Reconnecting India to rest of Asia

Since China launched the Belt and Road Initiative (BRI) to connect and integrate the Afro-Eurasian super-continent, four other countries, including India, have come up with their own counter-initiatives. 

Japan has the Enhanced Partnership for Quality Infrastructure initiative, the United States established the International Development Finance Corporation (IDFC), and the European Union introduced a Strategy for Connecting Europe and Asia. 

In 2014, soon after he was elected, Prime Minister Modi came up with is new ‘Neighbourhood First’ policy which set India on a path to strengthen intra- and inter-regional connectivity. In 2015, the Act East Policy was announced with a similar objective. ‘Connectivity’ has therefore emerged as India’s newest geostrategic buzzword. 

But India’s implementation on the new policy has been mixed. What should be done to make India’s counter-strategy work better?

The India-Nepal-China geopolitical tri-junction, Kunda Dixit

After independence, India kept itself isolated and disconnected from its neighbouring countries. There were several India-led crossborder initiatives, but Delhi’s position towards its neighbours was that of ‘benign neglect’. Presently in response to the rise of China, India has made regional connectivity a top priority.

Initially, India had preferred the South Asia Association for Regional Cooperation (SAARC) as the vehicle for pursuing regional infrastructure cooperation. But this did not make much progress because of Indo-Pakistani rivalry. India has, therefore, adopted a dual-track approach to connectivity made up of intra- and inter-regional approaches.

Encouraging progress has been made in bilateral and sub-regional projects. Over a dozen new Integrated Check Posts have been constructed to facilitate trade with Bangladesh, Bhutan, Burma and Nepal. Inland waterway agreements are also being operationalised with Bangladesh and Nepal. 

The number of railway connections with Bangladesh has increased from one in 2008 to four. In 2019, India and Nepal inaugurated South Asia’s first cross-border oil pipeline. 

In sub-regional cooperation, Bangladesh, Bhutan, India, and Nepal (BBIN) economic cooperation has gained considerable traction. The BBIN Motor Vehicle Agreement for free movement of people, goods, and motor vehicles has been implemented, although Bhutan has withdrawn temporarily. 

Recently, Bangladesh has allowed its ports in Chittagong and Mongla to be used as a transit for cargo moving to India’s north-eastern states. This cuts the distance between Kolkata to Agartala via Assam from 1600 kilometres to 450 km. 

Encouraged by this development, BBIN countries are implementing plans to enhance multimodal connectivity in the sub-region. With BBIN, India’s Northeast region is emerging as the bridgehead between South and Southeast Asia.

BIMSTEC, BCIM, BBIN - & ‘BCIN', Kanak Mani Dixit in Dhaka

South Asia Sub-regional Economic Cooperation programme, which is supported by the Asian Development Bank (ADB), has completed about 50 regional projects worth over US$11 billion. 

Less successful, however, have been India’s inter-regional connectivity projects. To its west, India is supporting the International North-South Transport Corridor for moving freight between India, Iran, Afghanistan, Armenia, Russia, Central Asia, and Europe by avoiding Pakistan. 

There is also the India-Iran-Afghanistan Transit Corridor which focuses on the southern Iranian port of Chabahar, which is strategically located close to the China-operated Gwadar port in Pakistan. Progress on these projects has been slow because, under the pressure from the US which has imposed sanctions against Iran over the latter’s nuclear ambitions, India has dragged its feet.

In the east, India has four initiatives to enhance connectivity with ASEAN. The first is the Kaladan Multi-Modal Transit Transport Corridor which is a sea-river-land hybrid corridor that seeks to improve India’s access to its North-East through Burma. Although initiated more than two decades ago, this project has yet to take off because of financing problems and hostility from the Arakan Army, a Burmese rebel group.

The Trilateral Highway project between India’s Northeast region, Burma’s Bagan and Thailand’s Mae Sot has also met a similar fate. The third is the Mekong-India Economic Corridor which aims to jumpstart India-Southeast Asia trade and investment linkages by connecting Chennai to Ho Chi Minh City through Dawei Port in Burma. This project has stalled after the project’s main contractor, Italthai Group, pulled out.

The only promising project is the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), between the BBIN countries, Sri Lanka, and two ASEAN countries (Thailand and Burma). The BIMSTEC Motor Vehicle Agreement is being negotiated and the BIMSTEC Master Plan on Transport Connectivity has been prepared.

Between two oceans, Editorial

Narendra Modi has placed regional connectivity prominently on the Indian government’s agenda. However, for this policy to be successful, especially in the context of similar initiatives of other powers, it needs to be reset in at least five ways:

• Crossborder projects should be selected through proper data analysis and project evaluation techniques. Stakeholder and NGO participation should also be sought.
• Instead of ambitious initiatives, India should seek to implement relatively smaller and actionable projects. Indian initiatives face financial obstacles because of limited fiscal space. Its public sector banks are also not well capitalised, and private banks are too risk averse.
• Coordination problem needs to be addressed. India’s foreign infrastructure policy-making process is incoherent and decentralised. No single agency is responsible. A cabinet-level steering body might also be required.
• Successful connectivity policy requires trade openness. This is because ports, roads, railways, and airports will be of little use if barriers to trade are not dismantled. India should encourage trade openness and trade facilitation among South Asian countries.
• India should further deepen cooperation with other countries and multilateral development banks. With Japan and the US, India has established a trilateral infrastructure financing facility. Cooperation with Australia has also increased. In Bangladesh, India has tied up with Russia to develop a nuclear power plant. A lot more joint activities and co-financing are necessary. 

Pradumna B Rana is a Visiting Associate Professor at the Centre for Multilateralism Studies (CMS) at the S Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore. He is the principal author of Jump-starting South Asia: Revisiting Economic Reforms and Look East Policies (New Delhi, Oxford University Press, 2017).