The need for the creation of an independent development partnership agency
‘Soft power’ is the ability of a country to persuade other countries to fulfill their wishes without the use of coercion or pressure. The soft power of a country lies in its attractiveness and this attractiveness stems from three sources: its culture, its political values, and its foreign policies.
According to Brand Finance’s ‘Global Soft Power Index‘, India is ranked 27th in the world in terms of soft power. However, India’s main challenge has been the timely completion of international projects, especially infrastructure projects. For example, the development of Iran’s Chabahar port.
Requires friendly use of soft power
To build goodwill: Indian ethos and practices have helped it build a lofty image and widespread goodwill globally, but it must also see quality project completion.
As a Strategic Investment: To become a major strategic investor in commercially viable and financially attractive public-private partnerships, infrastructure projects, India needs to deliver on its promises.
Post-Pandemic Changes: With the growing scope of cooperation and the realization that global problems require global efforts, India’s role as the ‘Pharmacy of the World’ has gained importance.
Trade and Investment Flow: To build an image of being a trusted and reliable partner, India has to assure other countries that it is capable of fulfilling its commitments. This will again result in an increase in trade and investment flows into the Indian markets.
India’s Supply Structure
India’s development cooperation has converged into a holistic integrated framework—a development body that has five forms or types:
capacity building:
India focuses on three main components: providing training in India, sending teams of experts to partner countries, and providing equipment for project sites. India has also raised major issues at various multilateral fora including the World Trade Organization (WTO) and the World Intellectual Property Organization (WIPO).
Concessional Finance:
Concessional financing accounts for about 70% of India’s development cooperation portfolio.
Development assistance is provided by the Government of India in the form of Lines of Credit (LOCs) through the Import-Export Bank of India under the Indian Development and Economic Assistance Scheme (IDEAS). A total of 306 Line of Credit (LOCs) worth US$ 30.59 billion have been extended to 65 countries.
Technology Sharing:
Innovation and entrepreneurship should be the dominant soft power both within and outside the country.
For example, Indian engineers in Ethiopia have provided assistance and training in areas such as irrigation, power, and railway management.
Grant:
India provides development assistance of $6.48 billion annually in the form of Official Development Assistance (ODA) and receives the assistance of $6.09 billion from major partners.
Business:
India provides assistance by providing duty-free and quota-free access to its market. India was one of the few countries that first announced duty-free and quota-free access to low-income countries.
Indian private investment in the world has increased over time with major investments in the telecom, IT, energy, and automobile sectors.
concerns/challenges
Lack of Institutional Framework:
India needs an independent development partner agency that develops long-term and short-term strategies, identifies priorities, builds knowledge, and facilitates learning.
To achieve its infrastructural goals, India needs to remove policy-related and bureaucratic internal institutional barriers.
Lack of Finance:
With limited capacity to finance infrastructure projects, India needs to allocate its funds rationally, keeping in mind its strategic objectives.
Apart from this, with the improvement of the Indian economy and the opening of the market, India can be helped to collect funds for international projects.
Delivery-Deficit Nation:
India’s neighboring countries have often been complaining about India making big promises but missing out on fulfillment.
There have been complaints about delays in the completion of projects in countries where India has undertaken projects such as the construction of road and rail lines, the establishment of integrated border posts or hydroelectric projects, etc.
Protectionism:
Protectionism is having a significant impact on economic diplomacy. According to a report by the Asian Development Bank (ADB), India is ranked 24th out of 25 countries in the Asia-Pacific region in terms of trade openness.
Integrated check posts set up at borders have to face cumbersome procedures like extra checking and delay in paperwork for trucks which consumes both time and profit.
way ahead
Creation of Institutional Structure:
The need of the hour is to set up a specialized agency for efficient distribution of results. For example, in the year 2018, China established its International Development Cooperation Agency.
The establishment of an independent development partnership agency—which will facilitate sharing of information and create a platform for policy coordination among government departments—will ensure coordinated efforts, which are essential for expeditious mobilization of developmental benefits and resources.
This agency will have to work towards the fulfillment of the Sustainable Development Goals (SDGs) by establishing coordination between the government, private sector, education sector, and civil society.
Engagement of the private sector and civil society:
Possibilities of innovative public-private partnership (PPP) models should be explored with Indian businesses to leverage their expertise to realize India’s development cooperation goals.
Multilateralism:
COVID-19 has shown that cooperation between countries during the global health crisis can accelerate the response needed in individual countries and territories. It involves creating, adapting, transmitting, and sharing knowledge and experiences to improve health while making the most of existing resources and capabilities.
Non-Sovereign Funds:
A non-sovereign window like the Asian Development Bank’s private sector window would provide greater flexibility and opportunity.
Apart from greenfield projects, this fund can also take up unfinished projects and fix future timelines for their completion.
Business Openness:
India also needs to work towards facilitating clearance procedures, import policy barriers, testing and certification requirements, anti-dumping and countervailing measures.
India should expand its investment and trade with its neighboring countries so as to take advantage of greater regional and economic integration, where India is more open than closed to its neighboring economies.
Conclusion
It is an opportune time for India to restructure its development finance system for deeper and effective engagement and to address the rapidly emerging new competitive development financing landscape.
India’s own development experience is also evolving along with programs like JAM Trinity, Ayushman Bharat and other initiatives like Gati Shakti, which should be included in the portfolio and shared with partner developing countries.
