of Indian diaspora in America by the government has resulted in the inevitable blowback.
      • Diaspora divided and bipartisan support waning: The diaspora has been divided, and the bipartisan support for India is now squandered. Progressive sections on the Democratic side and religious libertarians and evangelicals on the Trump side are both concerned over India’s actions back home.

    Conclusion

    Partnership with America is critical to India. India must take the steps to align the interest but whenever it diverges India must take measures to minimise its impact on India while furthering its interests.

  • [op-ed snap] Same country, different script

    Context

    Pakistan is changing significantly, which is good for itself and its neighbour as well.

    Changing Pakistan

    • Major stakeholders in favour of peace: The civil society, the political parties, and even the military establishment of Pakistan have come to favour peaceful and cooperative relations with India.
    • Both the power-centre on the same page: Both Islamabad and Rawalpindi, Pakistan’s two centres of power, are now on the same page in seeking “honourable peace” with New Delhi on the basis of “sovereign equality”.
      • Heavy price paid by Pakistan: There is a broad consensus in Pakistani society and polity that their country has paid a very heavy price by supporting the forces of Islamist extremism and terrorism.
      • The futility of using terrorism as foreign policy: There is also consensus that using terrorism for achieving mistaken foreign policy ends in Afghanistan and India.

    Conducive conditions for dialogues

    • Four factors have influenced the welcome winds of change in Pakistan.
    • First-Realisation that Pakistan has suffered a lot:
      • Harm at home and to the global image: There is the across-the-board realisation that Pakistan has suffered a lot, both domestically and in terms of damage to its global image, by supporting religious extremism and terrorism.
      • A large number of casualties: Terrorists have killed a shockingly large number of civilians -certainly far many more than in India. Several thousand soldiers have lost their lives in the army’s “war on terror”-more than the number of casualties in all the wars with India.
      • The threat of FATF blacklisting: Furthermore, Islamabad is under relentless pressure from the Financial Action Task Force (FATF) to act decisively and irreversibly against terrorist organisations.
    • Second-Decrease in religious radicalisation in Pakistan
      • The decrease in the financial support to radicalism: What has contributed to the diminished importance of religious radicalism is also the shrinking inflow of petrodollars from Saudi Arabia and Gulf countries that promoted this agenda.
      • The ideological influence of religious radicalisation on Pakistan’s civil society is clearly declining.
      • Change in Saudi Government Policy: Export of Wahhabism is no longer a foreign policy priority of the Saudi Arabian government.
      • Changing policies in UAE: The United Arab Emirates has gone a step further, under the leadership of Abu Dhabi’s Crown Prince Mohammed bin Zayed Al Nahyan, it is pursuing inter-religious tolerance with a zeal that has surprised Muslims and non-Muslims alike.
    • Third-Interest of China
      • Rise of China as an economic and security partner: The third factor is China, which has emerged as Pakistan’s most important economic and security partner.
      • The China-Pakistan Economic Corridor (CPEC) and BRI: The flagship projects under Beijing’s BRI has begun to modernise Pakistan’s infrastructure spectacularly, but its security is which could be threatened by terrorism is also the concern for China.
      • Connection with China’s Xinjiang Province: China has urged Pakistan’s ruling establishment to take firm steps to curb the activities of Islamist groups because they can easily foment trouble in China’s Muslim-majority Xinjiang province.
      • India-China relation factor: Beijing is also engaged in a steady effort to improve relations with New Delhi, in recognition of India’s rising economic and geopolitical stature in Asia and globally.
      • Possibility of India-China-Pakistan cooperation: China’s President Xi Jinping even mooted cooperation among China, India and Pakistan at Mamallapuram summit.
    • Fourth-Military establishment in favour of peace.
      • The military establishment seems to be fully convinced of the need for normalisation of India-Pakistan
      • Opening of Kartarpur Sahib Corridor: The opening of the Kartarpur Sahib Corridor, perhaps the greatest confidence-building measure between the two countries since 1947, is almost entirely due to Gen. Bajwa’s personal commitment to the project.
      • The economic crisis in Pakistan: Bajwa’s is also said to be convinced of the need to open the doors for economic and trade cooperation between the two countries given a serious economic crisis Pakistan is going through.
      • Discussion on the Kashmir issue: The Pakistan Army may also be ready to discuss a solution to the Kashmir issue on the basis of a formula Gen. Pervez Musharraf had discussed with PMs Atal Bihari Vajpayee and Dr Manmohan Singh.

    Conclusion

    India needs to seize the opportunity to resume the talks with Pakistan on all the contentious issues and try to resolve the disputes so that the improved relations could help both the countries and the neighbouring countries.

  • India-Pakistan Trade

    Tensions between India and Pakistan in 2019 have reduced the already low volumes of trade between the two countries to near zero.

    India-Pakistan trade, in the beginning

    • In 1948-49, about 56% of Pakistan’s exports were to India, and 32% of its imports came from India.
    • From 1948-65, India and Pakistan used a number of land routes for bilateral trade; there were eight customs stations in Pakistan’s Punjab province and three customs checkpoints in Sindh.
    • India remained Pakistan’s largest trading partner until 1955-56. Between 1947 and 1965, the countries signed 14 bilateral agreements on trade, covering avoidance of double taxation, air services, and banking, etc.
    • In 1965, nine branches of six Indian banks were operating in Pakistan.

    Close to vanishing

    • Following the terrorist attack on the CRPF convoy in Pulwama in February, India withdrew Most Favoured Nation (MFN) status for Pakistan and raised customs duty on Pakistani imports to 200% .
    • In April, India suspended cross-LoC trade to stop the misuse of this route by Pakistan-based elements.
    • Pakistan on its part closed its airspace to India for a prolonged period.
    • The decisions by both countries, while targeted at hurting the neighbour, have severely impacted the livelihoods of individuals and families involved in cross-border trading activities.

  • [op-ed snap] Seize the summit

    Context

    India announced that it will invite all heads of government of Shanghai Co-operation Organisation member countries, including Pakistan.

    Significance of the invitation

    • First since 2014: The summit will assume significance should Pakistan Prime Minister accept the invitation.
      • As it will be the first by a head of government or state of that country to India since former Prime Minister Nawaz Sharif attended the swearing-in ceremony of Prime Minister in 2014.
    • Hopes belied: Nothing came from that meeting and hopes created by the invitation were belied.
    • Failed attempts to engage: Attempts to engage after that failed, including at a previous SCO summit at Ufa in 2015.

    Latest events that further reduced the engagement

    • Pulwama attack: First, there was the February 2019 Pulwama attack, India’s Balakot response, and Pakistan’s counter-response.
    • Article 370: After India did away with Jammu & Kashmir’s special status, India and Pakistan have downgraded even their diplomatic presence in each other’s countries.
    • Both the countries withdrew their high commissioners after the Article 370 issue.
    • Trade stopped completely: Bilateral trade, which had managed to survive earlier shocks to relations, has stopped completely.

    Opportunities presented by SCO summit

    • “Inputs of all stakeholders”: In deciding whether to accept the invitation, the Pakistan PM will have to take into consideration “inputs of all stakeholders”.
    • A polite way of saying that the final yes or no will rest with the Pakistan Army.
    • A chance for a high-level meeting: Even if Imran Khan stays away and sends a minister instead, it would still be a chance for a high-level bilateral meeting.
    • The world wants India and Pakistan to engage: The world wants India and Pakistan to engage, and this was evident in the way the UNSC refused to take up the Kashmir issue, saying it was not the forum for it.
    • Opportunity for India to make a start: India has declared several times recently that it wants to peel away from historical foreign policy baggage.
      • India should make a start with Pakistan by making it possible for such a meeting to take place.
    • Making acceptance of invitation easier: India can make it easier for the Pakistan Prime Minister to accept the invitation.
    • Resuming trade: A start could be made by resuming trade, which has ground to a dead halt
    • Sending High Commissioner back: India can start by sending India’s High Commissioner back to his office in Islamabad.

     Conclusion

    The SCO summit presents an opportunity for both the countries to end the long hiatus in the relations which is essential for both the countries to resolve the long-standing issues and progress of both the countries.