India is really looking towards the East now
by Pranay Gupte, Straits Times, Singapore, June 17, 2004
NEW DELHI – ‘We always said, ‘Look East’, but then we would go West,’ Mr Jairam Ramesh was saying in his small ground-floor office here over the weekend. ‘Now India wants to go East and also have the East come to us.’
That means, for example, India is proposing economically integrating parts of its 3.2 million sq km of land with countries like Singapore.
In particular, the resource-rich but economically struggling Seven Sisters – the north-eastern states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura – ‘need to develop with the cooperation of South-east Asia, to which they are geographically close’, Mr Ramesh told The Straits Times. ‘These states have biodiversity, hydropower, oil, gas and coal – but they are waiting for integration into South-east Asia’s economy. ‘Indeed, there’s no reason why the Seven Sisters cannot remain politically united with India but also economically integrated into South-east Asia’s flourishing economies,’ he said.
‘We want investment in manufacturing and in developing agro-business. Special export zones and eco-tourism are other areas for development.’ Prime Minister Manmohan Singh represents Assam, so ‘there’s a natural affinity there’. For foreign investors, these regions of India – and others as well, of course – offer political stability, cheap labour, educated workers proficient in English, and an already large but still growing consumer market (50 million people). Foreign companies get major tax holidays, and there is no tax on exports.
Then, specifically, there is India’s relationship with Singapore. ‘India would like to… become a back office for the multinationals based in Singapore,’ Mr Ramesh said. ‘It’s India’s wish to be aligned with Singapore’s economy so that we are engaged as service providers. And since Singapore already has a free-trade agreement with the United States, Indian companies could look at Singapore as an entry point for entering the big US market. After all, the prospects of an India-US free-trade agreement are pretty remote right now.’
Who is Mr Ramesh and why should it matter what he says about India and South-east Asia? The 50-year-old Tamil Brahmin heads the economic department of the Indian National Congress, which leads the ruling 13-party coalition of the United Progressive Alliance. He is among the three or four people who plotted the stunning defeat of the ruling National Democratic Alliance, led by the Hindu-nationalist Bharatiya Janata Party (BJP), in last month’s general election. He is also a key adviser to numerous governments of India’s 29 states and seven federal territories.
But perhaps most significantly, Mr Ramesh is particularly close to two people: Prime Minister Manmohan Singh, and Mrs Sonia Gandhi, the head of the Congress Party. To put it another way, when Mr Ramesh speaks – and he does so with remarkable clarity and eloquence – he is really enunciating what is on the minds of those two extremely powerful people.
‘We’re certainly more South-east Asia-centric than the previous government,’ Mr Ramesh said. ‘And we’re certainly less obsessed with the United States than the BJP.’
That is not to say the new government is about to jettison its predecessor’s entire foreign policy. But Mr Ramesh leaves little doubt the Singh government will give more priority to strengthening political and economic relations with Singapore and South-east Asia. In fact, he expressed India’s particular gratitude to Prime Minister Goh Chok Tong for sponsoring its Asia-Pacific Economic Cooperation forum membership attempt, although India eventually failed to gain entry. Mr Ramesh called Mr Goh ‘India’s steadfast friend’.
He conceded that India had missed several opportunities to strengthen economic ties with South-east Asia; for example, in 1965 and 1967 it declined opportunities to join Asean, decisions he termed ‘big mistakes, because we lost out on opportunities to be part of the tremendous economic growth of the region’.
He said a framework of a free-trade pact between India and Asean was ‘in the pipeline’. ‘These may be small steps for South-east Asia, but they are giant steps for India,’ Mr Ramesh said. ‘There’s no question that in the past, our attitude towards the South-east Asia and East Asia region was condescending and culturally and linguistically arrogant,’ he said. ‘I think that part of the resentment many South-east Asians have towards India stems from this earlier arrogance on our part,’ Mr Ramesh said. ‘But that’s changed now,’ he declared. ‘We’ve moved a very long way in building better ties with South-east Asia. Singapore has heavily invested in our telecom industry; the Malaysians are helping build highways. South Korea’s LG and Hyundai are doing remarkably well in India.
Trade and investment generally are growing. ‘But it’s only the tip of the iceberg. We are confident about much better times ahead.’
IN HIS exclusive interview with The Straits Times, Mr Ramesh also outlined other highlights of the ruling coalition’s foreign policy: Accelerated efforts to bring about a rapprochement with Pakistan, with which India has fought – and won – three wars since both countries gained independence from Britain in 1947. ‘Formal and informal lines of communication will be ongoing, especially on the Kashmir issue,’ he said. Kashmir is claimed by both countries.
Intensification of political and economic ties with China. Mr Ramesh pointed out that this year, bilateral trade is expected to rise eight-fold to US$10 billion (S$17.3 billion). He disclosed that India recently received a proposal from China to establish an economic partnership between its Yunan province and Thailand, Myanmar, Bangladesh and North-east India, which would create jobs in languishing parts of these regions.
India will not support the establishment of an independent Tamil state in Sri Lanka. ‘While we are all for the protection of the rights of the Tamil minority, India will not back the break-up of Sri Lanka,’ he said. ‘India wants involvement in the peace talks between the Sri Lankan government and Tamil rebels, and we support a federal Constitution with more power devolving to regions. But we won’t support any territorial break-up.’
The resolution of problems such as the trade deficit between India and Bangladesh, and India’s ‘concern that Bangladesh serves as a haven for terrorist groups’. Mr Ramesh acknowledged that India and Bangladesh have a ‘very serious problem’ with the trade deficit, which the latter resents: each year India buys US$100 million worth of goods from Bangladesh, which buys US$1 billion in Indian goods.
And, of course, there’s the ongoing problem of river-water distribution. Accelerated economic and political cooperation with Nepal. Mr Ramesh sees the populous Indian states of Uttar Pradesh and Bihar forming stronger ties with bordering Nepal. ‘Without cooperation with Nepal, UP and Bihar won’t be able to effectively address their long-term poverty problems,’ he said. These states account for 60 per cent of South Asia’s poor; the three rivers that flow through them all have their upper catchments in Nepal. ‘Deforestation in Nepal has devastating consequences… these rivers provide sustenance but they also cause sorrow through flooding.’ Dealing with the nexus between Nepal’s increasingly strong Maoists and Naxalite guerillas in India.
‘Unfortunately, many Maoists draw sustenance from Indian territory… there’s also a very strong nexus between Maoists and Naxalites, particularly in tribal India.’
India and Iraq. ‘The previous government was about to send Indian troops to Iraq,’ Mr Ramesh said. ‘That will not happen while the United Progressive Alliance (UPA) government is in power.’
Mr Ramesh also said the UPA would favour more attention to regional water and environmental-protection projects, and support a nuclear non-proliferation pact between India, China and Pakistan.
‘And while this may sound romantic, we would also support the establishment of a South Asian parliament – something along the lines of the European parliament,’ he said.