By Ambassador Rahul Chhabra
The foundation of India’s Economic Diplomacy was laid with announcement of the statement of intent providing support to its friends in the Global South, accompanying the setting up of the Indian Technical and Economic Cooperation Programme (ITEC – September 1964): “It was necessary to establish relations on mutual concern and inter-dependence based not only on commonly held ideals and aspirations but also on solid economic foundations”. The concept was broadened much wider after liberalisation (early 1990s) and the “India Means Business” campaign launched across the world, and at Davos.
A newly arrived Ambassador from a Nordic country came to see me in the South Block; he was extremely keen to have his Prime Minister visit India; we were going into election mode. He was disappointed that we would not be able to move forward on his proposal for the next few months. I offered him an alternative; if he could arrange to bring to India the top leadership of his sovereign wealth fund, I would arrange all high-level relevant meetings. Both of us delivered; they committed to invest US $ 20 billion. Today, their exposure stands at US $ 17 billion.
Tools:
Organising trade shows and “Make in India” events have become standard practice for Indian missions all over the world. Wooing MNCs, private equity and sovereign wealth funds; pursuing oil concessions is now par for the course.
Export Promotion: Pursuing market access and contesting non-tariff barriers.
Targeted use of Foreign Assistance: The ITEC Programme extends to 160 countries with 14000 annual scholarships offered in 800 courses across 200 premier institutions. There has been a dramatic expansion of India’s aid programme. The most recent example is this week’s supply of 3.5 tonnes of aid comprising water purification supplies, chlorine tablets and ORS sachets in wake of the cholera outbreak in Zambia.
Modernised Development Finance Tools: In 2005, India rolled out its first Lines of Credit (LoCs) to Africa worth US $ 500 million, with soft interest rates that included a grant element of 30%. The portfolio today has expanded to US $ 30 billion.
Leveraging its satellite capabilities over the past decade, India began offering its health & education services across Africa through the e-VidyaBharti and e-ArogyaBharti programmes.
Case Study: Capacity Building Programme for Maldivian Civil Servants
Despite current frictions, Maldives has sought renewal of the 2019 MoU to train 1000 bureaucrats in India, over the next 5 years. The final 30th training programme, with 40 Maldivian Civil servants visiting India this month will bring the total to 1,005 officials.
The above included customised training programmes for officials from the Anti-Corruption Commission & Information Commission. The programme encompasses sharing of Indian learning from its schemes & projects such as e-governance, digital India, universalisation of public services, approaches to sustainable development goals, public grievance redressal mechanism and disaster management with special reference to coastal regions.
The frosty relationship has not deterred the Maldivian government from seeking a renewal on the same terms & conditions. Over 2,200 in-person trainings have been held since 2019.
Recent Initiatives/Examples:
Vaccine Maitri, wherein India made vaccines were sent to over 100 countries (several million doses as grants) and COWIN platform was offered as a digital public good for effective vaccination campaigns.
Oil from Russia & Venezuela
International Solar Alliance, Coalition for Disaster Resilient Infrastructure, Global Biofuels Alliance, is an example of India’s solution-oriented approach to addressing global challenges of clean and renewable energy.
India joined the Mineral Security Partnership (June 2023) in its quest for Critical and strategic Minerals including tin, lithium and cobalt.
India, Japan and Australia launched the Supply Chain Resilience Initiative (2021). The 14 member Indo-Pacific Economic Framework’s SCRA came into force in Feb 2024; India is looking at designating rare earth minerals, electronics and pharmaceuticals as critical sectors.
Global DPI Repository (November 2023) along with a social impact fund of US $ 25 million to fast track the implementation in the Global South.
Future of Economic Diplomacy:
Tourism: Arrivals continue to lag pre-Covid levels. Requirement is for very focused marketing activities required to attract foreign tourists from traditional as well as lesser-tapped emerging markets (SE Asia, Africa and S America). Organising B2B activities, India Evenings, roadshows, events, virtual and physical marketing activities and targeted India-specific campaigns (focus on nature and adventure tourism) to be launched by the Indian Missions. Launching a revamped Incredible India website is also on the anvil. With India increasingly becoming a powerhouse for outbound tourism, it can use this force as in the case of Maldives.
Technology: With India moving up the value chain in terms of manufacturing capabilities, the Indian industry is looking for advanced technologies across the board.
Cybersecurity: In 2007 Estonia faced a massive cyberattack from Russia. They currently host the NATO cybersecurity center & EU IT agency. 99% of Estonian Public Services are online, 24/7
Negotiating/Renegotiating FTAs/CEPAs: Final rounds are on with the EU & the UK. Sought greater market access for steel, rice and shrimp from South Korea; original agreement operationalised in 2010.
Strengthening State level officials and mechanisms to deal with foreign investors/trade queries/delegations. Being the first touchpoint, it is absolutely critical that we put our best foot forward. Unfortunately, this aspect is often neglected in our planning and outreach activities.
Conclusion:
Having lived on both the east and west coast of Africa for over half a decade, and having travelled to several countries on official visits, I was able to meet politicians who had learned science/maths from Indian teachers, interact with civil servants, doctors, nurses, agricultural/industrial engineers trained in India, and see the Defence colleges set up with our assistance.
Emerging challenges in the near future include protectionism, preference for bilateral or multilateral trade agreements, hurdles to labour mobility with the increasing anti-immigrant sentiment in major Western countries.
NGOs in the fields of education (Pratham model of primary school education), financial inclusion (IndiaStack to configure Aadhar-like solutions) and healthcare (Jaipur foot) and other models (Barefoot College of Women Solar Energy Technicians) are leading the charge, promoting Ideas, knowledge and making a veritable difference.
According to a leading analyst, “India’s growth trajectory will be swifter and more intentional this time around. Unlike the scenario with China, where manufacturing was primarily driven by cost considerations, the situation with India is marked by a significant emphasis on intellectual property. India’s strength lies not just in its lower costs but its intellectual capabilities and educational standards, enabling it to tackle more complex projects adeptly”.
As in other domains of foreign policy, India’s stance on Economic Diplomacy will be closely followed by not only its competitors, but also by its friends in the Global South.
Author is Former Secretary (Economic Relations), Ministry of External Affairs, Government of India.
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