International Relations: April 2021 Current Affair | UPSC Mains: International Relations PDF Download

 Page 1


	
2.	INTERNATIONAL	RELATIONS	
2.1.	INDIA’S	ECONOMIC	DIPLOMACY	IN	SOUTH	ASIA	
Why in news? 
Globally, it is considered that India has a troubling habit of over-promising and under-delivering from trade to 
infrastructure development in South Asia. 
Economic Diplomacy 
• Economic diplomacy is the art of serving economic security and strategic interests of the country by the use 
of economic instrument in conduct of State to State relations. 
• The Indian classic on diplomacy, namely, Kautilya’s “Artha Shastra” has recognized the relevance of “Saam, 
Daam, Dand and Bhed” in conduct of diplomacy. It is designed to influence policy and regulatory decisions of 
foreign governments as well as those of international organizations. It goes beyond trade and investment to 
the resolution of multiple causes of international conflicts.  
• Economic diplomacy is being pursued at different levels to achieve objectives such as  
o Projection of India as a major economic power 
o Multilateral trade and economic negotiations 
o Energy security 
o Regional and bilateral trade agreements 
o Access to foreign resources like promotion of foreign investments in India 
o Realization of political objectives through economic action 
o Promotion of exports and Indian businesses abroad 
Success of India’s Economic Diplomacy in South Asia 
• Infrastructure: India is committed to support 
neighbouring countries in its journey to emerge 
as a united, sovereign, democratic, peaceful, 
stable, prosperous and inclusive nation.  
o For example, reconstruction of the Salma 
dam (Afghan-India Friendship Dam), Zaranj-
Delaram road give access to Afghanistan's 
Garland Highway, construction of the 900-
megawatt (MW) Arun III hydropower project 
in Nepal etc. 
• Neighbourhood first policy: It is part of India’s 
foreign policy which aims at promotion of 
regional peace, economic integration and 
developing a regional strategy based on India’s natural geographical advantages, improves cross border 
connectivity, shared cultural heritage, and preeminent strategic position. This policy also helps in reduction 
of the influence of China in the South-Asian countries. 
• Investment: Assistance in material and services has been extended by India to South Asian countries time and 
again. With its aspiration for global leadership, India has established COVID- 19 emergency fund for SAARC 
countries.  
• Energy: Energy cooperation is a main focus of the South Asia Sub-regional Economic Cooperation (SASEC) 
program.  
o For example, India recently approved plans to invest $1.69 billion to build transmission and distribution 
lines to carry electricity from Nepal. 
o The Rooppur Nuclear power project is an initiative under India and Russia to undertake atomic energy 
projects in Bangladesh. 
• Tourism: South Asia has emerged as an attractive tourist destination due to its natural and cultural diversity, 
and price competitiveness. Tourist from the neighbourhood comprise approximately a third of the total 
foreign tourist arrivals in India. 
SASEC 
• It is formed in 2001 which comprises seven countries 
namely India, Bangladesh, Bhutan, Maldives, Nepal, Sri 
Lanka and Myanmar. 
• It aims to increase economic growth by building cross-
border connectivity, energy cooperation, promote 
regional prosperity, and build a better quality of life for 
the people of the sub-region. 
• SASEC countries share a common vision of boosting 
intraregional trade and cooperation in South Asia, 
while also developing connectivity and trade with 
Southeast Asia through Myanmar, to the People’s 
Republic of China, and the global market. 
• The Asian Development Bank (ADB) serves as 
Secretariat to the SASEC Program. 
Page 2


	
2.	INTERNATIONAL	RELATIONS	
2.1.	INDIA’S	ECONOMIC	DIPLOMACY	IN	SOUTH	ASIA	
Why in news? 
Globally, it is considered that India has a troubling habit of over-promising and under-delivering from trade to 
infrastructure development in South Asia. 
Economic Diplomacy 
• Economic diplomacy is the art of serving economic security and strategic interests of the country by the use 
of economic instrument in conduct of State to State relations. 
• The Indian classic on diplomacy, namely, Kautilya’s “Artha Shastra” has recognized the relevance of “Saam, 
Daam, Dand and Bhed” in conduct of diplomacy. It is designed to influence policy and regulatory decisions of 
foreign governments as well as those of international organizations. It goes beyond trade and investment to 
the resolution of multiple causes of international conflicts.  
• Economic diplomacy is being pursued at different levels to achieve objectives such as  
o Projection of India as a major economic power 
o Multilateral trade and economic negotiations 
o Energy security 
o Regional and bilateral trade agreements 
o Access to foreign resources like promotion of foreign investments in India 
o Realization of political objectives through economic action 
o Promotion of exports and Indian businesses abroad 
Success of India’s Economic Diplomacy in South Asia 
• Infrastructure: India is committed to support 
neighbouring countries in its journey to emerge 
as a united, sovereign, democratic, peaceful, 
stable, prosperous and inclusive nation.  
o For example, reconstruction of the Salma 
dam (Afghan-India Friendship Dam), Zaranj-
Delaram road give access to Afghanistan's 
Garland Highway, construction of the 900-
megawatt (MW) Arun III hydropower project 
in Nepal etc. 
• Neighbourhood first policy: It is part of India’s 
foreign policy which aims at promotion of 
regional peace, economic integration and 
developing a regional strategy based on India’s natural geographical advantages, improves cross border 
connectivity, shared cultural heritage, and preeminent strategic position. This policy also helps in reduction 
of the influence of China in the South-Asian countries. 
• Investment: Assistance in material and services has been extended by India to South Asian countries time and 
again. With its aspiration for global leadership, India has established COVID- 19 emergency fund for SAARC 
countries.  
• Energy: Energy cooperation is a main focus of the South Asia Sub-regional Economic Cooperation (SASEC) 
program.  
o For example, India recently approved plans to invest $1.69 billion to build transmission and distribution 
lines to carry electricity from Nepal. 
o The Rooppur Nuclear power project is an initiative under India and Russia to undertake atomic energy 
projects in Bangladesh. 
• Tourism: South Asia has emerged as an attractive tourist destination due to its natural and cultural diversity, 
and price competitiveness. Tourist from the neighbourhood comprise approximately a third of the total 
foreign tourist arrivals in India. 
SASEC 
• It is formed in 2001 which comprises seven countries 
namely India, Bangladesh, Bhutan, Maldives, Nepal, Sri 
Lanka and Myanmar. 
• It aims to increase economic growth by building cross-
border connectivity, energy cooperation, promote 
regional prosperity, and build a better quality of life for 
the people of the sub-region. 
• SASEC countries share a common vision of boosting 
intraregional trade and cooperation in South Asia, 
while also developing connectivity and trade with 
Southeast Asia through Myanmar, to the People’s 
Republic of China, and the global market. 
• The Asian Development Bank (ADB) serves as 
Secretariat to the SASEC Program. 
	
o In 2019, the World Economic Forum’s Travel and Tourism Competitiveness Index (TTCI) ranked South 
Asia as the most improved region since 2017. Within this, India has shown the greatest improvement in 
rank among the top 25% countries, from 40th in 2017 to 34th in 2019. 
Issues with India’s Economic Diplomacy in South Asia 
• Trade: India has Trade Imbalance with South Asian countries and is reflected as: 
o Intra-regional trade: South Asia’s intra-regional trade is the lowest globally, constituting only 5% of the 
region’s total trade. The current integration is just one-third of its potential with an annual estimated gap 
of $23 billion. 
o Protectionism: According 
to global trade data, trade 
restrictiveness index is 2 to 
9 times higher for imports 
from South Asia than rest of 
the world in case of India, 
Nepal, Sri Lanka and 
Pakistan 
o Disproportionate cost of 
trade-The South Asian 
regional trading cost is 20% 
higher than ASEAN.  
• Connectivity: 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.  
o India has a troubling habit of over-promising and under-delivering. For Example, Bangladesh-Bhutan-
India-Nepal Motor Vehicles Agreement (BBIN-MVA), Turkmenistan, Afghanistan, Pakistan and India 
(TAPI) gas pipeline etc. 
• Infrastructure: In most of the 
countries India has taken up projects 
such as road and railway lines, 
establishing integrated border 
checkpoints, and hydropower 
projects but there is witnessed 
delivery deficit in these projects.  
o For example, In Nepal, the Police 
Academy, expected to be 
complete 32 years ago, is still in 
limbo. 
o Maitri Power Project is 50:50 
joint venture between 
Bangladesh’s state-owned 
Power Development Board and 
India’s National Thermal Power 
Corporation (NTPC). This project 
was to be completed by 2016. 
However, till now, only 60% of the work has been completed. 
• Discrimination in Aid: India has shown extraordinary generosity toward the Maldives, Nepal, Bhutan, and 
Afghanistan. In its budgets, India provided more aid to these four countries than the rest of the countries of 
SAARC, leading to insecurity among other neighbors.  
o For instance, in the 2019 budget, Bhutan received 28.1 billion rupees, Nepal got 10.5 billion rupees, the 
Maldives got 5.8 billion rupees, but Sri Lanka got only 2.5 billion rupees. Sri Lanka sees this as 
discrimination in aid, feeling India offers more to those strategically more essential. 
Page 3


	
2.	INTERNATIONAL	RELATIONS	
2.1.	INDIA’S	ECONOMIC	DIPLOMACY	IN	SOUTH	ASIA	
Why in news? 
Globally, it is considered that India has a troubling habit of over-promising and under-delivering from trade to 
infrastructure development in South Asia. 
Economic Diplomacy 
• Economic diplomacy is the art of serving economic security and strategic interests of the country by the use 
of economic instrument in conduct of State to State relations. 
• The Indian classic on diplomacy, namely, Kautilya’s “Artha Shastra” has recognized the relevance of “Saam, 
Daam, Dand and Bhed” in conduct of diplomacy. It is designed to influence policy and regulatory decisions of 
foreign governments as well as those of international organizations. It goes beyond trade and investment to 
the resolution of multiple causes of international conflicts.  
• Economic diplomacy is being pursued at different levels to achieve objectives such as  
o Projection of India as a major economic power 
o Multilateral trade and economic negotiations 
o Energy security 
o Regional and bilateral trade agreements 
o Access to foreign resources like promotion of foreign investments in India 
o Realization of political objectives through economic action 
o Promotion of exports and Indian businesses abroad 
Success of India’s Economic Diplomacy in South Asia 
• Infrastructure: India is committed to support 
neighbouring countries in its journey to emerge 
as a united, sovereign, democratic, peaceful, 
stable, prosperous and inclusive nation.  
o For example, reconstruction of the Salma 
dam (Afghan-India Friendship Dam), Zaranj-
Delaram road give access to Afghanistan's 
Garland Highway, construction of the 900-
megawatt (MW) Arun III hydropower project 
in Nepal etc. 
• Neighbourhood first policy: It is part of India’s 
foreign policy which aims at promotion of 
regional peace, economic integration and 
developing a regional strategy based on India’s natural geographical advantages, improves cross border 
connectivity, shared cultural heritage, and preeminent strategic position. This policy also helps in reduction 
of the influence of China in the South-Asian countries. 
• Investment: Assistance in material and services has been extended by India to South Asian countries time and 
again. With its aspiration for global leadership, India has established COVID- 19 emergency fund for SAARC 
countries.  
• Energy: Energy cooperation is a main focus of the South Asia Sub-regional Economic Cooperation (SASEC) 
program.  
o For example, India recently approved plans to invest $1.69 billion to build transmission and distribution 
lines to carry electricity from Nepal. 
o The Rooppur Nuclear power project is an initiative under India and Russia to undertake atomic energy 
projects in Bangladesh. 
• Tourism: South Asia has emerged as an attractive tourist destination due to its natural and cultural diversity, 
and price competitiveness. Tourist from the neighbourhood comprise approximately a third of the total 
foreign tourist arrivals in India. 
SASEC 
• It is formed in 2001 which comprises seven countries 
namely India, Bangladesh, Bhutan, Maldives, Nepal, Sri 
Lanka and Myanmar. 
• It aims to increase economic growth by building cross-
border connectivity, energy cooperation, promote 
regional prosperity, and build a better quality of life for 
the people of the sub-region. 
• SASEC countries share a common vision of boosting 
intraregional trade and cooperation in South Asia, 
while also developing connectivity and trade with 
Southeast Asia through Myanmar, to the People’s 
Republic of China, and the global market. 
• The Asian Development Bank (ADB) serves as 
Secretariat to the SASEC Program. 
	
o In 2019, the World Economic Forum’s Travel and Tourism Competitiveness Index (TTCI) ranked South 
Asia as the most improved region since 2017. Within this, India has shown the greatest improvement in 
rank among the top 25% countries, from 40th in 2017 to 34th in 2019. 
Issues with India’s Economic Diplomacy in South Asia 
• Trade: India has Trade Imbalance with South Asian countries and is reflected as: 
o Intra-regional trade: South Asia’s intra-regional trade is the lowest globally, constituting only 5% of the 
region’s total trade. The current integration is just one-third of its potential with an annual estimated gap 
of $23 billion. 
o Protectionism: According 
to global trade data, trade 
restrictiveness index is 2 to 
9 times higher for imports 
from South Asia than rest of 
the world in case of India, 
Nepal, Sri Lanka and 
Pakistan 
o Disproportionate cost of 
trade-The South Asian 
regional trading cost is 20% 
higher than ASEAN.  
• Connectivity: 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.  
o India has a troubling habit of over-promising and under-delivering. For Example, Bangladesh-Bhutan-
India-Nepal Motor Vehicles Agreement (BBIN-MVA), Turkmenistan, Afghanistan, Pakistan and India 
(TAPI) gas pipeline etc. 
• Infrastructure: In most of the 
countries India has taken up projects 
such as road and railway lines, 
establishing integrated border 
checkpoints, and hydropower 
projects but there is witnessed 
delivery deficit in these projects.  
o For example, In Nepal, the Police 
Academy, expected to be 
complete 32 years ago, is still in 
limbo. 
o Maitri Power Project is 50:50 
joint venture between 
Bangladesh’s state-owned 
Power Development Board and 
India’s National Thermal Power 
Corporation (NTPC). This project 
was to be completed by 2016. 
However, till now, only 60% of the work has been completed. 
• Discrimination in Aid: India has shown extraordinary generosity toward the Maldives, Nepal, Bhutan, and 
Afghanistan. In its budgets, India provided more aid to these four countries than the rest of the countries of 
SAARC, leading to insecurity among other neighbors.  
o For instance, in the 2019 budget, Bhutan received 28.1 billion rupees, Nepal got 10.5 billion rupees, the 
Maldives got 5.8 billion rupees, but Sri Lanka got only 2.5 billion rupees. Sri Lanka sees this as 
discrimination in aid, feeling India offers more to those strategically more essential. 
	
• Migration: Policies like The Citizenship (Amendment) Act, National Register of Citizens put forth protectionist 
approach which is insensitive to the realities of identity and migration in the subcontinent. 
• Institutional hurdles: Dysfunctional reputation of institutions such as SAARC (South Asian Association for 
Regional Cooperation) is a result of not only short-sighted economic policies and the contentious India-
Pakistan relationship, but also of the deep mistrust in key bilateral relationships. The mistrust defining these 
relationships has stemmed from complex domestic politics. 
• Energy: South Asia has witnessed a growing imbalance between energy demand and its supply from 
indigenous sources resulting in increased import dependence.  
o Access to the significant energy resources in the neighboring countries is denied, which increases the cost 
of energy supply and reduces energy security of the individual countries and of the region as a whole.  
o The World Bank estimates that regional cooperation and engagement will yield energy savings of about 
$17 billion in capital cost reductions through 2045. 
• China Factor: China has extensively made inroads into the South Asian region through Belt and Road Initiative 
(BRI) which has emerged as the most crucial instrument in China’s soft power diplomacy in South Asia. 
o China has been increasing its investments in South Asia due to India’s neglect over the years. 
o For example, China has been busy completing the East-West highway that traverses Nepal and is also 
working on a railway line from Tibet to Lhasa. It has many projects underway in Bangladesh, Sri Lanka and 
Afghanistan as well. 
Way Forward 
• Energy Security: The countries in the South-Asian region could benefit significantly by strengthening the 
mechanism of energy trade through improved connectivity. Therefore, greater cooperation within South Asia 
could be one of the most effective ways to deal with the regional energy deficit and ensure energy security of 
the region. 
• Regional Infrastructure: A stronger connectivity not only strengthens the intra- and inter– regional trade but 
also generates higher income and prosperity and hence regional infrastructure must be prioritised. 
• Strengthening Institutions: Reforming the institutional hurdles is necessary if India desires to overcome its 
neighbors’ misperceptions and compete with Chinese investments in South Asia. For this, India must eliminate 
non-tariff barriers and other trade barriers, strings-attached aid, and complete all the existing projects to 
regain the neighbors’ trust. 
• Trade and Investment: 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. 
• Use of improved technology: To manage the transportation and security of the South-Asian region, 
technology will help to reduce trade costs through higher efficiency and by managing additional traffic. A 
stronger regional cooperation with other regions and countries is thus imminent in order to secure the 
technology to manage the transportation corridors, trade and security. 
2.2.	BAY	OF	BENGAL	INITIATIVE	FOR	MULTI-SECTORAL	TECHNICAL	AND	
ECONOMIC	COOPERATION	(BIMSTEC)	
Why in news?  
Recently, the 17
th
 meeting of foreign ministers of BIMSTEC member countries took place.  
More about news 
• The meeting, chaired by Sri Lanka, was held in virtual mode with the participation of all BIMSTEC Member 
States.  
• The meeting endorsed the BIMSTEC Master Plan for Transport Connectivity for adoption at the next BIMSTEC 
Summit and three MoUs / Agreements for signing at the next BIMSTEC Summit, namely 
o The BIMSTEC Convention on Mutual Legal Assistance in Criminal Matters 
o MoU on Mutual Cooperation between Diplomatic Academies/Training Institutions of BIMSTEC Member 
States 
o Memorandum of Association on the Establishment of BIMSTEC Technology Transfer Facility (TTF) in 
Colombo, Sri Lanka. 
Page 4


	
2.	INTERNATIONAL	RELATIONS	
2.1.	INDIA’S	ECONOMIC	DIPLOMACY	IN	SOUTH	ASIA	
Why in news? 
Globally, it is considered that India has a troubling habit of over-promising and under-delivering from trade to 
infrastructure development in South Asia. 
Economic Diplomacy 
• Economic diplomacy is the art of serving economic security and strategic interests of the country by the use 
of economic instrument in conduct of State to State relations. 
• The Indian classic on diplomacy, namely, Kautilya’s “Artha Shastra” has recognized the relevance of “Saam, 
Daam, Dand and Bhed” in conduct of diplomacy. It is designed to influence policy and regulatory decisions of 
foreign governments as well as those of international organizations. It goes beyond trade and investment to 
the resolution of multiple causes of international conflicts.  
• Economic diplomacy is being pursued at different levels to achieve objectives such as  
o Projection of India as a major economic power 
o Multilateral trade and economic negotiations 
o Energy security 
o Regional and bilateral trade agreements 
o Access to foreign resources like promotion of foreign investments in India 
o Realization of political objectives through economic action 
o Promotion of exports and Indian businesses abroad 
Success of India’s Economic Diplomacy in South Asia 
• Infrastructure: India is committed to support 
neighbouring countries in its journey to emerge 
as a united, sovereign, democratic, peaceful, 
stable, prosperous and inclusive nation.  
o For example, reconstruction of the Salma 
dam (Afghan-India Friendship Dam), Zaranj-
Delaram road give access to Afghanistan's 
Garland Highway, construction of the 900-
megawatt (MW) Arun III hydropower project 
in Nepal etc. 
• Neighbourhood first policy: It is part of India’s 
foreign policy which aims at promotion of 
regional peace, economic integration and 
developing a regional strategy based on India’s natural geographical advantages, improves cross border 
connectivity, shared cultural heritage, and preeminent strategic position. This policy also helps in reduction 
of the influence of China in the South-Asian countries. 
• Investment: Assistance in material and services has been extended by India to South Asian countries time and 
again. With its aspiration for global leadership, India has established COVID- 19 emergency fund for SAARC 
countries.  
• Energy: Energy cooperation is a main focus of the South Asia Sub-regional Economic Cooperation (SASEC) 
program.  
o For example, India recently approved plans to invest $1.69 billion to build transmission and distribution 
lines to carry electricity from Nepal. 
o The Rooppur Nuclear power project is an initiative under India and Russia to undertake atomic energy 
projects in Bangladesh. 
• Tourism: South Asia has emerged as an attractive tourist destination due to its natural and cultural diversity, 
and price competitiveness. Tourist from the neighbourhood comprise approximately a third of the total 
foreign tourist arrivals in India. 
SASEC 
• It is formed in 2001 which comprises seven countries 
namely India, Bangladesh, Bhutan, Maldives, Nepal, Sri 
Lanka and Myanmar. 
• It aims to increase economic growth by building cross-
border connectivity, energy cooperation, promote 
regional prosperity, and build a better quality of life for 
the people of the sub-region. 
• SASEC countries share a common vision of boosting 
intraregional trade and cooperation in South Asia, 
while also developing connectivity and trade with 
Southeast Asia through Myanmar, to the People’s 
Republic of China, and the global market. 
• The Asian Development Bank (ADB) serves as 
Secretariat to the SASEC Program. 
	
o In 2019, the World Economic Forum’s Travel and Tourism Competitiveness Index (TTCI) ranked South 
Asia as the most improved region since 2017. Within this, India has shown the greatest improvement in 
rank among the top 25% countries, from 40th in 2017 to 34th in 2019. 
Issues with India’s Economic Diplomacy in South Asia 
• Trade: India has Trade Imbalance with South Asian countries and is reflected as: 
o Intra-regional trade: South Asia’s intra-regional trade is the lowest globally, constituting only 5% of the 
region’s total trade. The current integration is just one-third of its potential with an annual estimated gap 
of $23 billion. 
o Protectionism: According 
to global trade data, trade 
restrictiveness index is 2 to 
9 times higher for imports 
from South Asia than rest of 
the world in case of India, 
Nepal, Sri Lanka and 
Pakistan 
o Disproportionate cost of 
trade-The South Asian 
regional trading cost is 20% 
higher than ASEAN.  
• Connectivity: 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.  
o India has a troubling habit of over-promising and under-delivering. For Example, Bangladesh-Bhutan-
India-Nepal Motor Vehicles Agreement (BBIN-MVA), Turkmenistan, Afghanistan, Pakistan and India 
(TAPI) gas pipeline etc. 
• Infrastructure: In most of the 
countries India has taken up projects 
such as road and railway lines, 
establishing integrated border 
checkpoints, and hydropower 
projects but there is witnessed 
delivery deficit in these projects.  
o For example, In Nepal, the Police 
Academy, expected to be 
complete 32 years ago, is still in 
limbo. 
o Maitri Power Project is 50:50 
joint venture between 
Bangladesh’s state-owned 
Power Development Board and 
India’s National Thermal Power 
Corporation (NTPC). This project 
was to be completed by 2016. 
However, till now, only 60% of the work has been completed. 
• Discrimination in Aid: India has shown extraordinary generosity toward the Maldives, Nepal, Bhutan, and 
Afghanistan. In its budgets, India provided more aid to these four countries than the rest of the countries of 
SAARC, leading to insecurity among other neighbors.  
o For instance, in the 2019 budget, Bhutan received 28.1 billion rupees, Nepal got 10.5 billion rupees, the 
Maldives got 5.8 billion rupees, but Sri Lanka got only 2.5 billion rupees. Sri Lanka sees this as 
discrimination in aid, feeling India offers more to those strategically more essential. 
	
• Migration: Policies like The Citizenship (Amendment) Act, National Register of Citizens put forth protectionist 
approach which is insensitive to the realities of identity and migration in the subcontinent. 
• Institutional hurdles: Dysfunctional reputation of institutions such as SAARC (South Asian Association for 
Regional Cooperation) is a result of not only short-sighted economic policies and the contentious India-
Pakistan relationship, but also of the deep mistrust in key bilateral relationships. The mistrust defining these 
relationships has stemmed from complex domestic politics. 
• Energy: South Asia has witnessed a growing imbalance between energy demand and its supply from 
indigenous sources resulting in increased import dependence.  
o Access to the significant energy resources in the neighboring countries is denied, which increases the cost 
of energy supply and reduces energy security of the individual countries and of the region as a whole.  
o The World Bank estimates that regional cooperation and engagement will yield energy savings of about 
$17 billion in capital cost reductions through 2045. 
• China Factor: China has extensively made inroads into the South Asian region through Belt and Road Initiative 
(BRI) which has emerged as the most crucial instrument in China’s soft power diplomacy in South Asia. 
o China has been increasing its investments in South Asia due to India’s neglect over the years. 
o For example, China has been busy completing the East-West highway that traverses Nepal and is also 
working on a railway line from Tibet to Lhasa. It has many projects underway in Bangladesh, Sri Lanka and 
Afghanistan as well. 
Way Forward 
• Energy Security: The countries in the South-Asian region could benefit significantly by strengthening the 
mechanism of energy trade through improved connectivity. Therefore, greater cooperation within South Asia 
could be one of the most effective ways to deal with the regional energy deficit and ensure energy security of 
the region. 
• Regional Infrastructure: A stronger connectivity not only strengthens the intra- and inter– regional trade but 
also generates higher income and prosperity and hence regional infrastructure must be prioritised. 
• Strengthening Institutions: Reforming the institutional hurdles is necessary if India desires to overcome its 
neighbors’ misperceptions and compete with Chinese investments in South Asia. For this, India must eliminate 
non-tariff barriers and other trade barriers, strings-attached aid, and complete all the existing projects to 
regain the neighbors’ trust. 
• Trade and Investment: 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. 
• Use of improved technology: To manage the transportation and security of the South-Asian region, 
technology will help to reduce trade costs through higher efficiency and by managing additional traffic. A 
stronger regional cooperation with other regions and countries is thus imminent in order to secure the 
technology to manage the transportation corridors, trade and security. 
2.2.	BAY	OF	BENGAL	INITIATIVE	FOR	MULTI-SECTORAL	TECHNICAL	AND	
ECONOMIC	COOPERATION	(BIMSTEC)	
Why in news?  
Recently, the 17
th
 meeting of foreign ministers of BIMSTEC member countries took place.  
More about news 
• The meeting, chaired by Sri Lanka, was held in virtual mode with the participation of all BIMSTEC Member 
States.  
• The meeting endorsed the BIMSTEC Master Plan for Transport Connectivity for adoption at the next BIMSTEC 
Summit and three MoUs / Agreements for signing at the next BIMSTEC Summit, namely 
o The BIMSTEC Convention on Mutual Legal Assistance in Criminal Matters 
o MoU on Mutual Cooperation between Diplomatic Academies/Training Institutions of BIMSTEC Member 
States 
o Memorandum of Association on the Establishment of BIMSTEC Technology Transfer Facility (TTF) in 
Colombo, Sri Lanka. 
	
• They encouraged Member 
States to complete their 
internal procedures for 
adoption of the BIMSTEC 
Charter and endorsed 
Rationalization of Sectors 
and Sub-sectors of 
cooperation under the 
BIMSTEC framework which 
will be adopted at the next 
BIMSTEC Summit. 
• The meeting welcomed 
the proposal of the Chair 
to hold the Fifth BIMSTEC 
Summit in Sri Lanka in next 
few months. 
• The meeting took note 
that the BIMSTEC Centre 
for Weather and Climate, 
being hosted in India, is 
fully functional with the 
state of the art facilities to 
provide Disaster Early 
Warnings. 
About BIMSTEC 
• Conceived in 1997, 
through the Bangkok 
Declaration, BIMSTEC is a 
grouping of seven 
countries (refer 
infographics).  
• It aims to accelerate economic growth and social progress among members across multiple sectors. 
• It was headquartered in Dhaka in 2011 and its first secretary general was appointed in 2014. 
• There are 14 Priority Areas of Cooperation under BIMSTEC: Trade & Investment, Technology, Energy, 
Transportation & Communication, Tourism, Fisheries, Agriculture, Cultural Cooperation, Environment and 
Disaster Management, Public Health, People-to-People Contact, Poverty Alleviation, Counter-Terrorism and 
Transnational Crime, Climate Change.  
	
• Some key agreements signed by BIMSTEC members include a convention for combating terrorism, 
transnational organised crime and illicit drug trafficking. However, this awaits ratification. 
• BIMSTEC Grid Interconnection signed during the BIMSTEC Summit in Kathmandu, Nepal, in 2018, aims to 
promote an optimal power transmission in the BIMSTEC region. 
• The BIMSTEC is unique as far as regional organisations are concerned because it straddles two contiguous 
regions South Asia and Southeast Asia. 
Page 5


	
2.	INTERNATIONAL	RELATIONS	
2.1.	INDIA’S	ECONOMIC	DIPLOMACY	IN	SOUTH	ASIA	
Why in news? 
Globally, it is considered that India has a troubling habit of over-promising and under-delivering from trade to 
infrastructure development in South Asia. 
Economic Diplomacy 
• Economic diplomacy is the art of serving economic security and strategic interests of the country by the use 
of economic instrument in conduct of State to State relations. 
• The Indian classic on diplomacy, namely, Kautilya’s “Artha Shastra” has recognized the relevance of “Saam, 
Daam, Dand and Bhed” in conduct of diplomacy. It is designed to influence policy and regulatory decisions of 
foreign governments as well as those of international organizations. It goes beyond trade and investment to 
the resolution of multiple causes of international conflicts.  
• Economic diplomacy is being pursued at different levels to achieve objectives such as  
o Projection of India as a major economic power 
o Multilateral trade and economic negotiations 
o Energy security 
o Regional and bilateral trade agreements 
o Access to foreign resources like promotion of foreign investments in India 
o Realization of political objectives through economic action 
o Promotion of exports and Indian businesses abroad 
Success of India’s Economic Diplomacy in South Asia 
• Infrastructure: India is committed to support 
neighbouring countries in its journey to emerge 
as a united, sovereign, democratic, peaceful, 
stable, prosperous and inclusive nation.  
o For example, reconstruction of the Salma 
dam (Afghan-India Friendship Dam), Zaranj-
Delaram road give access to Afghanistan's 
Garland Highway, construction of the 900-
megawatt (MW) Arun III hydropower project 
in Nepal etc. 
• Neighbourhood first policy: It is part of India’s 
foreign policy which aims at promotion of 
regional peace, economic integration and 
developing a regional strategy based on India’s natural geographical advantages, improves cross border 
connectivity, shared cultural heritage, and preeminent strategic position. This policy also helps in reduction 
of the influence of China in the South-Asian countries. 
• Investment: Assistance in material and services has been extended by India to South Asian countries time and 
again. With its aspiration for global leadership, India has established COVID- 19 emergency fund for SAARC 
countries.  
• Energy: Energy cooperation is a main focus of the South Asia Sub-regional Economic Cooperation (SASEC) 
program.  
o For example, India recently approved plans to invest $1.69 billion to build transmission and distribution 
lines to carry electricity from Nepal. 
o The Rooppur Nuclear power project is an initiative under India and Russia to undertake atomic energy 
projects in Bangladesh. 
• Tourism: South Asia has emerged as an attractive tourist destination due to its natural and cultural diversity, 
and price competitiveness. Tourist from the neighbourhood comprise approximately a third of the total 
foreign tourist arrivals in India. 
SASEC 
• It is formed in 2001 which comprises seven countries 
namely India, Bangladesh, Bhutan, Maldives, Nepal, Sri 
Lanka and Myanmar. 
• It aims to increase economic growth by building cross-
border connectivity, energy cooperation, promote 
regional prosperity, and build a better quality of life for 
the people of the sub-region. 
• SASEC countries share a common vision of boosting 
intraregional trade and cooperation in South Asia, 
while also developing connectivity and trade with 
Southeast Asia through Myanmar, to the People’s 
Republic of China, and the global market. 
• The Asian Development Bank (ADB) serves as 
Secretariat to the SASEC Program. 
	
o In 2019, the World Economic Forum’s Travel and Tourism Competitiveness Index (TTCI) ranked South 
Asia as the most improved region since 2017. Within this, India has shown the greatest improvement in 
rank among the top 25% countries, from 40th in 2017 to 34th in 2019. 
Issues with India’s Economic Diplomacy in South Asia 
• Trade: India has Trade Imbalance with South Asian countries and is reflected as: 
o Intra-regional trade: South Asia’s intra-regional trade is the lowest globally, constituting only 5% of the 
region’s total trade. The current integration is just one-third of its potential with an annual estimated gap 
of $23 billion. 
o Protectionism: According 
to global trade data, trade 
restrictiveness index is 2 to 
9 times higher for imports 
from South Asia than rest of 
the world in case of India, 
Nepal, Sri Lanka and 
Pakistan 
o Disproportionate cost of 
trade-The South Asian 
regional trading cost is 20% 
higher than ASEAN.  
• Connectivity: 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.  
o India has a troubling habit of over-promising and under-delivering. For Example, Bangladesh-Bhutan-
India-Nepal Motor Vehicles Agreement (BBIN-MVA), Turkmenistan, Afghanistan, Pakistan and India 
(TAPI) gas pipeline etc. 
• Infrastructure: In most of the 
countries India has taken up projects 
such as road and railway lines, 
establishing integrated border 
checkpoints, and hydropower 
projects but there is witnessed 
delivery deficit in these projects.  
o For example, In Nepal, the Police 
Academy, expected to be 
complete 32 years ago, is still in 
limbo. 
o Maitri Power Project is 50:50 
joint venture between 
Bangladesh’s state-owned 
Power Development Board and 
India’s National Thermal Power 
Corporation (NTPC). This project 
was to be completed by 2016. 
However, till now, only 60% of the work has been completed. 
• Discrimination in Aid: India has shown extraordinary generosity toward the Maldives, Nepal, Bhutan, and 
Afghanistan. In its budgets, India provided more aid to these four countries than the rest of the countries of 
SAARC, leading to insecurity among other neighbors.  
o For instance, in the 2019 budget, Bhutan received 28.1 billion rupees, Nepal got 10.5 billion rupees, the 
Maldives got 5.8 billion rupees, but Sri Lanka got only 2.5 billion rupees. Sri Lanka sees this as 
discrimination in aid, feeling India offers more to those strategically more essential. 
	
• Migration: Policies like The Citizenship (Amendment) Act, National Register of Citizens put forth protectionist 
approach which is insensitive to the realities of identity and migration in the subcontinent. 
• Institutional hurdles: Dysfunctional reputation of institutions such as SAARC (South Asian Association for 
Regional Cooperation) is a result of not only short-sighted economic policies and the contentious India-
Pakistan relationship, but also of the deep mistrust in key bilateral relationships. The mistrust defining these 
relationships has stemmed from complex domestic politics. 
• Energy: South Asia has witnessed a growing imbalance between energy demand and its supply from 
indigenous sources resulting in increased import dependence.  
o Access to the significant energy resources in the neighboring countries is denied, which increases the cost 
of energy supply and reduces energy security of the individual countries and of the region as a whole.  
o The World Bank estimates that regional cooperation and engagement will yield energy savings of about 
$17 billion in capital cost reductions through 2045. 
• China Factor: China has extensively made inroads into the South Asian region through Belt and Road Initiative 
(BRI) which has emerged as the most crucial instrument in China’s soft power diplomacy in South Asia. 
o China has been increasing its investments in South Asia due to India’s neglect over the years. 
o For example, China has been busy completing the East-West highway that traverses Nepal and is also 
working on a railway line from Tibet to Lhasa. It has many projects underway in Bangladesh, Sri Lanka and 
Afghanistan as well. 
Way Forward 
• Energy Security: The countries in the South-Asian region could benefit significantly by strengthening the 
mechanism of energy trade through improved connectivity. Therefore, greater cooperation within South Asia 
could be one of the most effective ways to deal with the regional energy deficit and ensure energy security of 
the region. 
• Regional Infrastructure: A stronger connectivity not only strengthens the intra- and inter– regional trade but 
also generates higher income and prosperity and hence regional infrastructure must be prioritised. 
• Strengthening Institutions: Reforming the institutional hurdles is necessary if India desires to overcome its 
neighbors’ misperceptions and compete with Chinese investments in South Asia. For this, India must eliminate 
non-tariff barriers and other trade barriers, strings-attached aid, and complete all the existing projects to 
regain the neighbors’ trust. 
• Trade and Investment: 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. 
• Use of improved technology: To manage the transportation and security of the South-Asian region, 
technology will help to reduce trade costs through higher efficiency and by managing additional traffic. A 
stronger regional cooperation with other regions and countries is thus imminent in order to secure the 
technology to manage the transportation corridors, trade and security. 
2.2.	BAY	OF	BENGAL	INITIATIVE	FOR	MULTI-SECTORAL	TECHNICAL	AND	
ECONOMIC	COOPERATION	(BIMSTEC)	
Why in news?  
Recently, the 17
th
 meeting of foreign ministers of BIMSTEC member countries took place.  
More about news 
• The meeting, chaired by Sri Lanka, was held in virtual mode with the participation of all BIMSTEC Member 
States.  
• The meeting endorsed the BIMSTEC Master Plan for Transport Connectivity for adoption at the next BIMSTEC 
Summit and three MoUs / Agreements for signing at the next BIMSTEC Summit, namely 
o The BIMSTEC Convention on Mutual Legal Assistance in Criminal Matters 
o MoU on Mutual Cooperation between Diplomatic Academies/Training Institutions of BIMSTEC Member 
States 
o Memorandum of Association on the Establishment of BIMSTEC Technology Transfer Facility (TTF) in 
Colombo, Sri Lanka. 
	
• They encouraged Member 
States to complete their 
internal procedures for 
adoption of the BIMSTEC 
Charter and endorsed 
Rationalization of Sectors 
and Sub-sectors of 
cooperation under the 
BIMSTEC framework which 
will be adopted at the next 
BIMSTEC Summit. 
• The meeting welcomed 
the proposal of the Chair 
to hold the Fifth BIMSTEC 
Summit in Sri Lanka in next 
few months. 
• The meeting took note 
that the BIMSTEC Centre 
for Weather and Climate, 
being hosted in India, is 
fully functional with the 
state of the art facilities to 
provide Disaster Early 
Warnings. 
About BIMSTEC 
• Conceived in 1997, 
through the Bangkok 
Declaration, BIMSTEC is a 
grouping of seven 
countries (refer 
infographics).  
• It aims to accelerate economic growth and social progress among members across multiple sectors. 
• It was headquartered in Dhaka in 2011 and its first secretary general was appointed in 2014. 
• There are 14 Priority Areas of Cooperation under BIMSTEC: Trade & Investment, Technology, Energy, 
Transportation & Communication, Tourism, Fisheries, Agriculture, Cultural Cooperation, Environment and 
Disaster Management, Public Health, People-to-People Contact, Poverty Alleviation, Counter-Terrorism and 
Transnational Crime, Climate Change.  
	
• Some key agreements signed by BIMSTEC members include a convention for combating terrorism, 
transnational organised crime and illicit drug trafficking. However, this awaits ratification. 
• BIMSTEC Grid Interconnection signed during the BIMSTEC Summit in Kathmandu, Nepal, in 2018, aims to 
promote an optimal power transmission in the BIMSTEC region. 
• The BIMSTEC is unique as far as regional organisations are concerned because it straddles two contiguous 
regions South Asia and Southeast Asia. 
	
Relevance of BIMSTEC for India 
• Emergence of Indo-Pacific: The recent resurgence of strategic and economic interests in the Bay, as part of a 
larger maritime strategic space, namely, the Indo-Pacific, has helped BIMSTEC gain salience as a promising 
sub-regional grouping.  
o The Bay, being the key transit route between the Indian Ocean and the Pacific Oceans, is now poised to 
become “a zone of geopolitical rivalry among major powers and of regional conflict.” 
• Alternative to SAARC: Due to setbacks to the South Asian Association of Regional Cooperation (SAARC), largely 
owing to Pakistan’s obstructions BIMSTEC has emerged as the “preferred platform” for regional cooperation 
in South Asia. 
• Alternative to BRI: India is skeptical over the involvement of China in the almost-annulled Bangladesh-China-
India-Myanmar (BCIM) Economic Corridor. Also, India’s non-participation in China’s Belt and Road Initiative 
(BRI), make it more important to strengthen India’s own strategic and economic ties in South Asia.  
o India’s Act East Policy and within it BIMSTEC, in particular is seen as a critical alternative to the country’s 
non-participation in the BRI.  
• Tackling traditional but shared threats: The Bay is plagued by a variety of non-traditional security threats, 
such as illegal migration and armed piracy. Consequently, the important issues of freedom of navigation in the 
waters, controlling transnational threats, harnessing and sharing the Bay’s natural wealth, and promoting 
infrastructural and people-to-people connectivity become common to the BIMSTEC member countries. 
• No border dispute: BIMSTEC is seen to be progressing well mainly because member countries do not have 
major border disputes. Any small scuffles, like the Nepal-India map row, can be resolved bilaterally.  
Challenges of BIMSTEC 
• Dormancy: BIMSTEC has come under scrutiny mainly due to dormancy in initial years. Since its inception the 
world has gone through drastic changes marked by a huge push towards globalisation, a global financial crisis, 
China’s strategy to the Belt-and-Road Initiative (BRI) and, most recently, the COVID-19 pandemic. However, 
Much of BIMSTEC’s objective of ensuring shared and accelerated growth has remained only on paper. 
• Stalled FTA process: Amongst economic agreements, the Free Trade Agreement (FTA) is particularly important 
for all member states. In 2018, India aggressively pushed for the conclusion of a long-pending FTA among 
BIMSTEC nations but differences between India and Thailand over market access for professionals, duty cuts 
on traded goods and policy relaxation stalled the process. 
• Exclusion of other regional countries: The fact that other countries in the Bay of Bengal like Malaysia, 
Singapore and Indonesia have not been involved even as dialogue partners has also been a point of contention. 
• China’s leveraging capability: The recent military coup in Myanmar will queer the pitch for BIMSTEC as some 
sanctions are imposed by Western countries. Myanmar’s dependence on China may increase if the latter 
leverages its veto power in the UN Security Council (UNSC) to foil sanctions proposed by the UN body. The 
coup will also pose challenges for India since Myanmar may face public agitation and intensified ethnic strife. 
The other major impediment is the festering issue of the Rohingya refugees who fled from Myanmar to 
Bangladesh and India. 
Way forward 
• Recognition to Changing Geopolitical Milieu: BIMSTEC must recognise that the geopolitical situation has been 
affected adversely by China’s actions in its geographical periphery, in the South China Sea, Hong Kong, Taiwan 
and India. China’s intrusive geopolitical and geoeconomic role in Nepal and deepening economic and military 
engagement with other South Asian countries that are members of BIMSTEC, are likely to have an adverse 
impact on the organisation. 
• Decision based on majority:  BIMSTEC has been slow on the come-up because unlike bodies like the EU or 
ASEAN, it is based on consensus-building which takes time. BIMSTEC could replace the consensus based 
decision making process to majority based decision making. 
• India’s leadership: It is argued that many small member countries see India assuming a “big brother” 
posture. Therefore, India needs to bridge this trust deficit by projecting itself as an equal partner to other 
BIMSTEC member-countries. This will ensure better integration in the region.  
o Moreover, making COVID-19 vaccine widely affordable will be a humanitarian imperative requiring 
international cooperation. India, with the capacity to produce the bulk of the world’s supply of vaccines, 
should be at the forefront of this effort.