Introduction

All countries face multiple policy choices in their early years of development. One of the first policy choices they face is in resource allocation—should resources be allocated to agriculture or to manufacturing to accelerate the country’s development process? Typically, development includes a structural transformation of economies from least developed, where agriculture is the largest contributor to gross domestic product (GDP), to high-income where agriculture occupies less than 5 percent of GDP. This structural transformation was witnessed by England in the 18th century, Japan in the late 19^th century and east Asia in the late 20^th century. This article first tries to understand whether agriculture can foster economic development and then explores if such a model is suited for India.

Agriculture-led development models

Unlike Keynesian development models that advocate savings and investment, an agriculture-led development model argues for the development of the agricultural sector to fuel the rest of the economy. This implies that resource allocation will be in favour of agriculture. It is particularly useful for states that are predominantly agrarian like in the north-eastern region where 70 percent of the region’s workforce is engaged in agriculture. In this model, advocated by Arthur Lewis, agriculture is first developed until a structural change of the labour force occurs – where labour moves out of agriculture into more productive sectors like industry or services. However, Arthur Lewis’ two-sector model limits the role of agriculture to supplying surplus labour to more modern and high productive sectors such as manufacturing, emphasising labour productivity and increased output. Subsequent theories recognise the central role that agriculture plays in launching the development process in developing countries by providing linkages to non-agricultural sectors. Johnston and Mellor (1961) for example, view agriculture as central to the development process, providing surplus labour, supplying food and contributing to foreign-exchange, lacking which development cannot take place. It is worth recalling that in the initial stages of development, manufacturing is agriculturally related.

Empirical evidence from cross-country studies show that agriculture is over two times as effective in reducing poverty than either the manufacturing or service sectors[i]. It increases labour productivity and wages, and produces savings that are invested in other sectors. Drawing from this argument, agriculture plays a key role in escaping a “poverty trap” as it is labour intensive, employing a large section of the population. It is also suggested that “GDP growth originating from agriculture has a much larger positive effect on expenditure gains for the poorest households than growth originating in the rest of the economy”.[ii]

Harris and Todaro (1970) and Mellor and Johnston (1984) argue that encouragement of agriculture in the initial stages of the development cycle, increases agriculture-dependent household income, increases their spending power and eventually reduces overall poverty. In essence, a four transmission mechanism for poverty-reducing growth occurs. First, food becomes cheaper and farm incomes increase thereby creating more jobs, and finally incomes multiply which stimulates economic diversification. What is clear is that structural transformation from agriculture to manufacturing and services is inevitable as a country develops. However, this growth should be corresponded with an equal share of labour force out of agriculture into more productive sectors. Unfortunately, these theorists continued to view agriculture as the handmaiden of industrialisation. There is a need to re-think this paradigm with an explicit focus on agriculture for development rather than the role of agriculture in industrialisation.

Agriculture and Economic Development

The pertinent question is can agriculture foster economic development? Empirical evidence points to the pro-poor growth that only agriculture can provide, as it directly affects small and medium landowners and does not rely on a trickle-down effect. Importantly, poverty reduction emerges from rural areas. Empirical evidence from cross-country studies show that agriculture is over two times as effective in reducing poverty than either the manufacturing or service sectors.[iii] It increases labour productivity and wages, and produces savings that are invested in other sectors. Drawing from this argument, agriculture plays a key role in escaping “poverty trap” as it is labour intensive, employing a large section of the population. It is also suggested that GDP growth originating from agriculture induces growth among the 40 percent poorest in a country.[iv]

Increased land productivity is inversely proportional to poverty.[v] Irrigated farmlands produce more crop and “diversify their cropping systems”, increasing their earnings, as compared to non-irrigated farmlands.[vi] The earnings are spent within the local community, having linkages to poverty reduction across sectors. However, one needs caution in forming a causal relationship between poverty reduction and irrigated farmlands and non-irrigated farmlands, as other factors such as access to credit and level of education also affect poverty reduction.

In the early stages of development, agriculture is the lead foreign exchange earner through its exports. In regions that are rich in natural resources and where labour is abundant but infrastructure is poor and private investment is minimal, agriculture as a development strategy to foster economic growth is most suited as it provides a comparative advantage in transitioning to primary commodities manufacturing. India’s north-eastern region will benefit from this comparative advantage.

Johnston and Mellor (1961) outlined five ways by which agriculture can promote economic development. The first is meeting increased food demands as a country develops (food security), second, as “a means for increasing income and foreign exchange earnings”, third and fourth, in contributing capital and labour to advanced sectors, and fifth, by stimulating the economy through increases in farm wages.[vii] Three of the five means continue to view agriculture in an exploitative role, used only to feed other sectors, but the authors emphasise that each mean plays an equal role. Underlying Johnston and Mellor’s argument are the backward and forward linkages to non-agriculture sectors, particularly when excess income from increased agricultural production is spent on local goods and services. The authors’ note that income elasticity of demand for food is higher in developing countries, implying a greater demand for agricultural produce as a country develops. Their argument views agriculture as stimulating a chain reaction for development. As a country grows, its population demands more agricultural produce which is met by farmers, thereby increasing their surplus income as well as their ability to demand other goods and services that are locally produced. Others call for greater government intervention when pursuing an agriculture-led development strategy, especially to help maintain the growth of agriculture and to raise productivity and incomes.[viii] Overall, a strong positive link is found between agriculture and long-term economic development in both Asia and Africa, and is stronger with increased trade openness.[ix]

Ultimately how successful such a model is will depend on the absorptive capacity of the manufacturing sector – how effectively can they make use of the excess agricultural inputs. Essentially, how will the manufacturing sector make use of the structural change that is assumed to occur? Empirical evidence points to a positive relationship between competitiveness and development. Therefore, the more competitive the manufacturing sector (or other productive sectors), the more the benefit from agricultural-led development models. Policy implications for countries therefore is to ensure that the structural transformation of labour occurs. Particularly for countries like India that has a growing population it is important to fast-track this labour-shift. Paradoxically, the process of development eventually limits the role of agriculture and favours industrialisation.[x]

Is Agriculture-led Development Suitable as a Model for India?

40 percent of India’s workforce is engaged in agriculture. 328.73 million hectares of land is suitable for agricultural cultivation in India. Of this 64.03 percent is cultivated, and 67 percent of this is irrigated either by canals or tube-wells. Majority (68.45 percent) of this land is owned by marginal holders. In 2018-19, the agriculture sector grew at 2.4 percent at constant 2011-12 prices. The percentage share of value of agricultural exports to national exports is 11.90 percent. Based on Census data, between 1951 and 2011, India’s population grew by 231 percent, whereas those engaged in agriculture declined by a mere 21 percent.

 

 

 

 

 

 

 

Figure 1: Share of labour employment by sector from 2004 to 2019

Source: Author’s own compilation based on data from NSS survey’s in 2004, 2010 and 2019.

What do these statistics imply? As seen in Figure 1, India is an agricultural country, with majority of its population engaged in the agricultural sector. A shift of surplus labour to more productive sectors is evident, albeit gradually. A positive trend is that between 2004-2019 labour shift is converging, implying a more even distribution of labour. Between 2010 and 2019, labour employment in agriculture has been stable, whereas that of services has declined. It is likely that labour absorption into manufacturing was from services rather than from agriculture. Growth in labour employment in manufacturing is a positive sign, but benefits are more when labour is absorbed from agriculture as it is easier to skill workforce in manufacture sector than in services.

 

 

 

 

 

Figure 2: Sectoral shares in Gross Domestic Product (GDP) between 2011 and 2019 based on the 2011-12 series.

Source: Author’s own compilation based on data from the Reserve Bank of India[xi]

Figure 2 shows the share of GDP by various sectors between 2011 and 2019, based on the 2011-12 series. Although the RBIs classification is more detailed and includes agriculture, mining, manufacturing, electricity, construction, transport, finance, and public administration, for the purpose of this paper the sectors were merged and classified into agriculture, industry and services. The share of industry marginally increased in the 2011-2019 period, while services saw an increase from 59 to 63 percent and continues to maintain an overwhelming lead. Agriculture on the other hand decreased from 19 percent in 2011 to 14.6 percent in 2019, yet employs a disproportionately large number of people.

 

 

 

 

 

Figure 3: Sectoral shares in Gross Value Added (GVA) between 2009 and 2020

Source: Author’s own compilation based on data from the 2020-21 Budget[xii]

However, GDP does not reveal the entire story. Examining Gross Value Added (GVA) gives a more accurate picture as it takes into account the real contribution of each sector and is therefore a better measurement of a nation’s economic performance. As seen in Figure 3, a structural change is evident but this is seemingly driven by the service sector. The share of agriculture in the total GVA has declined from 2009-2019 on account of a high growth in the service sector. Growth in the tertiary sectors is highest between the 2014-2020 period. Interestingly, both agriculture and industry declined at roughly the same rate in this period. This is because agriculture output affects industrial growth. High growth in non-agricultural sectors and decline in agriculture is common as a country develops. However, the growth in services is not in proportion to the structural change in labour as seen in Figure 1. A policy implication is to further train labour that moves out of agriculture so as to enable their quick employability in services or industry.

The Green Revolution of the 1960s and 1970s in India increased agricultural productivity in select states. This spurred growth in the agricultural sector but reduced urbanisation and manufacturing growth.[xiii] Agricultural productivity growth increased proxies for rural public goods provisions in these districts, including education, better roads and health-care. Rural agricultural wages improved but at the cost of increased inequality in land ownership. Agricultural productivity may have increased but at the expensive of manufacturing. The Green Revolution “impeded structural transformation across Indian districts”.[xiv] Mistakes from the Green Revolution cannot be repeated.

It is clear from Figure 1, 2 and 3 that India’s path to development has, thus far, been driven by the services and manufacturing sectors. Agriculture continues to play an important role largely due to the enormous number of people dependent on it for their livelihood, but has not been at the forefront of development. Multiple policy implications emerge.

First, India’s agricultural sector is dependent on rainfall. A bad monsoon affects agricultural production, while pre-monsoon rainfall bodes well for kharif sowing. Agricultural is critical for macroeconomic stability and for sustained growth. Typically, industry responds positively to a good agricultural year. Therefore, there is a need to make agriculture less dependent on monsoon and encourage other irrigation and water-harvesting methods that ensure stable produce every year.

Second, supply bottlenecks will need to be addressed as well as create direct farm-to-fork supply chains. This will ensure that farmers are given the choice to sell directly to their customers demanding a higher price and eliminating dependency on middle-men.

Third, given that a large majority of Indian farmers are marginal, the focus must be shifted towards increased agricultural productivity per hectare. Research need to focus on increasing agricultural productivity and transferring this knowledge to farmers. Focus must also be directed towards “more crop per drop”. Encouraging farmers to diversify to higher-value commodities will be a key factory in increasing agricultural growth and income, thereby reducing poverty.

Fourth, markets will be need to be further developed and restrictions on internal and external trade loosened. Partnering with the private sector particularly for marketing, value chain and agro-processing is important. The private sector will have both the funds and incentive to manage cold storage units ensuring long-lasting agricultural produce.

Farm Laws 2020

To give the agriculture sector a boost, a set of laws were passed late last year including The Farmers (Empowerment and Protection) Agreement On Price Assurance and Farmers Services Act 2020, The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act 2020, and The Essential Commodities (Amendment) Act 2020. Each of these Acts aim to clear the bottlenecks in Indian agriculture that were highlighted in the previous section. Below, the first two Acts are examined.

The first Act gives farmers the liberty to enter into agreements to produce agricultural products that are demanded by the market, without compromising on the farmer’s rights. Likely outcomes are better pricing for producers and consumers, as well as improved quality of produce for consumers. Farmers will benefit from market analysis to inform actions to diversify land use, will be better equipped to manage risks of uncertain produce, are more likely to adapt to newer technologies and to engage in land pooling. The private sector is likely to encourage insuring agricultural produce, shifting the risk of a bad crop year away from the farmer. Moreover, involvement of the private sector incentivises the creation of superior value chains.

The second Act removes barriers to trade and allows farmers to sell their produce anywhere in India. This will ensure remunerative prices and competitive trading, paving the way for alternatives to non-traditional physical trading platforms. It will allow the highly profitable farm-to-table movement to kick-off in India. Free markets in agriculture are not inherently bad. They give producers more freedom and choice in trading. Involvement of the private sector in agriculture ensures efficient value and supply chains, better marketing and profits to all players along the value chain. However, to truly reap benefits from a free market, farmers will have to be informed of market developments, true pricing and value of their produce, and will need to be sufficiently trained in marketing.

These farm laws conform to a globalised world run on free-market principles, giving farmers more choice and freedom to sell their produce. If implemented effectively, potential outcomes include crop diversification, maximum production, efficient use of resources, increased farm income, access to credit and insurance, and reduced poverty. Additional potential outcomes for the sector include efficient supply chains, storage facilities and value chains. Consumers on the other hand will benefit from competitive prices and improved quality produce. These measures will not only help spur the agriculture sector, but will also give a boost to the manufacturing sector, as they are intricately connected. The new laws can form the basis for an agricultural-led development model.

Conclusion

An agricultural-led development model promises increased incomes, reduced poverty, development of rural non-farm sector, strengthened domestic production base for industry, food security, increased trade, and better balance of payments. In particular, its impact on food price stability and contribution to total factor productivity for the entire economy cannot be ignored. It is a model for pro-poor growth which is driven from the bottom, instead of relying on a trickle-down effect to occur. Such models have worked in Asian economies like Japan, South Korea and Malaysia and bodes well with a growing economy like India. Moreover, growth in agriculture supports growth in industry and not the other way around. However, India will have to ensure a quick structural change in labour to fully benefit from such a model.

As seen in this paper, the decline in agricultural contribution has not been in proportion with the decline of workforce engaged in agriculture. Current government initiatives to skill workforce are welcome, but this needs to be enhanced to ensure faster absorption of the workforce particularly into manufacturing and services. Equally important is to open trade as openness to trade is directly proportional to higher growth, increased income and reduced poverty. To fully reap the benefits of an agriculture-led development model, attention must be given to increasing farm productivity, particularly since majority of Indian farm holding is marginal. In these regards, the Farmers Bill 2020 is only the beginning of an agricultural-led development revolution, but must be complimented by structural change, openness to trade, skilling of workforce, crop diversification and above all, increased productivity. Ultimately, the success of such a model will depend on the absorptive capacity into the manufacturing and service sectors.

This paper has been developed from a previously written article on a similar topic by the same author.

Author Brief Bio: Shreya Challagalla is Senior Research Fellow, India Foundation.

[i] See arguments on agriculture and poverty and economic growth from Christiaensen et al (2006); Timmer and Akkus (2008); Diao, Hazell and Thurlow (2010); World Bank (2007)

[ii] See Janvry and Sadoulet (2010) pg 6, who use data to provide evidence of agriculture’s contribution to reduction in poverty at the sectoral and household levels.

[iii] See Christianensen et al (2006); Timmer and Akkus (2008); World Bank (2007)

[iv] Janvry and Sadoulet find that the effect on poverty reduction amongst the poorest is highest when GDP originates from agriculture.

[v] Ibid., also see Zeng et al (2015)

[vi] See Bacha et al (2011) pg 9

[vii] See Johnston and Mellor (1961) pg 572

[viii] Timmer (1992) reviews three stages of thought on the role of agriculture in economic development, and argues that it is not enough to leave agriculture to market forces and that timely government policy interventions are required if agriculture is to play a stimulative role in economic development.

[ix] See Awokuse’s ‘Does agriculture really matter for economic growth in developing countries?’

[x] See Kuznets (1973); and Timmer and Akkus (2008)

[xi] The entire dataset may be found here – https://dbie.rbi.org.in/DBIE/dbie.rbi?site=home

[xii] Refer to Chapter 1, ‘State of the Economy’ in the 2020-21 Budget which can be accessed here – https://www.indiabudget.gov.in/budget2020-21/economicsurvey/doc/vol2chapter/echap01_vol2.pdf

[xiii] See Moscana (2019) who compares structural change data across and within countries

[xiv] Ibid, pg 3

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Praket Arya: We find ourselves in truly unique circumstances, facing a once in a century pandemic and the worst contraction in the economy since 1952. If I asked you to describe the Indian economy in less than three words after this budget, what words would you pick?

Sanjeev Sanyal: I would pick rebounding strongly. India has been through a major lockdown and made health-related choices which have been instrumental in keeping the pandemic in control. The vaccine has also been rolled out and the economy is now recovering as can be seen by virtually any high-frequency data. The budget has given extra fillip to boost the economy through an extended infrastructure build out that will last for several years. This, allied with the structural reforms that were done earlier will go a long way in getting the economy back on track, with India poised to be among the fastest, if not the fastest economy, in the next couple of years.

Praket Arya: There is a perception with respect to the direction the Indian economy is heading, particularly after this budget, that the government is unsure as to where it wants to position itself in the political economy spectrum. This budget indicates a shift towards growth in what we call ‘trickle-down economics’, compared to all the previous budgets since 2014, which according to many, focused primarily on redistribution and social policies like direct benefit transfers. What is your take on this?

Sanjeev Sanyal: In the ultimate analysis, we need to grow, and that requires the energy of the private sector. This was recently reiterated by the Prime Minister on the floor of the house. But we also need trickle down to occur, for which the channels have to be created. So, a significant amount of effort was devoted in previous years, in creating the Jan Dhan system or the health insurance network et cetera, to create both a safety net as well as the channels of that trickle down. But in the end, you have to go for growth, for which the private sector is the key. Our growth model is about private investment, private innovation. We are also inviting foreign direct investment in various ways into our economy. In this investment driven model of economics, we have taken care of the pathways for trickle down and also made sure of a safety net. This was done through the lockdown period from April 2020 onwards wherein free food was given to 800 million people, which is perhaps the world’s largest food distribution program. Money was also provided to the poorest people through the Jan Dhan accounts. A safety net was also provided to the MSME sector. So, due emphasis was paid to the business of how to make sure trickle down happens, but in the end, the growth engine, the creation of wealth has to be done by the private sector. That is why we have laid emphasis on keeping taxes low, and on deregulation. Where government resources are invested, it is towards creating infrastructure, which of course the general public can use, but a business can also take advantage of. So, all of this has a particular tilt which we are completely unapologetic about.

Praket Arya: If I may ask you point blank, is it not a complete U-turn in the government’s approach?

Sanjeev Sanyal: No, we have believed in a minimum government, maximum governance. I think many people here believe only one part or the other, depending on their proclivities. I am not a libertarian who believes in the minimal state; I believe in a strong state, but I also believe in a limited state. It is perhaps the Chanakyan worldview, as opposed to say the Nehruvian worldview which is an all pervasive but weak state. So those things the state does, it should take seriously and do a good job of, whether it is in terms of security and defense related issues, or providing basic infrastructure or regulations which are needed. But these have to be limited to what they are supposed to do and not have this all-pervasive expansion of the state into areas that should not be there.

Praket Arya: Speaking of the so-called shift in the governance approach, do you think it’s possible to reconcile inequality and growth in the Indian context, more so after this pandemic?

Sanjeev Sanyal: I think this dichotomy is a false one. It’s probably false everywhere, but it certainly is false in India. At the end of the day, we are a poor country and if we only focus on inequality, we are simply redistributing poverty, as we have done for years on end. Clearly, that is not a great model. We changed that model in 1991 and we have clearly succeeded. We have to generate wealth to be able to redistribute it and provide the many things that everybody benefits from, both rich and poor. Benefits come to all from good infrastructure, good health system, proper sanitation, protection of the environment and so on. In developing countries where we are dealing with absolute poverty, we have to have growth. Yes, we also have to assist some of that trickle down, but the key lies in engineering growth which will create the wealth for the rest of the things that we want to do.

Praket Arya: The fiscal deficit presently stands at 9.5% and it’s targeted at 6.8% for the next fiscal. This is way higher than what any rating agency or international organisation may advocate. It is of course understood that the economy needed the impetus in the form of various stimuli that were periodically offered in the lockdown. But, can a counter cyclical and expansionary fiscal policy be prudent for maintaining a healthy debt to GDP ratio?

Sanjeev Sanyal: These are extremely unusual circumstances. This government is otherwise fiscally conservative, and has oft been accused of being too conservative, but there are circumstances where you have to be willing to absorb the need for a stimulus. Of the 9.5% fiscal deficit, some of it is obviously a stimulus, but some is a loss of revenue. And some of it is just the denominator shrinking. Going forward, we are confident that the denominator will expand quite fast. In nominal terms, we expect a 14% GDP growth rate in the budget, but I’m quite certain that it’s too conservative. In the economic survey, we have talked of 15.3% growth. The IMF expects almost 16%. So, I think we will do quite well in terms of getting the denominator going again, and that will feed through to some recovery in the revenue side, which has already been seen in GST and other collections.

The question is, do we want to then try and close the gap as quickly as possible? The answer is no. There are points in history where keeping some momentum going on the fiscal side is a good idea, and this is one of those moments. In the economic survey, we make the case that in fact, even from a fiscal consolidation perspective, going for growth at this juncture may be a good thing to do. The question then is, what do we spend that extra space on? And here we have made a very clear choice. We have gone for spending on infrastructure, which in its wider definition includes sectors like health. The debt we are creating are being left to future generations to pay, so it is also important to leave to the future generations, the assets to match the debts. Creating debt without assets is not a particularly useful approach. Such an approach leads to the balance sheet going awry and is unlikely to lead to higher growth. That is why the focus is now on spending the money directly on infrastructure, as we know from experience that this creates jobs and a demand for all kinds of products such as steel, cement and so on. And after a period of time, it also helps the supply side by creating infrastructure on the supply side.

Praket Arya: Will the fiscal deficit in the short term impact negatively on interest rates and inflation?

Sanjeev Sanyal: This is something that we have to manage. Inflation depends on a large number of things, including international interest rates. Our judgment is that at this juncture, at least for some time, international interest rates will not rise. So that gives us some space. With respect to demand driven inflation, I do not believe it will be driven up too quickly. There is enough slack in the system, not to mention we have done all the supply side measures, which have also probably hopefully opened up the gates on the supply side. So, I think sustained inflation, driven by demand, is unlikely. This is a judgment call, but we can adjust it along the way. If the economy grows so well and creates so many jobs that drive up inflation, then the stimulus given would not be required and it can be scaled down. Adjustments may be done based on the situation, but there is no point in adjusting for inflation at the point in the cycle we are in right now.

Praket Arya: You have stated that we are looking at a better than 10% recovery in the next fiscal. One of the biggest determinants of growth going forward, however, will be the sentiment of both businesses and consumers. The businesses are not going to make fresh investments unless they believe that the economy is going to do better. This could impact on employment and output. In the absence of a strong consumer sentiment, aggregate demand will not rise, which will eventually bog investment. After the budget, we see that in a certain section of the economy, there is exuberance about its future prospects, which is reflected by the stock markets. However, there is a very large section that remains bogged down by low employment opportunities and reduced incomes. This is also reflected in the RBI’s consumer confidence survey. Would such a mismatch between business and consumer sentiment create economic uncertainties?

Sanjeev Sanyal: I think the key here is that we have to get the animal spirits going because that creates the investments. The view that investments and consumption are at some sort of loggerheads and that you have to choose one or the other may perhaps be misplaced. There is a view that consumption drives investment, but more than adequate evidence also exists, as seen from the East Asia growth story, that investment drives growth, creates employment and consequently creates consumption. So, the causality works both ways. All we are doing right now is basically taking the view that we can drive investment driven growth in India, directly, first through government spending on infrastructure. Then as you can see, animal spirit seems to be coming back. There is clearly also an increase in FDI coming into India, and this has happened even during the period of the pandemic. All these factors, we hope, will drive investment, especially as plenty of investment opportunities exist. That is the driver of growth which will create jobs and demand to fuel consumption. This, I realise, turns on the head what has been perceived as conventional wisdom in India. It also turns on the head some of the thinking that may be there in certain Western countries, but it is not an unusual model because many East Asian countries during their high growth phase used exactly this model to grow and create investment.

It is critical for India to be open to both foreign investment and private investment and we are open to both. We are also very keen to insert India into global supply chains. Here efforts are being made through Production Linked Incentive (PLI) schemes to try and target various sectors. Other reforms include removing outdated regulatory laws. Towards this end for example, we have removed outdated regulations in the telecom sector and in Business Process Outsourcing (BPO) in the IT sector. We have also freed up the cartography and geospatial sector and reformed labor laws. We have also done farm reforms despite a fair amount of political pushback. So, this is a government that believes in carrying all the reforms that need to be done.

Praket Arya: We see a phenomenal increase in the budget outlay for health and wellbeing and particularly in healthcare infrastructure. But, given the fact that health is a state subject in our federal structure, and that two-third of all health spending happen in the state, evidence suggests that not all states spend proportionate to their capacity and healthcare infrastructure. How will this be addressed? Also, as American Nobel Laureate Kenneth Arrow suggested in the 1960s that laissez-faire does not really work well for the healthcare sector, given the problem of asymmetric information, how does the government hope to regulate the private healthcare sector, which has been in the limelight for all the wrong reasons during this pandemic?

Sanjeev Sanyal: The budget that was presented was the Central Government’s budget. So, I would not like to comment on what the State Governments should do. They are all democratically elected and are responsible to their respective voters. At the national level, we made a pitch for higher allocation to health and sanitation. People forget that a significant effort on our part is on sanitation. In many ways, sanitation has a bigger impact on health than medical facilities. People sometimes forget that most of the gains in longevity since the industrial revolution, happened because of better drains and toilets than because of better doctors. This comes in the domain of preventive health care. So, this is something we need to invest in, and that is the context of the ‘Swachh Bharat’ campaign, the toilet building campaign.

With respect to regulation, two issues need consideration. The first is, what needs to be regulated and the second is what kind of regulation is required. The health sector is a peculiar sector in which the supplier decides how much demand there will be. There is thus an obvious asymmetry and that needs a certain amount of regulation, otherwise we will end up with peculiar situations such as exist in the United States, which despite spending 15% to 16% of their GDP on health, the outcomes are not proportionate to the money spent. They are extremely good with specific diseases like rare cancers et cetera, but general health provision remains comparatively pedestrian. So, in India we need to be careful that health does not become like any other product, and that is why it needs to be regulated. It also requires some public spending in medical services to provide competition, so that there is an anchor to the pricing. There has to be transparency. We have to open the gates in terms of having more doctors and medical practitioners but regulation is required to see that a certain standard is maintained in quality of doctors and that malpractices are kept in reign. So, we cannot have a free market like in cars, but I would advocate other than safety regulations and a few other features, we need to open the gates.

This is where we are at now with health regulations. I am quite clear that we need a mix of public and private healthcare facilities. There are problems with relying entirely on the public sector – the usual inefficiency problems. So, we need the private sector to show us the innovation and the efficiency, but we also need the public sector in order to provide competition and force transparency on the private sector. That basically is the context now as far as regulation is concerned.

There is another chapter in the economic survey which makes the point that it is very important that you don’t regulate passively just by creating rules and evermore rules. That is a major problem in India, in every sector, not just in the health sector. It is true also of financial markets and other institutions. The idea in my view is that you reduce and simplify the regulations, and then pay more attention to supervision. This is something, unfortunately, we don’t give enough credence to. We need more supervision rather than more tedious rules. We need somebody that keeps track of the sector and responds to its evolving needs.

Praket Arya: In this budget, we also see a lot of measures to boost manufacturing and strengthen the recoveries of MSMEs, which has actually been responding well to the various stimuli offered by the government, periodically, all through last year. However, the contact sensitive service industry has not responded and recovered as well as we had expected, particularly for sunrise sectors like hospitality, which has seen no direct relief package from the government. Do you think pent up demand and the ongoing vaccination drive will enable recovery, or will it be too little too late?

Sanjeev Sanyal: Direct contact sectors like travel and hospitality, as also some segments of the entertainment sector, have all been impacted negatively by the pandemic. While we would love to open up these sectors, we have to be cognizant of the fact that we haven’t yet come to the end of this pandemic. Yes, we have controlled it, but that’s largely by restricting certain kinds of activities. We are opening them up as fast as we can, but we will have to do it step-by-step, in a calibrated way. So, the real issue is, how do we help this sector?

Well, until the sector has been opened up, little help can be given. As I have stated many a time, there is no point in pressing the accelerator until you’ve taken your foot off the brake. So, we need to take the foot off the brake, then having done that, demand will come back naturally to some extent. That is when we need to help it. Besides providing certain financial solutions, we need to get rid of outdated regulations. Many of these however, are at the state level. For this sector too infrastructure development has been helpful as it provides easier access to these places. We should not allow the debate to get sidelined into irrelevant suggestions such as people asking for a GST holiday! I am not certain if anybody is not travelling because of GST concerns. Giving a GST holiday will lead to unnecessary complications being introduced in to the GST system, which is based on a value-added chain. So, if you suddenly remove one bit of the chain, it will create a host of other problems, but will have no tangible benefit. Knee-jerk solutions do not work. However, we can have a serious conversation on this issue, to determine the appropriate response. Perhaps there is a case for investing a lot more effort into preserving our historical sites and cleaning up certain natural areas. That will give greater resonance and payoffs, rather than doing away with GST for this sector.

Praket Arya: Let us now talk about agriculture. This was the only sector that escaped contraction in 2020-2021 and this ensured that rural demand did not collapse at a time when the economy was mired in deep crisis. High food inflation levels all through 2020 also helped in supporting this. Since December 2020, we see that there is a fall in food inflation levels, particularly with the bumper production of kharif crops and seasonal vegetables. What do you think are the prospects for rural demand with respect to agriculture and the non-farm blue collar workforce?

Sanjeev Sanyal: An important thing to remember is that agriculture was uniquely placed in terms of surviving the pandemic, because it did not require a concentration of people, so to that extent it was somewhat buffered from the pandemic. But there are certain long-term issues that we need to think about. First, we must recognise that rural India is no longer only agriculture. There are a lot of other activities happening there and thriving. Agriculture remains very important, but the other activities are also not less, some of them being driven by agriculture such as agri-business, supply chains, and so on. Some of them of course, may have nothing to do with agriculture at all. All these activities need to be encouraged. Even with agriculture, we now need to begin to think of it somewhat differently from the old idea that we need to grow ever more calories, which is essentially the green revolution. We now understand where they came from, because back in the sixties we had a food crisis. We were not growing enough food. We had to import them under somewhat difficult circumstances. Memories of the famines of the colonial era was still fresh.

But the fact of the matter is we now have the opposite problem and the problem is this: we want the sector to grow at least 3 to 4 percent a year, but at the same time, our population growth rate is slowing down. It is already below 1 percent and it is declining. In fact, in some ways, food consumption must be already at zero because frankly, even the population growth we are getting now is having, because older people are living longer and many of them are living in the cities. So their food consumption per capita is also anyway declining. Under those circumstances, there is no way we can sustain consumption of food. Now there is at the margin, some people who are not eating enough and yes, you know, some supplier food needs to be put through to them. But frankly, this is not a long-term trajectory of growing more grains. In fact, even where there is a problem with malnutrition, the causative factors that need to be dealt with are diseases and diarrhea. This is one part of the problem which growing more rice and wheat does not solve, but the other is that they need other kinds of crops such as vegetables or pulses or fish et cetera. The problem here is that our entire agricultural policy is tuned towards doing one thing, growing more calories. So, we have got to begin to create avenues for other things to grow now because the agriculture sector is dependent on a certain framework.

MSP should be kept because it provides some sort of a cushion for the time being. But the fact of the matter is you do need, if you want high growth and particularly if you begin to think of the farm sector like any other business, a certain level of innovation will be required. Lack of innovation is bad for the sector itself. So that is the context in which we need to open up other avenues for farmers to think about their activity as business, to begin to grow things that have other uses—whether it is flowers and orchids for export, or growing certain kinds of fibers that can be used in new kinds of fabrics, etcetera. This requires a dynamic that these new farm laws allow. If you continue with a monopoly of government control, mandis, Agricultural Produce Market Committee (APMCs), the Essential Commodities Act, then this modernization simply will not happen. That is why we have taken the step knowing fully well that there would be difficulties and opposition to it, because in the long run, that is the only path that we can take. Otherwise, what we are doing is growing more and more calories, ironically which we do not need, and in the process, we are running down groundwater levels and also poisoning the earth with excessive amounts of fertilizer and pesticides. And so, this is a strange situation where we are actually mortgaging the future to grow crops that we don’t actually need. We are then spending a large amount of money trying to store food that we don’t need. So, this is a game that we have to get out of.

Praket Arya: Last year, we saw the Prime Minister launch a INR 1 trillion agriculture infrastructure development fund to boost post-harvest management infrastructure and various community farming assets. With this budget we see the introduction of the Agriculture Infrastructure and Development Cess (AIDC). Although this is a welcome move, as it does not put an additional burden on consumers for most items and promotes state financing, the state governments cannot really be too happy about it as it puts an additional burden on their already falling revenues.

Sanjeev Sanyal: I think that has been misrepresented if what you are meaning is the cess on fuel. This is really an accounting issue for the central government, wherein an existing surcharge gets converted into an agricultural cess wallet. The earlier additional surcharge was anyway not going to the state governments. What is happening now is simply the central government’s accounting issue and has nothing do with the state governments.

Why is this being done? Well, if we wish to have a next generation agriculture, we need to move away from growing fixed products and diversifying into other fields such as growing millets, health foods, high end cereals, etcetera. This can happen only if we have the infrastructure to do so. Otherwise, we will have to go for this via the bulk type effort that we currently have through the Food Corporation of India. That is why a certain amount of infrastructure is required that can be built up through these resources.

Author Brief Bios:

Sanjeev Sanyal: Sanjeev Sanyal is the Principal Economic Advisor to the Government of India.  An internationally acclaimed economist and best-selling author, he spent two decades in the financial sector and was Global Strategist & Managing Director at Deutsche Bank till 2015. He was named Young Global Leader by the World Economic Forum in 2010. He is also a well-known environmentalist and urban theorist. In 2007, he was awarded the Eisenhower Fellowship for his work on urban dynamics. He has been a Visiting Scholar at Oxford University, Adjunct Fellow at the Institute of Policy Studies, Singapore and a Senior Fellow of the World-Wide Fund for Nature. He has also served on the Future City Sub-Committee of the Singapore government tasked with building a long-term vision for the city-state.

Praket Arya: Praket Arya is an economist by education. He is an alumnus of The University of Edinburgh, Scotland, and St. Xavier’s College, Mumbai. His research interests include Development Economics and the International Political Economy of the European Union and the Greater Eurasian Space.

“Future battlespace will be shaped by technology and technological superiority – Thus technological self-reliance remains the mantra for the future.”

Introduction

A document of the armed forces of India, called the ‘Technology Perspective and Capability Roadmap’ or TPCR is promulgated in the public domain and more so to the industry at large on a pre-determined basis. Based on the ‘Long Term Integrated Perspective Plan’ or LTIPP, the TPCR broadly lays out the technological horizon for the armed forces in the foreseeable future. Like the LTIPP, the TPCR also follows a 15 year cycle with a proviso for introducing a product that may become relevant and quite possibly imperative in the period in between. Following the technological innovations taking place around the world and their application in the military domain, the aim of the perspective is to remain on top of the technology curve with the ability to possibly cover the matrix thrown up to stay ahead of any adversary who may have untoward designs against the country. Thus, it is a broad spectrum document, which, while not being specific towards a ‘product,’ broadly points the way for the leadership and policy makers to determine the direction the country should follow in its path of self-preservation and defence against any external aggression.

From the days when mechanical means of warfare became an integral part of war-fighting equipment, generally accepted around the First World War with the introduction of the tank and the first forays of air power, doctrine drove technology. As the years went by, this remained the norm till possibly the last four decades when the computer revolution and information domain began to play a major part in everyday life. Communications and the internet provided the information corridor and as data began to grow and bandwidths alongside, they provided the all-important data-transfer which has been the key to so many major decisions across the world. Innovations and information threw up technologies at a faster pace and sophistication in military weaponry advanced in leaps and bounds. Accessibility provided a large range of acquisitions available in the market and proliferation of the arms market saw levels never seen before. Thus, at some point in time, the roles were reversed and the pace of technology provided the military planners a basis to form their doctrine. But there was one major controlling factor. Niche technologies remained the coveted right of some of the major powers and in some fields, the major companies or Original Equipment Manufacturers (OEMs). Militaries the world over were constrained to seek such technologies which came at enormous cost and remained as sole propriety with the major powers.

National Security and Evolvement

National Security is an all encompassing, non-negotiable and non-compromising issue. After more than half a millennium of rule by foreign powers, India’s moment of self governance in 1947 also came as part of the learning curve in National Security. The aggression by the newly created Pakistan to wrest Kashmir, though suppressed, brought to the fore the need to possess adequate defences to prevent such actions in the future. Armed with outdated WW-II weaponry, it was certainly not the way forward to defend the extensive borders, with hostile and soon to be proven hostile, neighbours. The need for an indigenous defence industry was immediately felt and realising that that the only knowhow was to repair and reproduce small arms, the Defence Industrial Base (DIB) was established in 1950 from which emerged the Defence Research and Development Organisation (DRDO) which was tasked to develop defence systems for the three military services.

To move the project forward, Defence Public Sector Units (DPSU) were established so that the manufacture could be streamlined. For want of technological knowhow and expertise, it was natural to seek foreign help and collaboration. From Fully Formed (FF) equipment to gain knowledge, to Semi-Knocked Down (SKD) kits and finally the CKD or Completely Knocked Down Kits, progress was genuinely pursued. But after such a laboured process, India was not able to become self-reliant and till date virtually remains dependent on foreign OEMs for its hardware. While the reasons for this sorry state were identified as shortages of trained manpower, poor quality facilities, poor quality of production and delayed timelines, these were pointers to a population with no drive or incentive to progress and participate in the industrial development of its country. Restricting development and manufacture of defence equipment to the government controlled PSUs, which were rife with labour unions dictating work conditions, further constricted growth. The sobriquet of being one of the world’s largest importers of military hardware has been like the proverbial millstone around our necks.

Serious efforts to streamline the military acquisition program were commenced in 2003 with the introduction of the Defence Procurement Procedure (DPP). Evolving through a series of iterations in 2005, 2008, 2012 and 2014, the 2016 edition of DPP is in vogue with a further tweak in 2020. The basic categories of Buy (Indian), Buy and Make (Indian), Make (Indian), Buy and Make and lastly Buy (Global), though providing the priority to the indigenous industry, has failed to meet the ambitions and we still continue to Buy (Global) in most cases, especially when it comes to sophisticated Air Force equipment. Quality defence equipment production still eludes us, the precision tooling, the machine fabrication, the trained and effective manpower and abominably high costs have also deterred the private industry which was never offered a helping hand by the government. With no guarantee of acceptance, military hardware production has remained in the realm of the PSUs, doomed to drag its feet through history.

Between the ability of the DRDO and the PSUs to meet the requirement projected by the LTIPP and the Defence Budget to fund what has eluded the former, through Buy (Global) products from OEMs, the Indian Armed Forces have, historically, “managed with what they have”. The bid to induct private industry participation in small percentages commenced early in the century and the TPCR provided the technology vision to the private players to develop capability and capacity. The introductory quote of the Raksha Mantri in the TPCR logically states, “Our defence forces require timely and cost effective acquisition of defence equipment to enable them to meet any challenges to the country’s security”. While all our plans converge towards minimising the technology gap and optimising combat potential, the purse strings seemingly keep getting tighter and state-of-the-art systems keep eluding us, remaining like the proverbial carrot in front of the donkey cart.

The Defence Budget

The Defence Budget has been an enigma for the Indian Armed Forces. It is there but isn’t really there. The optimism of the announcement of the annual budget is always followed by the disappointment of the allocation. For some reason, National Security does not find the importance to merit the consideration that one would expect. Notwithstanding the wars India has had to fight, the defence budget over the years has remained at less than 2% of the GDP, well short of desired levels. But budget allocations by the government are always weighed against the requirements of the nation for progressive growth.

Narendra Modi, since assuming the mantle of the Prime Minister in 2014 has maintained his focus on infrastructural development in this country, which became his main priority. With a focused purpose, his serious effort to alleviate poverty and modernise India in a drive to achieve recognition as a regional power, a precursor to further ambitions to see the nation recognised as a world power, the Prime Minister’s directions were clear. Providing the military with the barest upgradations, it was his belief that the armed forces, even with limited growth still possessed the potential to not only contain any threat but effectively act against it in a timely manner.

With the Covid pandemic having taken its toll on all economies, the defence budget 2020-21 was unlikely to provide any solace to the armed forces. Banking on the fact that the nine month stand-off against Chinese troop incursions and the prolonged alert status of the armed forces, not to mention the urgency to make good long pending deficiencies, there was hope that the GoI would make substantial change this year. An allocation of Rs 4,71, 378 crores (USD 66.9 billion) for the MoD did seem to meet the expectations. But the distribution of Rs 3, 23, 053 crore (USD 45.8 billion) to the Defence Service Estimates which caters to the expenses of the DRDO and the three services, Rs 1,33,825 crore (USD 19 billion) for Defence Pensions and Rs 14,500 crore (USD 2.1 billion) for MoD civilians has put the entire defence budget in the proper perspective. The ratios are dynamic but represent the government’s desire to meet the requirements of the Armed Forces. Defence Budget 2020-21 also represents a growth of 9.4% which may appear substantial but translates to Rs 40,367 crore which, in a high technology, high cost sector does not amount to much. What people do not perceive is the fact that year after year the services generally suffer from a back-log of committed liabilities, which further stunts their growth potential.

It is always hoped that progressive budgets will overcome the rate of obsolescence of military equipment. But the steady consumption or wear and tear that military assets are subject to need to be addressed adequately, especially in critical areas of fighting elements. The steady draw down of fighter squadrons due to obsolescence of aircraft, is a classic example of how the most critical item of deterrence has not been suitably prioritised. A comparative study between resource requirement and resource allocation has remained a perilous 25%-30%. It is a large gap to bridge. So, in essence, what the military invariably has to resort to is to cut down on or curtail certain expenditures while prioritising what is available – essentially an exercise to streamline available assets to higher levels of efficiency.

Atmanirbharta

The great modernisation drive the Indian armed forces have embarked upon, with MoD having signed contracts for T-90 tanks, Akash missile systems, Anti-submarine warfare craft among the major assets, will need a boost from successive budgets. From the time the Modi government has come to power, the Make in India drive has been given a huge thrust. Realising that the country for long has subsisted on imports which tend to eat into the economy and the foreign exchange reserves, the Prime Minister embarked on a multi-nation tour to encourage foreign industry participation in what he called Make in India. A most laudable proposal which would harness jobs for many, provide a base to absorb technology, improve associated infrastructure, develop indigenous industry – all with the purpose to become self reliant, especially in defence and boost the economy. There is no denying the vision of making India into a global business hub would be a success story. But five years down the line there has not been much progress. While the causes for this may be many, the idea has been mooted and we pray for progress. The Prime Minister’s recent drive for Atmanirbhar Bharat is aimed to enhance his Make in India dream. Placing importance on the Indian defence industry, the long forbidden arena has been steadily opened up to the private industry. In a definite paradigm shift the DPP 2016 has been tweaked to include the prioritised “Buy – Indian (Indigenously Designed, Developed and Manufactured) or IDDM”.

There has been a major change in outlook of the government because of the Prime Minister’s policies of attaining self reliance. It is very evident that medium and small scale industry cannot cope with market forces and especially in an area like defence equipment. Attempting to manufacture items which have severe and stringent tolerance levels can be intimidating. Production costs cannot be met without financial assistance and the chances of rejection are very high. In such a hostile environment the need to provide government backing becomes very essential. The government is making all possible provisions to see that the indigenous industry gets the necessary wherewithal, the infrastructure and financial support to feel secure and make their contributions. It will be an uphill task but some of the bigger industries have come forward in support of the Prime Minister’s initiative to piggy-back some of the smaller players.

Aero-India 2021 became a prominent platform for the government to promote its Atmanirbhar policy while lobbying with the international vendors flocking the air show, with the Make in India dream. Around the time of the Aero India 2021, the Defence Acquisition Council cleared and gave their Acceptance of Necessity (AON) for Rs 28,000 crore worth of acquisitions for the IAF, of which Rs 27,000 crore (almost the entire amount) were directed towards Atmanirbhar and Make in India initiatives. In this were six AWACS aircraft, worth Rs 10,990 crore whose development and production will be implemented by the DRDO. An additional Rs 47,000 crore was cleared by the Cabinet Committee on Security (CCS) for a deal for 83 Tejas aircraft. This was entered into with the HAL who is expected to work with 500 big and small companies to progress the manufacture and produce the desired number between 2024-2028.

Notwithstanding the fact that the Tejas Mk 1A will have at least 50% imported technology and components, which will have to be procured in foreign exchange, it is considered the biggest indigenous defence contract ever. The Raksha Mantri has put a caveat on HAL to progressively increase the indigenous content in the Tejas to 60% well before the last aircraft rolls out of the production line. Hopefully, HAL will meet the timelines and the decline in fighter squadrons will bottom out in the near future.

A major turn has been the tweak introduced in the DPP 2016. It is a chapter which envisages a new initiative of selecting an Indian private firm as a ‘Strategic Partner’ for the manufacture of (one or more) defence systems like Fighter aircraft, Submarines, Tanks or Helicopters. Once selected, these companies are to seek Transfer of Technology and manufacturing know-how to set up domestic manufacturing infrastructure and supply chains. This has been a paradigm shift of culture and ethos – to move away from DRDO/PSUs/OFBs and give the private sector a major foothold in the Indian defence market.

The Downside

Without being pessimistic, one must simultaneously understand that proliferation of technology and accessibility has changed the way business is done in the modern world. Most big countries and OEMs have realised that continuing to do research, development, design, manufacture and production in large quantities, is no longer a viable economic option. With the world moving towards ‘Horizontal Specialisation,’ the OEMs and major service suppliers are receiving components and sub-parts from distributed engineering and manufacturing sources from distantly removed sources. In other words, arms production (as an example) has become a ‘trans-national’ enterprise, because even the most economically strong states cannot hope to sustain autonomous production of military hardware.

The other factor that horizontal specialisation exposes is the fact that it may be actually cheaper (which it is) to import the sub-systems/parts, either because of costs of Design and Development (D&D) or the fact that one may get a superior quality product from another source. There is also the perpetual threat of being overtaken by technology. Then all the D&D efforts have been wasted.

There is no doubt that India needs to have an established indigenous defence industry. There are security imperatives that mandate securing and preserving certain intellectual property so that the country or its weapon systems do not get compromised in this highly influential and septic cyber domain. The biggest reason that we have to have a level of self sufficiency is the fact that in crises we need to adapt. India, famous for its ‘Jugaad’ capability has risen to the occasion at every count. From fabricating bomb crutches on the Lysander aircraft by Sqn Ldr ‘Jumbo’ Majumdar and executing a successful bombing strike against the Japanese in WW-II, to the Army Commander of Northern Command talking of fabricating miles of pipeline in hostile conditions of the recent stand-off with the Chinese Army, for the requirement of forward troops. This can only come about through technical education and expertise. A competent defence industrial base (DIB) stimulates the economy, develops skills, knowhow and dual-use technologies that contribute so much to the bigger manufacturing hubs. We just need to develop and strengthen India’s DIB.

Conclusion

The matrix of the Military Requirement, Budget and Atmanirbharta (Self Reliance) is complex, to say the least. The three services take great care to chart out a technological roadmap with absolute professionalism because they are the first responders to threat to national security. The LTIPP needs to be given more respect than it gets from the government and in fact should form the basis on which the government should seek its security environment. While sometimes the acquisition program may seem over-optimistic and ostentatious, the requirements must always be viewed across the holistic and realistic canvas of National Security.

The facts of wear and tear on military equipment operating in the harshest of conditions and having to be regularly exercised and used, cannot be wished away. The draw-down of fighter squadrons in the IAF did not happen overnight. It is taking crises to get reaction and action. The fall back on an indigenous industry to made good shortages has been a dream. Constantly engaged in military conflict with the neighbours, India’s defence support system has fallen well short of the desired levels. Dependency on most of the sophisticated equipment has left us insecure should sanctions be imposed or the channel throttled for any diplomatic altercation. The Prime Minister’s drive to attain self reliance through his Atmanirbhar initiative and his offer for Make in India, is the best prospect for a future India. The shortfalls are many and varied. The younger generation should understand the need to take this country into the higher levels of recognition through its capabilities and opportunities. But the fulcrum on which India’s hopes and aspirations for self reliance in defence rests on the defence budget and the government perspective to national security. It is always precarious and treacherous and in fact the matrix so created walks a fine line like a tight-rope walk, which can have only two results – success or disaster.

Author Brief Bio: An alumnus of NDA and DSSC, Air Marshal Sumit Mukerji, PVSM, SC, VSM, has served the IAF as a fighter pilot with distinction He has commanded three units, a MiG-29 Sqn, a MiG-25 SR Sqn and TACDE (considered the ‘Top Gun’ school of the IAF) and also served as the Air Attaché in Washington DC. He retired in 2011 as the AOC-in-C of Southern Air Command.

References:

Ash Rossiter & Brendon J. Cannon, “Making arms in India? Examining New Delhi’s renewed drive for defence-industrial indigenization”, Defence Studies, 2019, 19:4, 353-372, DOI: 10.1080/14702436.2019.1685880

Team Mint, “Budgeting for India’s defence”, Mint,

https://www.livemint.com/budget/news/budgeting-for-india-s-defence-11609719241824.html

Oishee Kundu, “Risks in Defence Procurement: India in the 21st Century”, Defence and Peace Economics, 2019, DOI: 10.1080/10242694.2019.1646443

Technology Perspective and Capability Roadmap, Ministry of Defence, Govt of India, https://www.mod.gov.in/sites/default/files/tpcr.pdf

Laxman Kumar Behera, “India’s Defence Budget 2020-21”, MPIDSA, https://idsa.in/issuebrief/india-def-budget-2020-21-lkbehera-040220

Ranjit Ghosh, “INDIGENISATION: Key to Self-Sufficiency and Strategic Capability, GLOBAL DEFENCE INDUSTRIALISATION AND RE-MODELING THE INDIAN PROGRAMME”, 2016, https://idsa.in/system/files/book/book-india-defence_0.pdf

Kevin A Desouza, “Transfer of Defence Technology: Understanding the Nuances and Making it Work for India”, 2020, https://idsa.in/system/files/book/book_transfer-of-defence-technology_0.pdf

Defence Procurement Procedure 2016, Ministry of Defence, Govt of India, https://www.mod.gov.in/sites/default/files/UVDPP201611119.pdf

India possesses 7,500 km of coastline and about 14,500 km of potentially navigable waterways,^[i] with seventy percent of India’s trade by value carried by sea. Indian peninsula is strategically located on the global map and forms an important part of the Indian Ocean Region (IOR). IOR is a large ocean spread from East Africa to Indo-China, limited by Antarctica’s Southern Ocean and India mainland itself in the north. For India to be a robust sea trading nation, the safety and security of the national and international cargo in the EEZ and its transit in the vast IOR shall always be a priority.

With the globalisation of the industries, the volume of shipping traffic has increased manifold and monitoring of ships, trawlers, fishing boats etc. has become an essential requirement. Organisations like International Maritime Organisation (IMO) have been actively involved in promulgating stricter regulations for the sea going vessels in regards to safety, pollution control etc. and it’s essential that such regulations are effectively monitored for compliances. The instances of illegal, unreported and unregulated (IUU) fishing or trawler skirmishes as breach of conduct in the international waters or close to EEZs are now increasing in frequency. Self-proclamation of areas like militarisation of South China Sea shall continue to be a growing concern in international politics. In this coming decade, it may not be business-as-usual within the maritime industry.

Risk to Mercantile Marine Trade

Maritime trade has always been a high-risk business due to accidents caused by bad weather, navigation transit in restricted waters, piracy attacks etc. The ‘Rules of the Road’ at sea established by the IMO are required to be strictly followed and are legally binding on the sea faring nations. The regular sea patrols by Indian Navy and Indian Coast Guard are supposed to ensure compliance and safe passage of the sea vessels at all times against maritime terrorism, piracy, arms running, human and contraband trafficking etc.

Indian Government has been active in ensuring safety and security of maritime trade. India has a firm programme under SAGAR (Security and Growth for All in the Region) launched by Prime Minister Modi to reiterate India’s position as a partner and first responder, which also highlights the importance of ASEAN countries in the region. India has been active towards making the surrounding waters safe for marine trade. Based upon the various safety and incident reports, recently Ministry of Ports, Shipping and Waterways has implemented a routing system in congested South West Indian waters for Merchant and Fishing Vessels separation^[ii] for safe navigation. In 2018, Information Fusion Centre – Indian Ocean Region (IFC-IOR) was setup in Gurugram, Haryana to meet the objective of making the mercantile trade secure in waters.

The IFC-IOR Centre forms part of multinational and inter-agency collaboration to resolve common maritime security concerns through a network of Information Fusion Centres. IFC-IOR shares maritime non-sensitive information on vessels of interest with other friendly nations to enhance monitoring and safety of the globally traversing sea vessels. The Information Management and Analysis Centre (IMAC) setup is jointly administered by the Indian Navy and Indian Coast Guard. IMAC links all the coastal radar chains to generate a seamless real-time picture of the complete Indian coastline. Various long-range identification and tracking systems collect and distribute vessel information to facilitate a global identification and tracking of ships. A real-time Maritime Domain Awareness picture is evolved by fusing information from various sources like the Automatic Identification System (AIS), Long-Range Identification Tracking System, collaborating navies and coast guards’ operations centres, public agencies and shipping community.

As per India’s IFC-IOR observations, about 1,45,000 vessels were observed to be operating in the IOR in 2019, with an average of 11,000-12,000 vessels at any given time.

Figure 1: IFC-IOR MARSEC Report Nov’2020

IFC-IOR’s monthly Maritime Security(MARSEC) Report^[iii] for the month of Nov’2020 reported 192 maritime security events in the following categories:

• Piracy and Armed Robbery
• Maritime Terrorism
• Contraband Smuggling
• Illegal Unreported Unregulated (IUU) Fishing
• Natural Events
• Irregular Human Migration
• Maritime Incidents
• Environmental Security

As per the Report, the third of all incidents composed of maritime incidents, followed by contraband smuggling, irregular human migration, IUU fishing and piracy & armed robbery. A month-on-month analysis observes that IUU fishing saw 25% decrease, but 45% increase in incidents of poaching (reported off Djibouti, India, Indonesia, Malaysia, Maldives, Pakistan, Sri Lanka, Tanzania, Thailand and Yemen).

Modern Marine Technological Trends

Ships at sea have always been early adopters of the latest technologies, be it for safe navigation or for communication with the shore. The Safety of Life at Sea (SOLAS) Convention is one of the important international treaties regarding the safety of merchant ships. The need arises to take support of the technology to create persistent sector surveillance capabilities with techniques like AIS (Automatic Information System) or the equivalent systems for smaller than SOLAS boats or, Multi-platform Data Fusion etc. The use of such hi-tech systems enhances the global Maritime Domain Awareness, thereby improving the marine security, safety and environment. Some of the evolving technologies in maritime domain are:

• Space based Automatic Identification System (SAT-AIS). As per IMO, the Automatic Identification System (AIS) for maritime safety and vessel traffic system is mandatory for ships as per their qualification criterion. The AIS broadcast utilise Very High Frequency (VHF) band of frequencies to transmit their position reports along with short messages describing ship and its voyage. Even though ship-to-ship and ship-to-ashore communications exists, however, a need for global AIS coverage was required for areas beyond frequency range. To overcome this, a space-based AIS receiver in low earth orbit has been developed and the system successfully made operational. Satellite-based AIS (SAT-AIS) makes it possible to track AIS fitted seafaring vessels beyond the coastal areas. This makes it possible now for a large-area ocean surveillance with AIS messages retransmitted by the satellites to the earth stations and AIS information shared amongst the member nations. The space based AIS can provide nearly hundred percent ship detection probability, with capacity to report thousand ships in a particular coverage area. The use of software-defined technology in the Space based AIS receivers allows for a full in-orbit re-configurability i.e., with this technique a mission can evolve throughout its lifetime. Some of the SAT-AIS primary beneficiaries shall be:
• IFC-IOR and IMAC. Vessel traffic and navigation monitoring and Maritime security services
• Coast Guard. For anti-piracy, IUU fishing and compliance of various national and international Regulations
• SAR (Search and Rescue) operations at sea.
• MARPOL Compliance. Monitoring and enforcement of pollution control regulations at sea, dangerous and hazardous cargos monitoring.
• Commercial fleet management companies
• Maritime Cloud Network. VHF Data Exchange System (VDES) is a radio frequency based communication network for information transmission between ship-to-ship, ship-to-shore and AIS satellites. The VDES optimises the use of RF spectrum by sending higher rate data along with AIS data. The VDES network protocol assists in the e-Navigation using a Maritime Cloud by utilising the Marine Mobile VHF band. The AIS is a component of VDES which uses advanced technique of Gaussian Minimum Shift Keying (GMSK) modulation.
• Multi-Platform Multi Sensor Data Fusion (MPMSDF). The sea is a highly dynamic environment and to garner any strategic maritime information, multi-sensor data fusion is undertaken to create a maritime Situational Awareness. This helps to pass on a workable maritime intelligence to the Navy and the Coast Guard. To achieve the data fusion, following sources of information are utilised:
• Marine AIS
• Coastal radars
• HF/VUHF communications
• Beacons
• Satellite Communication (Voice and Data)
• VSAT terminals
• Web and Social Media

The target data received from heterogenous sources like radars, AIS etc. from various sea going platforms are correlated and fused as per the principles of Multi-platform Multi-sensor Data Fusion (MPMSDF) system. The MPMSDF data enhances the detection capability and assist in early identification of any suspicious or threatening target(s) at sea.

(d) Artificial Intelligence (AI). Despite best of the weather forecast systems in place, the situation for ships on water is always evolving. An example is the recent unfortunate incident of Japanese ONE Apus resulting in about 2,000 containers lost or damaged in the Pacific Ocean.^[iv] Predicting the weather at sea is extremely challenging for meteorological department due to rapidly evolving dynamic conditions in the ocean environment. For example, a decade long study (1999-2019)^[v] on the cyclones in the month of November in the Indian region highlighted that cyclones usually deviate from the expected tracks. This is due to multiple factors affecting the cyclone path, like steering jet currents etc. With multiple Space based weather measurements, some improvements have been made in the weather prediction to forecast timely warnings. However, the use of Artificial Intelligence models has been effectively leveraged to make a more accurate weather prediction map.

(f) Industry 4.0. Industry 4.0 or the fourth industrial revolution too shall be part of marine industry and applicable to real world design, construction and operation segments. Industry 4.0 comprises of smart sensors, networked technology (IT/IoT), intelligent data analysis, AI, Augmented and Mixed Reality (AR/MR) to achieve higher efficiencies and making operations fully autonomous. Ports and terminals are undergoing a digital transformation and shall further imbibe Industry 4.0 practices. Global Supply Chain integration with Ports shall see newer state of the art emerging technologies leading to smart ports or Ports 4.0. Developments in the Industry 4.0 shall be directly applicable to Shipping 4.0 and large scale fleet performance monitoring shall be part of this initiative. Government of India has setup SAMARTH Udyog Bharat 4.0 (Smart Advanced Manufacturing and Rapid Transformation Hubs) under Department of Heavy Industries, Ministry of Heavy Industries and Public Enterprises to provide an impetus to Industry 4.0 initiative.

Figure 2: Industry 4.0 Evolution

(g) Cyber Security. On 01 Jan’2021, IMO’s latest requirements for integrating cyber risk into onboard Safety Management systems came into force^[vi]. IMO adopted Resolution MSC.428 (98) which refers to a ship’s Safety Management System (SMS) accounting for the cyber risk management in compliance with the Information Security Management code.  IMO has provided guidelines based on cyber security framework to identify and detect risks, protecting assets, responding to risk and recovering from cyber-attacks. The additional Class notations pertaining to Cyber Managed and Cyber Secure too may be assigned to ships or offshore units since maritime industry shall remain a target of cyber-criminals in 2021.

Conclusion

The sustenance and growth of the blue economy for India shall always be highly dependent upon the safety and security ensured over the high seas. In today’s geo-political situation, the blue economy’s security is also closely tied to a nation’s sovereignty. To achieve security over the vast open oceans, the technological innovations shall be the way ahead. These innovations may be in the form of incremental improvements from within marine industry, or a major disruptive change imposed due to land-based technological transformations. Further, the implementation of these contemporary technologies themselves shall enable launch of multiple latent marine technologies like autonomous cargo vessels, cyber-physical evolution for robotics onboard vessels and in the ports etc.

Author Brief Bio: Milind Kulshreshtha is a former Naval Officer who is a C4I expert and a Strategic Analyst. He has an expertise in the Joint Warfare C4I algorithms pertaining to Threat Assessment & Warfare modules, Multi-platform Multi-sensor Data Fusion (MPMSDF), and has a keen interest in Air Defence and Space Command.

^[i] http://sagarmala.gov.in/about-sagarmala/background

^[ii] https://pib.gov.in/PressReleasePage.aspx?PRID=1640178

^[iii] https://www.indiannavy.nic.in/ifc-ior/IFC_IOR_MMSU_Nov_20.pdf

^[iv] Aaron Sheldrick, “Container ship loses nearly 2,000 cargo carriers in Pacific storm”, Reuters, Dec 4, 2020, https://www.reuters.com/article/us-china-shipping-container-accident/container-ship-loses-nearly-2000-cargo-carriers-in-pacific-storm-idUSKBN28E0T7?edition-redirect=in

^[v] https://www.indiannavy.nic.in/ifc-ior/Cyclone_Study.pdf

^[vi] https://marine-offshore.bureauveritas.com/magazine/imo-2021-puts-spotlight-cyber-security

Author: Ayaan Hirsi Ali

Publishers: Harper

Year of Publishing: February 2021

Book Review by: B. Shruti Rao

Ayaan Hirsi Ali’s recently published book Prey: Immigration, Islam, and the Erosion of Women’s Rights is a valorous and timely book. It addresses the abasement of the feminist movement and gender equality in European nations as an inevitable fallout of the European migration crisis.

An interesting watershed movement that Ali identifies is German Chancellor Merkel’s movement of weakness in a July 2015 press conference where she was confronted with a despondent Palestinian refugee whose family was about to face deportation. Following the event, Merkel unpreparedly (as Ali proves) announced Germany’s Open Border Policy for refugees, declaring “We can manage that”. According to Ali, this virtue signalling move largely rooted in the German desire for the atonement of past sins ‘has done the most harm to (the status of) European women in her lifetime, (and was ironically) made by a woman’.

In 2015 alone, close to 2 million people, mainly men, arrived in western European nations from Syria, Afghanistan, Iraq, Pakistan, Nigeria, and other countries with large Muslim populations. Since 2009 more than 3 million have been living as illegal entrants and asylum seekers in western Europe. Author Ali, through her own painstaking research and the work of many European social scientists, lays bare the fact that this deluge of millions of young, male Muslims has clearly led to a drastic rise in cases of sexual assaults, rapes, and public harassment of women in large parts of the continent. The obvious argument of correlation does not imply causation is powerfully addressed by her research. The repertoire of work that Ali refers to while making this serious claim reveals the scale and the intensity of research work carried out in Europe on cultural, religious, political and legal differences that have led to this disparate sense of values in immigrants. India in many ways, situated in a difficult neighbourhood, suffers from similar inflows which have and will continue to have long term demographic, cultural and even electoral consequences. Yet, these issues have barely perturbed the minds of the Indian intelligentsia and attempts to arrest these developments through policies have met with great political resistance and opprobrium, domestically and abroad. Abetting this short-sighted activism is the 21^st century Dhritarashtra of India, the Indian academia which continues to remain in denial.

The dangers posed by such denial is predicted well by the European case study. Ayaan Hirsi Ali contends it is this very denial of the inherent misogyny and disdain for liberal values in certain cultures that has led to the erosion of the gains made towards women’s right in western nations. She highlights how even talking about violence by Muslim men against European women is unfashionable in an age of identity politics, when everyone is expected to “operate within a partly historical matrix of victimhood”. Consequently, the idea of imposing liberal values on the Muslim world is being construed as a form of neo-colonialism. As Ali reveals, this guilt has become so entrenched that European victims of sexual assault even make excuses for their attackers. Afraid of being branded racist, these women strike an apologetic tone on behalf of those who assaulted them. At the same time, to serve their politics, European politicians play down the threat, sometimes even making excuses for criminal behaviour. In the name of respecting cultural norms, judges hand out light sentences to these perpetrators and the European media self-censors reporting to avoid stoking racial and religious tensions.

Such guilt-ridden sensitivities towards multiculturalism and intersectionality come at a great cost to the west. Western societies have taken for granted their achievement in creating liberal societies that offer the highest level of emancipation to citizens and sexual self-determination to women in modern history. By not recognising that some cultures are yet to fully embrace modern liberal values, and adopting an unquestioning attitude towards the undertones of religious and political misogyny in them, the west seems to be undermining its own values in the name of equality.

Ideas of liberalism, emanating from the west and decades of single-minded activism towards gender equality has produced the language, legal systems, and discourses that significantly improved the position of women in these western countries. Many cultures and societies have overtime recognised the superiority of these ideas and have made wholehearted attempts at emulation. As research proves immigrants from these cultures find it easier to integrate into western societies and make positive contributions.

Ali reveals that the socio-political and religious arrangements in Muslim communities have insulated generations of immigrants from liberal ideas, and consequently they not only resist but also challenge the way of life in their host countries. The most egregious challenge they pose is to the liberated common women of the west who increasingly have to cede access to public spaces, and have to censor their sartorial and self-expression choices in a trade-off for personal safety. The victims of such anachronistic restrictions long rejected in the west are not only European women but also Jews, members of the LGBTQ community and women from the immigrant communities. Yet their plight fails to arouse similar outcry as the more fashionable #metoo cases since most victims of sexual violence perpetrated by the illegal migrants belong to the lower rungs of the social echelons, low-income neighbourhoods, and small towns in Europe. Ali writes that it is in these neighbourhoods where failure to integrate immigrants into the legal and cultural system of the West has created segregated parallel societies where religious dogmas, victimhood, and sexist behaviour are perpetuated generation on generation.

Ayaan Hirsi Ali makes several such observations that expose the hypocrisy of our times. Her book Prey has been written at great risk to her personal safety and professional standing. The statistics she reports are staggering and make one wonder how the west has been able to keep them undercover for so long. The only saving grace has been the democratic system where citizens can cast their votes in anonymity to political parties that offer protection from unchecked immigration. UK (Brexit), Sweden, Germany, France, Italy, Netherlands, Hungary, Austria, Belgium are a few nations where immigration has become the central issue in national elections.

She is herself a Somali born asylum seeker to the Netherland and has experienced life on both sides of the border. Loyal to her classical liberal values, she desires open borders and greater freedoms for which effective integration of immigrants is indispensable. Towards that her book makes several policy suggestions that must be taken seriously by policymakers even in India not just for immigrants but also for the integration of segregated parallel communities.

The book is both poignant and prophetic. The problems exposed by Ali are not alien to the Indian society. Just like Europe, anyone in India who seeks to discuss these issues in a serious fashion is almost certain to be accused of xenophobia, bigotry and of legitimizing alt-right politics. Even beyond Islam and immigration, diversity in India has led to the existence of communities with a broad range of personal freedoms for women and sensitivities about gender equality. Our laws and public discourse must quickly recognise the problems that come with cultural relativism which allows all of these disparate cultures to be put on the same pedestal.

Allowing religious personal laws that promote sexist practices and education systems that might lead to the radicalisation of young ones in the name of multiculturalism has to stop. Indian state must strengthen its commitment to gender equality and introduce gender and sex education through the education system. Discourse on Indian feminism must permeate the larger society and unlike the west, it should not be held hostage by a few gender studies departments populated by those who have little to do with ground realities.

Interestingly, research quoted in the book has brought out that in western nations men of the Indian diaspora not only outperform the natives in education, participation in the labour market and income but also have lower average crime rates. Indian men will do well to learn from their diasporic brethren.

(Brief Bio: Ms B. Shruti Rao is a part of the Yenching Scholars at Peking University. She is a Young India Fellow, Ashoka University and has previous work experience with India Foundation and PriceWaterhouseCoopers Bangalore)

India’s Flag is oft called the Tricolour, for its three horizontal stripes in colours of saffron, white and green. But what is often missed is the fourth colour in the flag—the blue wheel in the centre. Prime Minister Narendra Modi made reference to this, in an address he delivered at the commissioning of the ‘Barracuda’ in Mauritius on 12 March 2015. Referring to the blue wheel, he said, “To me, the blue chakra or wheel in India’s flag represents the potential of the blue revolution, or the ocean economy”.^[i]

The Barracuda—a 1,300-tonne offshore patrol vessel (OPV) built by Garden Reach Shipyard & Engineers (GRSE), was the first warship ordered by a foreign country from an Indian shipyard.^[ii] In his address at the commissioning of the ‘Barracuda,’ Prime Minister Modi sketched out India’s vision of the Indian Ocean. He spoke of the criticality of the Indian Ocean to the future of the world, and stated that all would prosper when the seas were safe, secure and free for all. The vision he articulated contained five key elements. These were:^[iii]

• India will do everything to safeguard its mainland and islands and defend its interests. Equally, India will work to ensure a safe, secure and stable Indian Ocean Region.
• India will deepen economic and security cooperation with her friends in the region, especially her maritime neighbours and island states and will continue to build their maritime security capacities and economic strength.
• Deepen mutual understanding on maritime challenges and strengthen our collective ability to address them through regional mechanisms for maritime cooperation.
• Seek a more integrated and cooperative future in the region that enhances the prospects for sustainable development for all.
• The primary responsibility for peace, stability and prosperity in the Indian Ocean rests on those who live in the region. However, India recognises the fact that there are other nations around the world with strong interests and stakes in the region and India is deeply engaged with them.

From the above, emerged the acronym SAGAR or Security and Growth for All in the Region, which has become the fulcrum of India’s vision in the Indian Ocean and in the wider Indo-Pacific region. It is a tool for India’s development, and towards that end, this shared marine space would need to be protected. In a sense, this represents a transition in the Indian thought process, which for long has thought of itself as a continental power, but now also sees itself through a maritime lens.

Indian history records a long maritime tradition, covering a period of over five millennia. As far back as 2500 BCE, the Harappans built tidal docks at Lothal for berthing and servicing ships, and were perhaps the first in the world to do so. India’s strong naval tradition finds reference in her sacred scriptures, as also in Kautilya’s Arthashastra and in other texts. The Chola empire saw the zenith of ancient Indian sea power, but with the decline of the Cholas towards the end of the 13th century, Indian sea power declined. The Arabs gradually edged out the Indians from the sea faring trade and were themselves sidelined when the Portuguese came on the scene and assumed control of the seas in the early sixteenth century. There was a brief period which saw the resurgence of Indian sea power with the rise of the Marathas. Maharaja Shivaji had started creating his own navy, which reached the zenith of its power under the command of notable admirals like Sidhoji Gujar and Kanhoji Angre. But with the death of Angre, Maratha naval power declined.^[iv]

An interesting aspect to be noted is the co-relation of India’s economic prosperity and its control of the seas. As India lost control of the seas, external forces entered to rule over the land, which in turn led to India’s economic decline. Post-independence, the Indian security establishment had its focus on the land borders, as India had inimical neighbours. But now, maritime trade is becoming a key indicator in India’s growth story. And hence the need for a vibrant Ocean policy, emphasising the need to keep the sea lanes free, safe and secure for all.

Soon after assuming office for the second term in May 2019, the Narendra Modi-led government set a target of taking the economy to USD 5 trillion over the next five years. This was a daunting and an ambitious undertaking, but given that the fundamentals of the economy were strong, it was not something which could not be achieved. The pandemic caused by Covid 19, a virus that emanated from China, will certainly delay the timelines by perhaps another three to four years, so we could be looking at 2028 to achieve the laid down target. But a more important point to note is that to achieve the target, greater dependence has to be on the blue economy, which conceptualises the oceans as “shared development spaces”.

The World Bank has defined Blue Economy as the “sustainable use of ocean resources for economic growth, improved livelihood and jobs, and ocean ecosystem health”.^[v] India’s development effort will increasingly be dependent on the Blue Economy and the Oceanic space thus becomes vital for India. According to the Ministry of Shipping, around 95% of India’s trading by volume and 70% by value is done through maritime transport. India’s Sagarmala programme is designed to promote port-led development in the country through harnessing India’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on key international maritime trade routes. A total of 189 projects have been identified for modernisation of ports involving an investment of Rs 1.42 trillion (USD 22 billion) by the year 2035.^[vi] Peace and stability in the Indo-Pacific is hence a key requirement for India’s development agenda.

Growing Chinese naval and air power in the South China Sea and its expansionist designs in the region, have understandably raised concerns, not only amongst the ASEAN countries, but also among other regional powers, primarily the US, Japan, Australia and India. China’s ‘nine dash line’ is being unilaterally imposed on China’s smaller neighbours, in utter disregard to the UN Conventions. Evidently, there is a need to push back against Chinese expansionism and towards a rule-based order.

The Quadrilateral Security Dialogue, popularly called the Quad—an informal strategic forum between the United States, Japan, Australia and India, is at present being maintained by semi-regular summits, information exchanges and military drills between member countries. There is a need to formalise the Quad and make it agenda and rule based, to prevent Chinese hegemony in the region. This would encourage some if not all the ASEAN countries to join the grouping, which will likely also see the United Kingdom, France and some other European nations coming in.

A united effort is required to check Chinese expansionism, especially as the UN appears to be singularly ineffective in this regard. India must play a leading role towards that end, confronted as she is by Chinese hegemonist attitudes in its northern and Eastern borders. This is better done sooner rather than later, otherwise the world may well witness another moment, where lack of decisive action when required, led to the Second World War. Keeping the sea lanes of communication safe, secure and free for all, as stated by Prime Minister Modi, must hence be a priority not only for India, but for all who value peace and freedom.

Author Brief Bio: Maj. Gen. Dhruv C. Katoch is Editor, India Foundation Journal and Director, India Foundation.

^[i] https://indianexpress.com/article/opinion/columns/for-the-record-to-me-the-blue-chakra-or-wheel-in-indias-flag-represents-the-potential-of-the-blue-revolution-or-the-ocean-economy/

^[ii] https://www.business-standard.com/article/economy-policy/india-s-first-warship-export-to-mauritius-114121900027_1.html

^[iii] The full text of Prime Minister Modi’s speech is available at https://www.pmindia.gov.in/en/news_updates/text-of-the-pms-remarks-on-the-commissioning-of-coast-ship-barracuda/

^[iv] https://www.researchgate.net/publication/344443150_Maritime_History_of_Ancient_Hindu_Traders

^[v] https://www.worldbank.org/en/news/infographic/2017/06/06/blue-economy

^[vi] Details of Sagarmala National Perspective Plans are available at http://sagarmala.gov.in/about-sagarmala/national-perspective-plans

This article explores Australia’s adoption of the Indo-Pacific concept in light of its strategic challenges.  For several decades the idea of the Asia Pacific as Australia’s region has provided a foundation for a successful strategy for providing security and economic prosperity for Australia.   But growing strategic interactions between the Pacific and Indian Ocean theatres, driven by China’s growing economic, political and military power and India’s emergence as a major regional power, now requires a broader concept of Australia’s region. This article concludes that the concept of the Indo-Pacific as a region provides Australia with an opportunity to develop a more cohesive national strategy that better integrates its strategic imperatives to find security in a stable and prosperous neighborhood.

Australia’s role in building the “Asia Pacific” as a region

Before considering the implications of Australia’s approach to the Indo-Pacific, it is necessary to understand its previous approach to the “Asia Pacific” as a region. Since its establishment in 1901, Australia’s strategic perspectives have been primarily directed northwards, towards potential threats emanating from northeast Asia and through the Southeast Asian archipelago. Australia has long seen itself as principally a Pacific Ocean state. European settlement of the Australian continent from the early 1800s was largely focused on the fertile southeast. As a result, the three major cities in the southeast of Australia, Sydney, Melbourne, and Brisbane, represent almost 50 percent of Australia’s population, and altogether the eastern states and territories constitute more than 80 percent of Australia’s population. Through the latter part of the twentieth century, Australia’s key economic, political, and strategic relationships in the region—including with the US, Japan and China—were all in the Pacific Ocean, or in current parlance, in the “Asia Pacific.”

The Australian continent straddles the Indian and Pacific Ocean and, indeed, it has by far the longest Indian Ocean coastline of any country. But only a small proportion of Australia’s population lives on the western side of the Australian continent, and its political, defence and security relationships in the Indian Ocean are relatively undeveloped.

Australia’s longstanding strategic focus on the Pacific lay behind its past enthusiastic support for the idea of the “Asia Pacific” as a way of defining its region. The idea of the Asia Pacific has been one of the most important mental maps for Australia over the last several decades, forming an almost ubiquitous part of Australia’s thinking about the world. However, despite its ubiquity, the idea of the Asia-Pacific as a region is a relatively recent one, and one that was intentionally constructed. The concept of the Asia Pacific was initially pushed during the 1970s and 1980s by countries such as Japan and Australia, who feared a possible US disengagement from East Asia in the wake of its defeat in the Vietnam War. Both countries wanted to better bind the United States with what they hoped would become a politically stable and economically vibrant East Asia.

Although principally driven by economic opportunities, for Australia, the idea of the Asia Pacific has always had a strong underlying security element – that of keeping the US engaged in Asia as a benign offshore balancer and the main security provider to the region. The concept of the “Asia Pacific” also gave Australia an opportunity to bind itself closer to East Asia as a “Pacific” nation, if not necessarily an “Asian” one. These motivations remain compelling. Australia has successfully used the concept of the Asia Pacific as a region to tie itself much more closely to East Asia, helping Australia to find security in a more prosperous region.

Although the concept of the Asia Pacific included the United States, it did not include India or the great majority of other Indian Ocean littoral states. Consistent with the boundaries of the Asia-Pacific Economic Cooperation (APEC) grouping, Australia’s mental map of the Asia Pacific never extended to South Asia or beyond. This mental dividing line between the “Asia Pacific” and “Indian Ocean” regions reflected late twentieth century understandings of the relative lack of strategic interactions between those two theatres.

The development of a clear “mental map” of the Asia Pacific as a cohesive space considerably helped Australia to establish unified, whole-of-government policies towards that region. Australian policymakers also have a clear mental map of the Pacific islands, which has been an important driver behind the development of unified policies towards that sub-region. For decades, Australia has also pursued a clear and comprehensive southern strategy including the Southern Ocean and Antarctica (over which it has territorial claims of more than 40 percent of that landmass) that has successfully de-securitised that space through emphasising peaceful environmental and scientific cooperation with other interested states.^[i]

But, in contrast, Australia has not yet formulated a comprehensive strategic view of the Indian Ocean region.^[ii] Its mental map of the Indian Ocean has long been in the nature of an essential trading highway connecting Australia with the Persian Gulf and Europe rather than a region in which Australia should be developing key partnerships. But the Indian Ocean region is becoming increasingly important in Australian strategic planning. Australia’s 2009 Defence White Paper assessed that the Indian Ocean would have greater strategic significance in the period to 2030 and would eventually join the Pacific in terms of its centrality to Australia’s maritime strategy and defence planning.^[iii] Similarly, the 2016 Defence White Paper, notes that “The Indian Ocean has become an important focus for Australian strategic policy in recent years,” and that it is also likely to become a more significant zone of competition among major powers^[iv]. Other official statements^[v] also stress the importance of the Indian Ocean region but none of them provide a useful road map for Australia’s engagement in that region.

Consequences of the Indo-Pacific construct for Australia’s regional strategy

The “Indo-Pacific” strategic construct, in which the Indian and Pacific oceans are seen as an increasingly interdependent strategic and economic space, is fundamentally changing the way Australia thinks about its broader region.^[vi] Among other things, it is spurring the development of a more cohesive and unified regional strategy having regard to Australia’s competing strategic imperatives.

As noted, traditionally, the Pacific and Indian Oceans have been seen as largely separate strategic spheres. East Asia and the Pacific operated with one set of economic, political and security dynamics, and South Asia and the Indian Ocean with another. Strategic interactions between the two theatres were relatively limited, partly reflecting the limited economic, political, and military reach of important countries in East Asia and the Indian Ocean. Until recently, China, Japan and South Korea had little political, economic or security presence in the Indian Ocean region and India had little presence in the Pacific.

But this is now changing, led by the expansion of the economic and security interests of China, Japan and other East Asian states into the Indian Ocean and India’s growing role in the Pacific. As a result, it is no longer sufficient to put the Pacific Ocean and Indian Ocean theatres in separate boxes in understanding major power interactions, especially in the maritime realm. There was a growing realisation among many Australian strategic thinkers that Australia needed a more unified strategic perspective of the long Asian littoral that stretches from Vladivostok to the Persian Gulf.

Shinzo Abe may have been the first regional leader to talk about the idea of the Indo-Pacific when he talked about the ‘confluence of the seas’ in an address to the Indian Parliament in 2007, but Australian officials have been among the most enthusiastic promoters of the concept.  Australia’s 2013 Defence White Paper represented the first official adoption of the Indo-Pacific region by any country, when it noted what it called, “the emergence of the Indo-Pacific as a single strategic arc” which Australia must concern itself with, with Southeast Asia lying at its center.^[vii] Indeed, in retrospect, it seems obvious that Australia, sitting between the Pacific and Indian Oceans, should understand the long Asian littoral in unified strategic terms.

The adoption of the Indo-Pacific as Australia’s self-identified strategic space has significant consequences for Australia’s future interactions with that space. First, it can help provide a better understanding of Australia’s likely role in any future confrontation between China and the United States and its allies and partners. Second, it can better frame the scope of Australia’s relationships with key regional security partners such as Japan, France and India.  Third, the identification of the Indo-Pacific as Australia’s region can help in the development of a unified regional security strategy, principally focused on the maritime realm. Fourth, an Indo-Pacific strategy can be used to provide a conceptual basis for the development of broader relationships with countries in the Indian Ocean. Fifth, an Indo-Pacific strategy can help prioritise Australia’s allocation of defence resources between its commitments in the Middle East and commitments towards its closer neighbourhood. Each of these consequences will be discussed in turn.

The concept of the Indo-Pacific allows us to better understand Australia’s future strategic role in the region. Australia has an important role in the Indo-Pacific strategies being pursued by the US and other countries such as Japan, India, and France, which are all seeking to address the challenges caused by China’s rising power. Decades ago, Australia had the good fortune of finding itself on the geographical periphery of the Cold War. Then, the confrontation between the United States and the Soviet Union and their respective allies was focused on central Europe, the North Atlantic, and Northeast Asia. The Indian Ocean and South Pacific largely lay on the periphery of that confrontation. Although Australia found security through a close security alliance with the United States, it was able to avoid becoming a member of an integrated military alliance in the nature of the North Atlantic Treaty Organisation (NATO) or the US-Japan alliance. Its position, far from key areas of potential conflict between the superpowers, meant that Australia was also able to avoid hosting foreign military forces on its soil in any significant numbers.

In contrast, future rivalry between China and the US and its allies and partners will involve Australia much more directly. The Australian homeland is also under threat, if likely not through conventional military means. In recent years, China has attempted to project power directly into the Australian homeland through cyberattacks, trade threats, efforts to control the large Chinese diaspora and (largely ineffective) attempts to interfere with domestic politics.^[viii] These developments have raised the stakes considerably for Australia and has provoked a sharp response from the Australian government. The Australia-China bilateral relationship is now at its lowest point in more than 50 years.^[ix]

Importantly, Australia’s geographic position at the confluence of the Pacific and Indian Oceans means that it, along with countries such as Indonesia, will act as a gatekeeper for the movement of trade and military forces between those theatres. A US naval analyst described the geographic positions of Australia, Japan and India vis-à-vis China as like a “baseball diamond”, where Australia is the “home plate” while Japan and India are first and third bases.^[x] Australia’s geography and other strategic characteristics mean that it will likely play a much more active role in any potential future confrontation with China, as compared with the role it played during the Cold War. The hosting of a US marine contingent to Darwin may be the harbinger of the stationing of significant US naval and air forces on Australian soil, potentially including a revived US ‘First Fleet’.^[xi] This would assist the United States to rapidly swing naval and air forces between the Pacific and Indian Ocean theatres. Australian analyst, Andrew Carr, has called the use of Australia by US forces as a base to project power into Asia the “MacArthur Model” (by analogy with the US use of Australia during the Pacific War), in contrast with the somewhat different US-Australia relationship since that time.^[xii] Australia may soon see the return of the MacArthur Model as a security partner of the United States.

Australia’s status as a significant regional military power, with small but sophisticated armed forces, a powerful navy, and—importantly—a historical willingness to project power at long distances, also makes it an attractive security partner for many countries. The shift in Australia’s strategic perspectives from one focused (separately) on the Asia Pacific and the Middle East to a more unified view of the Indo-Pacific also has some crucial implications for Australian relationships in the region. A more unified understanding of Australia’s area of strategic interest affects Australian perspectives on its other alliance partnerships in the Pacific and Indian Ocean theatres. In recent years, Australia has moved to develop a closer and more direct security relationship with Japan, which includes enhanced cooperation throughout the Indo-Pacific, including in Southeast Asia, the South Pacific, and the Indian Ocean. Australia and France have also been enhancing their security relationship with an eye to how they can contribute to each other’s security across the Indo-Pacific.

The shift in Australian strategic perspectives to the Indo-Pacific has particular implications for its approach to the Indian Ocean. Some important security challenges in the Indian Ocean, particularly the security of vital sea lines of communication (SLOCs) across it, need to be approached through understanding the dynamics of strategic competition among major Indo-Pacific powers. There is a significant likelihood that a major interruption to the SLOCs in the Indian Ocean would be connected, directly or indirectly, to developments elsewhere in the Indo-Pacific. This means that in many cases, a localised response by Australia would be inadequate. In addition, Australia may be in a better position to approach new security challenges in the Middle East/West Asia with support from or coordination with other security relationships within the Indo-Pacific region, such as India. Australia may find that India could be a valuable new security partner in that part of the world.

Thus, the Indo-Pacific concept can be used to give greater coherence to Australia’s defence strategy. Since the official adoption of the Indo-Pacific concept in the 2013 Defence White Paper, Australia’s defence strategy has been understood to be a national maritime strategy^[xiii] undertaken in a predominantly maritime environment.^[xiv] This has important implications for the allocation of defence resources. Maritime security now receives the lion’s share of defence funding, and the Australian navy is now undergoing its biggest recapitalisation since at least World War II.

Further, by combining the Indian and Pacific Oceans into a single maritime zone, the Indo-Pacific concept calls for a systematic strategy of responding to threats against Australia’s interests across the Indian and Pacific Ocean regions. Thus, for example, the ongoing rebalancing of the Australian naval fleet from its east coast towards Fleet Base West near Fremantle, Western Australia, which in coming years will include most of Australia’s new submarine fleet and the forward deployment of Australia’s new air warfare destroyers, should not merely be measured by Australia’s strategic needs in the Indian Ocean. The strategic value of Fremantle port should not be understood by its location on the Indian Ocean, but rather due to its relative proximity to much of the Indo-Pacific littoral compared with major ports on Australia’s east coast. Enhanced use of Fremantle makes considerable sense for enhancing the ability of the Australian Navy (and potentially also US fleet units based there in future) to quickly swing naval resources between the Western Pacific and Indian Ocean theatres. The ability to quickly swing resources between the Pacific and Indian Ocean theatres will become increasingly vital for Australia and its regional partners.

The concept of the Indo-Pacific also provides a useful framework for approaching Australia’s strategic relationships with India and other Indian Ocean states, which may be profoundly different from Australia’s past approach to countries in that theatre. The development of the Australia-India relationship in recent years reflects not only a recognition of shared interests between the two countries in the Indian Ocean but also much more broadly across the Indo-Pacific. That supports the idea that the two countries should be seeking out potential areas for security cooperation, and particularly maritime security cooperation, in the Indian Ocean, Southeast Asia and the Western Pacific.

The Indo-Pacific concept also provides some valuable pointers for the geographic allocation of Australia’s defence resources. The huge size of the Indian Ocean creates real dangers of the diffusion of its limited resources if Australia was to pursue ocean-wide engagement indiscriminately. Accordingly, Australia’s Indo-Pacific strategy will likely force it to place a particular focus on countries in the eastern half of the Indian Ocean, such as India, Sri Lanka, Bangladesh, Myanmar, Thailand, Malaysia, Singapore and Indonesia.^[xv] Several countries in the eastern Indian Ocean could be the source of significant security risks such as violent extremism, political instability, or large unregulated population movements, as well as significant economic opportunities. Those risks and opportunities will increasingly require Australian agencies to give Southern Asian/Bay of Bengal states such as India, Sri Lanka, and Bangladesh no less priority in engagement than is currently given by Canberra to many ASEAN countries. Nevertheless, Australia will also need to continue to politically engage in the western Indian Ocean in conjunction with the US and strategic partners such as India, France and Japan.^[xvi]

The development of substantive security partnerships with India and other key states on the southern Asian littoral would represent a significant departure from Australia’s past approach. Previously, Australia would frequently deploy military forces from Australia to the Middle East, transiting Indian Ocean waters secured by the British or US navies without much regard for the countries lying in between. But Australia’s future defence presence in the Indian Ocean region will increasingly involve a greater continuum of regional relationships. The current reduction of the Australian naval presence in the Persian Gulf/northwest Indian Ocean from a more or less full-time presence to the deployment of a frigate for six months per year is allowing the Australian navy to re-allocate resources to the eastern Indian Ocean, Southeast Asia, and South Pacific. This was demonstrated by the 2019 Exercise Indo Pacific Endeavour which involved the tour of the largest Australian fleet to South Asia since at least World War II.^[xvii]

The redefinition of Australia’s key strategic space will likely require Australia to juggle with several regional concepts such as the “Asia Pacific,” the “Indo-Pacific,” the “Indian Ocean,” and even the “Eastern Indian Ocean”, each of which may be useful for different purposes. Despite its name, the “Indo-Pacific” does not provide an all-encompassing and exclusive framework for Australia’s engagement across the entire Pacific Ocean or Indian Ocean theatres. This means that Australia will need to work with several regional concepts at the same time and will also need to be comfortable in working with partners that have different geographic conceptions of the Indo-Pacific, reflecting their own location, history and strategic needs. India, for example, has a much greater focus than Australia on the security of the western Indian Ocean and East African littoral, for obvious reasons.

The concept of the Indo-Pacific does not involve a simple agglomeration of the entire Pacific and Indian Ocean theatres, which makes little sense. From Australia’s perspective, it would not be meaningful or practical to combine the entire Pacific and Indian Ocean theatres, including the space from, say, Peru to Madagascar. Rather, the Indo-Pacific must be primarily understood as a functional rather than just a purely geographical concept involving sharp lines on a map.

Conclusion

As a huge country with a relatively small population, Australia has long struggled to meet the strategic imperatives it has regarded as essential to its defence and security. For more than a century, its need to support its great power allies, its desire to help build a secure region, and its imperative to defend the continental homeland have been undertaken in a relatively disaggregated manner. Australia’s defence forces have frequently found themselves whipsawed between commitments in the Middle East, West Asia, Southeast Asia, Northeast Asia, the Pacific, and Australia’s northeast maritime approaches.

Australia’s changing conception of its principal region, from the Asia Pacific to the Indo-Pacific makes considerable sense in understanding and responding to various regional security challenges. There are several potential consequences of Australia’s identification of the Indo-Pacific as its principal strategic space. One is in highlighting Australia’s likely role in future rivalry or confrontation between China and the US and its allies. Australia’s location between the Pacific and Indian Oceans makes it an important piece of real estate in any future conflict that spans both those oceans.

The concept of the Indo-Pacific is also a valuable framing device for Australia’s relationships with key regional security partners such as Japan, France and India. It will increasingly find itself working with so-called “like-minded” security partners on a pan-regional basis.

The concept of the Indo-Pacific will also help Australia develop a unified regional security strategy which is principally focused on the maritime realm. The Indo-Pacific prioritises the importance of the maritime realm and the littoral states of the Asian continent, and tends to de-emphasise continental concerns.

The Indo-Pacific also provides a valuable conceptual basis for the development of broader security relationships with countries in the Indian Ocean. For most of its history, Australia has given little priority to security relationships in the Indian Ocean. The relative decline of US naval predominance will force Australia to build more productive security relationships in the Indian Ocean region, beginning with India and other selected states on the southern Asian littoral.

Finally, the concept of the Indo-Pacific will help to prioritise the allocation of Australia’s defence resources across the extended region. In particular, it can be a valuable tool in juggling Australia’s military commitments in the Middle East with its commitments towards its closer neighbourhood.

In some ways, the concept of a “region” might be seen as the drawing of arbitrary lines to divide indivisible landmasses and oceans. But our “mental maps,” the way we carve up the world around us into useable pieces, can have significant consequences for the real world. Australia’s adoption of the Indo-Pacific as the principal guide towards its strategic space will likely have significant consequences for Australia’s strategic interactions with the world around it.

Author Brief Bio: Dr David Brewster is Senior Research Fellow, National Security College, Australian National University.

^[i] David Brewster, Australia’s Second Sea: Facing our Multipolar Future in the Indian Ocean, Australian Strategic Policy Institute, 2019.   https://www.aspi.org.au/report/australias-second-sea-facing-our-multipolar-future-indian-ocean

^[ii] Sam Bateman and Anthony Bergin, Our Western Front, Australian Strategic Policy Institute, 2010, p.20.

^[iii] Australian Government, Department of Defence (2009), Defending Australia in the Asia Pacific Century: Force 2030, Commonwealth of Australia, para 4.43.

^[iv]Australian Government, Department of Defence (2016). Defence White Paper 2016, Australian Government, paras 292-3.

^[v]Australian Government (2012), Australia in the Asian Century White Paper, Australian Government, p.236; Australian Government, The Senate Foreign Affairs, Defence and Trade References Committee (2013). The importance of the Indian Ocean rim for Australia’s foreign, trade and defence policy, Australian Government.

^[vi] See generally, Rory Medcalf, Contest for the Indo Pacific: Why China won’t map the future (Melbourne: La Trobe University Press, 2020).

^[vii] Australian Government, Department of Defence (2013), Defence White Paper 2013, Australian Government

^[viii] See generally, Clive Hamilton, Silent Invasion: China’s Influence in Australia (Melbourne: Hardie Grant, 2018).

^[ix] Tony Walker, “Timeline of a broken relationship: how China and Australia went from chilly to barely speaking”, The Conversation, 9 December 2020. https://theconversation.com/timeline-of-a-broken-relationship-how-china-and-australia-went-from-chilly-to-barely-speaking-151567

^[x] Satu Nagao (ed.), Strategies for the Indo-Pacific: Perceptions of the U.S. and Like-Minded Countries, Hudson Institute, 2019, p.19.

^[xi] Salvatore Babones, “US should station a new First Fleet on our northern coast”, The Australian, 15 December 2020.

^[xii] Andrew Carr, “Re-examining the Australia–US alliance (part 2): the Menzies and MacArthur models” ASPI Strategist, 25 February 2019. https://www.aspistrategist.org.au/re-examining-the-australia-us-alliance-part-2-the-menzies-and-macarthur-models/

^[xiii] Australian Government, Defence White Paper 2013, para 3.32.

^[xiv] Australian Government, Defence White Paper 2013, para 2.9.

^[xv] David Brewster, ‘New maritime governance and cooperation arrangements in the eastern Indian Ocean: challenges and prospects’, in Jivanta Schoettli, Maritime governance in South Asia and the Indian Ocean (World Scientific, 2017).

^[xvi]David Brewster, “Australia can’t continue to divide the Indian Ocean in two” Lowy Interpreter, 19 February 2020.  https://www.lowyinstitute.org/the-interpreter/australia-can-t-continue-divide-indian-ocean-two

^[xvii] Ankit Panda, “Royal Australian Navy Task Group Arrives in Sri Lanka for Indo-Pacific Endeavor 2019 Exercises” The Diplomat, 18 March 2019.

Introduction

The idea of connecting the Pacific and the Indian Oceans emerged during Japanese Prime Minister Shinzo Abe’s speech in the Indian parliament in 2007^[i]. He emphasised the idea because he wanted to highlight the importance of India. The “Indo-Pacific” is the concept instead of the “Asia-Pacific,” which did not include India. Recently, improved cooperation between India and Japan has become more evident. India and Japan have been increasing their diplomatic exchanges, joint exercises of their armed forces, and seeking joint infrastructure projects. However, deep India-Japan relations have not always naturally occurred because of geographical and geopolitical distance. For example, according to the Indian Ministry of External Affairs, 37,933 non-resident Indians (NRIs) live in Japan (MEA). And Japan’s Ministry of Foreign Affairs points out that about 9,838 Japanese lived in India in 2018.^[ii] However, 1,280,000 NRIs and 446,925 Japanese are living in the US. 241,000 NRIs and 98,436 Japanese are living in Australia. And 55,500 NRIs and 120,076 Japanese live in China. Compared with these numbers, India and Japan have relatively few people-to-people exchanges. Therefore, it is logical to ask why the relations of India-Japan have progressed recently.

India-Japan relations have grown closer since end of the 2000s, when China’s activities began to grow and were perceived as a threat to India and Japan. And India-Japan security relations have developed faster than economic relations. In addition, India-Japan bilateral relations have developed alongside multilateral relations, including with the US and Australia. As a result, this article focuses on the China factor in India-Japan relations and looks at three issues: What has happened since 2000s? What can India-Japan cooperation do? And, how does India-Japan cooperation affect relations with the US and Australia?

What has happened?

Let us take a look at three areas: The sea around Japan, the South China Sea and the Indian Ocean

The Sea around Japan

For Japan, the Chinese submarines are a threat to Japan’s SLOCs in the Indian Ocean. But at the same time, the main concerning points are China’s activities in the sea around Japan. For some years now, Beijing has been expanding its military activities near Japan. For example, in 2004, a Chinese nuclear attack submarine violated Japan’s territorial seas in the East China Sea. China has also been carrying out naval exercises on the Pacific side of Japan since 2008, as is show in Figure 1 below.

Figure 1: China’s naval and air activities around Japan

Source: Ministry of Defense of Japan, 2020

The Chinese air force has also been expanding its activities. In 2013, Japan’s Ministry of Defense white paper pointed out that, “in FY 2012, the number of scrambles against Chinese aircrafts exceeded the number of those against the Russian aircrafts for the first time.” In 2016, the number of scrambles against Chinese aircraft further increased to 851. This decreased to 500 in FY 2017, but the number rose to 638 in FY 2018 and 675 in FY 2019 (see Figure 2).

Figure 2: Number of scrambles of Japan’s Air Self-Defense Force

Source: Joint Staff, Ministry of Defense of Japan, 2020

The South China Sea

From Japan’s point of view, the situation in the South China Sea is a serious matter. While in 2016 the Permanent Court of Arbitration in The Hague rejected China’s claim to ownership of 90 percent of the South China Sea, Beijing is ignoring the verdict and building three new airports on seven artificial islands in the South China Sea. This has provoked Japanese concern, and Prime Minister Abe, in an article published in 2012, just two days before he was sworn in as prime minister, noted that, “increasingly, the South China Sea seems set to become a ‘Lake Beijing,’ which analysts say will be to China what the Sea of Okhotsk was to Soviet Russia: a sea deep enough for the People’s Liberation Army’s navy to base their nuclear-powered attack submarines, capable of launching missiles with nuclear warheads”^[iii]. His statement pointed out to the possibility of China deploying ballistic missile submarines under the protection of fighter jets launched from these artificial islands, and excluding all foreign ships and airplanes that might identify their submarines.^[iv] Abe pointed out that, “if Japan were to yield, the South China Sea would become even more fortified.”^[v]

The Indian Ocean

China has expanded its activities in the Indian Ocean, which has caused concern for India. Beijing insisted on solving its “Malacca Dilemma”—that it must avoid excessive dependence on the Malacca Strait, which is a strategic shipping lane for China’s oil and is controlled by the US Navy. As a result, China is creating alternative routes such as a Middle East-Pakistan-Xinjiang Uyghur route and a Middle East-Myanmar-China route. These are a core part of China’s Belt and Road Initiatives.

On one hand, Beijing is investing in developing ports such as Gwadar in Pakistan, Hambantota in Sri Lanka, Chittagong in Bangladesh, and Kyaukpyu in Myanmar in the Indian Ocean. Because of the sheer size of China’s investments and the 6-8 percent interest rates it charges on loans, these countries now have enormous debts (the World Bank and Asia Development Bank, in contrast, charge 0.25-3 percent).^[vi] With Hambantota, Sri Lanka was unable to repay its loan. It thus became a victim of China’s “debt diplomacy” and in December 2017 handed over the port to China as part of a 99-year lease agreement.

In the meantime, in order to secure sea routes, China has started to expand its military forces in the region. China expanded its military activities in the Indian Ocean since 2009, when it joined anti-piracy measures off the coast of Somalia. Chinese submarines have patrolled since 2012, and the Chinese surface fleet has called at ports in all the countries around India, including Pakistan, the Maldives, Sri Lanka, Bangladesh, and Myanmar. According to Admiral Sunil Lanba, Chief of Naval Staff, Indian Navy, Beijing has deployed 6-8 warships in the Indian Ocean,^[vii] while in Pakistan, it has started to deploy ground forces. Referring to China’s operation of the Hambantota port, some raise concerns that if the Chinese navy begins to use civil-purpose ports as naval supply bases, China could overcome its weakness, which is its lack of a naval port in the region.

In addition, China also exports submarines to countries around India. Bangladesh received two in 2016, and Pakistan decided to import eight Chinese submarines for its navy. In particular, Islamabad’s willingness to possess nuclear submarines must not be overlooked. Because it lacks the technology, there is a reasonable possibility that China will support such “indigenous” nuclear submarines to counter India.

The activities of these submarines indicate that they could potentially attack India’s nuclear ballistic missile submarines, aircraft carriers, and sea lines of communication (SLOCs). This means that these submarines will, to a great extent, regulate India’s activities (Figure 3).

Figure 3: China’s activities in the Indian Ocean

Source: author

The India-China border area

Since 2000, China has been developing infrastructure projects in the India-China border area, increasing the number of strategic roads, trains, tunnels, bridges, and airports. The military balance in the India-China border is changing because of China’s rapid military infrastructure modernisation. Along with these infrastructure projects, Beijing has started to deploy more armed forces in the area. In 2011, India recorded 213 incursions in the India-China border area, but in the following years, the numbers were larger: 426 in 2012, 411 in 2013, 460 in 2014, 428 in 2015, 296 in 2016, 473 in 2017, 404 in 2018, and 663 in 2019.

China is deploying troops in Pakistan-occupied Kashmir and Pakistan where a part of the China-Pakistan economic corridor, which is a core project of the Belt and Road Initiative, is situated.^[viii] Beijing is also developing infrastructure projects to connect to Nepal. It has entered the Doklam heights, claimed by both China and Bhutan, insisting on building a new road to deploy more forces. This led to Indian and Chinese armed forces facing each other in a standoff along the 3,500 km India-China border (including the Line of Actual Control, a line separating the territory controlled by India from the territory controlled by China).

And in 2020, the situation escalated further. China entered the India side in the spring and the two sides clashed in June. At least 20 Indian soldiers sacrificed their lives (the Chinese did not publish any losses). After that, China continued to redeploy fighter jets and missiles from other areas of China. For example, China moved H-6 bombers that can employ cruise missiles from Wugong to Golmud and Kashgar^[ix]. China also deployed DF-21 missiles to Kailash Mansaravar^[x] (DF-21s use new types of warheads that the US and Japan cannot intercept through missile defense systems). At the Hotan air base, China has been increasing heavy fighters and bombers such as the J-11 and J-16. Also at the Hotan base, many other types of military aircraft such as the Y-8G electronic reconnaissance aircraft, the KJ-500 early warning aircraft, and the CH-4 drone were present.^[xi] The latest J-20 stealth fighter jets are also deployed.^[xii] To protect these airfields and missiles, China is deploying Su-300 surface-to-air missiles.^[xiii] To deal with China’s build-up, India has repeatedly conducted missile tests. In six weeks (September to October), India conducted more than 12 missile tests.^[xiv]

What can India-Japan cooperation do?

What effect can India-Japan cooperation have on this kind of Chinese aggression? If history is any guide, the motive behind China’s maritime expansion is based on military balance. For example, when France withdrew from Vietnam in the 1950s, China occupied half of the Paracel Islands. In 1974, immediately after the Vietnam War ended and the US withdrew from the region, China occupied the other half. In 1988, after the Soviet withdrawal from Vietnam, China attacked the Spratly Islands, controlled by Vietnam. Along similar lines, after the US withdrawal from the Philippines, China occupied Mischief Reef, claimed by both the Philippines and Vietnam (Ministry of Defense of Japan, 2020). Whenever China found a power vacuum created by a changing military balance, it exploited it and expanded its territories. Maintaining a military balance to avoid creating a power vacuum will counter China’s strategy. And if India and Japan (and the US and Australia) cooperate with each other, there are at least three methods to maintain military balance.

The India-China border and the East China Sea

First, we should focus on the linkage of the India-China border area and the East China Sea. For example, if India cooperates with Japan (and the US), India will not need to deal with all the Chinese fighter jets and missiles at once because China is likely to keep some of its fighter jets and missiles in its east side against Japan, and vice versa. China’s defence budget is also divided among its east front against Japan and its southern front against India. Therefore, by using its know-how of high-end military infrastructural development, Japan can support India’s efforts to modernise its defence in the India-China border area. Since 2014, Japan has invested in India’s strategic road project in the northeast region of India. By using this road, the Indian army can deploy more forces and supplies to the border area. And as mentioned above, in 2018, India and Japan started joint development of unmanned ground vehicles. These unmanned ground vehicles are useful along the India-China border where conditions are too harsh for people to stay in the winter.

In addition, India-Japan cooperation can have some effect in the event of an India-China crisis. Dispatching the Izumo-class helicopter carrier with a US aircraft carrier during the Malabar Exercise in 2017, and the statement of support for India from the Japanese ambassador, achieved good results in the Doklam crisis in 2017.^[xv] A similar situation occurred in 2020. Japan can use similar measures in a future crisis. In addition, as a good means to dissuade China, Japan should draw China’s attention toward Japan instead of toward India. For example, if Japan deployed the Self Defense Forces (SDF) in the Senkaku Islands, China would deploy more forces to Japan rather than to India.

The security burden in the Indian Ocean

Second, if India has the will and capabilities, Japan, US and Australia will be able to release themselves from the heavy burden to safeguard security in the Indian Ocean and can deploy more military force in the East China Sea and the South China Sea to maintain military balance. And India can set the key role in the Indian Ocean. Recently, India has shown its presence actively (Figure 4). India will be a new hope for Japan. Japan should share the know-how related to anti-submarine capabilities and enhance India’s capability as a security provider. In the “Japan-India Joint Statement Toward a Free, Open and Prosperous Indo-Pacific” in September 2017, “They noted the ongoing close cooperation between the Japan Maritime Self-Defense Force (JMSDF) and the Indian Navy in various specialised areas of mutual interest, including anti-submarine aspects.”^[xvi]

Figure 4: India’s presence in the Indian Ocean

*The figure was made by the author

India-Japan infrastructure cooperation is a useful method to neutralise China’s influence in the Indian Ocean Region. The Hambantota port in Sri Lanka had no alternative to a “debt diplomacy” offer from China: the threat of sanctions and war crimes charges in the wake of Sri Lanka’s civil war meant that China was the only country willing to provide it with massive investment. Beijing thus created a huge debt for Sri Lanka. This enabled Beijing to negotiate the 99-year lease of the Hanbantota port. India and Japan should offer an alternative. For example, Bangladesh has already chosen Japan’s Matarbari port project instead of China’s Sonadia project (Figure 5), and thus it is possible that India and Japan can use a similar tactic.

Supporting Southeast Asia

Third, Japan and India can collaborate to support Southeast Asian countries around the South China Sea, which need to beef up their defence with a trustworthy partner that provides military support. Thus, Japan and India should collaborate with each other and support these countries more effectively. For example, Japan and India can collaborate to support Vietnam.

For India, the Andaman and Nicobar Islands are a gateway to connect with Southeast Asia. These islands are strategically important, as they are near the Malacca Strait and SLOCs. As described above, China’s submarines venture into the Indian Ocean, sailing from China’s Hainan Island through the South China Sea and choke points including the Malacca Strait. Therefore, to track China’s submarine activities, the Andaman–Nicobar Islands are an excellent location. India is modernising its infrastructure to deploy large warships, patrol planes, and transport planes in the Andaman-Nicobar Islands. No detailed official report has been published, but some media reports indicate that India, Japan, and the US are planning to install a submarine detecting sensor system along the coastline of the Bay of Bengal.^[xvii] Japan has also decided to support radar facilities and power plants in the Andaman and Nicobar Islands. Japan is also planning to build a light fibre cable connection between mainland India and these islands. Although these are civil projects to resolve electric power shortage difficulties, there is a high probability that the project will have strategic effects related to China.

Impact of India-Japan Cooperation on Relations with the US and Australia

As mentioned above, India-Japan cooperation has been a core part of the US-led security framework in the Indo-Pacific. And that framework itself has changed. After World War II, the “hub and spoke system”—US alliances with countries such as Japan, Australia, the Philippines, and South Korea—maintained order in the Indo-Pacific (Figure 5). Although the US formed alliances with many countries in East Asia, a close defence relationship was lacking among its allies. For example, both Japan and Australia are US allies, but during the Cold War, there were no close security relations between Japan and Australia. In such a context, Japan and Australia are dependent on US military power and information. The hub-and-spoke system would function effectively if the US had enough military resources to tackle all the problems in this region.

However, a salient feature of the recent security situation is the changing US–China military balance. For example, during 2000-19, the US commissioned 21 new submarines. During the same period, China commissioned at least 54 submarines. US allies and friendly countries need to fill the power vacuum to maintain military balance. As a result, a new security framework has emerged. This new framework is a security network of US allies and friendly countries, and includes not only US-led cooperation, but also India-Japan-Australia, India-Japan-Vietnam, India-Australia-Indonesia and India-Australia-France, all of which do not include the US. In this case, India-Japan security cooperation will be the key.

Figure 5: Old alliance and new alliance

Source: Satoru Nagao, “The Japan-India-Australia ‘Alliance’ as Key Agreement in the Indo-Pacific,” ISPSW Strategy Series, September 2015,

https://www.files.ethz.ch/isn/193713/375_Nagao.pdf

Conclusion

Why have India-Japan relations progressed recently? As mentioned above, this article focuses on the China factor in India-Japan relations. And China has been escalating its assertive behaviour against both India and Japan. Maintaining military balance is vital to curbing China’s activities. To do this, a new type of the Indo-Pacific security framework is establishing itself, one in which India-Japan cooperation plays a vital part.

What kind of tasks will India-Japan cooperation face? In light of the above analysis, there are at least three. First, it is important to deal with China’s economic strength. Because China has enough money, it can modernise its military very rapidly. Because China has enough money, it can create debt in developing countries by leveraging the infrastructure projects of the Belt and Road Initiatives. Curbing the income of China will thus be vital. India’s rising economy and Japan’s number three world economic status could create an alternative market to China if there is enough cooperation. But the supply chains of both countries are still very dependent on China. How to solve these difficulties will be an important challenge for India-Japan cooperation.

Second, under escalating US-China competition, the US has tried to institutionalise Quad cooperation. But compared with Europe, the Indo-Pacific region is far wider and more diverse. If one includes the sea between Indonesian islands, the size of the Indo-Pacific region is similar to that of the EU. How to institutionalise the framework will be the challenge for all involved countries, including India and Japan.

Third, opposition to China cannot be the only reason that India and Japan are connected. Therefore, for the long-term success of India-Japan cooperation, the two countries need to find another reason to maintain cordial and deep relations. During the Cold War, India-Japan relations did not develop well, and without strong efforts, their relations could return to that state. India-Japan relations have been developing at a very fast pace lately. This is the best chance for both India and Japan. Now is the time to act.

Author Brief Bio: Dr. Satoru Nagao is a Fellow (Non-Resident) at Hudson Institute, based in Tokyo, Japan. From December 2017 through November 2020, he was a visiting fellow at Hudson Institute, based in Washington, D.C.

^[i] Shinzo Abe, “Confluence of the Two Seas,” Ministry of Foreign Affairs of Japan, August 22, 2017,

https://www.mofa.go.jp/region/asia-paci/pmv0708/speech-2.html

^[ii] Ministry of External Affairs of Japan, Population of Overseas Indians,

https://mea.gov.in/images/attach/NRIs-and-PIOs_1.pdf

Ministry of Foreign Affairs of Japan, Kaigaizairyuuhoujinnsuu (Japanese), November 13, 2019,

https://www.mofa.go.jp/mofaj/toko/page22_000043.html

^[iii] Shinzo Abe, “Asia’s Democratic Security Diamond,” Project Syndicate, December 27, 2012, http://www.project-syndicate.org/commentary/a-strategic-alliance-for-japan-and-india-by-shinzo-abe#Vd6yytDokZJCiwtv.01

^[iv] Satoru Nagao, “Nightmare Scenario in the South China Sea: Japan’s Perspective,” Maritime Issues, September 12, 2019,

http://www.maritimeissues.com/security/nightmare-scenario-in-the-south-china-sea-japans-perspective.html

Yoshida, Reiji, “Beijing’s Senkaku Goal: Sub ‘Safe Haven’ in South China Sea,” The Japan Times, November 7, 2012,

http://www.japantimes.co.jp/news/2012/11/07/national/beijings-senkaku-goal-sub-safe-haven-in-south-china-sea/#.WDQ774VOKUk

^[v] Shinzo Abe, “Asia’s Democratic Security Diamond,” Project Syndicate, December 27, 2012, http://www.project-syndicate.org/commentary/a-strategic-alliance-for-japan-and-india-by-shinzo-abe#Vd6yytDokZJCiwtv.01

^[vi] Dipanjan Roy Chaudhury, “China May Put South Asia on Road to Debt Trap,” Economic Times, May 2, 2017,

http://economictimes.indiatimes.com/news/politics-and-nation/china-may-put-south-asia-on-road-to-debt-trap/articleshow/58467309.cms

^[vii] “China’s Growing Presence in Indian Ocean Challenge for India: Navy Chief,” NDTV, March 14, 2019, https://www.ndtv.com/india-news/chinas-growing-presence-in-indian-ocean-challenge-for-india-navy-chief-2007615

^[viii] “Chinese Army Troops Spotted Along Line of Control in Pakistan-Occupied Kashmir,” The Economic Times, July 12, 2018, https://economictimes.indiatimes.com/news/defence/chinese-army-troops-spotted-along-line-of-control-in-pakistan-occupied-kashmir/articleshow/51380320.cms

Manish Shukla, “China Deploys Troops in Sindh, Just 90 Km away from Indo-Pak Border,” Zeenews, March 21, 2019,

https://zeenews.india.com/india/china-deploys-troops-in-sindh-just-90-km-away-from-indo-pak-border-2189314.html

^[ix] Vinayak Bhat, “Massive deployment at China’s airbases, aerial exercises underway,” India Today, October 4, 2020,

https://www.indiatoday.in/india/story/massive-deployment-at-china-s-airbases-aerial-exercises-underway-1728256-2020-10-04

^[x] “Amid border tensions with India, China constructs missile site at Kailash-Mansarovar,” The Economic Times, August 31, 2020,

https://economictimes.indiatimes.com/news/defence/amid-border-tensions-with-india-china-constructs-missile-site-at-kailash-mansarovar/articleshow/77849618.cms

^[xi] Michael Peck, “China Has Doubled Its Fighter Jets On India’s Border,” Forbes, August 10, 2020,

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^[xii] Sutirtho Patranobis, “China’s J-20 fighter jets near India border? State media downplays report,” Hidustan Times, August 19, 2020,

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^[xiii] Mayank Singh, “Massive Chinese build-up along Line of Actual Control,” The New Indian Express, August 27, 2020,

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^[xiv] Sushant Kulkarni, “Explained: Why has the DRDO recently conducted a flurry of missile tests?” The Indian Express, October 21, 2020,

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^[xv] “Doklam stand-off: Japan backs India, says no one should try to change status quo by force,” The Times of India, August 18, 2017,

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“Don’t bank on US and Japan, you’ll lose: Chinese daily warns India over Doklam standoff,” Business Today, July 21, 2017,

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^[xvi] Ministry of Foreign Affairs of Japan, Japan-India Joint Statement: Toward a Free, Open and Prosperous Indo-Pacific, September 14, 2017, https://www.mofa.go.jp/mofaj/files/000289999.pdf

^[xvii] Singh, Abhjit, “India’s ‘Undersea Wall’ in the Eastern Indian Ocean,” Asia Maritime Transparency Initiative, June 15, 2016,

https://amti.csis.org/indias-undersea-wall-eastern-indian-ocean/

Context

Oceania covers a large area of the Pacific part of the Indo-Pacific – roughly between Hawaii, Japan and New Zealand. In good times, this area is the bridge between Asia and the Americas. In bad times, it is the battle-zone. Many of these islands were on the front line of the Pacific Theatre during World War Two, and form parts of the Second and Third Island Chain hemming in China. It still hosts military installations, such as the American base in Guam and the French one in New Caledonia.

China needs to break through those island chains if it is to achieve strategic independence in the larger Indo-Pacific. It is trying to do that in part through gaining influence in the countries of the region, and has been focused on across-the-board engagement throughout Oceania. Partially as a result, other countries including the United States, Japan, and India are showing renewed interest in the region. The people of Oceania are finding themselves courted and pressured in ways they haven’t seen since the era of European colonial expansion in the late 19^th century.

As the leadership in Oceania weigh their options, one country that stands out to many as a potential game-changer is India. India seems keen to engage with Oceania, and Oceania is receptive, but movement is slow. The question is why, and what can be done about it?

What is Oceania?

Oceania covers approximately 1/6^th of the planet’s surface, and is home to around 10,000 islands, making up over twenty countries and territories (some also include Australia and/or New Zealand). As each habitable island can claim a 200 nautical mile exclusive economic zone (EEZ), some of the countries cover vast areas. The republic of Kiribati, with a population of around only 1,20,000, has an EEZ approximately the size of all of India.

The main regional grouping is the Pacific Island Forum (PIF) consisting of Australia and New Zealand and 16 Pacific Island Countries (PICs). Nine of the 16 PICs are sovereign nations: Fiji, Kiribati, Nauru, Papua New Guinea, Samoa, Solomon Islands, Kingdom of Tonga, Tuvalu, and Vanuatu.

The other seven are linked to larger nations through differing agreements, though all have individual votes in at least some international fora. The ones more to the North – the Federated States of Micronesia (FSM), Marshall Islands, and Palau – have Compacts of Free Association with the United States, giving their citizens access to the US, and entailing close defence cooperation.

The Cook Islands, Niue and Tokelau are in Free Association with New Zealand, and French Polynesia and New Caledonia are part of France. In fact, over half of Frances’ EEZ is in the Pacific. There are also locations that aren’t part of PIF, such as the UK’s Pitcairn Island, the US’s Guam and Commonwealth of Northern Marianas, and France’s Wallis and Futuna.

The economies and societies of the strategically important nations of Oceania vary considerably; though largely there are relatively high rates of literacy, and English language abilities. Only three of the independent PICs have militaries—Papua New Guinea, Fiji and Tonga.

Strategic Environment

Until recent Chinese advances, the region was considered largely in the Western sphere of influence. However, after the end of the Cold War, the US and UK largely lost interest in the region, with the UK closing three High Commissions in countries in Oceania in 2006.

The bulk of Five Eyes ‘oversight’ in the central and southern part of the region – often referred to as Melanesia and Polynesia, and including countries such as Papua New Guinea, Solomon Islands, Tonga, Fiji and Samoa – passed to Australia and New Zealand – two countries which both had colonies and complex histories in the region. The northern part, including the US Freely Associated States such as Palau, the Marshall Islands and the Federated States of Micronesia, still have substantial US influence, as well as increasing Japanese engagement.

Chinese engagement is growing rapidly, and is deep. China has five university-based Oceania research institutes and has delegated primary outreach to the region to Guangdong. This gives the government of Guangdong incentive to increase engagement as it will raise its profile with Beijing, as well as making the vast bureaucratic expanse of China more accessible to the governments of Oceania by having them pass through a smaller entry point with dedicated contacts.

Additionally, countries in Oceania that have signed on to the Belt & Road Initiative (BRI) include the Cook Islands, Fiji, Papua New Guinea, Samoa, Tonga, and Vanuatu. The pace is accelerating. In September 2019, Kiribati and the Solomon Islands switched recognition from Taiwan to China and almost immediately afterwards they joined the BRI.

Australia and New Zealand themselves have become more enmeshed with China. In 2019-2020, 39% of Australian exports went to China. In 2019, 23% of New Zealand’s goods and services exports went to China. New Zealand was the first Western country to agree to a Free Trade Agreement (FTA) with China, to sign on to Beijing’s Asian Infrastructure Bank and it was the first Five Eyes country to join the BRI. Australia has begun a vocal pushback against Chinese influence, especially since COVID-19, but New Zealand is more quiet.

Growing Chinese influence is raising concern in capitals with a stake in the Indo-Pacific, including India, the US, Japan and others. As a result, there has been a flurry of activity. Australia and New Zealand, keen not to lose their position of perceived influence in the region, have announced reinvigorated polices. The UK has opened three new diplomatic missions; French leaders are visiting more often; Japan is putting much more emphasis on its Pacific Islands leaders and defence outreach; the United States is funding a massive Pacific Deterrence Initiative with a component for bolstering partners in Oceania; and India announced a new Oceania division in the MEA.

India and Oceania

Signs of an interest in Oceania began very early in the first term of Prime Minister Narendra Modi. In an early demonstration of his new approach to foreign policy, including a highlighted role for the Indo-Pacific, he went to Fiji after the 2014 G20 Brisbane Summit. This made him the first Indian Prime Minister to visit in over three decades. While there, he met with leaders from fourteen PICs, and launched initiatives that were well thought out to show sincere interest in building relations. One that stood out was the announcement of e-visas on arrival in India.

Visas are a sensitive issue for many in Oceania. The process for getting even tourist visas to Australia, New Zealand and the United States is often difficult, expensive and occasionally humiliating. Conversely, many countries in Oceania have easy visa-free like access to the UK and Schengen zone and visa waivers for China. By making visas to India easy to obtain, PM Modi was showing in a very real way, trust and openness to the people of Oceania.

Another notable aspect of the visit was that two days later, Chinese President Xi Jinping visited Fiji as well. However, Xi could only meet leaders from eight PICs, rather than the fourteen who met PM Modi, as the others had relations with Taiwan. It demonstrated the lack of geopolitical baggage in working with India.

In August 2015, Modi hosted fourteen PIC leaders in India. A wide range of initiatives were announced, including PICs access to free Indian television and radio content, training for journalists, the setting up of India Centres (with books on India, etc.), renewable energy training and technical cooperation, the setting up of IT labs to facilitate e-education and e-medicine, cooperation with coastal surveillance, hydrology, coastal studies, disaster management, disaster early warning systems, fisheries, health camps, military-to-military cooperation, SME business support, diplomatic training, generic drug manufacturing, and more. However, there was little follow up.

One problem was that MEA was overstretched and coverage of the region was fragmented. Only two of the fourteen PICs, Papua New Guinea and Fiji, had an Indian High Commission with no permanent Indian representation in the dozen other PICs. Responsibility for them was spread out over half-a-dozen or so different Indian missions, making coordination and institutionalisation of knowledge and contacts very difficult.

Additionally, within Oceania there was the perception that India was prioritising engagement with Fiji because of its ethnic Indian diaspora (approximately 38% of the population), and that Delhi was using Indo-Fijians/Indian-Pacific islanders as their main regional interlocutors for similar reasons.

While there is local understanding for India’s instinct to engage with its diaspora, there is exasperation at that being the perceived driver of foreign policy. One reason is that some elements of diaspora have a substantial amount of baggage, that India risks carrying along with them. For example, Indo-Fijian politician Aiyaz Sayed-Khaiyum, holds so many government portfolios, including justice, economy, aviation, communication, public service and enterprises, climate change and anti-corruption, that he is known as ‘Minister A-to-Z’.

He might seem like a good entry point, however in late 2020, it was announced he was being investigated in connection with politically-linked bomb blasts in 1987. There are also regional security concerns around potential radicalisation of some within the Indo-Fijian population. India should be careful and choose interlocutors who think like them rather than just look like them.

This is particularly important because, within Oceania, there is a very high desire for more engagement with India. The majority of the people of Oceania share the same values as most Indian, including faith, family, and education. And there are many economic crossovers, from village-scale economics, to the need for reasonably priced equipment and infrastructure that can withstand hot humid environments, to an aspirational middle class.

China’s entry point is economic before mutating into strategic which in turn attracts others into the region. Engagement with India is seen as economic that evolves into creating more domestic security through providing affordable but reliable essentials such as education, health care, IT, printing, transportation and pharmaceuticals, along with affordable quality of life goods such as textiles, spices and décor.

So the desire is there on both sides, the question is how to make it work. In order to delve deeper into the constraints, we will look at a specific case study, the Kingdom of Tonga.

The Kingdom of Tonga

Tonga was chosen for a range of reasons. Its population of around 1,00,000 makes it a medium sized country by Oceania standards, and it has a literacy rate of close to 100%. Having never been colonised, it has long-standing and experienced foreign policy expertise.

Tonga’s first modern era King, George Tupou I (1797 – 1893) deftly navigated his country through the era of colonial expansion in the Pacific. While other countries in the region were taken over by Germany, France, the UK, New Zealand and Australia, Tupou I balanced external powers in part through a carefully negotiated set of treaties that recognised it as an independent country (Germany in 1876, UK in 1879, and the United States in 1886). At the same time, he set up his country as a mirror of what would be found in the West. This included a Constitution (1875), a legal code, an English-style education system, commercial rights, a postal system, and even one of the world’s earliest EEZ claims (by latitude and longitude). He also, in what Tongans refer to as Tonga’s first treaty, “gave the country to God” – implying any country who tried to take it, was taking it from the Almighty.

This sense of independence combined with a martial tradition (before the arrival of Europeans, Tongans had themselves colonised elsewhere in the Pacific, including parts of Fiji and Samoa) made it even less attractive as a European colonial target. When, in the early 1900s, New Zealand tried to convince the UK to let it take over Tonga, the understated response from the British was it would “raise difficulties”.

Tonga also has a strong regional soft power network. As the last surviving Polynesian Kingdom in an area where familial status is valued, closeness to the Royal House of Tonga reflects standing. King Tupou II (1874 – 1918), carrying on a longstanding tradition, married some of his children into high-ranking Houses across the region as a foreign policy tool, creating enduring kinship relationships across the region.

Additionally, the Royal House gives Tonga international soft power, as it interacts with other Royal and Imperial Households, including in the UK, Japan, Thailand, New Zealand (Maori King) and the royal houses of the Middle East and India. At the 2015 Coronation of the current King of Tonga, guests included political leaders and representatives of chiefly houses from across Oceania, as well as the current Emperor of Japan. Tonga is unique in the region in this respect.

Tonga and the Indo-Pacific

In terms of defence, Tonga is one of only three countries in Oceania with its own military (the other two being Papua New Guinea and Fiji). It has been deployed in Afghanistan, does regular joint training exercises with a range of countries and is currently writing its first Defence White Paper.

Tonga switched recognition from Taiwan to China in 1998, following China’s support of Tonga’s membership in the United Nations. The government of Tonga has a substantial loan from China and signed on to the BRI. There are persistent Chinese interest in major infrastructure projects in the Kingdom, including a ‘slipway’ (China was keen to develop ports across the region). Tonga is typical in the region in that when pressed by Canberra and Wellington about working with China, one reply is that it needed the investment (planes, boats, roads, etc.), and if traditional partners haven’t helped, why should they reject new partners.

Tonga, like most countries in the region, was not naïve; it just saw itself as having different priorities than Canberra and Wellington. Australia and New Zealand were perceived as wanting to ‘secure’ the region in order to enhance their own strategic value and for their own economic advantage. Meanwhile Tongan leaders were trying to ensure development on their own terms by assessing their increasing international options, in order to again find a balance between alliances and independence.

This, to a degree or another, was relevant beyond Oceania as well. Many of the medium-sized and smaller Indo-Pacific nations similarly considered themselves primarily as ‘balancers’ as opposed to ‘weights’. Understanding some of the factors that went into Tongan decision-making helped understand where potential inflection points were across the region.

Effective engagement with Tonga, as with all Indo-Pacific countries, requires understanding very different starting points for history (regional countries tend to have long memories), strategic options, and the responsibilities of the citizen and the state. For example, a Tongan reference point for collective security was an incident involving a 19^th century civil war in neighbouring Fiji. Tupou I had become involved and he wanted to put an end to the way Fijians executed prisoners. He decreed that if a village attacks another village, then the attacking village will be known as the enemy of all other villages. Understanding this viewpoint can help today in discussions with Tonga around, for example, acceptable Chinese behaviour regarding Taiwan.

Tonga – India relations

In the 1950s and 1960s, Tonga sent civil servants to India for training. From the 1970s, selected Tongan military went as well, including Prince Tu’ipelehake. His Late Majesty King Taufa’ahau Tupou IV made two state visits to India, in 1971 and 1976. In 1982, India’s Prime Minister Indira Gandhi visited Tonga. She was the first Prime Minister from India to visit Tonga. To date no other Prime Minister has visited Tonga, so the relationship lagged until 2014, when PM Modi went to Fiji.

In spite of the many announcements made, there have been few concrete outcomes, though those that have come to pass have been appreciated. For example, Tonga is a keen and active member of the International Solar Alliance. To better understand how closer cooperation would benefit both countries and increase Indo-Pacific security, here are four specific examples of how Indian engagement with Oceania, using Tonga as a case study, can help increase local security leading to a more stable Indo-Pacific.

• Many countries in the region don’t have forensic labs, or if they do they are limited. Apart from limiting medical work, this means that criminal investigations are also impeded, or samples need to be sent out of the country, often to New Zealand or Australia for analysis, potentially creating a chain of custody issues. For someone from Tonga, to do training in Australia would be prohibitively expensive, as would be equipping a lab with Australian-certified equipment. And Australia has no incentive to train the people of Tonga or build a lab as it would limit its own role in a critical area. Meanwhile, this is not an area China wants to facilitate either, as it also doesn’t benefit from a country in Oceania becoming more independent. India can offer excellent low-cost training in forensics, with affordably priced equipment. To be clear, this is not aid. Tonga currently pays for forensic services. That money can be reallocated for training and equipping, saving the Tongan government money over the long term, though short-term financing might be required during the transition.
• Tonga is in a similar situation with dialysis. In spite of a huge demand, there are no machines or trained technicians in the country. Equipment, supplies and training from New Zealand are prohibitively expensive, and it has happened that Tongans in New Zealand for dialysis who run out of money are sent back to Tonga to die. Again, this is an area where access to Indian equipment and training could have a dramatic effect.
• Veterinary training. Tonga is an agricultural country with not a single veterinarian, except those who come occasionally as volunteers from abroad. Again, training in India would be more affordable, and culturally compatible for Tongan vet students.
• Tax collection IT. A current concern in Tonga is that the country has very inefficient customs and tax collection, including from the many small ethnically-Chinese run shops. One expert mentioned that Tonga could easily pay off its loan to China, if only Tonga could efficiently collect taxes. The system they are considering buying is from the US and costs close to $10 million. If something cheaper and as good were available from India, it could transform public accounting in Tonga. They just don’t know who to ask.

There are myriad other sectors like this, including coconut products, space, emergency supplies (tents, etc.). Tongans, and the people of Oceania in general, are overcharged for foundational aspects of economic development such as higher education, energy, communications and transportation, while at the same time are flooded with Chinese goods. So, how to make the link? The impediments have come from both sides. First, the barriers for India to engage with Tonga.

• Visas. Tonga did not reciprocate the easy visa access given by India to Tonga. The process for an Indian to obtain a visa to Tonga can seem somewhat opaque.
• Transportation. The only way Indians who wish to visit or invest in Tonga is via transits in Australia, New Zealand or Fiji. Even before COVID-19, all travel to Tonga was made difficult by Australia and New Zealand by requiring transit visas that could be complicated or lengthy to obtain.
• Tongan bureaucracy. Tonga’s foreign Affairs office is overstretched and does not have the time to learn what India is offering for example in terms of scholarships, training, supports, etc., and matching it with Tonga’s requirements.

Recommendations

The barriers from the India side have some overlap, but largely come down to not knowing how to engage, or with whom. In that context, here are some recommendations.

• India to have at least one person who is a point of contact in each country in Oceania. It could be an Honorary Consul, a manager of a cultural center, and/or the setting up of an India-Oceania Business Council, with branches in each country. That way India would have a person who could attend key events, talk to key people, get to know the countries and their needs, and act as a bridge.
• India to facilitate the setting up of an ‘Oceania House’ in New Delhi, with space for all the countries of Oceania to have offices and accommodations. This would act as the other end of the diplomatic and business-to-business bridge.
• In the same way that China has delegated Guangdong as an entry point, India could choose a climate-appropriate state, such as Kerala or Tamil Nadu, to lead on Oceania outreach.
• Work with the countries of Oceania to develop their unique products, such as kava, noni fruit etc with the potential for worldwide sales.
• On aid, if requested by the countries of Oceania, collaborate with complementary partners such as Japan. For example, if Japan builds a hospital, India could provide the medical training and pharmaceuticals. This could be especially helpful if building Quad-linked resilience networks.
• Launch direct flights between India and Oceania, perhaps hubbing out of Fiji, and bypassing countries with restrictive visas. This would also help those who want to go to India for medical care and education, and for Indian businesses and tourists to get to the region.
• Craft policies based on bilateral relationships, not via third countries. India wouldn’t like to be approached via the UK, so why should India approach Samoa via its former colonial power, New Zealand?

What Oceania needs from India is not necessarily MEA-led. It needs more trade, educational opportunities, training – and in many cases, it can pay. In fact, it already is paying in more expensive markets. Many aspects of the growth can be private-sector led. But the links need to be made, and that can perhaps be initiated by MEA, RIS or similar, until something like the India-Oceania Business Council is off the ground.

Oceania is a vast area, currently in flux. Engagement with India based on trade, education, health care, and more could fill the security gaps created by the push and pull between China and the West, benefitting all concerned, including Quad partners, and showing India to be the Indo-Pacific anchor of peace and security that it is destined to be.

Authors Brief Bios:

Ms. Cleo Paskal is a Non-Resident Senior Fellow for the Indo-Pacific at the Foundation for Defense of Democracies (US), as well as Associate Fellow at Chatham House (UK). Her other current affiliations include: International Advisory Board Member, Global Counter Terrorism Council (India); International Board of Advisors, Kalinga Institute of Indo-Pacific Studies (India); and Visiting Fellow, Centre d’études et de recherches internationales de l’Université de Montréal (Canada).

Lord Fakafanua is Chairman of the Royal Oceania Institute, Kingdom of Tonga. He is a seasoned politician in Tonga and is the incumbent Speaker of Parliament.  In 2014 he took a break from politics to pursue further studies at the University of the South Pacific, Fiji and recently completed a Master of Arts in Diplomacy, Law and Business at the O.P. Jindal Global University, India. Lord Fakafanua has since resumed his political career after getting re-elected in the November 2017 general elections.