The Hindu Business Line : Reaching out to forge partnerships

For all its claims of good neighbourliness, India is still to live down the image of a big brother. Neighbours are normally wary of one another to avoid being taken advantage of. Some years ago, the then Canadian Prime Minister, Pierre Trudeau, talking to the National Press Club in Washington, wryly remarked:

"Living next to you is like sleeping with an elephant; no matter how friendly and even-tempered the beast, one is affected by every twitch and grunt."

India's sheer size and now its growing stature as the fourth largest economy in purchasing power parity (PPP) terms make every move it makes being scrutinised closely by its neighbours for any latent or manifest signs of a ruse to put them down. The memory of its historic role in liberating Bangladesh and the activist intervention (although on the ostensible invitation of the government) in Sri Lanka with its Peace Keeping Force had led to an apprehension that, given a chance, it is not averse to throwing its weight about. Hence, India has to bend over backwards to ensure that it gives no scope for the slightest misunderstanding or grievance on this score.

Even when relations are on an even keel, they can nosedive by something like Rajiv Gandhi's refusal in March 1989 to extend the Nepal-India trade and transit agreement unless Nepal agreed to meet India's commercial and Defence concerns and ordering a virtual blockade by closing down 13 of the 15 border check posts that made possible most of Nepal's trade with the outside world. That is why in recent years India has meticulously pursued a hands-off policy, even to the extent of supporting Sri Lanka's operations against the LTTE and letting Nepal deal with Maoists in its own way.

But is India willing to put its money where its mouth is, by reaching out to the neighbouring countries to build durable economic partnerships? Every country in its neighbourhood, except Bhutan (thanks to import of power by India), has adverse terms of trade with India. India has been building up year after year trade surpluses vis-…-vis countries such as Pakistan, Nepal, Bangladesh, Sri Lanka and Maldives, besides imposing restrictions on free flow of trade and investments from them. These have the effect of disabling smaller countries from rising to their full economic potential.

LITMUS TEST

The latest decision of the Government to import eight million garment items of whatever fabric, all duty free, and through any port, from Bangladesh and eight million such items from Sri Lanka, six million of which will be duty-free, will certainly give a boost to the economy of those two countries and pave the way for a more equitable balance of trade. (The reaction of Tiruppur and other garment producing clusters in India is yet to be known). It also perhaps marks the beginning of a new policy of expanding, diversifying and strengthening the economic prospects of the region.

Any such policy can yield the expected results in commercial and psychological terms only if barriers to investments are lifted with freedom to choose the nature of industry, location and quantum. Here is the litmus test. Are India and its neighbours prepared to open the doors and provide unhindered access?

In particular, is the Centre willing to allow the States too to have a say in forging the economic partnerships suited to their strengths and needs? Can it afford to overlook security concerns relating to Al Qaeda, Taliban and so on in regard to Pakistan? How to counter the objections that domestic business and industry, feeling the pinch, are apt to raise?

Answers to these can certainly be found given statesmanship and goodwill.

B.S.RAGHAVAN

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