India’s inexplicable stance of not pursuing an active ‘Look East’ policy, other than for security reasons, is proving to be a severe business impediment for trade relations with India, US foreign policy expert Dr Ernest Bower has opined.
In a freewheeling chat with Express, Bower, a senior adviser and Sumitro Chair for Southeast Asia Studies and co-director of the Pacific Partners Initiative at the Center for Strategic and International Studies, expressed surprise over India’s seeming reluctance to cash in on its shared culture and heritage with South-East Asian countries.
He was in the city recently.
He mentioned how crucial it is for the US to develop ties with the Association of South-East Asian Nations (Asean) and countries like India.
“Some Indian companies are ‘looking East’, but not the majority. The Indian Defence has started to think more about the East. The Indian Navy too conducts joint exercises with almost all South Asian countries on a regular basis, which is indeed a positive trend. But the Indian Government does not actively pursue a Look East policy other than for security reasons and that is definitely a big issue for trade,” he pointed out.
Bower said it is surprising to note that while almost the entire South-East Asia derives its cultural and heritage foundation from the Indian sub-continent, India does not seem to pursue an active Look East policy.
“The Chinese, on the other hand, in the last 10-15 years has become the first or second largest trading partner with almost all South-East Asian countries. But India seems to be almost reluctant to cash in on its shared heritage,” he said.
“What India and the US ought to do is to chalk out joint business strategies to carry out trade with countries like Myanmar or Bangladesh. That is when fruitful business ventures would take place, leading to trade gains on both sides,” he opined.
On the US-China trade relations, Bower pointed out that all big American companies have always had a ‘China strategy’ in place.
“Say about 15 years ago, no boardroom in the US could survive without China plans. They all develop China strategies and they implement it. Most American companies have a presence in China. But now it is getting extremely hard to execute our business plans in China, as it is currently pursuing an aggressive promotion of native companies and investors, almost on the lines of cultivating sporting champions right from a young age. That makes it very difficult for outsiders to develop businesswise,” he said.
On the difference in the investment scenario in India and China, he said the Chinese are more organised and so they have a cutting edge.
“Every company now needs a cyber plan specific to China, its communication and technology. India is a big market. But unfortunately, it does not have a holistic national business plan. We have in no way given up on India. Doing business in India or Indonesia is like doing business in California, where you have to know the Central Government, the state government, the municipality, NGOs etc and all the rules therein.
“American companies expect a one-time approval from the Ministry of Commerce and that is it. They are bogged down by the intricate administrative levels of approval and tiers of governance they need to go through here in India. They are only gradually realising that in India, a more sophisticated and patient approach is required,” the US foreign policy expert said.
“The US has now laid its focus on the geopolitical connections, India’s relationship with Asean and the bigger picture. Our strategy in Asia is to create a group of countries to make the rules in business and trade and to play by these rules together,” the US foreign policy expert said.
On the investment pie, he said US firms have about 10 times more investment in Asean countries than in India, while they have nearly four times more investment in Asean than in China. “We’ll bounce back to India in the coming years,” he said.
“But Americans are never comfortable with a slow pace. They are not good at patience. We are gradually learning to be a little more patient. Because, we now understand Asia a little better. FDI here is good, but we are not comfortable with the pace. It is good to invest in Gujarat with its investor-friendly rules and single-window trade policies,” he said.
“The biggest drawback in India’s trade policy is its inconsistency. It is politically pinched and that is hard for investors. US companies are being pushed to make affordable products. We are learning to adapt to international markets. We want to have a bigger presence in India and we are trying to figure out how. Investors are lined up and looking. They want to be here. Their understanding of the political situation has increased and also of the risks involved. India is, however, yet to take advantage of the opening of such huge potential trading zones,” he said.
With respect to the 2014 electoral polls, he said: “It looks like politicians want to come to power based not on foreign policy or trading benefits, but solely on political gains.”
“The Americans definitely want India for strategic business growth. Yet, we fall through India’s lame Look East policy. Washington is trying to blur the lines between East Asia and South Asia in terms of burgeoning trade relations. Now, the American geo-strategic power-sharing policy looks right over Australia and Indonesia and the intermediate countries. It is in this context that we look forward to trade with India and other South Asian countries,” he said.
“By 2025, countries like Indonesia would have a population comprising three billion middle-class people and American companies are trying to figure out what these people would want and accordingly try to cater for the same,” Bower signed off.