“A key factor underlining India’s external policy, whether in geopolitics or economics, is the nation’s perception of itself and its global stance at different points in time. While leaders like Nehru and Indira Gandhi drove foreign policy in a certain direction that worked well enough until the rude shock of the Chinese aggression, it was post-liberalisation that economic policy took centre-stage among the planners, who realised that this shift was crucial if India was to unlock its potential as an emerging economy,” said R. Srinivasan, Editor, BusinessLine . He was speaking on “Foreign Policy: Trade and Investment” at an event organised by the Madras Management Association on Monday.

The country’s foreign policy today is strongly influenced by Prime Minister Modi’s view of India as a nation that’s been long denied its due, said Srinivasan, adding that the PM’s visits to several countries over the last six years were an attempt to correct this perception, as much as an effort to ramp up trade, project India as the counterweight to China in manufacturing and invite investments into India.

Economic diplomacy

Speaking from the foreign services perspective, S Swaminathan, a career diplomat who served in Brazil and later as Ambassador to Mongolia and Iceland, said: “Foreign policy is a reflection of the nation’s character and interests, in terms of the goals of national security and regional stability as much as food and energy security, technology and investments. And economic diplomacy is key to achieving foreign policy objectives.”

He said that, while traditionally this meant embassies and consulates helping Indian businesses find the right global markets for manufactured goods or IT and IT services, nowadays this includes attracting international investments, especially to push such initiatives as Make in India, Start-up India and skill development by leveraging technology from international partners. The visits of the Prime Minister, President or Foreign Ministry officials to 189 of 192 UN member-countries over the last five years were, he said, largely aimed at inviting these countries to invest in projects in India and to create world-class infrastructure.

“Ongoing efforts by successive foreign ministers and members of the foreign service to reach out to counterparts across dozens of countries have taken forward economic interactions. The recent informal meeting in Mahabalipuram between Modi and Chinese President Xi Jinping was the outcome of such interactions,” he said, adding that “apart from looking at ways to scale down the trade deficit, the leaders made efforts to identify new areas of trade and possible investments in key areas.”

Take everyone on board

“There’s no guarantee that such high-level interactions always result in successful outcomes on the ground,” said Srinivasan. “Despite the perception of India having been reset among global investors because of the efforts of the political leadership, there’s still a disconnect between the external ease-of-doing-business policy and the ground reality in terms of infrastructure or the policy environment of the State, where investors set up operations. State policies need to be strengthened and aligned to national goals, and this is an area that needs to be worked on,” he said.

Citing the example of Australia’s DFAT (Department of Foreign Affairs and Trade), where a single planning body deals with both political and economic interactions globally, N. Sathiya Moorthy, Senior Fellow & Director of the Chennai Chapter of the Observer Research Foundation, made the case for a greater cohesion in planning between the country’s foreign policy and its trade and investment policies. He said that, apart from involving States in policy-making, it would be in the interest of wider diplomacy and cooperation to take on board our Indian Ocean neighbours when drawing up the larger foreign policy framework.

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