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The new government’s foreign policy challenge: Economic with the political

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On June 9, a new government under Prime Minister Narendra Modi was sworn in. For the first time in a decade, the Bharatiya Janata Party has missed the majority mark. While a coalition government will have implications for India’s domestic policies, on the foreign policy front there will be continuity. S Jaishankar, at the helm of the foreign ministry, has a set goal to make India a “leading power”. This aligns with the BJP’s projection of India as Vishvabandhu — a friend of the world, but one to whom the nation comes first.

At the Bratislava Forum in June 2022, Jaishankar changed the political narrative on India, when he reminded the world that “Europe has to grow out of the mindset that Europe’s problems are the world’s problems but the world’s problems are not Europe’s problems.” It resonated everywhere, especially at home and in the Global South — and even in Europe, when a year later, at the Munich Security Conference, German Chancellor Olaf Scholz said that Jaishankar “had a point”. India’s goodwill, built over decades of being a neutral and non-aggressive power, has served the country well for the last five years, despite major geopolitical changes.

For the next five years, however, India will need a differentiated narrative — one that is based on the country’s 8.2 per cent GDP growth, entry into global trade regimes, and the digital model. How will Jaishankar straddle the political and the economic?

There will be continuities and shifts.

The first continuity pertains to South Asia. Visible at the inauguration of the new government were India’s neighbours, Bangladesh, Bhutan, Nepal, Maldives, Sri Lanka, along with Indian Ocean partners, Mauritius and Seychelles. All of South Asia except Pakistan was present, indicating that greater economic integration and more geopolitical cohesion in the Subcontinent is on the agenda.

Second, there was much talk of the Global South during India’s G20 presidency in 2023, crowned by the inclusion of the African Union into the G20. Last November, PM Modi inaugurated the (Dakshin) Development and Knowledge Sharing Initiative Global South Centre for Excellence, conceived for knowledge-sharing for locally relevant solutions and capacity-building. Expect more events than actual achievements. But that’s a start.

Festive offer

Third, India has built relationships with the great powers, especially the US. With the US and Russia, it has a continuing 2+2 ministerial (foreign and defence ministries) dialogue. India is in more multilateral groupings with the great powers than ever before — the G20, Quad, SCO, BRICS, I2U2, Indo-Pacific Economic Framework. New Delhi has managed its friendship with Moscow well, keeping the political engagement and oil and defence equipment imports going. Despite China’s stubborn refusal to withdraw its military from India’s northern border, India is still not at war with it — an example that the great powers should emulate.

India is also close to the other five G7 countries: Japan, France, the UK, Italy, and Germany, and since 2019, has been a permanent invitee to G7 summits.

Stepping into trade regimes with the great powers is still not a reality. These initiatives have in the last two years been taken by middle powers like Australia, the UAE and the four non-EU EFTA countries.

Coming to shifts, India’s global conversation has to transition from the political to the economic. Delhi has made many commitments to investors, and the biggest is that India can be a trusted +1 alternative to China. Expect a greater effort on the Make in India initiative and the expansion and professionalisation of supply chains and attendant infrastructure. Corporate India will be encouraged to increase investments in manufacturing.

India will need to position itself as a services exporter, beyond IT services. Much of the Global South is rich in human capital and will be following India’s example. A new coalition partner in the government, the Telugu Desam Party, is completing the building of Amaravati. Its goal is to have a modern capital — one that can compete on the tech front domestically (with Bangalore and Hyderabad) and internationally.

India’s digital public infrastructure model is already accepted and promoted in developed and developing countries. With commerce minister Piyush Goyal retaining his job, India will carefully, and with some confidence, enter more trade agreements – bilateral and regional. A South Asian trade agreement can be a triumph.

Like PM Modi, Indian ambassadors are now becoming salesmen. Their primary agenda is now to bring home investments. A few embassies used to have a junior commercial attaché; now this position carries seniority and weight.

The last five years have seen instability. Covid, the Russia-Ukraine war, the Gaza conflict and the sanctions imposed by the great powers have pushed the global system to the brink. The middle powers — countries with economic, regional and military heft — are beginning to be heard. Many like Australia, South Korea, Saudi Arabia, Turkey, Singapore, and Germany punch above their weight.

The emerging middle powers have significant talent and populations. This is where India fits in, along with Brazil, South Africa, Mexico, and Indonesia. India will increase its engagement with its peer group.

Lately, India has been wooed by governments of all inclinations and has sought engagement with all. Modi’s first overseas trip in his third term as PM was to Italy, as a guest at the G7 meeting on June 13. His next engagement will be the SCO summit in July, and more importantly, the BRICS summit in October in Russia.

India is an important participant in several groupings, old and new. Its goal is economic and financial progress, and just global governance. This is a reflection of the emerging multipolar world order, with neither the “exorbitant privilege” of dollar domination, nor the reserve-currency obsession of the Yuan.

India is central to the on-going global shifts. By keeping itself anchored, it helps to keep the world steady.

The writer is Executive Director and co-founder, Gateway House: Indian Council on Global Relations

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