Geopolitics without geoeconomics, a fool’s errand

Source: The post is based on the article “Geopolitics without geoeconomics, a fool’s errand” published in The Hindu on 19th September 2022.

Syllabus: GS 2 – Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Relevance: Importance of geo-economics for India.

News: India has shown a great desire to be a part of the geopolitical developments in the Indo-Pacific. However, the efforts taken by India seem to be insufficient as India requires shifting from geopolitical to geo-economic policy.

What is the current situation of India in geo-economics?

India’s focus is still on geopolitical aspects rather than geo-economics while the advanced economies have moved beyond that.

This is evident from India’s decision to stay away from the trade pillar of the Indo-Pacific Economic Framework (IPEF) and walking out of the negotiations of the Regional Comprehensive Economic Partnership (RCEP).

Both agreements provided India with a chance to enter geo-economics and improve its economy in the Indo-Pacific region.

However, these examples show that India is interested only in bilateral trade agreements and not in multilateral or plurilateral agreements. For example, the signing of the free trade agreement (FTA) with the UAE and the signing of Early Harvest Agreements with Australia and the United Kingdom.

What will be the potential impacts on India for neglecting geo-economics?

India has shown a lack of geopolitical interest in the Indo-Pacific region by not joining the trade pillar of IPEF and the decision to stay away from the multilateral trade agreement can affect India’s interest in multiple ways.

An advantage for China: India’s absence from various regional trading platforms will automatically boost China’s geo-economic hegemony in Asia. India-China trade has only increased in the past years despite the increasing tension at the border.

There is a fear that China can misuse its increasing trade ties with India for geopolitical gains.

It was also a great opportunity for India to be the part of trade pillar of IPEF and find an alternative to China’s trade as it is impossible to completely end trade ties with China.

Hamper’s supply chains: It would be hard for India to integrate itself into the regional and global supply chains without being a part of important regional multilateral trading agreements.

Loses business opportunities: Since the U.S. is looking to find an alternative to China’s trade there are some businesses that are moving away from China and shifting to countries like Vietnam. These investments or businesses could have shifted to India if India would have joined multilateral trade agreements such as IPEF.

These businesses and investments are important for India’s growth.

Hinders maritime security: India is serious about its maritime security, but it cannot only rely on the military for its security. This also requires involving other countries in Indo-Pacific to create economic stakes in India as it is already done by China.

India’s Act East policy will go back to its earlier form – Look East if it does not create economic stakes with other nations.

India has FTA with the ASEAN countries but it is equally important for India to become part of trading arrangements which have major non-regional states. This would help India to become a major part of the region’s supply chains.

Result in economic isolation of India: If India stayed away from joining regional multilateral trading arrangements then it would be economically isolated.

What can be done to improve India’s participation in geo economics?

First, India should rethink its geo-economic preferences if it is serious about enhancing its geopolitical influence in the Indo-Pacific region. There is still an opportunity for India to join the trade pillar of IPEF and it should also think to join RECP.

Second, it can also seek to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The US have walked out of this agreement and China is seeking to join it.

Third, India can start by joining IPEF and CPTPP which China is not a member.

Fourth, India should also actively show its interest in joining the Minerals Security Partnership (MSP). It is led by US and focuses on securing supply chains of critical minerals.

Fifth, India has cleared that IPEF and QUAD are not military agreements. If they are not military agreements then they can be considered as geo-economic agreements that can also help members to pursue their geo-political interests.