This article is based on “How to deliver abroad” which was published in The Indian Express on 21/10/2021. It talks about the need to create an independent development partnership agency.
Soft power is the ability of a country to persuade others to do what it wants without resorting to force or coercion. Soft power lies in a country’s attractiveness and comes from three resources: its culture, its political values, and its foreign policies.
According to Brand Finance’s Global Soft Power Index, India ranks 27th in terms of soft power. India’s main challenge, though, has been to timely deliver on International projects especially on infrastructure projects. For eg. Iran’s Chabahar Port.
Need to Deliver on Soft Power
- For creating Goodwill: Indian ethos and practices has helped it build a benevolent image and tremendous goodwill globally, but it has to be backed with quality project delivery.
- As a Strategic Investment: To become a leading strategic investor in commercially viable and financially attractive public-private partnership infrastructure projects, India needs to deliver on its promises.
- Post Pandemic Changes: With increased scope of cooperation and the realization that global problems require global efforts, India’s role has gained prominence as the pharmacy of the World.
- Trade and Investment flow: To build an image of a trusted and reliable partner, India needs to make other countries believe in its commitment to deliver. This will lead to rising trade and investment flows to growing Indian markets.
India’s Delivery Framework
India’s development cooperation has converged to an all-encompassing integrated framework, a development compact that has five modalities.
- 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 taken up larger issues at various multilateral forums including the World Trade Organization (WTO) and the World Intellectual Property Organization (WIPO).
- Concessional Finance:
- Concessional financing constitutes close to 70% of India’s development cooperation portfolio.
- Development assistance in the form of concessional Lines of Credit (LOCs) is extended by the Government of India under the Indian Development and Economic Assistance Scheme (IDEAS) through the Exim Bank of India. In total 306 LOCs worth US$ 30.59 billion have been extended to 65 countries.
- Technology Sharing:
- Innovation and entrepreneurship should be the soft power of choice both within the country and outside.
- For instance, in Ethiopia, Indian engineers provided support and training in areas such as irrigation, electrical power and railway management.
- India provides development assistance of $6.48 billion and receives assistance of $6.09 billion annually from key partners as Official Development Assistance (ODA).
- By providing duty-free and quota-free access to the Indian market. India was one of the first few countries that announced duty free, quota free access to low income countries.
- Indian private investment in the world has also surged over a period of time with major investments in telecommunications, IT, energy, and automobile sectors.
- Lack of Institutional Framework:
- India needs an independent development partnership agency that develops long-term and short-term strategies, identifies priorities, builds knowledge and facilitates learning.
- It needs to remove Internal institutional hurdles, such as policy and bureaucratic delays, to meet its infrastructure targets.
- Lack of Funds:
- With limited capacity to fund infrastructure projects, India needs to rationally allot its funds, keeping in mind its strategic objectives.
- Moreover, improving the Indian economy and opening up the market can help India to accumulate funds for international projects.
- Delivery-Deficit Nation:
- India’s neighbors have often complained of India making big promises but suffering from a delivery deficit.
- This is the case with most countries in which India has taken up projects, for instance, road and railway lines, establishing integrated border checkpoints, and hydropower projects.
- Protectionism is leading to a significant impact on economic diplomacy. India stood at rank 24 out of 25 countries in the Asia-Pacific region in terms of trade openness as per an Asian Development Bank (ADB) report.
- Integrated Check Posts set up at borders have suffered under cumbersome procedures, like additional checks of trucks and delays in paperwork, that consume both time and profits.
- Creation of Institutional structure:
- A specialised agency for proficient delivery of outcomes is the need of the hour. For example, In 2018, China founded its international development cooperation agency.
- An independent development partnership agency that facilitates information sharing and creates platforms for policy coordination across government departments, ensures coordinated efforts needed for development gains and mobilises resources quickly.
- The agency must work towards Sustainable Development Goals (SDGs) coordinating the government, private sector, academia and civil society.
- Private sector and civil society engagement:
- Exploring innovative public–private partnership (PPP) models with Indian businesses to leverage their expertise in helping realise India’s development cooperation goals.
- Covid-19 showed that cooperation among countries can accelerate the response within individual nations and across regions during a global health crisis. It involves creating, adapting, transferring, and sharing knowledge and experiences to improve health, while making the most of existing resources and capacities.
- Non Sovereign funds:
- A non-sovereign window like the private sector window of Asian Development Bank, would provide greater flexibility and bandwidth.
- In addition to greenfield projects, the fund may take up incomplete projects and prepare future timelines for their execution.
- Trade openness:
- India needs to work on smoothening clearance procedures, import policy barriers, testing and certification requirements, anti-dumping and countervailing measures.
- India must increase its investments and trade with neighboring countries to reap the benefits of greater regional and economic integration, making India open rather than being closed to its neighbors’ economies.
It is high time India restructures its development finance apparatus for deeper and effective engagement and to address the rapidly evolving newer competitive development financing landscape.
India’s own development experience is also evolving with programmes like the JAM Trinity, Ayushman Bharat and other initiatives like Gati Shakti - the learnings from which should be absorbed in the portfolio to be shared with fellow developing countries.
Drishti Mains Question
“It is high time that India sheds its image of a delivery-deficit Nation.” Comment on India’s poor record in timely completion of projects in foreign countries.