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Subject: Bilateral Relations

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

  • Places in news: Luxembourg

    Prime Minister has pitched for strengthening ties to further ramp up economic engagement between India and Luxembourg.

    Mark the location of Luxembourg. Since it is a landlocked country, there can be a question asking its bordering states.

    Luxembourg

    • Luxembourg is a small European country, landlocked by Belgium, France and Germany.
    • It’s mostly rural, with dense Ardennes forest and nature parks in the north, rocky gorges of the Mullerthal region in the east and the Moselle river valley in the southeast.
    • Its capital, Luxembourg City, is famed for its fortified medieval old town perched on sheer cliffs

    Why Luxembourg?

    • Luxembourg is one of the most important financial centres globally.
    • Several Indian companies have raised capital by issuing Global Depositary Receipts at the Luxembourg Stock Exchange.
    • Luxembourg-based investment funds hold substantial banking and asset management market share in portfolio investments in India.
    • It is also the third-largest source of Foreign Portfolio Investments (FPI) in India.
  • Challenges from the RCEP despite staying out of it

    India’s challenges from RCEP didn’t end by staying out of it. Remaining out of the RCEP has several implications for India. This article discusses such challenges.

    What RCEP mean for the region

    • The RCEP was finally signed by its 15 members on the sidelines of the Asean Summit last week without India.
    • This would make it a trade deal that includes the ten Asean economies, and all of Asean’s bilateral FTA partners, except India.
    • It would create new market access for China and Japan-the two largest economies of the group.
    • China, Japan and Korea were negotiating a trilateral trade pact, which now might become inconsequential following RCEP.
    • In this respect, RCEP would actually produce much greater market access outside of the Asean, among non-Asean members China, Japan and Korea.
    • Asean’s specific market access gains would be over and above those that are already available through various Asean+1 FTAs.
    • Additional market access gains would be more with respect to China, in terms of the additional tariff coverage and concessions that RCEP would provide.

    Implications for China

    • Apart from the additional preferential access it obtains, it is also able to pull off strategic dividends.
    • As the RCEP proceeds, it would establish China’s decisive say in writing the rules of trade in the region through the RCEP.
    • And this is precisely what the US would be wary of.

    Implications for the U.S.

    • President Obama had pitched the Trans-Pacific Partnership (TPP) as an obvious and essential alternative for counterbalancing Chinese strategic domination of the regional trade game.
    • The US was taken out of the TPP by President Trump.
    • The remaining members managed to salvage the deal, largely due to the spirited leadership provided by Japan and Australia.
    • While the TPP survives as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
    • But CPTPP is incapable of being a strategic counterweight to China, and the RCEP.
    • Nothing other than a CPTPP that includes the US would be able to counterbalance China in economic size and strategic clout.

    Way forward

    • The Quad—a security partnership between the US, Japan, India and Australia—is looking to expand beyond defence and assume broader strategic proportions.
    • Geopolitics is contributing significantly to the construction of economic alliances, including the reorganisation of regional supply chains.
    • Due to these factros, search for an Indo-Pacific trade and economic compact is likely to hasten following the conclusion of RCEP.
    • Following RCEP, and the almost non-existent possibility of returning to its fold, India too, might find itself working actively on moving towards an Indo-Pacific trade deal.
    • The RCEP, which has a sizeable number of key Indo-Pacific economies like Japan, Australia, Korea, Vietnam and Indonesia, would need to stick to these countries to stick to the trade agreement after its ratification.

    Conclusion

    RCEP might actually force the U.S to look at returning to CPTPP much more proactively than it might have imagined. It would also, expectedly, look at India to join the bloc. That would be another challenge to navigate. India’s challenges from the RCEP might have increased in spite of staying out of it.

  • India-Canada relations

    Track 1.5 dialogue

    •  The third round of India-Canada Track 1.5 Dialogue, comprising senior diplomats, officials and independent experts, will be held on a virtual platform.
    • This promising interaction represents a major, deliberate endeavour to boost the bilateral relationship.

    Convergence on China issue

    • Common challenges of the COVID-19 era accelerated the momentum of bilateral engagement.
    • Canada’s travails with China, starting with the arrest of Huawei’s chief financial officer in Canada in December 2018.
    • Later, the ‘hostage diplomacy’ practised by Beijing which arrested two Canadian nationals, has caused huge stress in Canada-China relations, turning Canadian public opinion against China.
    • This opened the door to a closer relationship with India.
    • In this backdrop, developments concerning the Indo-Pacific —  strengthening of the Quad and the growing interest of France, Netherlands and Germany to be active players in the region — are of immense relevance to Ottawa.
    • The forthcoming dialogue can deepen the India-Canada convergence on this issue.

    Principal area’s of bilateral cooperation

    • Canada-India merchandise trade exceeded C$10 billion in 2019.
    • Canada’s cumulative investment, including foreign direct investment and by Canadian pension funds, is a substantive C$55 billion.
    • Addressing virtually the ‘Invest India’ conference in Canada on  Prime Minister pointed out that mature Canadian investors have been present in India for many years and assured them that no barriers would come in their way.
    • Indian students are increasingly being educated in Canada, and a quarter million of them spent an estimated $5 billion in tuition fees and other expenses last year, a solid contribution to the Canadian economy.
    • Of 330,000 new immigrants accepted by Canada last year, 85,000 i.e. nearly 25%, were from India.
    • The Indian diaspora in Canada is now 1.6 million-strong, representing over 4% of the country’s total population.
    • The principal areas of bilateral cooperation are best defined by five Es: Economy, Energy, Education, Entertainment and Empowerment of women.
    • In particular, the digital domain holds immense potential, given Canada’s proven assets in technology — especially its large investment in Artificial Intelligence, innovation and capital resources, and India’s IT achievements, expanding digital payment architecture and policy modernisation.

    Conclusion

    Divided by geographical distance but united through clear common interests and shared values, India and Canada will begin their steady journey of progress, this time with a laser-like focus on common goals as well.

  • Unfurling India’s foreign policy concerns

    The article analyses two major concerns of India which would be influenced by the policies adopted by the next U.S. President. 

    Concern for India

    • What policy President-elect Joe Biden will adopt in its foreign policy will has bearing on India.
    • There are two foreign policy issues which are of great concern and interest — China and Iran in that order.
    • For the world, the equation between the United States and China may be the relationship of the greatest consequence.
    • For India, the most consequential relationship is not with the U.S. — as is sometimes claimed — but one with China.
    • What happens in greater West Asia will always remain of concern, but those interests will not be affected one way or the other by who is the President of the U.S.

    Quad dynamics and China

    • In the Trump years, India signed all the ‘foundational’ agreements with America.
    • India also bought billions of dollars worth of military hardware from them.
    • India resisted converting the Quad into a primarily military or strategic grouping, and is in fact aimed solely at containing China.
    • The Quad is an anti-China coalition.
    • How far it can be successful in containing the Dragon remains to be seen.
    • India’s External Affairs Minister has stated, India will not join any military alliance.
    • However, given the fact that all the other three, and perhaps five or six in future, are already in strategic alliance with one another and with the U.S., it is highly likely that India too will be forced to agree to some form of military alliance at a future date.
    • But no external power would want to get involved on our side in case of major hostilities with China.
    • On the other hand, if there is a major skirmish or worse in the South China Sea, the other members of the Quad will expect us to join them in fighting China, in an area far removed from our shores.

    Approach towards China

    • If Mr. Biden adopts a more conciliatory approach towards China, India may find ourselves in a difficult situation.
    • We do not want China to be permanently hostile to us; it will absorb huge resources, human and material.
    • The strong rhetoric employed in relation to China will need to be tempered.
    • Public opinion which has been worked up against China may make it difficult to do so immediately but the government is efficient in managing and moulding public opinion.

    Approach toward Iran

    • It may be difficult for Mr. Biden to quickly reverse Mr. Trump’s adventurist policy towards Iran.
    • It may not be possible for him given the domestic compulsions, to readopt JCPOA in its original form.
    • But he will surely, if slowly, engage Tehran in talks and negotiations through Oman or some other intermediary, to reduce tensions in the region.
    • India may be able to buy Iranian oil, and sell our pharma and other goods to that country.
    • The government may also feel less constrained in investing openly in oil and other infra projects in Iran, including the rail project in which Indian Railways Construction Ltd has been interested.

    Conclusion

    While India can’t expect the reversal of all Trump era policies, there will be certain changes in the stance adopted by the new U.S. President and India should be prepared to deal with it.

  • How a Biden’s Presidency may affect India?

    Donald Trump’s rise to the White House as well as his exit has led to a wide reactionary response in India.

    Also read:

    [Burning Issue] India US relations in the backdrop of recent hiccups

    (1) Economic Impact

    Trade

    • There are several ways in which the US economy, its health and the policy choices of its government affect India.
    • For one, the US is one of those rare big countries with which India enjoys a trade surplus. In other words, we export more goods to the US than what we import from it.
    • The trade surplus has widened from $5.2 billion in 2001-02 to $17.3 billion in 2019-20.
    • Under a Biden administration, India’s trade with the US could recover from the dip since 2017-18.

    FDI and FPI

    • The US is the fifth-biggest source for Foreign Direct Investment (FDI) into India. Of the total $476 billion FDI that has come in since April 2000, the US accounted for $30.4 billion — roughly 6.5 per cent — directly.
    • Only Mauritius, Singapore, Netherlands, and Japan have invested more FDI since 2000.
    • Apart from FDI the US also accounts for one-third of all Foreign Portfolio Investments (that is, investment in financial assets) into India.

    Ending protectionism

    • A Biden presidency may also see a renewed push towards a rules-based trading system across the world.
    • Instead of outright ad-hocism as was the case under Trump — as well as a move away from the protectionist approach that has been getting strong across the world.

    (2) Visa

    • For instance, how a US President looks at the H1-B visa issue, affects the prospects of Indian youth far more than the youth of any other country.
    • Under Trump, who severely curtailed the visa regime, thanks to his policy of “America First”, India had suffered the most.
    • That could change under Biden, who is unlikely to view immigrants and workers from India with Trump-like suspicion.

    (3) Technology

    • Other points of contention between India and the US are the tricky issue of data localisation or capping prices of medicines and medical devices.
    • These have a better chance of getting towards a resolution as we move away from the radical approach of President Trump to the pragmatism of a Biden presidency.

    (4) Diplomacy

    • Further, under the Trump administration, the US sanctions on Iran severely limited India’s sourcing of cheap crude oil.
    • For an economy such as India, which needs a regular supply of cheap oil to grow fast, a normalization of US-Iran relationship (and lifting of sanctions) would be more than useful.
    • On China, too, while the US apprehensions are unlikely to be fewer. It is more likely that a Biden administration will help India against China, instead of clubbing the two together.

    (5) Climate Action

    • Biden has promised to rejoin the Paris Climate Accord, and this may help countries such as India in dealing with the massive challenges — both technical and financial — on this front.
  • India-Maldives relations

    The Soleh government’s ‘India First Policy’ provides respite to India when contrasted with the approach of the predecessors.

    India-Maldives relations

    • India and the Maldives have had bilateral relations for centuries.
    • Maldivian students attend educational institutions in India.
    • Patients from the Maldives come here for super speciality healthcare.
    •  A liberal visa-free regime extended by India has aided the patients.
    • The Maldives is now a major tourist destination for some Indians and a job destination for others.
    • Given the geographical limitations imposed on the Maldives, India has exempted the nation from export curbs on essential commodities.

    Assistance to the Maldives

    • In 1988, under Operation Cactus when a coup was attempted against President, India sent paratroopers and Navy vessels and restored the legitimate leadership.
    • The 2004 tsunami and the drinking water crisis in Male a decade later were other occasions when India rushed assistance.
    • In COVID-19 disruption, India rushed $250 million aid in quick time and also rushed medical supplies to the Maldives, started a new cargo ferry and also opened an air travel bubble, the first such in South Asia.

    Strategic comfort to India

    • Abdulla Yameen was President when the water crisis occurred.
    • Now, the Yameen camp has launched an ‘India Out’ campaign against New Delhi’s massive developmental funding.
    • Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
    • Mr. Yameen’s tilt towards China and bias against India when in power was evident.
    • It is against this background that the Solih administration’s no-nonsense approach towards trilateral equations provide ‘strategic comfort’ to India.

    Concerns for India

    • India should be concerned about the protests as well as the occasional protest within the ruling Maldivian Democratic Party (MDP) of Mr. Solih.
    • There are apparent strains between Mohamed Nasheed, who was the nation’s first President elected under a multiparty democracy and Mr. Yameen.
    • This strain could affect the MDP during the run-up to the 2023 presidential polls.
    • Also, Mr. Nasheed’s on-again-off-again call for a changeover to a ‘parliamentary form of government’ can polarise the overpoliticised nation even more.

    Conclusion

    Given this background and India’s increasing geostrategic concerns in the shared seas, taking forward the multifaceted cooperation to the next stage quickly could also be at the focus of relations of the two countries.

  • Chabahar Rail Project

    An Iranian diplomat in an interview has said that Tehran now hopes that New Delhi will help facilitate equipment for the Chabahar-Zahedan railway line under a line of credit promised to it in 2018.

    Try this question

    Q. Discuss the strategic and economic significance of Chabahar Port and Rail Project for India.

    Recent controversy

    • The Iranian government in July had decided to proceed with the construction of this project on its own, citing delays from the Indian side in funding and starting the project.

    The Chabahar Rail Project

    • It is a 628 km Chabahar-Zahedan line, which will be extended to Zaranj across the border in Afghanistan.
    • The entire project would be completed by March 2022.
    • It was meant to be part of India’s commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternate trade route to Afghanistan and Central Asia.

    Why did Iran omit India from the project?

    • Despite several site visits by engineers, and preparations by Iranian railways, India never began the work, ostensibly due to worries that these could attract U.S. sanctions.
    • The U.S. had provided a sanctions waiver for the Chabahar port and the rail line to Zahedan, but it has been difficult to find equipment suppliers and partners due to worries they could be targeted by the U.S.
    • India has already “zeroed out” its oil imports from Iran due to U.S. sanctions.

    India’s reluctance with Iran

    • Looking at the whole aspects of relations, when it comes to politics, there has been a great common understanding and shared interests.
    • But when it comes to economic and trade relations, it has been subject to some limits and restrictions, which are hampered by the various sanctions imposed.
    • The US had put pressure directly or indirectly on the relations, although that has not been the will of both sides.

    The contentious partnership with China

    • Iran and China are close to finalising a 25-year Strategic Partnership which will include Chinese involvement in Chabahar’s duty-free zone, an oil refinery nearby, and possibly a larger role in Chabahar port as well.
    • The cooperation will extend from investments in infrastructure, manufacturing and upgrading energy and transport facilities, to refurbishing ports, refineries and other installations.
    • It is also rumoured that the Chabahar port will be leased to China surpassing India.
    • Iran had proposed a tie-up between the port at Gwadar and Chabahar last year and has offered interests to China in the Bandar-e-Jask port 350km away from Chabahar, as well as in the Chabahar duty-free zone.

    Back2Basics: India-Iran Partnership over Chabahar Port

    • In 2016, India signed a deal with Iran entailing $8 billion investment in Chabahar port and industries in Chabahar Special Economic Zone.
    • The port is being developed as a transit route to Afghanistan and Central Asia.
    • India has already built a 240-km road connecting Afghanistan with Iran.
    • All this were expected to bring cargo to Bandar Abbas port and Chabahar port, and free Kabul from its dependence on Pakistan to reach the outer world.
    • Completion of this project would give India access to Afghanistan and beyond to Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan, Kazakhstan, Russia and Europe via 7,200-km-long multi-modal North-South Transport Corridor (INSTC).
  • Sharing Indo-Pacific vision in the region

     Where do we geographically place the Indo-Pacific?

    • Term “Indo-Pacific” has come into prominence in the past decade.
    • India has used it in joint statements with a series of partner countries, including but not limited to the United States, Australia, France, Indonesia, Japan, and of course the United Kingdom.
    • It figures in meetings with our ASEAN and has helped advance the Quad consultations.
    • Indian Foreign Ministry has recently set up an Indo-Pacific Division as well as an Oceania Division a sign of India’s commitment to this critical geography.
    • This has encouraged other countries to perceive and define the region in its full extent.
    • For India, the Indo-Pacific is that vast maritime space stretching from the western coast of North America to the eastern shores of Africa.
    • Today, more and more countries are aligning their definition of the Indo-Pacific with Indias.

    Historical background

    • During the Cold War, the Indo-Pacific was divided into different spheres of influence and military theatres.
    • Whether it was the monsoon winds– or our maritime and trading history, we found it impossible to see the Horn of Africa and the Straits of Malacca on the other as disconnected.
    • The first for this is that the Indian peninsula, which thrusts into the Indian Ocean and gives us two magnificent coasts and near limitless maritime horizons to both our east and our west.
    • Monks and merchants, culture and cargo have travelled from India on those waters, to our east, west and south.
    • India’s great religious traditions, such as Buddhism, spread far and wide in the Indo-Pacific.
    • These experiences are our past and are our future; these experiences determine our concept of the Indo-Pacific.

    Why is the Indo-Pacific crucial?

    • The interconnectedness of the Indo-Pacific is finally coming into full play.
    • A motivating factor is the region’s emergence as a driver of international trade and well-being.
    • The Indo-Pacific ocean system carries an estimated 65 per cent of world trade and contributes 60 per cent of global GDP.
    • Ninety per cent of India’s international trade travels on its waters.
    • For us, and for many others, the shift in the economic trajectory from the Atlantic to the Indo-Pacific has been hugely consequential.
    • The rise of China and the imperative for a global rebalancing have added to the mix.
    • A rules-based international order is achievable only with a rules-based Indo-Pacific.

    India’s Indo-Pacific strategy

    • India’s Indo-Pacific strategy was enunciated in 2018 as the SAGAR doctrine.
    •  SAGAR is an acronym for “Security and Growth for All in the Region”.
    • This aspiration depends on securing end-to-end supply chains in the region; no disproportionate dependence on a single country; and ensuring prosperity for all stakeholder nations.
    • An Indo-Pacific guided by norms and governed by rules, with freedom of navigation, open connectivity, and respect for the territorial integrity and sovereignty of all states, is an article of faith for India.
    • Using this Initiative, India plans to support the building of a rules-based regional architecture resting on seven pillars. These are:1) Maritime security
      2) Maritime ecology
      3) Maritime resources
      4) Capacity building and resource sharing
      5) Disaster risk reduction and management
      6) Science, technology and academic cooperation
      7) Trade connectivity and maritime transport
    • We have sought to strengthen security and freedom of navigation in the Indo-Pacific by becoming a net security provider – in the Gulf of Aden.
    • Sharing what we can, in equipment, training and exercises, we have built relationships with partner countries across the region.
    • In the past six years, India has provided coastal surveillance radar systems to half a dozen nations – Mauritius, Seychelles, Sri Lanka, Maldives, Myanmar and Bangladesh.
    • All of these countries also use Indian patrol boats, as do Mozambique and Tanzania.
    •  Mobile training teams have been deputed to 11 countries.
    • Located just outside New Delhi, the Indian Navy’s Information Fusion Centre for the Indian Ocean Region has enhanced maritime domain awareness among partner countries.
    • India has also promoted and contributed to infrastructure, connectivity, economic projects and supply chains in the region.

    Humanitarian assistance and disaster relief

    • Notable humanitarian assistance and disaster relief (HADR) missions in the Indo-Pacific in recent years have included Operation Rahat in Yemen in 2015.
    • Whether it was the cyclone in Sri Lanka in 2016 or deaths and large-scale displacement of people that occurred in Madagascar in January this year, Indian assistance and an Indian ship have never been far away.
    • The Coalition for Disaster Resilient Infrastructure (CDRI)is intrinsic to India’s regional and global commitment to taking on climate change.

    Conclusion

    Whatever the navigation map, the fact that the Indo-Pacific is the 21st century’s locus of political and security concerns and competition, of growth and development, and of technology incubation and innovation is indisputable.

  • Back in news: Kartarpur Corridor

    Pakistan has decided to transfer the management of the Kartarpur Sahib Gurudwara from a Sikh body to a separate trust, saying it runs against the religious sentiments of the Sikh community.

    Try this PYQ:

    Consider the following Bhakti Saints:

    1. Dadu Dayal
    2. Guru Nanak
    3. Tyagaraja

    Who among the above was/were preaching when the Lodi dynasty fell and Babur took over?

    (a) 1 and 3

    (b) 2 only

    (c) 2 and 3

    (d) 1 and 2

    Kartarpur Corridor

    • The Kartarpur corridor connects the Darbar Sahib Gurdwara in Narowal district of Pakistan with the Dera Baba Nanak shrine in Gurdaspur district in India’s Punjab province.
    • The first guru of Sikhism, Guru Nanak, founded Kartarpur in 1504 AD on the right bank of the Ravi River. The name Kartarpur means “Place of God”.
    • The corridor is being built to commemorate 550th birth anniversary celebrations of Guru Nanak Dev, founder of Sikhism on 12th November 2019.

    About Guru Nanak

    • Guru Nanak Dev (1469-1539) also referred to as Baba Nanak was the founder of Sikhism and is the first of the ten Sikh Gurus.
    • He advocated the ‘Nirguna’ form of Bhakti. He rejected sacrifices, ritual baths, image worship, austerities and the scriptures of both Hindus and Muslims.
    • He appointed one of his disciples, Angad, to succeed him as the preceptor (guru), and this practice was followed for nearly 200 years.
    • The fifth preceptor, Guru Arjan, compiled his hymns along with those of his four successors and also other religious poets, like Baba Farid, Ravidas and Kabir, in the Adi Granth Sahib.
  • Importance of Gilgit-Baltistan

    Pakistan government has recently announced that it would give the Gilgit-Baltistan region “provisional provincial status”. When that happens, G-B will become the sixth official province of Pakistan.

    Tap to read more about: Reorganization of J&K

    Gilgit-Baltistan

    • Gilgit-Baltistan is the northernmost territory administered by Pakistan, providing the country’s only territorial frontier, and thus a land route, with China, where it meets the Xinjiang Autonomous Region.
    • The region is an illegally occupied Indian territory as it was the part of the erstwhile princely state of Jammu & Kashmir as it existed in 1947 at its accession to India.
    • To G-B’s west is Afghanistan, to its south is Pakistan-occupied Kashmir, and to the east J&K.

    Its current status

    • Though Pakistan, like India, links G-B’s fate to that of Kashmir, its administrative arrangements are different from those in PoK.
    • While PoK has its own Constitution that sets out its powers and their limits vis-à-vis Pakistan, G-B has been ruled mostly by executive fiat.
    • Until 2009, the region was simply called Northern Areas.
    • It had a Northern Areas Legislative Council with the Legislative Assembly. The NALC was an elected body, but had no more than an advisory role to the Islamabad.

    Why the separate status?

    • Pakistan’s separate arrangement with G-B goes back to the circumstances under which it came to administer it. On November 1 1947, after J&K ruler Hari Singh had signed the Instrument of Accession with India.
    • Gilgit had been leased to the British by Hari Singh in 1935. The British returned it in August 1947.
    • Pakistan did not accept G-B’s accession although it took administrative control of the territory.
    • India went to the UN and a series of resolutions were passed in the Security Council on the situation in Kashmir.
    • Pakistan believed that neither G-B nor PoK should be annexed to Pakistan, as this could undermine the international case for a plebiscite in Kashmir.
    • It also reckons that in the event a plebiscite ever takes place in Kashmir, votes in G-B will be important too. This is why it is only being called “provisional” provincial status.

    Move for a status-quo?

    • The plan to grant G-B provincial status is linked to CPEC and Chinese interest as well as a response to India’s abrogation of Art. 370.
    • While India has objected to the plan to make G-B a province of Pakistan and in the recent past asserted that it will take control of G-B, there is a realization that it is impossible to change the map now.
    • In this sense, it can be argued that the merger of G-B with Pakistan is a move that could help both countries put the past behind and move forward on the Kashmir issue, sometime in the future.

    What do the people in G-B want?

    • The people of G-B have been demanding for years that it be made a part of Pakistan since there is virtual no connect with India.
    • Some have in the past demanded a merger with PoK, but the people of G-B have no real connect with Kashmir either.
    • They belong to several non-Kashmiri ethnicities and speak various languages, none of these Kashmiri.
    • A majority of the estimated 1.5 million G-B residents are Shias. There is anger against Pakistan for unleashing extremist sectarian militant groups that target Shias.
    • There is a movement for independence, but it has very little traction.