Modi’s foreign policy to ensure ‘no red tape, only red carpet’ for investors

As Narendra Modi swept to power on the development plank rather than on a saffron agenda, it is but natural that after he takes over as the Indian Prime Minister in a few days his foreign policy too would be development-oriented. In other words, his immediate focus would be on economic diplomacy while every other form of diplomacy will take a back seat.

For the first six months or so, Modi will have hardly have any time to think of core foreign policy issues, instead focusing on beefing up the economy, creation of jobs, and building up an investor-friendly climate. While strategic issues will have to wait for some time, Modi’s most immediate foreign policy-related task would be to deliver on his favourite one-liner quote: “No red tape; only red carpet” for all investors, both domestic and foreign.

A technocrat intimately involved in an ambitious Indian government's mission of attracting investments worth $100 billion by 2020 in the field of electronics told me that the investors’ were so positive about Modi as Prime Minister that it would meet this target by next year. Moreover, the technocrat was confident that Modi would make this project far more ambitious and set a new target of $500 billion by 2020.

This is only the electronics sector in which telecom is one of the important sub-sectors. A far bigger story is set to unfold in the infrastructure sector.  Modi’s target could be to attract investments in this crucial area to the tune of a whopping one trillion dollars by 2020.

The technocrat said that Prime Minister Manmohan Singh in 2012 had set a target to garner investments worth $ 100 billion within five years, but only $13 billion has been invested so far.

Building a strong and vibrant infrastructure that would propel the GDP growth by focusing on creating a vast network of ports, airports, highways, expressways, high speed railways, power plants and new cities would be the top most priority of Modi, both in the immediate and long term future.

Achieving this in the near future would be a humongous task and a challenge. While Modi may contemplate a separate ministry dedicated to beefing up the infrastructure sector and keeping it directly under the monitoring of the PMO, it would require a hands-on approach in economic diplomacy.

In this scenario, the portfolio of External Affairs Ministry acquires greater significance. The new External Affairs Minister will be expected to fast track India’s economic diplomacy.

Sushma Swaraj seems to be an apt person to discharge the responsibility of External Affairs Minister, provided Modi keeps his faith in her despite certain political realities. Ravi Shankar Prasad, who has a better rapport with Modi than Swaraj, has already pitched for the post.

Whoever is India’s new external affairs minister, one can expect a paradigm shift in the role and responsibility of this vital ministry which is one of the four CCS (Cabinet Committee on Security) ministries. Home, Defence and Finance are the other three.

The new minister will have to travel abroad more frequently. Besides, one can expect a sharp hike in incoming visits by foreign dignitaries and the new foreign minister will have to personally interact with these dignitaries and make things easier for Modi. The new minister would also have to interact more closely with the Industry and Commerce minister.

Such is the importance of the portfolios of external affairs and industry and commerce that Modi may well be tempted to amalgamate all three or devise a mechanism where these three ministries work more cohesively than ever before.

Modi will inevitably be putting a laser beam focus on two countries for turning around the Indian infrastructure: Japan and Russia. India enjoys extremely close political ties with both these countries, free of any contentious issues.

Japan is already an integral part of India’s growth story and closely involved in massive infrastructure projects, including the $ 90 billion Delhi-Mumbai Industrial Corridor (DMIC). Modi can use his personal equation with the Japanese leadership to nudge them to do much more and they would be all too willing.

During the decade-long UPA tenure, India has tried its best to hardsell the DMIC project and given several presentations to many countries, including France, Germany and Russia, urging them to invest in the project.

Modi can also be expected to pitch in directly with the Russian leadership and persuade Moscow to invest in DMIC. The Indians had given a presentation to the Russian leadership in Moscow as recently as earlier this year. Russia has not yet taken any decision on the Indian request so far. A good part of DMIC directly benefits Gujarat, Maharashtra and Uttar Pradesh.

Modi can also look to China for huge investments. The Chinese are quite eager to pump in billions of dollars in the Indian infrastructure sector, but Indian security agencies have placed their own roadblocks to the proposals.

The UPA government chose not to a decision on whether to accept Chinese investments in infrastructure sector or not. Perhaps Modi’s attitude would be more hands-on. Perhaps he can devise ways in consultation with the security and intelligence agencies of having Chinese investments without compromising Indian security and strategic interests.

Thus, the external affairs ministry would be critical for Modi in changing the face of India in double quick time. At the same time, I do not foresee Modi interfering in the functioning of the MEA and reshuffling officials because there is no need for that in the near-term future.