Shifting security and economic concerns are prompting India to establish stronger partnerships across its western neighbourhood, writes G Parthasarathy
Over the past three decades, India has developed an integrated ‘Look East’ policy, building bridges of co-operation in its eastern neighbourhood. This region extends from across the Bay of Bengal and the Straits of Malacca to the South China Sea and the Pacific Ocean. Over 45 per cent of India’s exports traverse through these waters. Such efforts have led to its closer economic integration with ASEAN and the conclusion of Free Trade Agreements for both goods and services with ASEAN members.
At the same time, India has concluded Comprehensive Economic Co-operation Agreements with the economies of Japan and South Korea and developed a growing trade and economic relationship with China. There is now a vibrant security partnership with Japan and Vietnam, together with enhanced strategic ties with the US, in what is now called the ‘Indo-Pacific
Region’. Security ties with ASEAN members are expanding, and India is scheduled to host a summit meeting of the regional organisation of littoral States of the Bay of Bengal (BIMSTEC) later this year.
China’s policies of blocking action in the UN against Pakistan-based terrorist groups such as Lashkar-e-Taiba and Jaish-e-Mohammed, even as Beijing continues to support armed separatists from India’s northeastern states from across the Sino-Myanmar border, have resulted in an Indian backlash. Delhi has responded by facilitating meetings between the Dalai Lama and Chinese pro-democracy activists from Xinjiang, Tibet and elsewhere, in his abode in Dharamsala. This is, however, being combined with a process of active diplomatic and economic engagement with China, which recently hosted India’s President Pranab Mukherjee. The broad contours of policies for India’s relations with its eastern neighbourhood are now in place.
Prime Minister Narendra Modi is now shaping an integrated and strategic approach to India’s western neighbourhood, extending beyond Pakistan and Afghanistan and across the Persian/Arab Gulf to the Gulf of Aden. He appears determined to build this relationship with India’s western neighbourhood by strengthening ties with all four major power centres in the region – Iran, Egypt, Israel, and Saudi Arabia, along with its Gulf Arab partners. This is being carefully crafted by avoiding any direct involvement in sectarian, Shia-Sunni rivalries.
Mr Modi’s visits to the UAE and Saudi Arabia were aimed at building understanding with the Gulf Arab States, while expressing readiness to expand maritime and security co-operation. India is in the process of building up its maritime capabilities by expeditiously expanding its submarine fleet to three nuclear submarines and preparing to deploy two aircraft carriers across the Indian Ocean. The warship fleet is also to be strengthened with the acquisition of more modern frigates. Virtually all these vessels are being built in Indian shipyards.
These developments come at a time when the economies of oil-rich countries are under severe strain, caused by the precipitous fall in oil and gas prices. Given the slowdown in the global economy and declining growth rates in China, the expectation in the global oil and gas industry is that India is set to emerge as the fastest growing market for oil and gas. The fall in global oil prices has benefited India’s balance of payments immensely. Not only is there a greater incentive for India to work with others for peace and stability in the region, the need for a pro-active Indian role in promoting co-operation in its western neighbourhood has also been enhanced by the end of global sanctions against Iran. The removal of banking restrictions has enabled India to make long-delayed payments due to Iran.
The share of ten West Asian nations in India’s oil imports dropped from 62.5 per cent in 2012-13 to 57.5 per cent in 2014-15, but rose marginally to 59.2 per cent during the first 11 months of the following financial year (2015-16). India imported 109 million metric tons (mt) of crude oil from these ten nations between April 2015 and February 2016, amounting to around 59.2 per cent of total imports of 184 mt during that period. The increased share in 2015-16, as compared to 2014-15, was mainly driven by higher imports from Iraq (33 per cent increase to 32 mt) and Saudi Arabia (nine per cent rise to 37 mt), even as imports from Iran remained stagnant at 10 mt. But recent trends show a growing readiness of Indian oil companies to significantly increase Iranian oil imports.
Prime Minister Modi’s initiatives for improving ties with Iran have in view the potential for rapid expansion of trade, energy, investment and strategic ties with Tehran. Given Pakistan’s refusal to allow India access through its land borders to Afghanistan and Central Asia, the Iranian port of Chabahar has emerged not only as a crucial transit point for shipping goods to Afghanistan and Central Asia, but also as a key centre for collaborating with Iran in the production and export of oil and natural gas.
Indian oil companies and refineries already play a crucial role in expanding Iran’s exports of finished petroleum products, now of the order of over $40 billion annually, and the same companies have a keen interest in investing in exploration of the country’s untapped resources of oil and natural gas. Iran has also been a long-term partner of India in resisting Taliban extremism and both have contributed substantially by way of economic assistance to Afghanistan, after the American-led ouster of the Taliban. Much will depend now on the extent to which the US and Iran will cooperate in dealing with extremist groups such as Islamic State.
As for Israel, Mr Modi could well become the first Indian Prime Minister to visit the country by the end of this year. India has developed an open, friendly and transparent relationship with Israel, while making it clear that it remains committed to the emergence of a viable Palestinian state, living at peace with Israel.
But Delhi is not alone in developing ties with countries to the west. India remains wary of what it sees as a growing Chinese military presence beyond its western shores in the Indian Ocean. The Chinese Silk Road Economic Belt and the Maritime Silk Road join in Pakistan and link up with the western part of the Indian Ocean at the strategic port of Gwadar on Pakistan’s Makran Coast. Taking these developments into account, Mr Modi has visited Sri Lanka, the Seychelles and Mauritius, and is predicted to make his first visits to East Africa later this year, implenting a process of systematic engagement with countries across India’s entire Indian Ocean neighbourhood.