Strategic convergence sans robust economic engagement unsustainable

Prime Minister Narendra Modi, with the personal attention he has paid to foreign policy, lifted bilateral engagement to an entirely different level within a year of assuming office. There was international relief when he released the pause button that the engagement with the global community had been put into and injected the much-needed vigour that had somehow dissipated during UPA-II.

However, the prime minister needs to urgently recognize that in a globalizing world, genuine engagement is measured principally in economic terms. India, in other words, needs to be perceived as being good for international business, especially at a time of global economic slowdown and fears of recession. If this were to happen, it would be Modi's greatest foreign policy achievement. In the eyes of the international community, India would have finally and truly arrived.

Perhaps this is best understood in the context of India-Australia relations. For various historical reasons, starting from India's advocacy of non-alignment, its perceived alignment with the Soviet Union during the Cold War era, its nuclear tests followed by the spate of attacks on Indian students, bilateral relations had been static and even, at times, antagonistic.

In recent years, especially after the 2009 incidents on Indian students, efforts to seek a closer engagement were largely one-sided with Canberra reaching out to an aloof Delhi. Modi's visit to Australia last year genuinely got the people to believe that the moribund relationship was finally set to dramatically change for the better. Words like "strategic partnership" entered the lexicon and the joint statement issued by the two prime ministers was positive and exciting.

Some identified areas of cooperation, such as in the fields of defence, security and transnational crime were entirely government-led and government-administered. People would read and hear about such cooperation. They did not, however, directly participate either in the decision making process or its execution. Nevertheless, such cooperation sends out a powerful political signal that the heads of government are now committed to cutting across a gamut of sectors because they see a strategic convergence.

Where people get directly involved is with regard to people-to-people contact and more significantly, in trade and commerce. In neither of these, despite a prime ministerial endorsement, do we find any significant shift in mindsets, especially from the Indian side. Unless Modi personally intervenes, the spring of heightened hope will become the winter of lost opportunity.

Let me explain. At the end of this year, India was to hold, in Australia, as announced by Modi, the Make in India and Festival of Indian Culture. Six months into the year, the coordinating agency from the Indian side is yet to be decided upon, a calendar of events is yet to be drawn up and venues are yet to be booked. In countries like Australia, where world-class venues, such as the Sydney Opera House, are decided at least a year in advance, this is clearly unprofessional. When the image Modi is trying to project is that of a 'will-do' India - young, hungry, professional and competent - all we have succeeded is to demonstrate that we are none of these.

Consider again the strong message India could have sent with Modi's flagship Make in India project, if we were to showcase examples of joint collaboration with Australian industry and other international partners in actually manufacturing in India. However, this requires planning and preparation.

Consider also how a major fillip could have been given to his related Skilling India flagship project. Australia has some exceptional vocational training institutes that could largely enhance skills in India. This could have been used as an ideal platform to begin a dialogue that engages both the Australian and the Indian public. If we get a buy-in to the Skilling India idea from the public, significant participation and thus, endorsement, could have followed.

Move now to the Comprehensive Economic Cooperation Agreement [CECA] or the India-Australia FTA that is currently under negotiation. This truly would be an area of significant impact, in tangible terms, on India-Australia relations.

Less than a week ago, Australia and China entered into a historic FTA. Australia-China trade is already at $150 billion, whereas India-Australia trade is barely in double digits. Ch-AFTA, as it is referred to, is expected to unlock significant opportunities for both sides and further strengthen economic cooperation. It is anticipated that after the agreement takes effect, 85 percent of products from Australia would enter the Chinese market tariff-free.

Tourism is also expected to be a significant gainer through the FTA, with Australian service providers receiving guarantees that they can construct, renovate and operate wholly-Australian hotels and restaurants in China. This guaranteed access is also extended to travel agencies and tour operators and is expected to boost Australian tourism into China.

The India-Australia FTA will be benchmarked by the Australian business community vis-à-vis the FTA with Beijing. If we fall grossly short, this would infect the way in which we are perceived globally.

Our big handicap is that we continue to mollycoddle our industry through high tariffs to prevent market entry. Stiff opposition from the business community prevents us from flattening the playing field. It is time for the next generation of economic reforms that opens up the market and dismantles archaic legislation. Unless this happens, the Australia-India FTA would not realize its potential.

The manner in which India economically engages with the global community will determine whether the efforts the prime minister has made in the past one year on the foreign policy front would yield dividends. Strategic convergence without robust economic engagement is not sustainable.

By Amit Dasgupta

(The author, a former diplomat, at present heads the Mumbai campus of the SP Jain School of Global Management. The views expressed are personal. He can be reached at amit.dasgupta@spjain.org )