PSIR Bulletin

Amid changing post-pandemic realities, India needs to

29 DEC 2020

Context: The COVID-19 vaccines are coming. And along with this sanjivani comes a new age of
geopolitics. The vaccines are varied, with different pricing points and affordability. Nations have
secured their vaccine supplies from countries and companies they trust, often by forging new
alliances.

Post Covid world

 A multipolar world awaits: As we enter the third decade of the 21st century, a multipolar
world awaits us. The US and China — rivals for the top slot till the pandemic hit the world
— will now have to contend with traditional and rising powers like the UK, France, India
and Brazil.

 Selective engagement: Each country will engage with others selectively, not in every
arena. We will see the rise of a New World Order driven by national interest, reliability of
partners, and of course, economic factors.

 A new Great Game is underway in the Indo-Pacific where the Quad is emerging.

 The Middle East is in a deep churn as Israel and Arabs discover Abrahamic commonalities.

 Europe is caught in a struggle to retain its values amid the diversity it has acquired over the
years.

What India needs to do?

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  Gated Globalisation: India has to use a “Gated Globalisation” framework to negotiate this
change. The Gated Globalisation framework requires that India should protect its interests
in these unsettled times. Strong fences are necessary, but so is the creation of new
partnerships (like the Quad) based on trust and common interests.

 Partnership choices based on commerce: Beyond security, like everybody else, India has
to make partnership choices on trade, capital flows and the movement of labour.

 India’s global diaspora is now over 30 million and sends more through remittances ($80
billion per year) than foreign capital inflows. The pandemic-enforced work-from-home may
see the creation of new pools of skilled workers, living in virtual gated communities, further
enhancing income from jobs physically located elsewhere. India can utilize its diaspora.

Conclusion

Amid these rapidly changing post-pandemic realities, India has to be swift in identifying partners
whom it can trust and who will help protect and further its national interests. Ambiguity, lethargy
and posturing will not do.

For Beijing and New Delhi, 2020 was the point of no return

HARSH V. PANT

29 DEC 2020

Context: The ongoing standoff between India and China in the Himalayas will have long-term
impact in the Indo-Pacific —Chinese forces have shown no inclination to back away from the
positions they have occupied along the Line of Actual Control (LAC), which divides India- and
China-controlled territory in Ladakh region, since April.

India’s disappointments with China

 India could manage China diplomatically: Delhi evinced a naive belief that, despite all the
evidence to the contrary, India would be able to manage China diplomatically and that it
was possible to keep the shadow of the border dispute from darkening the larger
relationship.

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  Unilateral redrawing of LAC by China: In its attempt to unilaterally redraw the LAC this
year in its favor, Beijing ended up disregarding the central tenets of all pacts it has signed
with India since 1993 to keep the border peaceful.

 The militarisation of the LAC is taking place at an unprecedented pace today partly
because Indian infrastructure is in much better shape and Indian patrolling is far more
effective. India is also now ready to take Chinese aggression head-on, thereby getting ready
for a more volatile border. If a lasting solution to the border problem is not found, therefore,
greater turbulence along the LAC will continue to be the new normal.

What has been India’s strategy to deal with it?

 Challenging China’s global designs: Indian foreign policy has been at the front and centre
of challenging China’s global designs. New Delhi was the first country to warn the world of
the dangers of China’s Belt and Road Initiative (BRI). Today, India’s framing of the BRI is
widely accepted by most major global powers.

 Decoupling China: India has also managed to shape the global discourse on the Indo-
Pacific and is now working closely with like-minded regional players to give it operational
heft. And at a time when the Trump administration is attempting a process of trade and
technology decoupling with China, Washington and New Delhi are closer than ever.

 Negative public opinion about China in India: Indian public opinion, which was already
negative on China, has now become even more strongly anti-Chinese. And New Delhi has
become freer to make policy choices, both strategic and economic, that are anti-China.

Conclusion

None of these options is cost-free for India. But China’s actions have ensured that today India is
ready to bear those costs. India’s military and diplomatic responses to Chinese aggression have
made it clear that New Delhi is neither without options nor is it reticent in choosing them. It is now
for China to make up its mind about whether it wants a permanent foe in India or a neighbouring
country with which it can do business. Whatever the choice Beijing decides to make, it will
determine the strategic landscape of the Indo-Pacific.

India not ready for RCEP

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Background: On 15 November 2020, 15 nations (the 10 ASEAN countries, Australia, China, Japan,
New Zealand and South Korea) signed the Regional Comprehensive Economic Partnership (RCEP).
The clamour around India’s decision to walk away from the mega trade deal was loud. But the
trading bloc has kept the door open for India to return to the negotiating table.

Why India is not ready for RCEP?

 Hit by Pandemic: The nationwide lockdown in response to COVID-19 had a deleterious

 Focus on Self-reliant economy: Prime Minister Narendra Modi’s speech in May 2020 laid
out a grand vision of making economy more self-reliant. This ‘self-reliance’ is an extension
of his earlier ‘Make in India’ idea. This is neither import substitution, nor does it preclude
foreign investment.

 Lack of competitive business environment: RCEP would also enable India to attract
greater investment due to preferential access to the growing market of RCEP countries and
the flight of capital from China in response to the US–China trade war and the pandemic. For
India to reap these benefits, it needs a competitive business environment. In terms of the
ease-of-doing-business index, India lags behind all RCEP countries except Cambodia, Laos
and the Philippines.

 Macroeconomic and equity concerns: Putting the geopolitical issues involved with the
presence of China in the bloc aside, there are also macroeconomic and equity concerns in
India over RCEP. According to some estimates, the expected gains for India in GDP, trade
and investment through RCEP may be offset by a decline in overall economic well-being,
given distributive impacts across the value chain. This indicates a potentially problematic
impact of the mega trade deal in an economy that is in a poor position to adopt it.

Conclusion

There are contentions that staying outside RCEP is a flawed step with many a missed opportunity.
Yet the current post-lockdown Indian economy seems to be ill-prepared to embrace a trade deal

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like RCEP. India needs to urgently get its house in order by boosting demand, rationalising value
chains, creating better institutional arrangements and a more competitive economy.

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