India eyes “fair diplomacy” in Sri Lanka
India believes it needs to engage in “fair diplomacy” by keeping a check on the Chinese interaction in Sri Lanka which, India’s former Finance Ministry Secretary Dr. S. Narayan believes has increased today.
“All of us are aware from 2004-2014 there was very little traction between India and Sri Lanka,” he said and as a result a Modi-type government has taken on the task of first visiting Sri Lanka and if it is believed that India should be present on the island since China is there, then it is “fair diplomacy.”
Dr. Narayan explained that in the geographical locking of space between India and Sri Lanka in the formal and informal businesses it is important that opportunities were provided for both these to grow while addressing their concerns as well.
He pointed out that while China is ahead of India, however, in terms of aid and assistance India has been practicing it long before China came which they may not be willing to give.
Delivering a lecture on “India – Sri Lanka Economic Relations in Modi’s India” in Colombo on Tuesday, Dr. Narayan started out by highlighting the space of business growth that Sri Lanka had witnessed over the years with the current trade between the two nations at US$47 billion.
“Exports from Sri Lanka have grown significantly,” he said adding that the island has been able to capture the Indian market through several of its businesses like in the manufacture of furniture products, chicken sausages, glass, garments, chicken feed and even strawberries.
He explained that there has also been a significant increase in the informal trade like in flights from India to Sri Lanka.
Discussions between the two countries have been hovering for years with no real solutions found to some of the non-tariff barriers and even for Indian companies like those in pharmaceuticals entering into Sri Lanka.
In this context, the former Indian Finance Ministry Secretary believed that despite the fact that often trade negotiations happen at the level of policymakers, the discussion needs to move to encompass a much larger picture and focus on issues faced by businesses.
Moreover, he pointed out that although Sri Lanka is constantly interested in doing business with Tamil Nadu they need to move out of this obsession and explore the other regions like Andhra Pradesh among other states.
Relations between India and China were important to each other’s own affairs but they differed on the lines of commercial transactions versus aid and assistance, it was noted.
Indian companies and manufacturers cannot match the speed and capabilities of the Chinese, Dr. Narayan pointed out adding that Indian projects were extremely slow compared to the much faster Chinese businesses.
But when it comes to aid and assistance India exceeds compared to the level of engagement on by China.
India, which today seems to be aligning itself closely with the US however, is also in discussion with its other partners like Russia and China.
With a lot of Chinese defence equipment stashed in India the latter would want to retain its old friend and so in reality “what you are seeing now is a much more lightened sense,” of the real picture, Dr. Narayan said.
India, he explained was “putting a soft face forward” and was also taking care of its own self interests in the wake of the current developments.
India is currently undergoing a number of changes within its economy especially in the structure of its economic set up and its businesses with more of them moving into the formal sector.
Dr. Narayan dismissed the notion that India’s IT companies would come to Sri Lanka once the country opens up its IT sector.
He noted that there was no space in the IT mindset for larger companies to engage in small businesses and pointed out that small businesses were struggling and this was no opportunity for younger businesses to forge ahead within Sri Lanka.
During the panel discussion, eminent economist and Chairman Institute of Policy Studies Dr. Razeen Sally pointed out that Sri Lanka needs to improve its exports to India and conversely allow for Indian imports to Sri Lanka which he termed was a “good thing.”
Commenting on the new budget, he noted that it was a “different sort of budget” that will talk of liberalisation and reforms with trade openings adding that with a political push the prospects would be “very good.”
But Dr. Sally explained that one should tread carefully in moving towards liberalisation of tariff and non-tariff barriers when using trade laws.
He pointed out that the world is littered with failed trade adjustments and need to be careful of designing these programmes.