This article was originally published by the Centre for Landwarfare Studies (CLAWS), a Defense think-tank, on March 16, 2017 here. Republished in the Indian Defense Review on March 20, 2017 here.  

When Narendra Modi took oath as the 14th Indian Prime Minister in May 2014, he made an unprecedented diplomatic outreach to India’s neighbours by inviting their heads of government. The audacious move generated great euphoria and excitement, especially among the observers of South Asian politics and relations. It was the very first initiative of what later came to be known as the ‘neighbourhood first’ policy of the Modi government.

The day after his inauguration, Modi held bilateral meetings with the South Asian leaders and vowed to work towards making SAARC a strong regional block. He soon made his first foreign visit as Prime Minister to Bhutan, the Himalayan neighbour that has been India’s closest and time-tested ally. India’s foreign minister Sushma Swaraj too, made her first official foreign visit in the neighbourhood, to Bangladesh, where she laid the foundation for Modi’s visit that followed later on.

The diplomatic priority that Modi attached to the neighbourhood is evident from the fact he made a visit to all of India’s neighbours, except Maldives, and the numerous leaders hosted in New Delhi and meetings at other multilateral fora. With Bangladesh, the completion of the historic land boundary agreement, besides fresh initiatives in energy, connectivity and counter-terrorism, have catapulted the relationship to new heights. With Sri Lanka, the relationship has come back to normalcy after increased strain in ties during the Rajapaksa regime. Modi also made visits to the island nations of Mauritius and Seychelles, giving an impetus to India’s role as ‘net security provider’ in the Indian Ocean region.

According to foreign affairs analyst Dhruva Jaishankar, India’s neighbourhood first policy has four aspects. The willingness to give political and diplomatic priority to its immediate neighbours and Indian Ocean island states, providing them with support as needed, greater connectivity and integration, and to promote a model of India-led regionalism with which its neighbours are comfortable. Modi realises that his domestic agenda of development and rapid economic growth cannot be fulfilled without a stable and conducive neighbourhood. He has often emphasised that India cannot grow in isolation and that there is a lot to gain by mutual cooperation and shared prosperity in the region.

Besides the compelling economic logic, Modi is also watchful about growing Chinese penetration into South Asia. While Chinese presence in the region is not entirely avoidable or undesirable by India, there are some pressing strategic concerns that New Delhi has. China has been steadily building infrastructure, especially ports, at strategic locations around India which is often called as the strategy of encirclement or ‘string of pearls’. It has made deep inroads into most of India’s neighbours, besides emerging as an all-weather friend of Pakistan.

The proposed China Pakistan Economic Corridor, where Beijing plans to invest $46 billion in rail, road and gas pipeline projects, has raised concerns in India as it passes through Gilgit-Baltistan, which is part of Pakistan-occupied-Kashmir, a territory that India considers as its own. This issue also came up in the most recent round of strategic dialogue held in Beijing, where Indian foreign secretary S Jaishankar conveyed that China should respect India’s territorial sovereignty.

Further, the region as a whole ought to be wary of increased Chinese involvement as it could undermine the process of democratization in the delicate and mostly fledgling democracies of South Asia. India has always been at the receiving end of parochial nationalistic politics of some of its neighbours which derive strength from anti-India rhetoric. All countries, including India, would benefit if this is replaced by an atmosphere of mutual trust and cooperation where developmental politics takes the centre-stage. But China has no sympathy either for democracy or developmental politics. As S.D. Muni, an expert of South Asian affairs, opines, China prefers strong, assertive and centralised regimes at its periphery. This is evident from the fact that China never supported or encouraged democratization in any of its neighbours.

While the last two and half years and more have seen a number of ground breaking developments in India’s relations with its neighbouring countries, there have been huge challenges at the same time. Modi’s visit to Nepal, first bilateral visit by an Indian Prime Minister in over two decades, was received with huge fanfare and optimism. India was also the first responder after the Nepal earthquake, providing considerable assistance. Yet, Nepal’s constitutional crisis caused a serious setback in relations with India. Although New Delhi’s stance, that the interests of the Madhesis should be respected in the new Constitution, was in the best interest of both Nepal and India, there was a serious perception problem. India was criticised and accused of causing an economic blockade even though the blockade was actually on the Nepalese side of the border, enforced by the angry Madhesi population. Relations between India and Nepal, however, seem to have gotten back on track with the new government, led by Prime Minister Pushpa KamalDahal or ‘Prachanda’, in Kathmandu.

The biggest roadblock for India’s neighbourhood policy, however, has been Pakistan, a country which is not only serving as an epicentre of terrorism in the region but has also been quite unabashed in holding up regional integration and connectivity. Repeated cross-border terrorist attacks from Pakistan led to the cancellation of the SAARC summit scheduled in Islamabad last year, besides causing a meltdown of Indo-Pakistan relations.

These challenges, however, should not distract New Delhi from pursuing its agenda of greater regional integration and cooperation. The idea of ‘neighbourhood first’ need not include an errant neighbour like Pakistan, which can be dealt with separately. Even though SAARC has hit a roadblock, there are other institutional mechanisms such as the BIMSTEC, Mekong-Ganga cooperation mechanism, etc. where India can engage multilaterally. Even within the SAARC framework, India has been working on a ‘SAARC minus one’ approach. The Bangladesh-Bhutan-India-Nepal (BBIN) grouping has been one such example under which connectivity, energy and water management initiatives have been pursued. The common SAARC Satellite, which India has decided to go ahead with despite Pakistan’s objections, is another case in point.

The neighbourhood first policy has been one of India’s key foreign policy goals under the Modi government. It needs to march on, with or without Pakistan. Political engagement with the neighbours must continue to be prioritised in order to accelerate regional cooperation and integration which is the best interest of the region.

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This article was originally published in DailyO on February 6, 2017 here.

Amid a multitude of expectations, finance minister Arun Jaitley presented the Union Budget 2017-18 in Parliament, one which was low on fireworks but high on pragmatic and incremental changes.

Expansion of the tax base by reducing tax rate in the Rs 2.5-5 lakh income bracket, special focus on agriculture and rural sector, push towards a digital economy, beginning the process of cleaning up political funding and increased infrastructure expenditure are among the key highlights of the Budget.

That the government did not deviate from the path of fiscal consolidation, despite the various pressures, is particularly noteworthy.

In the domain of the financial sector, there was one major announcement made, the decision to abolish the Foreign Investment Promotion Board (FIPB).

Foreign Direct Investment (FDI) flows into India in two ways, the automatic route and through government approval. FIPB deals with the latter. Housed in the department of economic affairs, ministry of finance, the FIPB is an inter-ministerial body, responsible for processing of FDI proposals and making recommendations for government approval.

Besides the chairperson, who is the secretary from the department of economic affairs, the body comprises of secretaries from the department of commerce & industry as well as the ministry of external affairs.

Decisions of the FIPB are taken on the basis of existing FDI policy, press notes and other related notified guidelines formulated by Department of Industrial Policy and Promotion (DIPP) in the ministry of commerce.

The finance minister, who is in charge of FIPB, would consider the recommendations of FIPB on proposals with total foreign equity inflow of and below Rs 5,000 crore. Whereas the recommendations of FIPB on proposals with total foreign equity inflow of more than Rs 5,000 crore (earlier Rs 3,000 crore) would be placed for consideration of the cabinet committee on economic affairs.

The sectors under the automatic route, however, require no approval from the FIPB and are subject to only sectoral laws. Over the years, increasing liberalisation of the country’s FDI regime has resulted in more and more FDI through the automatic route. The FIPB has lost its erstwhile pre-eminence and the discretionary power with its bureaucrats doesn’t inspire much confidence within foreign investors.

Over the last two years, the Narendra Modi government has taken up a number of reforms to liberalise the FDI regime. In November 2015, 15 sectors were liberalised for FDI. Then in June 2016, the government made sweeping amendments to the FDI policy in seven sectors, most importantly in defence, civil aviation and pharmaceuticals.

Earlier, in the defence sector, FDI up to 49 per cent was permitted under the automatic route and up to 100 per cent through the government approval route, but only for cases resulting in access to “state-of-the-art” technology.

This condition of “state-of-the-art” technology, which was somewhat vague and hard to quantify, was done away with. In the aviation sector, reforms paved the way for allowing overseas entities to own 100 per cent in domestic airlines, and 100 per cent FDI under the automatic route in both greenfield and so-called brownfield projects.

Further, the government has taken other kinds of measures such as relaxing FDI norms for NRIs, PIOs and OCIs – allowing their non-repatriable investments to be treated on a par with domestic investments and not be subjected to FDI caps.

The government has also decided to grant Permanent Residency Status(PRS) to foreign investors who meet some set criteria in respect of minimum investment and employment generation. It would be granted first for 10 years, with multiple entry, and could be extended for another 10 years.

Those granted PRS will also be exempted from the registration requirement and given the right to purchase one residential property to live in. Countries like Singapore and Hong Kong, which are favoured FDI destinations across the globe, offer residency status for foreign entrepreneurs in return for investment.

The liberalisation of FDI along with various other measures including those under the Make in India initiative have shown visible impact. According to the World Investment Report 2016 released by the UN Conference for Trade and Development (UNCTAD), India’s FDI inflows have increased to $44 billion in 2015 as compared to $35 billion in 2014.

But there is a lot of potential and they need to grow further. The net FDI inflows as a proportion of GDP have shown a sharp rise after the NDA government took office, but it is still 1.7 per cent, compared to 2.8 per cent of China or 4.9 per cent in the case of Vietnam – the highest among major developing countries.

The decision to abolish FIPB and come up with a new roadmap can therefore be seen as part of the larger strategy of the government to boost FDI inflows. The finance minister in his Budget speech pointed out that presently over 90 per cent of total FDI inflows are through the automatic route and that we have now reached a stage where FIPB can be phased out.

Earlier in the speech, he also said: “India has emerged as the sixth largest manufacturing country in world, up from ninth. We are seen as the growth engine of the world. We have moved from a discretionary administration to a policy-based administration.”

This is a clear message to investors that India is the best bet for assured and rapid growth in an otherwise uncertain global scenario. In the climate of increasingly inward looking and protectionist tendencies across the world, the abolishing of FIPB and the statement of intent to further liberalise FDI policy sends out an encouraging signal.

It is a move that would boost ease of doing business, reduce red tape and make FDI easier.

This article was originally published in DailyO on December 3, 2016 here.

The holy city of Amritsar is all set to host the sixth Heart of Asia ministerial conference over this weekend, where representatives from over 40 countries are congregating to discuss and deliberate upon issues of peace, prosperity and progress of the nation which lies at the “heart” of Asia – Afghanistan.

Launched in 2011, the Heart of Asia-Istanbul Process was established as a platform to address regional issues, encouraging security, political and economic cooperation between Afghanistan and its neighbours.

The countries in the grouping include India, Russia, China, Pakistan, Iran, Saudi Arabia, the UAE, Turkey, and the Central Asian neighbours of Afghanistan. Those playing a supportive role in the initiative include US, Britain, France, Japan, Germany, Egypt, Australia, among others.

The previous ministerial conference was held in 2015 in Islamabad which was attended by India’s external affairs ministerSushma Swaraj. This time around, as Swaraj is not keeping well, India would be represented by finance minister Arun Jaitley, who would also be the co-chair of the conference, along with Afghan foreign minister Salahuddin Rabbani.

Prime Minister Modi and Afghan President Ashraf Ghani would inaugurate the ministerial conference on Sunday, December 4, a day after the bilateral meeting that is scheduled for Saturday.

The theme of the event, “Addressing challenges and achieving prosperity” is indicative and alludes to the kind of issues that would be at the forefront of the deliberations – terrorism and development.

The long drawn war that the Afghan forces are fighting against the Taliban needs support wherever it can come from. Emanating out of the Pakistani deep state – the military and ISI nexus – and executed on the ground by its subsidiaries such as the Taliban, terrorism continues to derail the Afghan development and rebuilding efforts.

Despite calls from neighbours to mend its ways, Pakistan is unwilling to let go of its “strategic assets” – in the form of various terrorist groups – any time soon, despite all the rhetoric that they support a stable Afghanistan. Violence continues to wreck people’s lives and Afghan blood is spilt every single day.

Terrorism has not only crippled Afghanistan and destabilised the region, but has also consistently displayed disdain for external players. The attack on German Consulate in Mazar-e-Sharif last month and the American University in Kabul in August 2016 are two recent examples.

Speaking a joint press conference with the MEA on Novermber 30, Afghanistan’s Ambassador to India, Shaida Mohammad Abdali, said that terrorism is the “greatest threat to this region”. He expressed hope that the Heart of Asia conference will adopt the Regional Counter Terrorism framework, drafted by Afghanistan and circulated among the members. This would be a useful step towards increasing the heat on Pakistan and hold it accountable for state-sponsored terrorism.

India must make full use of the opportunity and expose Pakistan’s terrorist designs. Sartaj Aziz, Pakistan’s de-facto minister of foreign affairs who will be attending the meet, must be delivered the message loud and clear that Pakistan’s use of terrorism as state policy will only lead to its diplomatic isolation. With the conference taking place just days after the Nagrota terror attack, it is well timed for a diplomatic offensive on Pakistan.

But terrorism is not the only way by which Pakistan is undermining Afghan interests. Economic development of Afghanistan is heavily dependent on connectivity. Here again, Pakistan has been exploiting its location and has left no stone unturned to create hurdles for its neighbour.

Pakistan refuses to allow Afghan trucks, which carry goods from Afghanistan to the Wagah border in Pakistan, to carry back products from India to Afghanistan. Even the goods that the Afghan trucks bring have to be offloaded at Wagah and reloaded again on other vehicles, to be brought into India.

By denying transit, Pakistan is severely hurting the economic interests of ordinary Afghans. Any talk about Afghanistan’s development cannot ignore this tragedy, perpetuated by the Pakistani establishment.

The Chahbahar route, facilitated by the India-Afghanistan-Iran trilateral, thankfully overcomes this land challenge. It is being called the “game-changer” of the fortunes of the region and rightly so. It establishes a permanent alternative to the land route, boosting prospects for greater trade and connectivity between Afghanistan and India.

Afghan Ambassador has further spoken of “offering” this opportunity for well-meaning countries, inviting them to come forward and connect with Afghanistan.

Connectivity, therefore, is going to be a matter of great importance as countries deliberate on economic cooperation with Afghanistan.

The location of the Heart of Asia conference couldn’t have been more pertinent. Amritsar, which has historically been a stop on the old Grand Trunk road that uninterruptedly connected Bengal to Kabul and beyond, is symbolic of the potential of connectivity that exists in this part of the world.

It actually sends out a message to Pakistan, which has been the main roadblock and deal breaker when it comes to regional integration.

This article was originally published in The Diplomat magazine on Nov 2, 2016 here.

The recently concluded eighth BRICS summit in Goa, India on October 15-16 saw a range of unprecedented outcomes and engagements. One of the biggest highlights among them was the BRICS-BIMSTEC Outreach Summit, where the BRICS (Brazil, Russia, India, China, and South Africa) leaders met the heads of government of the BIMSTEC countries. In the last two years, BRICS summits have seen engagements with regional players from the host country’s neighborhood. That India chose BIMSTEC over any other regional grouping is indicative of the importance New Delhi attaches to the Bay of Bengal region. BIMSTEC indeed has huge potential to emerge as a grouping that can accelerate the process of regional integration, security cooperation, and inclusive growth in this region. For India in particular, BIMSTEC can be a pivot to the Act East Policy. Through enhanced cross-border connectivity and interlinkages, India’s northeast region can take center stage as the gateway to South East Asia.

BIMSTEC, which stands for Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, is a multilateral grouping of seven countries: India, Bangladesh, Bhutan, Nepal, Myanmar, Sri Lanka, and Thailand. In June 1997, the four Bay of Bengal littoral countries of Bangladesh, India, Sri Lanka, and Thailand came together to form BIST-EC (Bangladesh-India-Sri Lanka-Thailand Economic Cooperation). In December the same year, Myanmar joined in to make it “BIMST-EC”, while Nepal received observer status in the organization the following year.

The inauguration of BIMST-EC and the years following it did not see very high profile engagements, as seen in the case of the South Asian Association for Regional Cooperation. Instead, the grouping was off to rather a more modest start, which saw only ministerial-level meetings for a long time. The group started off by laying down the principles, scope, and institutional mechanisms of the organization. In the second ministerial meeting, six sectors were identified for cooperation – trade and investment, technology, transport and communication, energy, tourism, and fisheries.

It was in 2004 that organization as we know it today took shape, with Nepal and Bhutan joining in as full members. It was renamed BIMSTEC, standing for the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, rather than initials of the names of member countries. In July 2004, the first BIMSTEC summit took place in Bangkok, attended by then-Indian Prime Minister Manmohan Singh, who had just taken office after the general elections. The subsequent eighth ministerial meeting in 2005 increased the number of sectors for cooperation to eight.

Though it was decided in the Thailand meeting of 2004 to hold the BIMSTEC summit every two years, only three such summits were held prior to the recent one in Goa. The second high level summit was held in New Delhi in 2008, four years after the Thailand summit. However, ministerial meetings have been constantly held over the years, bringing together foreign ministers and commerce/industry ministers to deliberate upon issues of mutual interest. Besides, other operational bodies have interacted regularly, such as the Senior Trade Economic Officials Meetings. The BIMSTEC Working Group is the coordinating body for all of this activity and its chair rotates with the BIMSTEC Chairmanship, which is currently held by Nepal.

The third BIMSTEC summit was held in Nay Pyi Taw, Myanmar in 2011. Here it was unanimously decided that a permanent Secretariat for BIMSTEC would be set up in Bangladesh and the first secretary general would be appointed from Sri Lanka. Consequently, Bangladesh Prime Minister Sheikh Hasina inaugurated the secretariat in Dhaka’s diplomatic enclave of Gulshan in 2014 and Sumith Nakandala from Sri Lanka took charge as the secretary general.

Goa was the fourth high level summit and the first-ever joint summit of the organization with another multilateral grouping. Through the BRICS-BIMSTEC Outreach summit, the BIMSTEC countries sought greater exposure to financial investments for the region. The New Development Bank established by the BRICS is of particular interest in this regard. Among the BIMSTEC countries themselves, there was renewed interest to fast track free-trade agreement negotiations to boost trade, pursue the possibilities for a blue economy, and improve connectivity and people-to-people contact.

Most notably, the BIMSTEC leaders, in the outcome document, unequivocally condemned terrorism:

“We condemn in the strongest terms the recent barbaric terror attacks in the region. We strongly believe that our fight against terrorism should not only seek to disrupt and eliminate terrorists, terror organizations and networks, but should also identify, hold accountable and take strong measures against States who encourage, support and finance terrorism, provide sanctuary to terrorists and terror groups, and falsely extol their virtues. There should be no glorification of terrorists as martyrs.”

After South Asian nations pulled out of the SAARC summit last month, the BIMSTEC summit marked the second time that Pakistan faced strong condemnation for its terrorist designs from leaders in South Asia. Such a condemnation is not only a diplomatic victory for India but also a pertinent stance for all BIMSTEC countries given the grave threat the entire region faces from terrorism.

The BIMSTEC leaders also identified various other areas of cooperation to move forward with concrete action – a BIMSTEC framework agreement on transit, trans-shipment and movement of vehicular traffic; having an annual exercise on disaster management; setting up a BIMSTEC center for technology transfer; initiating talks on a BIMSTEC coastal shipping agreement; information intelligence sharing and an annual meeting of national security chiefs; and so on. It was also decided to form a BIMSTEC eminent persons group to further explore and identify new avenues for collaboration. From the six sectors of cooperation in 1997, BIMSTEC cooperation today spans across 14 sectors, including agriculture, poverty alleviation, climate change, cultural cooperation, counterterrorism, and transnational crimes.

Home to over 1.5 billion people, which constitutes around 22 percent of the world’s population, with strong historical and cultural ties, and a combined GDP of $2.7 trillion, BIMSTEC has immense possibilities for the future. In the last five years, BIMSTEC member states have been able to sustain an average 6.5 percent economic growth rate despite the global financial slowdown. The BIMSTEC region has a huge amount of untapped natural, water, and human resources, from hydropower potential in the Himalayan basin to hydrocarbons in the Bay of Bengal.

There is however a long way to go in establishing satisfactory inter-regional transport connectivity, something that is foundational for several other fields of cooperation. To this end, as many as 100 projects have been identified by the BIMSTEC Transport Infrastructure and Logistics Study (BTILS), which would be funded by the Asian Development Bank. Also in the works is the Kaladan Multi-Modal Project, which would connect India to ASEAN countries, and the India-Myanmar-Thailand Trilateral Highway. Besides inter-regional cross-border connectivity, it is crucial that BIMSTEC countries simultaneously develop their own internal infrastructures – feeder road connectivity, which would form a major part of the supply chain – in order to fully benefit from the fruits of trade liberalization.

With the fresh lease of energy pumped into the organization, BIMSTEC today has political will backing it like never before. With Pakistan perennially playing spoilsport in SAARC, BIMSTEC can be expected to play a greater role in meeting the objectives of regional integration and cooperation in various sectors. BIMSTEC, unlike SAARC, is an “issue-free relationship” in which all countries are looking for cooperation that can help in their development process. Also unlike SAARC, BIMSTEC has no written charter and thus is more flexible. In each of the 14 priority areas of cooperation, a member country takes the lead.

With five countries that also belong to SAARC and two that belong to ASEAN, BIMSTEC can serve as the bridge between South Asia and Southeast Asia. With the lifting of sanctions on Myanmar and a democratic government at its helm, the country can particularly play this bridging role. As BIMSTEC celebrates its 20th anniversary next year, Goa could mark the beginning of a new rise in its trajectory.

This article was originally published on Nov 9, 2016 in the International Policy Digest here.

There were many meetings, some unprecedented and first of a kind at the 8th BRICS summit held in the coastal Indian city of Goa on October 15-16. Before the main summit India organized a total of 115 events with the underlying theme, “Building Response, Inclusive and Collective Solutions.” These included parliamentary meetings, ministerial level meetings, senior level engagements, workshops, track II meetings and business events. The first BRICS women’s parliamentary forum was held in Jaipur in August that deliberated on the implementation of Sustainable Development Goals. Following the summit, other meetings are scheduled, including the ministers of telecommunications.

As the chair and host of the BRICS, India left no stone unturned. The focus was on people to people contacts and efforts were made to disseminate the idea of BRICS across nearly 20 states. There were events like the BRICS Youth Summit and the BRICS Young Scientists’ Conclave. Business to business contacts were an important focus as evidenced by the 1st BRICS Trade Fair organized by FICCI that included businesses from across BRICS nations as well as the five Trade Ministers. Start-ups, manufacturing, innovative technologies were of particular importance at the event.

At the Goa summit, the BRICS Business Council presented a report to the BRICS leaders. Besides backing the idea of a BRICS rating agency, the Council recommended cooperation in infrastructure development and financing, the formation of a group of angel investors and cooperation in agricultural sectors. Several MoUs were signed which included environmental cooperation, regulation on BRICS customs cooperation and cooperation between the diplomatic academies of BRICS. The first BRICS documentation center will be started in Delhi by the think-tank, Observer Research Foundation which will make available documents and work of BRICS for research and other purposes.

The meeting of BRICS NSA’s in September resulted in a breakthrough that has the potential to boost counter-terrorism efforts by formalizing a BRICS forum on security matters which will be chaired by the NSA’s. They will focus on counter terrorism (including terror financing), cyber security and BRICS energy security. India has also proposed fresh initiatives such as a BRICS agricultural and railway research network and a BRICS sports council.

One new idea that could have far-reaching implications is the BRICS Credit Rating Agency which is aimed at “further bridging the gap in global financial architecture.” It can be seen as an alternative to the existing dominant trinity of S&P, Moody’s and Fitch which are the three top global credit rating agencies. There has been concern expressed over the methodologies of these agencies and that they constrain growth in emerging nations. A BRICS rating agency, it is hoped, will address these issues. Another major highlight was the BRICS-BIMSTEC Outreach summit, a unique forum in which BRICS leaders met with the heads of government of the BIMSTEC countries. Through the Outreach summit, BIMSTEC countries sought greater exposure to financial investments for the region. The New Development Bank (NDB) established by the BRICS is of particular interest in this regard.

India has always been an enthusiastic supporter of institution building within the BRICS. The NDB, which is today emerging as a key asset of the BRICS framework, was an idea suggested by India in 2012. The NDB has completed one year of operations under the chairmanship of K.V. Kamath and has started lending. India is the first beneficiary, getting a NDB loan of $350 million for a green energy project. Another solid institutional pillar under the BRICS framework is the Contingency Reserve Arrangement (CRA). Established in 2015, the CRA provides for the provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.

The geopolitical divergences between the BRICS nations, particularly India and China, cannot be denied. But this does not detract from the robust foundations that have been laid in the BRICS framework over the last years. The Goa Summit, the holistic efforts and the people to people contacts under the BRICS framework go a long way to strengthening the institutional framework over the coming years.

This article was orginally published in DailyO here.

Ever since the Indus Waters Treaty has come into the current discourse of India-Pakistan relations, some have called for abrogation of the lopsided treaty, while others have warned against it citing a range of consequences that would follow. But any evaluation of this matter must be cognisant of the fundamental fact that the treaty is grossly unfair to India.

Signed in 1960 by Prime Minister Jawaharlal Nehru and the then Pakistan President Ayub Khan, the Indus Water Treaty was brokered by World Bank. It is an extraordinarily generous water-sharing treaty, and is the only pact in the world that compels the upper riparian state to defer to the interests of the downstream state.

The treaty gives Pakistan control over the three so-called “western” rivers – Indus, Jhelum and Chenab that flow from Jammu and Kashmir before entering Pakistan. On the other hand, India gets to control the three eastern rivers – Ravi, Beas and Sutlej that flow from Punjab.

This parity in the number of rivers is, however, quite misleading. The three rivers that India gets to control have an awfully low volume of waters compared to the other three. In all, Pakistan gets a whopping 5,900 tmcft volume of water every year which is a massive 80.5 per cent share of the total waters, while India gets to use only 19.5 per cent.

What’s ironic is that Pakistan gobbles up all of this water even though its actual requirement is much less. It is egregious that annually about 40 million acre feet (maf) of water flows into the Arabian Sea absolutely unutilised, according to a study by a Supreme Court advocate.

If even some of these waters were allowed to be utilised by India, the water crunch in the states of Haryana, Punjab and Rajasthan could probably be solved. Further, the state most affected by the treaty is Jammu and Kashmir. The people and government of J&K have time and again raised this issue.

In 2002, the state Assembly passed a unanimous resolution demanding the abrogation of the pact, when Mufti Mohammed Sayeed was the chief minister. Given the power shortages in the state, full access to Indus waters has the ability to boost self-reliance which is key to solving the state’s problems. Pakistan, however, has a vested interest in continuing the status quo because it harms the people of J&K and undermines their economic growth.

Even though under the treaty India has the right to “non-consumptive” use of the three western rivers, which is for purposes such as hydropower generation and even storage upto 3.6 million acre feet, India has hardly made any use of these waters, allowing Pakistan to benefit from the surplus.

Even for the few projects that India has undertaken, such as the Kishanganga and Ratle projects well within the treaty framework, Pakistan has unabashedly taken them to international arbitration over petty objections, in effect stalling the projects resulting in obvious implications such as cost overruns.

Meanwhile as the Indian projects are halted, Pakistan itself is busy erecting dams to make its case stronger. Ironically, China too has stealthily built a dam on the Indus at Demchok in Ladakh.

The Indus Waters Treaty came into recent spotlight when MEA spokesperson Vikas Swarup on September 22 hinted at a press briefing that India may revisit it. “I am sure you are aware that there are differences between India and Pakistan on the implementation of the Indus Waters Treaty,” he said before adding that the issue is being addressed bilaterally and that all cooperative measures call for mutual trust and goodwill on both sides. “For any such treaty to work, it is important there must be mutual trust and cooperation. It can’t be a one-sided affair,” Swarup said.

Largesse be it in the case of river waters or other resources like land, marine resources, etc is not uncommon in diplomacy. India has a proven track record of making magnanimous overtures to its neighbours.

The recent land boundary agreement with Bangladesh is a fine example of how India is willing to walk the extra mile if the partner country is able to reciprocate with a sense of goodwill and positivity. But Pakistan is no Bangladesh or Bhutan.

There is neither mutual trust nor goodwill, which were the foundational basis of the Indus Waters Treaty, between India and Pakistan today. For 56 years of uninterrupted and unquestioned flow of waters from India to Pakistan, all India has got in return is the blood of its citizens.

As strategist Brahma Chellaney wrote in his recent article, “If India jettisons the 1960 Indus Waters Treaty (IWT), it can fashion water into its most potent tool of leverage to mend Pakistan’s behaviour. Pakistan has consistently backed away from bilateral agreements with India – from the Simla Agreement, to the commitment not to allow its territory to be used for cross-border terrorism… It cannot selectively demand India’s compliance with one treaty while it flouts a peace pact serving as the essential basis for all peaceful cooperation, including the sharing of river waters.” Chellaney has also pointed out that Pakistan’s use of state-reared terrorist groups can be invoked by India, under Article 62 of the Vienna Convention on the Law of Treaties, as constituting reasonable grounds for withdrawal from the Indus treaty.

The government has for now not decided to abrogate the treaty, but would be “maximising” the use from the western waters under the ambit of the treaty. In the high level review meeting held on Monday (September 26), Prime Minister Modi said that “blood and water cannot flow at the same time”, indicating a firm stance.

The government has also decided to suspend the meeting of Indus Water Commission until further notice, pointing out that such engagements need an atmosphere free from terror. But the government’s policy on the treaty must in no way stop here. This must only be the first step and future course of action must be contingent on whether Pakistan mends its ways – which is predictably quite unlikely.

Therefore, a step-by-step escalation would work well indicating to Pakistan that with every misadventure it undertakes, the costs will be raised. Come what may, abrogation as an option should not be ruled out because only then will India be able to make it clear that it is not going to be business as usual if Pakistan continues to bleed India.

This article was  originally published in DailyO (online opinion platform of India Today group) on September 21, 2016 here.

The recent visit of Afghan President Ashraf Ghani to New Delhi, where he met Prime Minister Narendra Modi, saw a slew of agreements and exchanges. Some of the major ones were agreements on extradition, mutual legal assistance treaty and outer space.

Both leaders flagged the issue of terrorism and agreed that it is the single biggest threat to peace, stability and progress in the region and beyond. They reaffirmed their resolve to counter terrorism and strengthen security and defence cooperation.

PM Modi pledged that India would allocate a sum of $1 billion for Afghanistan’s capacity building in areas of education, health, agriculture, skill development, women empowerment, energy, infrastructure, and strengthening of democratic institutions.

He also proposed to supply world class and affordable medicines and cooperation in solar energy through mutually agreed instruments.

Ghani comes full circle

The visit comes after a series of engagements between the two leaders. Modi has visited Afghanistan twice, following Ghani’s maiden visit to New Delhi exactly a year ago.

Between the visits, they have had constant engagements, including the video conferencing during the joint inauguration of the restored Stor Palace last month (August). The relations between the sides have been on a constant upsurge after Ghani abandoned his Pakistan “tilt”.

Back in September 2014 when Ghani took charge as President in the National Unity government, he decided to actively engage Pakistan in the hope that it will help stabilise the security situation by bringing the Taliban to the negotiating table.

But within a year Ghani realised the hollowness and deception of Pakistani assurances. The fighting season concomitant with the talks was one of the bloodiest that Afghanistan saw in years, with the Taliban even overrunning several districts.

The reports that Mullah Omar had died in April 2013 served as the last straw in making it unequivocally clear that the “peace process” was nothing but an eyewash. It was in the name of Mullah Omar, the Amir-ul-Momineen, that the talks were being held in 2015. Such was the farce during the process that the Taliban, backed by Pakistan’s ISI, even released a letter with an Eid message in the name of the long dead Mullah Omar.

Ghani, therefore, abandoned his failed outreach towards Pakistan, much to the relief of the Afghan public that was always sceptical of trusting Pakistan. The resentment against Pakistan’s terrorist designs is widespread among the Afghan civil society who look up to India as a truly reliable friend.

A retired Indian diplomat told this writer how an Afghan once remarked to him that “they [Pakistan] send terrorists to kill our people, whereas you build roads and bridges that improve our lives”. This is the general sentiment that guides the way most Afghans look at India.

The development partnership

The development partnership of India and Afghanistan has been the defining aspect of their contemporary bilateral relations. Over the last decade and more, India has heavily invested in the reconstruction and development projects inside Afghanistan, which has created immense goodwill.

The celebration on the streets by Afghan youth over the completion of the Salma Dam is a recent testimony to this. Officially called the India-Afghanistan Friendship Dam, the Rs 1,775-crore hydroelectric and irrigation dam is located on the Hari Rud River in Chishti district of Herat, and was inaugurated by PM Modi in June this year.

It was Modi’s second visit to Afghanistan after the historic Kabul visit last December that saw him inaugurate the Parliament building whose construction was also funded by India.

A number of projects in the areas of agriculture, rural development, health, education, vocational training, etc have been approved by the Indian government under the Small Development Projects (SDP) scheme. Besides these flagship initiatives, India through its state-owned and private companies has invested in a number of sectors in Afghanistan.

A consortium of six Indian companies led by Steel Authority of India had won the concession for three iron ore mines in the Hajigak region in 2011. The state owned power equipment maker BHEL commissioned two 220/20kV substations in Doshi and Charikar in January this year.

Recently, Afghanistan also invited Indian investments in the renewable energy sector, specifically off-grid renewable energy projects.

Apart from infrastructure and industrial projects, India has also been lending assistance to Afghanistan in other areas like sports.The BCCI helped provide for a “home ground” for Afghan cricket in India at the Greater Noida cricket stadium.

Further, the Indian government approved $1 million for constructing a cricket stadium in Kandahar under the SDP scheme.

In the 12th South Asian games held in India earlier this year, India sponsored the air-travel of the 214 strong Afghan contingent, besides bearing some other expenses. The request for India’s help, reportedly made by Afghan chief executive Abdullah Abdullah, was immediately agreed to by PM Modi.

Countering terrorism emanating out of Pakistan

That the Taliban plots its attacks with Pakistan’s support is well known not just to the Afghans but to the world.

Be it infiltrating terrorists across the LoC into India, orchestrating cross-border attacks like the one in Uri this Sunday (September 18), supporting the Taliban in Afghanistan that spills Afghan blood every single day, or abusing human rights in Balochistan and PoK, Pakistan has given us umpteen reasons to call it a terrorist state.

Yet, there isn’t enough international pressure on Pakistan to rein the terrorist designs of its “deep state” – the nexus of Pak military, ISI and the various jihadi groups.

The need to diplomatically isolate Pakistan is not only in the interest of Indian or Afghan security but that of the entire South Asian region and beyond. Even Bangladesh is suffering from the nefarious designs of the Pakistani State. In December 2015, Pakistan had to recall its diplomatFarina Arshad after Bangladeshi authorities alleged her of spying and financing terrorist organisations.

The effort of globally exposing Pakistan and its terrorist activities, therefore, must be led by India together with Afghanistan and Bangladesh. When New Delhi, Kabul and Dhaka all speak in one voice, it sends across a powerful message to the international community.

One of the most laudable decisions of the Modi government’s Afghanistan policy has been its decision to donate three Mi-35 multi-role helicopters, with fourth in the pipeline. The Indian helicopters are expected to boost Afghan air power and positively impact the fight against terrorism.

The long drawn war that the Afghan forces are fighting against the Taliban needs support wherever it can come from. Towards this end, not just India but all world powers should contribute towards emboldening capabilities of the Afghan National Security Forces.

Besides the developmental agenda, forums like Heart of Asia – Istanbul Process and the trilateral such as India-US-Afghanistan consultations, to be held in New York later this month, also need to heavily focus on the security situation and means to counter the Taliban.

The Strategic Partnership Agreement signed between India and Afghanistan in 2011 provides a framework for greater defence and security cooperation, as reiterated in the recent joint statement. Herein lie the opportunities to take India-Afghan relations to the next level.

As New Delhi examines the requests made by the Afghan Army chief General Qadam Shah Shahim last month, the one thing that should not be a matter of consideration is how its decisions are perceived by Islamabad.

There is absolutely no reason for India, to the extent it is economically feasible, to shy away from supporting and working towards a stable, democratic and peaceful Afghanistan.