Indian Politics & Policy Volume 1, Number 2, Fall 2018 | Page 78

Foreign Assistance in India’s Foreign Policy: Political and Economic Determinants
mar remain tiny at 0.24 percent and 0.36
percent, respectively, as at 2016–17.
India’s outward private investment
flows increased steadily, from a
very low base, over 2001–02 to 2017–
18, rising from $759 m to over $19 bn in
2008–09 then down to $9.1 bn in 2017–
18, totaling $177.77 bn over the period
(Table 8). As Table 9A shows, the bulk
of Indian outward FDI since 2010 has
gone to developed Western Europe
($44.7 bn) and North America ($24.5
bn), and to Southeast Asia (mainly, developed
Singapore) ($36.6 bn), oil-rich
West Asia ($14.3 bn), resource-rich
South America, and not to the main
aided regions with the sole exception
of Eastern Africa. Private investment
flows to South Asia of $2.33 bn (Table
9B) are very small (just over 1 percent
of all outward FDIs over 2010–17), although
they are significant from the
host country’s point of view in the cases
of Bhutan, Nepal, and Sri Lanka. 8 They
are practically nonexistent for Afghanistan,
Myanmar, Nepal, and Bangladesh,
all recipients of a significant chunk of
Indian assistance since 2004–05.
As far as Africa is concerned,
trade, exports, and imports show the
following pattern over the past few years
(2013–17). For sub-Saharan (non-Arab)
Africa as a whole, India’s trade from
that continent has decreased from 9.2
percent to 8.1 percent of its total trade,
exports decreased from 10.3 percent to
8.3 percent, and imports from 8.5 percent
to 8.1 percent. 9 As of 2016–17, total
trade with Africa was about $61 bn,
less than trade with China at $71 bn.
If we look at Africa sub-regionally and
country-wise in 2017, we see that $20
bn trade is with West Africa and $13
bn with Southern Africa out of a total
of $61 bn. This is due to the dominant
shares of just two countries in Indo-African
trade—Nigeria with $9.46 bn and
South Africa with $9.37 bn, totaling
$18.83 bn. This is due to large imports
from these energy- and resource-rich
countries, India’s trade profile with
these two countries being dominated
by imports. However, out of total assistance
to Africa, these two countries
are not at all dominant in the assistance
profile, the overwhelming bulk of the
assistance going to less developed or
less resource-rich countries.
Outward FDI and assistance are
also not correlated at all with respect
to Africa except for East Africa ($32.62
bn, almost 98% of the total to Africa of
$33.33 bn), a somewhat suspect figure
which needs to be further investigated,
the rest of Africa getting under 2 percent
of Indian FDI commitments.
Program Evolution and
Motivations: Politico-Security
Concerns in India’s Assistance
If trade and investment relations
have not been the prime drivers
what have been the motivations behind
India’s development partnership
program? To situate the program in its
politico-security and economic context,
we situate it in the evolution of India’s
foreign policy with respect to the major
regions of the program’s concentration,
viz., South Asia, Afghanistan, Myanmar,
and the African continent, in this
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