Indian Politics & Policy Volume 1, Number 2, Fall 2018 | Page 82

Foreign Assistance in India’s Foreign Policy: Political and Economic Determinants
to upgrade the FTA to a Comprehensive
Economic Partnership Agreement
(CEPA). India had become the biggest
FDI source by 2004 and the fourth largest
cumulatively.
In November 2005, Mahinda
Rajapakse was elected president of Sri
Lanka and visited India in December.
India stressed the importance of political
dialog and pressed its view that
there was no military solution, and offered
to share its constitutional experience.
By 2007, India became the largest
single source of tourists, the largest single
source of imports and third largest
destination for Sri Lankan exports. The
civil war ended in May 2009 with the
elimination of the LTTE, and President
Rajapakse was re-elected in January
2010. India stressed the importance of
reconciliation and a devolution-based
political solution to the conflict, and
gave assistance for relief and rehabilitation
of the internal refugees.
India opened two new consulates-general,
resumed ferry services,
renewed the MOU on SDPs, signed a
new MOU on Interconnection of Electricity
Grids, increased defense cooperation
focused on army and navy chief
visits and training, an LOC of $415 m
for the Northern Railway line, a demining
team, a package for relief and
rehabilitation and a commitment to
build 50,000 houses for the internally
displaced persons in the Northern,
Eastern, and Central provinces. Sri
Lanka assured India that political proposals
for devolution of power building
on the 13 th Amendment to its constitution
would be discussed with the Tamil
leadership but has dragged its feet
even under the new government that
took power in 2015. India remained the
largest trade partner, largest FDI, and
tourist source, and sees engagement as
vital for leverage. Assistance is part of
this engagement and leverage on both
internal reform and for providing an
incentive to maintain a distance from
a China that has emerged as the largest
donor to Sri Lanka since the end of the
civil war in 2009. India has stepped up
its aid since then in response to the geopolitical
competition for influence from
China, signified most dramatically in
Sri Lanka giving the southern Hambantota
port, overlooking the main Indian
Ocean sea lanes, to China on a 99-year
lease in 2017.
Afghanistan
Afghanistan has emerged as one of the
largest single-country assistance programs
for India. The political background
to this is as follows, in brief. After
the 9/11 attacks in the United States,
and the subsequent invasion, overthrow
of the Taliban regime and occupation of
Afghanistan by U.S.-led NATO forces
in late 2001, and the Bonn Agreement
of December 2001, India made assistance
commitments to the post-war
reconstruction of Afghanistan. This began
with $100 m in January 2002 at the
Tokyo Donors Conference. This needs
to be seen in light of the erstwhile Taliban
regime’s complicity in the hijack
of an Indian aircraft in December 1999
and its closeness to the Pakistani military.
It was in India’s security interests
to stabilize a moderate and democratic
alternative in Afghanistan.
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