AUTHOR: TRIDIVESH SINGH MAINI
The role of federating units – referred to as state governments, provinces, and landers (in Germany) in Foreign Policy – referred to as ‘paradiplomacy’ (introduced by Panayotis Soldatos) and ‘constituent diplomacy’ (John Kincaid) — began to get attention globally in the 1980s, while in India this phenomena has begun to get greater attention in the past two decades.
One of the important factors responsible for states becoming important stakeholders in external outreach was the economic reforms initiated in 1991. Maharashtra was amongst the first states in reaching out to foreign investors, in the aftermath of these reforms. Over the past two decades, the western state has consistently been a front runner as far as attracting Foreign Direct Investment (FDI) is concerned. According to the state’s economic survey report, FDI inflow into the state between April 2000 to September 2021 was Rs 9,59,746 crore. According to the survey, this accounted for a whopping 28 percent of the total FDI inflow of the country.
Other events which have given a fillip to para-diplomacy
Apart from the economic reforms, two events which gave para-diplomacy in India a strong fillip were successive coalition governments in the late 1990s, the growing importance of regional parties, and the Information Technology (IT)boom in the late 1990s in which South Indian states were at the forefront.
In recent years, the central government has repeatedly referred to the need for a competitive spirit – or ‘competitive federalism’– with regard to drawing FDI. It would be pertinent to point out, that the first wave of this competitive federalism can be traced back to the late 1990’s and early 2000’s when Karnataka and then Andhra Pradesh vied with each other for drawing investment in the IT Sector. Hyderabad, now the capital of Telangana, then the capital of undivided Andhra Pradesh along with Bengaluru (then Bangalore), the capital of Karnataka were both successful in emerging as important IT hubs recognized globally. The latter is often referred to as India’s Silicon Valley.
Rudolph and Rudolph in the article ‘Iconisation of Chandrababu Naidu: Sharing sovereignty in India’s federal market economy’ published by the Economic and Political Weekly (January 2001) discussed how then Chief Ministers of Andhra Pradesh and Karnataka respectively — Chandrababu Naidu and SM Krishna left no stone unturned in attracting big IT companies to invest in Hyderabad and Bengaluru.
Apart from policy changes in recent decades, it is an important tool for para-diplomacy in the diaspora. Diaspora from South Indian states has been an active stakeholder in hard-selling states like Tamil Nadu, Andhra Pradesh, etc in US and South-East Asia. The heads of top IT companies – Microsoft (Satya Nadella), Adobe (Shantanu Narayen), hail from Hyderabad while the CEO of Alphabet, Sunder Pichai received his schooling in Hyderabad.
Apart from sending delegations overseas, states have also begun to organize Global Investors Summits where they interact with potential investors from different parts of the world. It is not just states in Southern India and Western India that have emerged as important growth engines for the country but they have also begun to organize Global Investors Summits, alongside numerous others. In a post-pandemic world where international travels are uncertain, this is likely to emerge as an important means of reaching out to potential investors.
A most recent example of a state organizing a Global Investors Summit is West Bengal which organized the Bengal Global Summit 2022. While during earlier Summits, West Bengal has been able to attract investors from US and China, in the 2022 Summit there were senior representatives from Bangladesh and Bhutan. Bangladesh was represented by its Commerce Minister, Tipu Munshi while Bhutan was represented by its Economic Affairs Minister, Loknath Sharma.
While speaking at the summit, West Bengal Chief Minister Mamata Banerjee referred to her state’s important location not just in the context of India’s North East, but also vis-à-vis neighboring countries. Said, Banerjee:
“Bengal is the gateway to not only the Northeast of the country but also neighboring countries like Bangladesh, Nepal, and Bhutan,”
Representatives from both Bhutan and Bangladesh also referred to the geographical proximity of their respective countries to Bengal and how they could benefit from West Bengal’s economic progress
Focus Countries
Here it is also important to bear in mind that India’s ties with countries influence the choice of states. In the 1990s, a number of states focused on strengthening business linkages with the US. These efforts bore fruit especially if one were to look at the Southern Indian states and even the National Capital Region (NCR) region with Gurgaon (Haryana) being able to attract a large number of US-based companies.
When attempts were made by India to improve ties with China, delegations from a number of states visited China (in 2016, Chief Ministers from two states Andhra Pradesh and Madhya Pradesh were in China at the same time). In 2015, a dialogue – referred to as the provincial leaders’ forum — to promote exchanges between Indian states and Chinese provinces 2015. While as a result of bilateral tensions, sub-national exchanges between India and China may have reduced, in the current geopolitical situation, the Act East Policy (India’s policy vis-à-vis ASEAN, Japan, and Australia) and Look West policy (which is aimed at strengthening ties with the Middle East and Iran) are two important opportunities for Indian states.
If one were to look at the Act East Policy, a number of states have been cultivating linkages not just with Singapore and Malaysia but also with Thailand. While for southern states, historical linkages and the diaspora are important connections with South East Asia, North-Eastern states have also been brought on board given their geographical location and the fact that they are India’s gateway to South East Asia (the India-Myanmar-Thailand trilateral highway aims to connect Manipur’s Moreh with Mae Sot in Thailand via Myanmar). States like Manipur and Assam have become important stakeholders in the Act East Policy.
In the post covid19 world, there is scope for India’s state governments to reach out not just to the countries above but also to CMLV countries (especially Vietnam). Apart from economic linkages, there should be an attempt to strengthen people-to-people linkages with these countries. A large number of Indian tourists already visit Singapore, Thailand, and Malaysia due to air connectivity with these countries. It is essential to have flights from tier two cities to countries like Vietnam, Cambodia, and Myanmar as this will give a boost to both people to people linkages as well as tourism. While flights with Vietnam have increased, it is important to increase the frequency and to ensure that tier two cities in India also have more direct flights to Vietnam (currently, there are direct flights from New Delhi, Mumbai, Kolkata, and Bodhgaya). It is also important to increase air connectivity with Cambodia, currently, there are no direct flights even from Delhi and Mumbai. Greater air connectivity will not only give a boost to people-to-people links and tourism but also links between India and Cambodia.
If one were to look at the Gulf, Kerala with its large diaspora has always been an important stakeholder in ties between India and the Gulf. Remittances from Kerala account for a significant percentage of the total remittances that India receives. Post the covid19 pandemic, Kerala has been attempting to reduce its dependence upon remittances from the Gulf, and also ensure that expatriates returning from the Middle East can be assisted in starting new business ventures. In December 2021, Kerala CM Pinari Vijayan visited UAE and inaugurated the Kerala Pavilion at the Dubai Expo 2020. While commenting on the relationship between Kerala and UAE, Kerala Chief Minister said:
‘Kerala-UAE relations are not something formal. It is a very close heart-to-heart relationship. All top UAE officials whom I met here told me that Kerala and Keralites occupy a special place in their hearts. I did not hear this touching comment from one official but from all’
In March 2022, Tamil Nadu Chief Minister MK Stalin visited UAE. Stalin inaugurated the Tamil Nadu pavilion at the Dubai expo and also met with senior members of the Emirati government as well as heads of business houses. Stalin’s pitch was towards drawing FDI to Tamil Nadu. The Tamil Nadu CM said that MOUs worth Rs 6,100 crores had been signed during his visit to the UAE.
The visit of Stalin to the UAE came at an interesting time since a few days earlier India and UAE had signed an FTA agreement to push the level of bilateral trade up to $ 100 Billion from the current level of $ 60 Billion. State governments including those of Tamil Nadu will have an important role to play in pushing India’s trade with UAE.
Apart from the large Indian diaspora in the UAE, tourism is an important binding factor between both countries, and UAE is an attractive tourist destination for tourists from a number of Indian states. One of the reasons for this is the large number of direct flights between Dubai and Abu Dhabi, as well as the general location of UAE. There has also been an increase in recent years in the number of Emirati nationals visiting India.
While state participation has increased in foreign policy it is important to further enhance coordination between centers and states in order to make para-diplomacy more fruitful so that it can economically benefit individual states as well as India as a whole. It is also important for states to have a clear road map for exploring synergies with other countries. Rather than random outreach, it should be driven either by potential synergies, geographical location, and the diaspora in these countries. Investor Summits are one possible way of ensuring that external outreach delivers the desired results, but this needs to be done with a clear plan as mentioned earlier. It is also important that MOUs signed during these summits actually result in tangible outcomes (in the past there have been numerous instances where MOUs have been signed but projects have not taken off on the ground).
Given the changing global economic architecture as well as the geopolitical situation, there is immense potential for building greater economic and people-to-people linkages with countries on which India has not focused in the past. This includes certain countries in South East Asia, such as Vietnam and Cambodia, as well as UAE. Both central and state governments will have an important role in the same. It is important that para-diplomacy is not restricted just to the economic sphere and that there is a thrust on enhancing people-to-people ties and educational linkages. One area that a number of states can focus on is medical tourism. While a number of states with reasonable medical facilities already attract nationals from India’s immediate neighbors, Afghanistan, Iran, and Central Asia with better air connectivity, this sector could witness a further boost.
In a post-pandemic world, the nature of para-diplomacy is likely to be markedly different from that of the pre-pandemic world and both the center and states need to realize this. While one of the major obstacles in the conduct of para-diplomacy is likely to be the restrictions on international travel as well as the unpredictable nature of the pandemic, para-diplomacy can be carried out effectively through the effective use of technology. Apart from this, many countries are trying to come up with new economic models and this creates new possibilities in the realm of para diplomacy.
*“The views expressed in the article are author’s personal and are not endorsed by the Global Policy Consortium (GPC) or assumed by their members”
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