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Issue No.: 575 | May 2015
 

Modi Goes Abroad Again: Target Development Agenda at Home

B. Ramesh Babu
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The foreign policy of a country is an integral part of the national policy and subserves the overarching goals of economic development and national security.

On the eve of his three nation foreign tour in April 2015, Prime Minister Modi declared: "My France, Germany and Canada visit is centered round supporting India’s economic agenda and creating jobs for youth.” It is also aimed at paring down the nation’s enormous oil import bill of about $150 billion, which is likely to grow to $300 billion by 2030. In this regard, the Modi Government is talking to several foreign lending agencies, including the European Investment Bank (EIB), Agence Francaise de Developpment (AFD) of France and KIW Bankengruppe of Germany.

The focus in France is on defence, manufacturing, civilian nuclear energy and infrastructure. Modi will meet President Francois Hollande on April 9, and the next two days will be devoted to meetings with different sections of the French society. The much postponed sale of the Rafale jet fighters will naturally be on the top of the agenda in Paris. In 2009, the Indian Air Force opted for the Rafale jets over the competing American and Russian fighter aircraft on grounds of technical superiority, joint production and some other features suited to our specific needs. However, the mega deal went into some serious problems soon afterwards. Team Rafale was displeased and distraught over the endless delay at the Indian end. The Deal comprised the sale of 126 Rafale aircraft, of these 108 were to be manufactured locally at the Hindustan Aeronautics Limited (HAL), Bengaluru. One of the hitches is the issue of responsibility for quality and compliance of specifications of the aircraft manufactured in India. The French side insists that ‘everyone is responsible for what he does.’ India insists that as per the contract the French companies are responsible for all the 126 Rafale aircrafts irrespective of where they are built. Let us hope that Modi and Hollande will overcome the hurdle and the urgently needed advanced jets will be delivered soon. It may be added that the cooperation between Dassault Aviation and HAL on the upgrading of 51 Mirage 2,000 aircrafts currently underway is going on smoothly.

French nuclear giant Areva’s 2009 offer to supply EPR reactors with a possible follow up on enhancing their capacity to 10000 MW is another big item on Modi’s agenda in Paris. India is one of the 7 partners in the International Thermo Nuclear Experimental Reactor (ITER) coming up in Cadarache in France. The knowledge from this partnership will be used to build our own demonstrator reactors at home. This indeed is an example of Indo-French cooperation at the cutting edge of Nuclear Fusion Technology Research. It may be added that all the Indian nuclear plants are based on Fission. Producing electricity through Fusion will be much cheaper and safer. Modi Government has sanctioned huge sum for implementing the ITER project.

Coastal surveillance and insurance are the other sectors that are high on the agenda. As a part of the strategic talks in France, the Indian side is scheduled to discuss the question of sharing costs for setting up a 24 nation grid of coastal surveillance radars in the Indian Ocean to monitor civilian and military traffic in the Indian Ocean Region (IOR). India also could extend financial aid to the littoral nations in the task, which eventually would integrate the surveillance data from the French, the US and other naval military sites in the vast region. This whole enterprise is a part of New Delhi’s plan to enhance maritime domain awareness in the wake of 26/11 Mumbai attack and also in the context of China’s expansionism and its grand Maritime Silk Route scheme launched in 2014.

In response to raising the FDI cap in the insurance sector from 26% to 49%, a $5 billion French investment could be expected. Agri-business and food processing are the other sectors where there is enormous scope for IndoFrench co-operation. Manufacturing, infrastructure, agri-business and food processing are best suited to generate unskilled and skilled jobs in rural areas and small towns on a very large scale, a top priority of the NDA Government. Latest addition to the Prime Minister’s crowded agenda in France is that of building "Smart-Cities” in India. France is ready and willing to offer its expertise in furtherance of one of Modi’s pet projects. Modi is scheduled to visit the smart city of Toulouse. Pondicherry and Chandigarh already selected under the programme. There is also talk of including Hyderabad and Nagpur.

Onto Germany

Modi’s next stop in Europe is Germany, the powerhouse of the continent and the economic leader in the European Union (EU). Bilateral trade between the two countries increased remarkably over the years (21.5% in post-recession period of 2010). Investments by the German and Indian firms in each other’s’ countries are sizeable and are expected to grow rapidly. India is the partner country at the Hannover Trade Fair, world’s largest annual trade and technology exhibition and sales operation. More than 400 Indian firms have stalls in the Fair this year.

While in Germany, Modi’s focus will be on manufacturing, skill development and clean energy. Indo-German Chamber of Commerce (IGCC) is the largest foreign chamber in India. In 2006, IGCC celebrated its 50th anniversary and has set up the goal of 20 billion Euros by 2012. Textiles, leather goods, software and agro-exports are the major Indian exports to Germany. Cut flowers, flowering and ornamental plants, chicory, orchids, dried and preserved vegetables, poultry products, processed meat and natural honey are the main agro-products exported to Germany.

Onto Canada

Canada is the final destination in Modi’s three nation foreign tour. But, it is equally, if not more crucial for taking his Development Agenda forward. The Canadian Prime Minister Stephen Harper welcomed the forth coming visit of the Indian Prime Minister with these words: "Canada and India enjoy a close friendship based on shared values of democracy, pluralism, and mutual interest in expanding trade. India’s growing economy presents enormous opportunities for Canada and I look forward to meeting with Prime Minister Modi to further strengthen bilateral relations and expand our trade and investment ties with a view to benefiting citizens of both countries.”

Commenting on his visit to Canada, Modi declared that "Soon after Independence, Canada was one of our most important partners in economic development. We look forward to resuming our Civil Nuclear Energy cooperation with Canada, especially for sourcing uranium fuel for our nuclear power plants”. As of 2014, bilateral trade between India and Canada added up to 6.3 billion Canadian dollars and the target is to reach the 15 billion mark by 2015. This may seem difficult, but, if the Foreign Investment Promotion Act and the Comprehensive Economic Partnership Agreement are signed during Prime Minister Modi’s visit, the target is reachable, according to Sidney Frank, Canadian Consul General based in Bengaluru. The 1.2 million Canadians of Indian origin play a prominent role in the country’s economic, social and cultural development. At the time of writing this article, there were unconfirmed reports that the Indian Diasporas in Canada is planning a Madison Square Garden type show in Toronto!

Canada’s equation with Modi goes back when he was the Chief Minister of Gujarat. Gujarat has been a partner country for Canada in many Vibrant Gujarat events. About 600 Canadian companies do business in India in the fields of infrastructure, bio-technology, engineering, communications, energy and solid waste management, etc in India. Bilateral trade between the two countries was over 5.1 billion Canadian dollars in 2011, almost in balance, and growing steadily. Indian exports to Canada include organic chemicals, precious stones and metals, knit and woven apparel, machinery, and iron and steel. Our imports from Canada include peas and lentils, fertilizers, paper and paper board, would pulp, machinery, precious stones, iron, and steel.

Canada has rich experience in public-privatepartnership (PPP), a favoured model of generation investment capital in Modi’s scheme of things. By far, the most prominent areas of cooperation between the two countries are Joint Research and Development in the field of nuclear energy and uranium supply to India’s Pressurised Heavy Water (PHWs) nuclear reactors.

Conclusion

The foreign policy of a country is an integral part of the national policy and subserves the overarching goals of economic development and national security. Foreign tours by the key leaders and direct interaction with their counterparts in other countries are the means to further national interests. The Prime Minister’s three nation tour is aimed to attract investment from abroad on a very large scale. The sectors of our economy that are likely to benefit most may be listed as manufacturing, infrastructure, trade, defence production, nuclear energy, IT and communications, solar and other renewable energies, and research and development in science and technology, agroproducts and food processing.

Unlike the Asian Tigers in the recent past and China till recently, India did not follow the "FDI fed and export led growth” model. In our scheme of things foreign investment has always been secondary, reinforcing the massive domestic effort. In the context of the transformed and business friendly climate he fostered, Modi is seeking to harness foreign policy initiatives and successes in foreign relations to turn the tide at home. The opposition is making it difficult for him. That is the way our system functions. But, it is for him and the BJP to deliver on the domestic front. Almost year is gone. Technically speaking he has four more years to go. However, Modi and the NDA Government have to pull their act together before the palpable disappointment degenerates into national disillusionment!

DR. B. RAMESH BABU is a specialist in International Relations, American Politics and Foreign Policy. 
He is Visiting Professor at the University of Hyderabad, 20132014 and 
Scholar in Residence, Foundation for Democratic Reforms, Hyderabad. 
Formerly, Sir Pherozeshah Mehta Professor of Civics and Politics, University of Mumbai. 
Email: brameshbabu08@gmail.com
 
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