With the onset of the 21st century, Indian business enterprises started playing a more crucial role in advancing India’s economic interests abroad. The Indian private sector today is eager to see the state engaged more deeply in economic diplomacy in order to help acquire new markets for Indian goods, to boost India’s international investments, and to pave the way for Indian firms to pursue business ventures abroad. And the Indian state has recently begun playing a greater role in economic diplomacy, pushing the interests of the business community through myriad ways, including its growing development cooperation program, greater diaspora engagement, and sub-national economic diplomacy.
Some of the basic objectives of economic diplomacy in brief are - promotion of trade and investment achieve objectives in multilateral trade negotiations, energy security and realization of political objectives through economic action. Some selected tasks for the practitioners of economic diplomacy could be:
• Influence economic and commercial policies of the host-country to make them most conducive for the country’s national interests which include those of business and other stakeholders.
• Work with rule-making international bodies for shaping their decisions in the interest of the diplomat’s own country.
• Forestall potential conflicts with foreign governments, economic actors and NGOs so that risks of doing business etc. are minimized.
• Use multiple fora and media to enhance and safeguard the image, capability, reputation and credibility of their own country and enterprises.
The newly elected government under Prime Minister Modi has already signaled a key role for economic diplomacy in its foreign policy agenda.
India’s achievements in economic diplomacy particularly since the first oil shock of 1973 have been considerable. However, it still has a long way to go in the process of fully integrating its economic goals with its political and strategic objectives. To achieve this we need a sea change in our mindset. Changes are required not only in the functioning of our missions abroad but also at headquarters. In this regard we still seem to be in a sort of a vicious circle. There is a tendency to regard international economic relations as a highly specialized job that is best left to specialists. While lip service is paid to MEA’s co-coordinating role, in effect even this role is increasingly being assigned to other agencies. We must get out of this vicious circle and MEA must become the leading actor for economic diplomacy to become an effective tool of Foreign Policy. This is particularly important with the growing trend towards globalization and India’s rapid integration into the world economy.
For the success of economic diplomacy India has to ensure steady growth of trade, technology and investment flows. The mains source is going to be the United States. Our emphasis of increasing economic relations with the US must continue. European Union, though a close ally of US, is not a surrogate of the US and should be treated as such. This region is an important source of supply of advanced technology and INVESTMENTS to supplement Japan and the US.
Next, India should improve its communications link, both physical and cultural, with the ASEAN region, by consciously involving itself in building roads, highways, airlines, promoting travel and tourism and offer itself as a big hinterland as an alternative to China without showing signs of antagonism towards growing Chinese influence in the region. In fact, in certain areas of South West China, which are relatively remote from the thriving commercial centers of East-North-East China, such as Shanghai, Tienjing, Beijing, India has advantage to penetrate economically and forge useful trade and economic links and integrate them with ASEAN and BIMSTEC region. These are the five South-West China provinces, viz., on the spectrum of the Government of India for special attention and treatment.
Our traditional economic relations with the Russian Federation need to be revived.
Nearer home, i.e., in the SAARC, Government of India needs to adopt a bold strategy of integrating it with India by offering unilateral concessions for free flow of trade, tourism, capital and people so that the political boundaries become irrelevant. The idea is to make it fully integrated and unified economic community. There will be objections and obstacles from the smaller neighbours. But the vision should be clear to make the sub-continent a sphere of co-prosperity.
It will help us if the purchasing power in the immediate neighbourhood increased. China should not be allowed to out triumph India economically and also diplomatically in South Asia.
In East Asia, Japan and South Korea have already become important stake holders in India. This trend should be further encouraged. Mutually beneficial trade and economic exchanges with China should be allowed to grow.
West Asia and gulf should remain areas of Indian interest confined mainly to maintain uninterrupted supply of oil and safeguard well being of Indians in the gulf.
Central Asia, though geographically closer, will remain somewhat distant due to the turmoil and lack of communications with India. It should therefore, receive due attention.
Africa and Latin America have remained continents of fringe economic interest to India. The challenge is to reverse this trend.
Economic diplomacy requires all the finesse and knowledge of traditional diplomacy. In addition, it requires an in-depth knowledge of economic analysis, commercial relations, both national and GLOBAL TRADING rules, functioning of inter-governmental organizations, politics of trade & INVESTMENT, and policy issues ranging from health/environment to the prudential supervision of insurance. It also requires an in-depth knowledge of corporate structures and functioning of major corporations of the host-country.