Indian Politics & Policy Volume 1, Number 2, Fall 2018 | Page 87

Indian Politics & Policy
both insignificant to India’s trade and
outward investment profile but of considerable
importance to the recipients’
trade, inward investment, remittances
(for Bangladesh), and tourism (for Sri
Lanka) profile. In both cases, Indian assistance
is fairly recent, becoming significant
over the past half-decade, and
relatively concentrated in large LOC.
Scholarships and training are significant
in both cases.
Third, Afghanistan and Myanmar
are again recent cases of assistance,
motivated primarily by political and
security considerations with perceived
competition for political influence from
Pakistan and China, respectively. In
both cases, the recipient country is of
marginal economic but major geopolitical
significance to India, although both
can be of significance for India’s natural
resource needs in the future. This is because
if the democratically elected Afghan
government is not stabilized, and
if there is a Pakistani-backed Taliban
takeover after an eventual U.S. pullout,
then a regime backing terrorism against
India might get entrenched in Kabul.
Likewise, a Myanmar overwhelmingly
dependent on China is not in India’s security
interests, given the growing Chinese
presence in the Indian Ocean. India
does not bulk large in Afghanistan’s
or Myanmar’s trade and inward investment.
The pattern of assistance is one of
large LOCs rather than small projects,
although this is beginning to happen in
Afghanistan, where scholarships and
training are also significant.
Fourth, in the case of Africa, assistance
again is recent in its growth,
particularly after the India–Africa summits
of 2008, 2011, and 2015. It consists
of 158 of 227 operative LoCs, with an
average worth of $58 m, to 36 countries
and the ECOWAS Bank of Investment
spread across the continent, and is
concentrated in fairly large to medium
projects in infrastructure and agriculture,
although scholarships and training
are important. Within Africa, there has
been a shift of Indian assistance from
Eastern and Southern Africa to West
Africa, recognized to be energy- and
mineral-rich. However, in 2016–17 as
noted earlier, $18.83 bn of the $61 trade
was with Nigeria and South Africa only,
and these are not where the LOCs go.
Assistance is not driven by immediate
trade and resource considerations but
by long-term relationship-building,
plus close to 50 UN General Assembly
votes factored in.
Fifth, comparing the Modi government
with the previous Manmohan
Singh government, one sees more continuity
than change and a stepping up
of LOCs from the Exim Bank as India’s
economic capacity increases. The major
areas of focus remain South Asia and
Africa as before. However, India now
faces increased economic and political
competition from China in its South
Asian neighborhood with all countries
other than India having signed up for
the Belt and Road Initiative including
its maritime component, and China
having gained influence in Nepal, Sri
Lanka, and the Maldives during the
tenure of the Modi government.
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