Table of Contents
Analysis of The Indian Express Editorial 1 : The trade debate
Introduction: India’s Strategic Choice to Stay Out of RCEP
In November 2019, after prolonged negotiations, India made a significant decision to abstain from joining the Regional Comprehensive Economic Partnership (RCEP), a major trade agreement that involves 15 nations representing 30% of the global GDP and around 25% of the world’s exports. The decision sparked a broader conversation about India’s role in global trade and its path towards becoming a manufacturing powerhouse.
Why India Opted Out of RCEP
The primary rationale behind India’s decision not to participate in RCEP was rooted in its ambitions of transforming into a global manufacturing hub. To achieve this, India needs to be deeply integrated into global value chains. Critics argue that by staying out of such agreements, India could miss significant opportunities to capture export markets, attract foreign investments, and build a robust industrial base.
Protectionist policies, including high tariffs and non-tariff barriers, have raised concerns. These measures, while intended to shield domestic industries, may limit India’s potential gains from escalating trade tensions between China and the US, particularly through the “China plus one” strategy. This strategy involves companies diversifying their supply chains to countries beyond China, presenting a potential windfall for countries like India.
The Oxford Economics Report: A Cautionary Note
A recent report by Oxford Economics paints a revealing picture of India’s current trade dynamics. While the country has reaped some benefits from US-China trade rerouting, the scale of these benefits pales in comparison to the gains made by other Asian economies such as Vietnam, Indonesia, and Malaysia. Furthermore, the report highlights India’s struggle to attract a significant share of global foreign direct investment (FDI), despite a sharp drop in FDI inflows to China.
Revisiting India’s Trade Policies: A New Approach?
BVR Subrahmanyam, CEO of NITI Aayog, has publicly acknowledged that India may have missed out on the opportunities presented by the “China plus one” strategy. He has suggested that India reconsider its stance on international trade agreements, specifically mentioning RCEP and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This shift in perspective indicates a potential pivot in India’s trade policy, one that could better position the country in the global economic landscape.
Even smaller nations like Sri Lanka and Bangladesh are exploring membership in these trade blocs, further illustrating how pivotal such agreements have become in today’s interconnected world.
The Global Context: A Changed World
The world has dramatically shifted in the five years since India’s decision on RCEP. The global economy has weathered a pandemic, the ongoing Russia-Ukraine conflict, and rising tensions in the Middle East. These disruptions have severely impacted global supply chains. In addition, western nations, particularly the United States, are increasingly adopting protectionist policies. Trade is no longer driven solely by economic logic but is also heavily influenced by geopolitical and security considerations.
Donald Trump’s re-election and his proposed tariffs—up to 60% on Chinese imports and 10-20% on other goods—add another layer of unpredictability to the global trade environment. For India, navigating this complex landscape requires a recalibration of its trade strategy.
India’s Path Forward: Time for Reassessment
Given the fast-evolving global trade dynamics, India must critically reassess its trade policies. While the country has made some progress in signing trade agreements with nations like the UAE and Australia, other negotiations, particularly with the European Union and the UK, have stalled.
The comments made by Subrahmanyam may reflect a broader rethinking within the Indian government, signaling the need for more proactive engagement in trade partnerships. To truly capitalize on the “China plus one” strategy and global supply chain shifts, India must position itself as a key player in international trade agreements.
Conclusion: Subrahmanyam’s Call for Broader Debate
As India navigates an increasingly unpredictable global environment, Subrahmanyam’s call for reconsideration of trade agreements like RCEP is timely. With another Trump presidency on the horizon and growing protectionist tendencies worldwide, it’s essential for India to engage in a broader debate on its trade strategy. A well-calibrated approach can enable India to better integrate into the global economy, enhance its export potential, and attract crucial foreign investment.
Summary of Key Considerations for India’s Trade Strategy:
| Factor | Details |
|---|---|
| Global Trade Shifts | US-China trade tensions, protectionism, supply chain disruptions |
| Missed Opportunities | Limited benefits from trade rerouting and lower FDI compared to peers |
| Potential Benefits of RCEP | Integration into global value chains, access to new markets |
| Challenges | Domestic protectionist policies, geopolitical uncertainties |
| Future Strategy | Re-engagement with global trade agreements, improving ease of doing business |
Analysis of The Indian Express Editorial 2 : Why Delhi must reach out to Jakarta
Introduction
On October 20, 2024, a pivotal shift occurred in Indonesia’s political landscape as the nationalist Prabowo Subianto took office as the new president, succeeding Joko Widodo (Jokowi). In an interesting twist of continuity, Jokowi’s son, Gibran Rakabuming Raka, was appointed as vice president. While India and Indonesia share a long history, Indonesia has often remained on the fringes of India’s diplomatic radar. Now, more than ever, India has an opportunity to enhance its relationship with this key maritime neighbor, particularly under the new administration.
Why India Needs to Reach Out to Indonesia Now
Indonesia has always been a strategic neighbor for India, both geographically and economically. However, as China becomes the first country Prabowo has chosen to visit as president, India must act swiftly. Despite Chinese intrusions into Indonesian waters as recently as October 26, 2024, Prabowo’s choice signals his intent to manage relations with the rising superpower. His wariness towards the U.S., stemming from past human rights concerns, further underscores the importance of India’s diplomatic approach.
If India hesitates, it risks allowing Indonesia to drift deeper into China’s sphere of influence. Although Indonesia has reservations about China’s dominance in business and geopolitics, the pull of the Chinese economy is undeniable. India must proactively engage with the new Indonesian leadership to prevent this shift and solidify its own influence in Southeast Asia.
Prabowo Subianto: A Figure of Political Legacy
Prabowo Subianto comes from a family that has long played a significant role in Indonesian politics. His father, Sumitro Djojohadikusumo, is perhaps the only Indonesian figure to have served in high-ranking positions under both Sukarno and Suharto—two presidents with vastly different visions for Indonesia. Prabowo’s grandfather, Margono Djojohadikusumo, founded Bank Negara Indonesia, which briefly functioned as the central bank during Sukarno’s nationalist regime.
This complex political lineage showcases Prabowo’s deep-rooted ties to Indonesia’s governance and its economic landscape. It also hints at the balancing act he will likely undertake between maintaining national interests and managing international relations, which India should capitalize on.
A Brief History of India-Indonesia Relations
1. The Bandung Conference (1955)
India and Indonesia share historical ties dating back to the Bandung Conference of 1955, hosted by Indonesia’s first president, Sukarno. This conference laid the groundwork for the Non-Aligned Movement, a diplomatic initiative where both India and Indonesia played crucial roles.
2. CIA-Backed Separatist Rebellion (Late 1950s)
Sumitro Djojohadikusumo, Prabowo’s father, rebelled against Sukarno in the late 1950s with CIA support, following a falling-out with Sukarno’s leadership. This moment underscored Indonesia’s complex internal politics and international involvement during the Cold War.
3. U.S. Support for Sukarno’s Independence Movement (1948)
India supported Sukarno’s independence movement, and in 1948, the U.S. backed this effort in response to a communist coup attempt. This joint support played a critical role in ensuring the final departure of Dutch colonialists in 1949.
4. U.S. Opposition to Sukarno (1950s)
Despite earlier support, the U.S. grew wary of Sukarno’s left-leaning policies, seeing him as a potential threat to its anti-communist efforts in Asia.
5. The U.S.-Backed Coup (1965)
Declassified documents from 2017 reveal that the U.S. played a key role in the 1965 coup that ousted Sukarno and installed Suharto. This marked a Cold War victory for the U.S. and began Indonesia’s shift towards a pro-Western stance under Suharto.
6. Prabowo’s Military and Political Rise
By the late 1990s, Prabowo was well on his way to becoming Indonesia’s top military leader under Suharto. However, after Suharto’s fall in 1998, Prabowo faced accusations of human rights abuses and subsequently fell out of favor with Western powers.
7. Prabowo’s Comeback
After a period of exile, Prabowo made a significant political comeback. He and his brother Hashim rebuilt their business empire, and by 2019, Prabowo held the position of defense minister in President Jokowi’s cabinet. His political party, Gerindra, emerged as the third largest in the Indonesian parliament.
The Importance of Strengthening India-Indonesia Relations
1. Post-Suharto Era
Following Suharto’s resignation, several Indonesian presidents, such as Abdurrahman Wahid and Megawati Sukarnoputri, worked to improve relations with India, especially as tensions with China escalated over maritime disputes. Under President Jokowi, these relations deepened, including collaborations on the strategic port of Sabang and discussions of joint naval facilities.
2. Economic Cooperation
Indonesia is one of the world’s largest exporters of thermal coal, rubber, palm oil, nickel (a critical material for electric vehicle batteries), and tin. These resources are essential to India’s rapidly expanding manufacturing and energy sectors. Additionally, India’s service professionals can play a significant role in helping Indonesia reduce business costs, opening up more avenues for cooperation.
3. Cultural Connections
The India-Indonesia relationship is not merely diplomatic or economic; it is rooted in deep civilizational ties. Statues such as the Arjuna Wijaya monument in Jakarta, commissioned by Suharto, symbolize the rich cultural history shared by the two countries.
Conclusion
India and Indonesia share a long and intertwined history, but now is the time for India to revitalize its engagement with its Southeast Asian neighbor. With Prabowo Subianto in power, India has the chance to strengthen diplomatic, economic, and cultural ties before Indonesia is pulled further into China’s orbit. By leveraging historical connections, economic interests, and a shared vision for a stable Indo-Pacific, India can foster a relationship that benefits both nations and reinforces its role as a regional leader.
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