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India looking to the East

Published by The Straits Times, Singapore on 2004-06-16

NEW DELHI - "We always said, 'Look East,' but then we would go West," Mr Jairam Ramesh was saying in his small ground-floor office here over the weekend. "Now India wants to go East and also have the East come to us."

That means, for example, that India is proposing the concept of economically integrating parts of its 3.2 million square-kilometre entity with countries like Singapore. In particular, the resource-rich but economically struggling "seven sisters" - the northeastern states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura - "need to develop with the cooperation of Southeast Asia, to whom they are geographically close," Mr Ramesh told The Straits Times in an interview. "These states have biodiversity, hydropower, oil and gas, coal - but they are waiting for integration into Southeast Asia's economy."

"Indeed, there's no reason why the Seven Sisters cannot remain politically united with India but also economically integrated into Southeast Asia's flourishing economies," he added. "We want investment in manufacturing and in developing agro-business in these areas. Special export zones and eco-tourism are another area for development. Prime Minister Manmohan Singh represents Assam, so there's a natural affinity there."

For foreign investors, these regions of India - and others as well, of course - offer political stability, cheap labour, availability of educated workers proficient in English, and an already large but still growing consumer market (currently around 50 million people). Foreign companies get major tax holidays, and there is no tax on exports.

Then, specifically, there's India's relationship with Singapore.

"India would like to see India become a back office for the multinationals based in Singapore," Mr Ramesh said. "It's India's wish to be aligned with Singapore's economy so that we are engaged as service providers. And since Singapore already has a free-trade agreement with the United States, Indian companies could look at Singapore as an entry point for entering the big U.S. market. After all, the prospects of an India-U.S. free-trade agreement are pretty remote right now."

Now who is Mr Ramesh and why should it matter what he says about India and Southeast Asia?

Well, here's why: The 50-year-old Tamil Brahmin heads the economic department of the Indian National Congress, which leads the ruling 13-party coalition of the United Progressive Alliance. He's among the three or four people who plotted the stunning defeat by the UPA of the ruling National Democratic Alliance - which was led by the Hindu-nationalist Bharatiya Janata Party - in last month's general election. He's also a key advisor to numerous governments of India's 29 states and seven federal territories.

But perhaps most significantly, Mr Ramesh is particularly close to two people who govern India and determine policy-making: Prime Minister Manmohan Singh, and Mrs Sonia Gandhi, the head of the Congress Party. To put it another way, when Mr Ramesh speaks -and he does so with remarkable clarity and eloquence - he's really enunciating what's on the minds of those two extremely powerful people.

"We're certainly more South-east Asia-centric than the previous government," Mr Ramesh said. "And we're certainly less obsessed with the United States than the BJP."

That is not to say the new government is about to jettison its predecessor's entire foreign policy. But Mr Ramesh leaves little doubt that the Singh Government will be giving more priority to strengthening political and economic relations with Singapore and Southeast Asia.

In fact, he expressed India's particular gratitude to Prime Minister Goh Chok Tong for sponsoring its membership attempt in APEC, although India failed to gain entry. Mr Ramesh characterized Prime Minister Goh as "India's steadfast friend."

He conceded that India had missed several opportunities to strengthen economic ties with Southeast Asia; for example, in 1965 and 1967 India declined opportunities to join ASEAN, decisions that he termed "big mistakes because we lost out on opportunities to be part of the tremendous economic growth of the region."

He disclosed that a framework of a free-trade agreement between India and ASEAN was "in the pipeline."

"These may be small steps for Southeast Asia, but they are giant steps for India," Mr Ramesh said.

"There's no question that in the past our attitude toward the Southeast Asia and East Asia region was condescending and culturally and linguistically arrogant," he said.

"I think that part of the resentment that many Southeast Asians have toward India stems from this earlier arrogance on our part," Mr Ramesh said. "The last thing that Southeast Asians want from us is such arrogance."

"But that's changed now," Mr Ramesh declared. "We've moved a very long way in building better ties with Southeast Asia. Singapore has heavily invested in our telecom industry; the Malaysians are helping build highways. South Korea's LG and Hyundai are doing remarkably well in India. Trade and investment generally are growing. But it's only the tip of the iceberg. We are confident about much better times ahead."



In his exclusive interview with The Straits Times, Mr Jairam Ramesh outlined the highlights of the UPA's foreign policy:

1. Accelerated efforts to bring about a rapprochement with Pakistan, with whom India has fought - and won - three wars since both countries gained independence from the British in 1947. "Formal and informal lines of communication will be ongoing, especially on the Kashmir issue," Mr Ramesh said. The mountainous northern territory of Kashmir is claimed by both countries.
2. Intensification of political and economic ties with China. Mr. Ramesh pointed out that this year, bilateral trade between the two countries is expected to rise eight-fold to US$10 billion. Mr Ramesh disclosed that India recently received a proposal from China to establish an economic partnership between its Yunan province and Thailand, Myanmar, Bangladesh and Northeast India. Such a partnership would result in more job creation in languishing parts of these regions.
3. India will not support the establishment of an independent Tamil Ealaam state in Sri Lanka. "While we are all for the protection of the rights of the Tamil minority, India will not back the break-up of Sri Lanka in any way," Mr Ramesh said. "India wants involvement in the peace talks between the Sri Lankan government and the Tamil rebels, and we support a federal constitution that calls for more power devolving to regions. But we will not support any territorial break-up."
4. The resolution of problems such as the trade deficit between India and Bangladesh, and India's "concern that Bangladesh serves as a haven for terrorist groups." Mr Ramesh acknowledged that India and Bangladesh have a "very serious problem" concerning the trade deficit, which the latter resents: India each year buys US$100 million worth of goods from Bangladesh; the latter buys US$1 billion of Indian goods. And, of course, there's the ongoing problem of river-water distribution that still hasn't been resolved to the satisfaction of both countries.
5. Accelerated economic and political cooperation with Nepal. Mr Ramesh sees the populous Indian states of Uttar Pradesh and Bihar, which are contiguous to Nepal, developing stronger ties with Nepal. "Without cooperation with Nepal, U.P. and Bihar won't be able to effectively address their long-term poverty problems," he said. These states account for some 60 percent of South Asia's poor; the three rivers that flow through them - the Brahmaputra, the Ganges and the Padma - all have their upper catchments in Nepal. "The deforestation in Nepal has devastating consequences for U.P. and Bihar - these rivers provide sustenance but they also cause sorrow through flooding," he said.
6. Dealing with the nexus between Nepal's increasingly strong Maoists and the Naxalite guerrillas in India. "Unfortunately, many Maoists draw sustenance from Indian territory," Mr Ramesh said. "And there's also a very strong nexus between Maoists and Naxalites, particularly in tribal India. This is not only a security problem, it disrupts sustainable development in both countries."
7. India and Iraq. "The foreign minister of the previous government was about to send Indian troops to Iraq," Mr Ramesh said. "That will not happen while the UPA government is in power."

Mr Ramesh also said that the UPA would favour more attention to regional water and environmental-protection projects. It would support a nuclear non-proliferation pact between India, China and Pakistan, all of whom have nuclear weapons.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist


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