What happened to India’s neighbourhood-first policy? Answer lies in China’s gains

A group of experts, former policymakers and retired diplomats of the United States met six times through video conference over the course of 2020 to examine China’s growing presence in India’s backyard.

The United States Institute of Peace, an American federal institution established in 1984 by a Congressional legislation, felt the need to constitute the Senior Study Group as “China’s expanding presence in the region is already reshaping South Asia”.

The group in its findings, according to a USIP report published in December last year, observed that to some extent, countries such as Nepal, Sri Lanka and Bangladesh see engagement with China as a hedge against Indian dominance.

Incidentally, it was to change this perceived feeling of being “dominated” by India that the Narendra Modi government had initiated its neighbourhood-first policy.

Modi started his stint as prime minister in a hot and dusty evening in May 2014, turning his swearing-in ceremony into a pompous moment for India’s regional outreach.

All the heads of the South Asian Association for Regional Cooperation (SAARC) countries, including then Pakistan Prime Minister Nawaz Sharif, were in attendance at the forecourts of the Rashtrapati Bhavan to witness the change of guards in India.

Modi’s branding of the event impressed his devotees and detractors alike. The outreach was billed as a “Neighbourhood-First Policy”, which was to be a core component of the Modi government’s foreign policy.

Not for nothing BJP stalwart LK Advani dubbed his one-time protégée ahead of 2014 Lok Sabha elections a “brilliant and efficient events manager.”

Regional outreach

Taking the initiative forward, Modi chose Bhutan as the country for his first foreign visit as prime minister. His two-day visit to the Himalayan kingdom was viewed by the Indian media as an affirmation of the primacy of the neighbourhood.

The Times of India said the visit underscored Modi administration’s “commitment to India’s neighbours,” which was made clear “right from day one”.

Modi’s swearing-in ceremony that saw leaders of all Saarc nations attending “exemplified this point,” it added.

The visit signalled his [Modi’s] “foreign policy priorities [that] include South Asia first and foremost,” wrote security expert and writer Ankit Panda in The Diplomat.

Less than two months after his Bhutan trip in June 2014, Modi visited another Indian Himalayan neighbour Nepal, a first by an Indian Prime Minister in 17 years, to underscore the foreign-policy focus of his government.

However, within a few years of the pompous beginning, the neighbourhood initiative started to appear like just another well-managed event by Modi.

Quoting figures furnished by the government in the Lok Sabha, The Hindu had reported in 2018 that India’s financial assistance to Saarc neighbours declined considerably from Rs 5,928.6 crore for 2013-14 to Rs 3,483.6 crore for 2017-18.

The decline was steepest in 2014, the year the Modi government coined its “neighbourhood- first” slogan, the report added, quoting the external affair’s ministry’s data of assistance provided to various Saarc countries revealed in the parliament.

The share of South Asian neighbours (excluding Pakistan) in India’s foreign aid budget also saw a dip from 53.29 percent in 2013 to 45.7 percent in the financial year 2021, revealed budget figures.

The bilateral trades between South Asian countries and India too did not witness any major spike. A compilation of International Monetary Fund data by New Delhi-based Centre for Land Warfare Studies (CLAWS) in one of its reports in December last year showed that trade with South Asian countries, minus Pakistan, as a percentage of India’s total global trade increased to mere 3.09 per cent in 2019 from 2.09 per cent in 2013.

“In absolute terms, India’s trade with South Asia saw a growth of 125 percent from 2009-13 while it grew by just 21.65 percent in the 2014-19 period,” the report of the CLAWS pointed out.

China’s trade with South Asian countries (minus Pakistan) recorded a growth of 30.5 per cent during the 2014-19 period, the report added.

The growing distance

One of the factors attributed to the dismal volume of trade between India and its immediate neighbours is the protection New Delhi wants to provide to its market against imports, particularly from its neighbours.

The Asian Development Bank in a recent report put India in 24th position on trade openness among 25 countries in the Asia-Pacific region. Only Pakistan had a lower ranking.

If they were focusing these things wouldn't have been happening. We are losing entire neighbourhood dost. China giving corvettes and submarines to Bangladesh and even building submarine base for them. An entire port city legally transferred to China by SL. This in Maldives.

— Kannan Gopinathan (@naukarshah) July 25, 2021

As India failed to convert its neighbourhood-first slogan into an efficient mechanism for regional cooperation, China has started exerting its influence.

It has committed around $100 billion to Saarc countries even as it emerges as the largest overseas investor in the Maldives, Pakistan, and Sri Lanka.

Beijing’s influence in the region can be gauged from the approval the Sri Lankan Parliament gave to a controversial bill in May this year that would give China almost complete control over the Colombo Port City. This is in sharp contrast to the island country’s decision to scrap an important port deal with India and Japan in February this year.

What should further concern India is that along with Pakistan and Algeria, Bangladesh became the largest recipients of Chinese arms in 2016-20, according to Stockholm International Peace Research Institute.

The absence of a regional cooperation mechanism in South Asia after the Saarc became dormant also provided space to China to expand its influence in the region.

The last Saarc summit was held in Kathmandu in 2014. The next summit which was to be held in Islamabad in 2016 was cancelled after India pulled out of it following a terrorist attack on an Indian Army camp in Uri in Jammu and Kashmir.

The only recent significant activity of the grouping was the setting up of a $20 million Covid-19 emergency response fund last year.  Half of the fund– $10 million—came from India.

“China has made substantive inroads in terms of engaging the countries of the region barring India. The ‘Indo-centric’ South Asia has failed to develop a cooperative mechanism exposing the limits of Indian ability to lead a region,” says director at Centre for Studies in International Relations and Development Dr Binoda Kumar Mishra.

“The historical anxiety of the smaller South Asian countries vis-a-vis India is providing China with an opportunity to spread its influence in the region. Given South Asia’s political environment at the moment, it would be difficult to imagine a situation of cooperation among the neighbours. Thus, China has a clear opportunity to expand its influence in South Asia,” he says.

Losing ground to China

Again as India’s Vaccine Maitri initiative, launched in January this year to donate millions of doses of free Covid-19 vaccines to neighbouring countries like Bangladesh, Bhutan, Nepal, and Sri Lanka, faltered in the aftermath of deadly second wave of pandemic in the country, China stepped in to fill the vacuum.

After India was forced to suspend its vaccine exports in April, her neighbours turned to China to meet their jab requirements.

China was more than willing to comply. Barely days after India shelved its Vaccine Maitri initiative, Chinese foreign minister held a virtual meeting with his counterparts from South Asian countries on how to deal with the pandemic.

India, Maldives and Bhutan skipped the meeting, but other countries took part in it.

After the meeting, China made major intervention to address the vaccine crunch faced by these countries. Not stopping at that, Beijing earlier this month set up the China-South Asian Countries Poverty Alleviation and Cooperative Development Center. Again, India, Maldives and Bhutan were conspicuous by their absence. The development center is seen as an attempt by China to create a regional block as an alternative to Saarc to further marginalise India’s leadership role in the region.

“It must be said to the credit of the Chinese government that they have succeeded not only in arresting the negative impact of the COVID-19 pandemic but also have managed to put their economic wheel running forward. While other countries are still reeling under the impact of the pandemic, China has emerged as one of the largest suppliers of medicine and equipment to deal with the health crisis,” Mishra observes.

China is also exploiting turmoil in Myanmar (a non-Saarc Indian neighbour) and Afghanistan to its advantage.

The Myanmar Army in February seized power from a democratically elected government alleging fraud in the November 8 elections.

Many suspected that the coup was engineered by China. The Australian Strategic Policy Institute (ASPI) in a report went to the extent of claiming that China was operating clandestine flights to Myanmar.

Modi govt plans to revive ‘Vaccine Maitri’ in July-August, but only in neighbourhood@NayanimaBasu reports#ThePrintForeignAffairshttps://t.co/QElqjPZ7GB

— Shekhar Gupta (@ShekharGupta) June 23, 2021

“Each night for more than a week, unregistered flights between Yangon and Kunming have been transporting unknown goods and personnel from China to Myanmar,” the report published in February said.

“The military regime that’s now in charge of Myanmar is trying very hard to hide the flights. The Chinese government and Myanmar Airways have claimed the planes were carrying seafood exports. However, the details of the flights in question make that highly unlikely,” the report added.

The veracity of the report though is difficult to ascertain, Beijing in the past too helped the junta to tide over international sanctions.

There is a strong visible motive for China to help ouster the Aung San Suu Kyi regime. Under the China-Myanmar Economic Corridor, Beijing had lined up 38 projects, but the previous regime had approved only 9. The new military ruler has already indicated that it would restart some of the stalled Chinese projects.

“The BRI (Belt and Road initiative) of China is bound to get further impetus following sanctions on Myanmar,” Chief of Defence Staff General Bipin Rawat recently said. He was speaking at a webinar on the ‘Opportunities and Challenges in North East India’.

“The turmoil in Myanmar can be termed as what the doctor had ordered for China. The limited democratic government of Myanmar under Suu Kyi was proving to be difficult for China to continue its influence of the junta years. The cancellation of large investment projects such as Myitsone dam and hydroelectric power development project was an indication that Myanmar was trying to wriggle out of Chinese influence,” notes Mishra.

“But the coming back of the junta is like bringing China to the driver’s seat in Myanmar. With the army in power in Myanmar, one can see the repetition of the mistakes by the western countries of treating the government of the day as untouchables, leaving them with no option but to embrace the Chinese. Thus, it is advantage China in Myanmar and the former is doing everything to cover the lost ground during the period of limited democracy,” he points out.

China further sees an opening in withdrawal of troops by the US from Afghanistan. There are reports that the Chinese authorities have already started negotiating both with the current Afghan regime and Taliban to invest in the war-ravaged country through the BRI.

The Taliban has already indicated its willingness to do business with China saying that the country would be a “welcome friend” in Afghanistan.

Mishra feels that the Afghanistan situation though is not exactly a win-win situation for China, unlike in Myanmar, where it can afford to sit back and watch the developments unfold till it is time to act to its advantage.

“Chinese foreign policy approach of non-discrimination on the basis of the nature of the government puts it in a better position to deal with any government that is ruling Kabul. Further, China does not hesitate to deal with non-state actors having a writ within Afghanistan,” he explains.

“But the Chinese worry lies in the domestic challenge it faces in the form of Uighur issue. The way the Chinese have been dealing with the Uighur problem, they themselves fear the chances of radicalisation of mass Uighur population,” Mishra says.

“With a radical government in Afghanistan, it will not be easy for China to prevent possible radicalisation of the Uighurs. Therefore, China would be anxiously eager to see things settle in Afghanistan with a stable government (be that of the Taliban even) so that it can work with it to advance its economic and strategic interests in the trouble-torn country and keep the spread of radicalisation from Afghanistan to China in check,” he added.

To countervail the Chinese push, India needs more than good events to propel its neighbourhood policy. To begin with, India should try to win the trust of its neighbours by investing more in their development process and increasing trade with them.

“India’s options are currently limited by compulsions. Some of the compulsions are India’s self doing. However, India’s options depend on its foreign policy ambitions. If India wishes to remain contented with an active China in the region, then it has nothing to worry. But if India wishes to emerge as an important player in the comity of nations, then a regional orientation or an exclusive focus on China is not going to help,” claims Mishra.

Further, India’s interest would serve better if the Modi government avoids pushing contentious domestic issues such as Citizenships Amendment Act (CAA) that vilifies its friendly neighbours and puts some restrictions on irresponsible utterances by senior ministers about the neighbours. Until then, India’s chances of winning back its neighbours seem like a long shot.

“And if what Vajpaiye once said—you can change our friends but not neighbours—is to be believed, Modi and co must realise that internal peace and development depend on external relations,” says Suhas Chakma, director of Delhi-based Rights and Risk Analysis Group.