The Interface of Domestic and International Factors in India's Foreign Policy by unknow

Author:unknow
Language: eng
Format: epub
Tags: Business & Economics, Globalization, History, Asia, India & South Asia, Political Science, General, International Relations, Diplomacy
ISBN: 9781000368833
Google: 1roYEAAAQBAJ
Goodreads: 55718055
Publisher: Routledge
Published: 2021-02-14T00:00:00+00:00

Bilateral relations

Apparently both countries have today replaced previous foreign policy preferences of non-alignment with a more pragmatic and non-ideological approach, or what some observers call “multi-alignment with all” (Mohan 2015b). Both countries endorse the capitalist market and free trade, despite state-managed policies continuing, although India has average tariff levels that are more than twice as high as in China. The unresolved (border) problems remain an issue but, at the same time, there seems to be a pragmatic move away from geo-political anxieties and uncertainties to a more geo-economically based convergence in both bilateral and multilateral foreign policy relations and even development models. Recently though there have been several eruptions of what might escalate into military conflict.

India’s foreign policy gradually changed from a socialist to a capitalist vision, which came with a shift away from conservatism, nationalism and politics to letting economics dominate and finally a change away from being anti-Western leader of the Third World to becoming a foreign policy actor in its own right (Mohan 2006). Likewise, China’s foreign policy also moved away from overtly relying on Maoist ideology to a situation today where the relationship with the United States overshadows all other relations. Nevertheless, bilateral links between India and China have improved and new alliances have been sought through diplomatic and economic rapprochement. This also implies less concern about national sovereignty – the traditional hard core of approaches dealing with ‘balance of power’ – towards a more pragmatic relationship where geo-economic matters, until recently, have played an increasing role.

The trade imbalance in China’s advantage causes some tensions. Chinese non-tariff barriers are only a small part of this. The problem is India’s uncompetitive manufacturing sector. The deficit problem is more complicated because trade primarily takes place via sea-lanes, while cross-border trade remains underutilized due to perceived security threats, difficult geography and reluctance by Delhi to implement policies and support land-based trading. India has sought to diversify its trade basket, but raw materials and other low-end commodities still make up the bulk of its exports to China. In contrast, manufactured goods, from trinkets to turbines, are exported from China into India. India–China bilateral trade reached $84.44 billion in 2017, a historic milestone. It included an astonishing 40 percent increase in India’s exports to China (Times of India 7 March 2018).

The two countries continue to face impediments in moving from bilateral trade to mutual investment, although, according to a consulting firm, “there are about 150 Indian companies operating in China compared with 40 Chinese companies doing business in India” (Huang 2010, 122). This has changed dramatically since Chinese investment in India increased to $8 billion in 2017 from $1.6 billion in 2014. Alibaba has invested in PayTM, Snapdeal and Zomato. In the next three years, during the Modi regime, investment grew five-fold to $8 billion. This makes the Chinese presence in the Indian market very prominent where four out of the top five brands are Chinese (Gatewayhouse 2020).

In this context, it is interesting to note the increasing economic cooperation and exchange between cities and private companies through the liaison and critical role of consulates.

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