The India–ASEAN relationship received a shot in the arm with the conclusion of the 8th Delhi Dialogue on 17–19 February 2016. Since 1991, India has been aggressively pursuing increased trade and strategic relations with Southeast Asian Countries as a part of its ‘Look East’ policy. Now, ASEAN has grown to be India’s fourth largest trading partner after China, the European Union and the United States.
Indian Prime Minister Narendra Modi’s signature ‘Make in India’ initiative — which aims to transform India into a global manufacturing hub — specially mentions the importance of special economic zones (SEZs) in attracting foreign investors. However, despite the strong pitch, these export-oriented enclaves have struggled to draw investments.
Is India emerging as a great power? French President François Hollande’s recent trip to India included a joint statement with Indian Prime Minister Narendra Modi, which focused on security cooperation. This encouraged some speculative enthusiasm regarding India’s ‘widening role’ in Asia’s security.
For some years now, there have been rising expectations that India would be part of the Southeast Asian balance of forces and would act as a counterweight in the Indian Ocean to China’s increasing and capricious dominance.
India’s Special Economic Zones (SEZ) policy, announced in April 2000, has been the single most important initiative ever taken by the Indian government to promote private investment in industrial activity.
It is not the first time that India has tried to develop its SEZs. The first wave of export zones started in 1965 and ended in 2000 with little success. The prospects are better this time. The current policy targets private investment in SEZ development and offers several lucrative incentives and features that were not available in previous initiatives.
Anyone familiar with quantifying gross domestic product (GDP) knows that at times it is more an art than a science. This is often particularly true in developing nations, where limited access to sophisticated technologies and practices make reporting difficult and the chances of “rigging” quite prominent.
However, the World Bank’s Senior Vice President and Chief Economist, Kaushik Basu, has come to the defense of India in particular, saying that their self-reported GDP estimates are beyond reproach.
India’s 2015–2020 foreign trade policy aims to increase merchandise exports from US$450 billion in 2013–14 to US$750 billion by 2020. This will be difficult to achieve. More than a year of negative exports growth has raised concerns about India’s ability to boost exports and to achieve and sustain its current 8 percent growth rate.
Unlike other emerging economies, strong investor sentiment and the meltdown in crude oil prices bolstered India’s growth in the last financial year. Though the projected growth rate for 2016 shows a slight decline of 0.1 percent, the World Bank predicts that India will grow by a robust 7.8 percent this year and by 7.9 percent in the next two years. This means India is shaping up to outpace China in the next three years.
A dispute before the World Trade Organization (WTO) has surprised many; India has appealed a ruling by the WTO and now seeks a compromise in a dispute regarding domestic content requirements for the nation’s solar panel programs. The dispute has caused a number of companies in India’s renewable energy industry to halt expansion until a resolution can be reached.
Since becoming India’s prime minister in May 2014, Narendra Modi has sought to make the country ‘open for business’. But while there is hope that his pro-business policies — often dubbed ‘Modinomics’ — will improve economic growth, aspects of India’s foreign trade policy seem at odds with the country’s aspiration for deeper engagement with the world economy.
According to finance minister Arun Jaitley, India’s economy may grow as much as 9.0 percent annually, but only under the right economic conditions, according to CNN Money. The South Asian country achieved significant growth in 2015, but it was held back due to such factors as a decline in the steel industry and a heavy monsoon season. India remains the fastest growing major market in the world, outgrowing China.
