India stepping forward in regional security

Thirteen years can be a long time in regional security and diplomacy.

It is thirteen years since the Quadrilateral security dialogue (or the Quad) between the officials of Australia, India, Japan and the US, gave in to Chinese coercion.

This year it is back and potentially stronger.

India has decided to stand strong, as it becomes a significant regional power. It is again leading the Quad in the Malabar series of naval exercises in the Bay of Bengal – the exercises aim to support an “open and prosperous Indo-Pacific”.

In 2007 countries like India and Australia gave in to Chinese pressure and pulled out of the exercises – China then described the Quad as an “Asian NATO” designed solely to contain China.

The Malabar series of naval exercises is a complex annual fixture with ships, aircraft and submarines of the Indian, US, Australia and Japanese navies exercising alternately in the Indian and the Western Pacific Oceans.

India is different from the other Quad members in that it shares a land border with China – so in that way, it has most at risk in stirring up the Chinese. To put it in perspective, this border is the world’s longest unsettled boundary. Recent military escalation along the border has caused global concern.

All four members of the Quad know that China might “punish” them in response to the Malabar exercises, but they are going ahead anyway.

One narrative is driving most of the strategic decisions and activities in the Indian Ocean region – and that is the need to respond to China. China is seen as the only major power acting to the detriment of the order and stability of the region.

Most feel that attempts to appease China have only led to increased belligerence and a disrespect for diplomatic avenues. Hence, the Quad. And hence, India is stepping forward.

India and Japan closely watching USA elections


India and Japan might feel better about regional affairs if Biden wins the Presidency of the USA next week.

Why? Because neither country feels comfortable with the bombast and cold war rhetoric emerging from the Trump Administration and US Secretary of State, Mike Pompeo.

Even Australia, which is often too keen to outdo the US, was cautious in response to Pompeo and alluded to our interest in a good relationship with China.

These are some of the key points I take from a recent very thoughtful analysis by John McCarthy AO, a Senior Advisor to Asialink and former Australian Ambassador to the United States, Indonesia, Japan, and High Commissioner to India.

McCarthy makes the point that Pompeo went much further than Japan or India would like when he told the recent Quad meeting in Tokyo that they should “build out a true security framework”.

McCarthy wrote: “Apart from not sharing Pompeo’s buccaneer spirit, Japan continues to seek some equilibrium in its relations with China and has constitutional issues with security groupings. And while India continues to have serious border issues with China, it shows no inclination to veer from its doctrine of Strategic Autonomy.”

“If the Quad is to be in our interests, it has to be a cautious Quad. It is acknowledged—at least formally—by Quad members that ASEAN remains central to regional interstate architecture,” he said.

McCarthy also illustrated how “cause and effect” works in diplomacy: “The more the Quad develops a distinct identity, the greater the risk of growing regional fracturing between three groups—China, the Quad, and ASEAN—possibly with China pulling at Myanmar, Cambodia and Laos, and the Quad pulling at Vietnam. This will make it all the harder to develop even the loose regional approaches on managing China’s rise-particularly on the South China Sea.”

Important to note, as McCarthy does in his conclusion, that Biden’s main priority on election would be to get his own house in order.

That, at least, would yield positive outcomes for us all and be a relief from the bombast.

India boosts Quad naval cooperation as China hostility continues

New defence ties in the Indian Ocean region are rolling out on a regular basis – the latest one reports Australia will join three-way Malabar naval exercises – involving the United States, Japan and India.

Australia left the program after participating in 2007 – leaving following some strong criticism from China.

The move back by Australia shows how much regional attitudes to China have changed.

This new move could raise concerns in China, which has criticised similar joint drills as “destabilising”. China has been slamming import restrictions on Australian cola, cotton, wine and other products.

In contrast to declining relations with China, Australian PM Morrison and Indian PM Modi are working closely together.

India took the initiative of inviting Australia back in a sign of cooperation between the “Quad” countries.

The Malabar exercises are held in the Bay of Bengal.

The joint drills are super significant because they are the first concrete action of the Quad grouping.

China has denounced the Quad as an attempt to contain its development.

India’s decision on expanding the exercises comes at a time when it is locked in a military stand-off on the disputed land border with China.

7 ways “culture” can be what helps or hinders westerners and Indians working together

Disputes over contracts and plans

Most westerners place a high importance on rules, laws, regulations and contracts. They are almost “set in stone” and apply without exception. Most importantly, rules come before relationships – even if it is a family member. Variations to agreement cause confusion and even anger.

In Asia and especially in India, there are all the rules and contracts and so on, but the common view is that each circumstance and each relationship is different, so the rule may or may not apply. It becomes a moment by moment thing. Variations to agreements are taken for granted and fully expected to happen.

How does this work in business? For many westerners, any change to a contract becomes a time to consult the lawyers and can be a relationship ending event. For Asians, change is expected and accepted.

Why western individualism hits the collective wall

Even children are encouraged to make their own decisions in the west – including on courses, careers and most definitely on choice of partner. Under individualism, you make your choices and must take care of yourself – and in some countries this is harshly applied, in others there is a more compassionate welfare safety net.

Most Asian families make decisions for their children, including courses, careers and partners. The view is that the group – the family and so on – is more important than the individual. In return, the group looks after any member at time of need.

How does this work in business? An American is ready to sign the deal now – but the Asian partner wants time to talk to colleagues and ensure a group decision. Pressure versus group consultation.

Why westerners misunderstand indirect communication

In the west people can work together without having a good relationship and direct communication is highly valued. In fact, any indirect communication – going around the bush – creates mistrust in the other or is simply missed by the westerner. They just want the facts – a simple “yes” or “no” will do.

In India there is an overlap between work and personal life and they choose indirect communication because their major concern is to keep the relationship. Being direct such as saying “no” is difficult.

How does this work in business? People in the west keep work and personal lives separate so are less likely to socialise with Asian colleagues – or any colleagues – after work.

Why some hide face, while others save it

Most westerners make a big effort to hide emotions – this varies of course. They see “reason” as more important than “feelings”, so they often keep thoughts to themselves.

In Asia, spontaneous emotional responses can break out and this often surprises westerners. Saving face can become the most important thing.

How does this work in business? An Asian colleague will give or expect some emotional outbursts but is also looking for the following harmony.

Why becoming someone clashes with born something

Westerners value people by what they do or what they have achieved. Performance is king, no matter who you are.

Asian culture generally values people for who they are, so power, title and respect matter greatly, but of course the person should behave according to this status.

How does this work in business? Westerners will often “high five” with everyone including junior colleagues and everyone gets in to share the celebration, while in Asia the leader might receive most of the credit.

Why order dominates the western mind

“Order’ is highly prized in the west. That means doing things on schedule, being punctual, sticking to your plans and a “time is money” view of most things. They react badly to any disturbance to the smooth schedule.

“Time” is viewed differently across Asia, with the past, present and future seen as interwoven and so plans and commitments are more flexible.

How does this work in business? This different view of schedules and time causes relationship breakdowns and can see the end of the deal.

Why westerners feel in control of everything, including climate change

“Control” is big in the west – to the extent they see people as controlling nature or the environment, down to how they work with teams and with the organisation. Conflict is fine so long as the job gets done.

Asian cultures see nature and the environment more as controlling them – events, circumstances are in control more than the team. Conflict is avoided even at the expense of timely delivery.

How does this work in business? Westerners will need to give more reassurance and feedback to their Asian teams and setting clear objectives becomes paramount for both sides.

Adapting via Cross-Cultural Understanding Courses

These cultural differences can have big impacts, but with learning and adaptability, both sides can find they quickly work well, understand more and feel better about how things are going. Cultural understanding provides quick and positive results. Cultural ignorance can be the deal breaker. My “Cross-Culture Understand” training program can set you on the right course – whether an Indian wanting to engage the west, or westerner wanting to engage India.

Stephen Manallack speaking at the Australia India Address

Why do westerners sweat so much over plans and deals? It’s all about “culture”

Why do westerners fret so much over contracts and project plans? Why do they become angry and agitated if things have to change? And why do their relationships end when the other side has a different view of planning? Why do westerners and Asians struggle to understand each other?

The answer can be found in one word – culture.

In writing about cultural differences, I do not mean to give offence, criticise, imply one is better or create division – my aim is understanding.

For Asia and the west, culture can be “make or break” in business, yet most of us are not even aware that the way we think is largely determined by our culture. This lack of awareness is poor preparation for global business and trade, where knowing culture is king.

With Asia, culture becomes complicated for westerners and many give up on it.

With India, cultural understanding becomes even more complicated, because it is a land of many cultures, different ways of seeing the world and is rich in diversity. For me, this is one of the great attractions of India. It is also why I go to Asia a lot. But for others it can become a deal breaker.

So, how can we bring an understanding of cultural differences to our business and trade negotiations between westerners and Asia? How can we find acceptance and understanding even when there is difference?

That answer can be found in two words – understanding culture.

Why contracts and project plans end in disputes

Most westerners place a high importance on rules, laws, regulations and contracts. They are almost “set in stone” and apply without exception. Most importantly, rules come before relationships – even if it is a family member. Variations to agreement cause confusion and even anger.

In Asia and especially in India, there are all the rules and contracts and so on, but the common view is that each circumstance and each relationship is different, so the rule may or may not apply. It becomes a moment by moment thing. Variations to agreements are taken for granted and fully expected to happen.

How does this work in business? For many westerners, any change to a contract becomes a time to consult the lawyers and can be a relationship ending event. For Asians, change is expected and accepted.

Why western individualism hits the collective wall

Even children are encouraged to make their own decisions in the west – including on courses, careers and most definitely on choice of partner. Under individualism, you make your choices and must take care of yourself – and in some countries this is harshly applied, in others there is a more compassionate welfare safety net.

Most Asian families make decisions for their children, including courses, careers and partners. The view is that the group – the family and so on – is more important than the individual. In return, the group looks after any member at time of need.

How does this work in business? An American is ready to sign the deal now – but the Asian partner wants time to talk to colleagues and ensure a group decision. Pressure versus group consultation.

Why westerners misunderstand indirect communication

In the west people can work together without having a good relationship and direct communication is highly valued. In fact, any indirect communication – going around the bush – creates mistrust in the other or is simply missed by the westerner. They just want the facts – a simple “yes” or “no” will do.

In Asia there is an overlap between work and personal life and they choose indirect communication because their major concern is to keep the relationship. Being direct such as saying “no” is difficult.

How does this work in business? People in the west keep work and personal lives separate so are less likely to socialise with Asian colleagues – or any colleagues – after work.

Why some hide face, while others save it

Most westerners make a big effort to hide emotions – this varies of course. They see “reason” as more important than “feelings”, so they often keep thoughts to themselves.

In Asia, spontaneous emotional responses can break out and this often surprises westerners. Saving face can become the most important thing.

How does this work in business? An Asian colleague will give or expect some emotional outbursts but is also looking for the following harmony.

Why becoming someone clashes with born something

Westerners value people by what they do or what they have achieved. Performance is king, no matter who you are.

Asian culture generally values people for who they are, so power, title and respect matter greatly, but of course the person should behave according to this status.

How does this work in business? Westerners will often “high five” with everyone including junior colleagues and everyone gets in to share the celebration, while in Asia the leader might receive most of the credit.

Why order dominates the western mind

“Order’ is highly prized in the west. That means doing things on schedule, being punctual, sticking to your plans and a “time is money” view of most things. They react badly to any disturbance to the smooth schedule.

“Time” is viewed differently across Asia, with the past, present and future seen as interwoven and so plans and commitments are more flexible.

How does this work in business? This different view of schedules and time causes relationship breakdowns and can see the end of the deal.

Why westerners feel in control of everything, including climate change

“Control” is big in the west – to the extent they see people as controlling nature or the environment, down to how they work with teams and with the organisation. Conflict is fine so long as the job gets done.

Asian cultures see nature and the environment more as controlling them – events, circumstances are in control more than the team. Conflict is avoided even at the expense of timely delivery.

How does this work in business? Westerners will need to give more reassurance and feedback to their Asian teams and setting clear objectives becomes paramount for both sides.

Adapting

These cultural differences can have big impacts, but with learning and adaptability, both sides can find they quickly work well, understand more and feel better about how things are going. Cultural understanding provides quick and positive results. Cultural ignorance can be the deal breaker.

Why did Australia-India-Japan Economic Ministers’ reach an historic agreement on a Supply Chains Resilience Program?

September 1 saw an important move by Japan bear fruit with India and Australia – the three are fast tracking supply chain cooperation and have given their bureaucrats just a few months to work out the details.

While Japan led the deal, in recent times India has growing concerns about supply chain dependence on China combined with Chinese border stoushes, while Australia is being hit by Chinese trade restrictions.

All three countries are very “China trade dependent”. They also have a vested interest in a stable Indian Ocean and Pacific Ocean.

The Joint Ministerial Conference was held by video and involved Australia’s Minister for Trade, Tourism and Investment, Senator the Honourable Simon Birmingham, India’s Minister of Commerce and Industry, His Excellency Piyush Goyal, and Japan’s Minister of Economy, Trade and Industry, His Excellency Kajiyama Hiroshi.

What does Supply Chain Resilience mean?

In the context of international trade, supply chain resilience is an approach that helps a country to ensure that it has diversified its supply risk across a clutch of supplying nations instead of being dependent on just one or a few – in this case, dependent on China.

Why is Japan taking the lead?

While Japan exported $135 billion worth of goods to China in 2019, it also imported $169 billion worth from the world’s second-largest economy, accounting for 24% of its total imports, according to data from tradingeconomics.com. Electrical and electronic gear, and machinery, nuclear reactors and boilers were sectors that clocked up significant imports into Japan. So, if China stops production (as it did during Covid19) then economic activity in Japan is heavily impacted.

As part of the country’s economic stimulus package, the Japanese government recently earmarked $2.2 billion to incentivise its companies to move their manufacturing out of China – much of it likely to go back to Japan.

Why was Japan keen to have India in there?

Japan is the fourth-largest investor in India with cumulative foreign direct investments touching $33.5 billion in the 2000-2020 period accounting for 7.2% of inflows in that period, according to quasi government agency India Invest.

Imports from Japan into India more than doubled over 12 years to $12.8 billion in FY19. Exports from India to the world’s third-largest economy stood at $4.9 billion that year, data from the agency showed.

What motivated Australia?

Australia, Japan and India are already part of another informal grouping, the Quadrilateral Security Dialogue, or the Quad, which includes the U.S.

China has been Australia’s largest trading partner and that it counts for 32.6% of Australia’s exports, with iron ore, coal and gas dominating the products shipped to Asia’s largest economy. Education is the leading part of Australia’s services exports. But relations including trade ties between the two have been deteriorating for a while now – kind of a flow on from the US-China trade war.

What does India stand to gain, or lose?

While the US recently became India’s biggest trading partner, close behind is China – the two economies are close – maybe too close for India’s liking. China’s share of imports into India in 2018 (considering the top 20 items supplied by China) stood at 14.5%, according to an impact analysis by the Confederation of Indian Industry in February 2020. In areas such as Active Pharmaceutical Ingredients for medicines such as paracetamol, India is fully dependent on China. In electronics, China accounts for 45% of India’s imports, the analysis showed.

Chinese supplies dominate segments of the Indian economy. Sectors that have been impacted by supply chain issues arising out of the pandemic include pharmaceuticals, automotive parts, electronics, shipping, chemicals and textiles.

India trade policies and “self reliance” focus could be bad news for Australia

As China continues a trade war with Australia, news from India would be a concern to those who see India as an alternative market to China.

In his India Independence Day speech, Prime Minister Narendra Modi launched “Atma Nirbhar Bharat Abhiyan” (Indian self-reliance). This would have set the alarm bells ringing in Austrade and the Government.

It sounds like protectionism, looks like protectionism and seems impossible to achieve without protectionism – but everyone in India is busy telling us it is not protectionism.

Even so, the speech by PM Modi gave a call for reducing imports and pushing exports of finished products in place of raw material, saying the country will have to move forward with the mantra of ‘Make in India’ as well as ‘Make for World’.

External Affairs Minister (EAM) S Jaishankar later clarified, saying that Atma Nirbhar Bharat merges domestic production and consumption with global supply chains. He added that it’s not about being self-contained or being closed to the world rather being self-sustaining and self-generating.

China has imposed an 80 percent tariff on barley imports from Australia in retaliation for Canberra’s demand for an independent investigation into the origins of the COVID-19 pandemic. This will cost Australian farmers AU$500 million annually. It has also hit imports of Australian wines.

Can Australia turn to India as an alternative? For wines, probably not – Australia is seen as a source of non-premium cheap wines in India so our premium sales to China would not appeal there – at least not without a lot of marketing.

Here’s what I think Atma Nirbhar Bharat means India will do:

  1. Reduce its over-dependence on other countries for trade by focusing on inward manufacturing.
  2. Promote Indian products, brands and services by becoming “VOCAL FOR LOCAL”; and
  3. Continue to trade with other countries but aim to eliminate trade imbalances and, where possible, adopt a mercantilist approach to international trade.

So, Australia and other potential trading partners with India will have to make up their own minds. For for now, Atma Nirbhar Bharat does not look like good news for them.

How does Indian democracy work?

Pictured above is Indian Prime Minister Narendra Modi

I am often asked about India’s democracy – most people know of India as “the world’s biggest democracy” but few know the structure of it. Here is a short summary:

Indian government

The Republic of India is a federal democracy comprising 28 states and nine union territories. The Head of State is the President and the Head of Government is the Prime Minister – currently PM Narendra Modi.

Indian Parliament

loksabha

The Indian Parliament is bicameral, comprising the 545-member Lok Sabha (‘people’s’ or lower house) and the 245-member Rajya Sabha (‘states’ or upper house). Lok Sabha members are elected by universal adult suffrage every five years (except for two appointed Anglo-Indian members) using the ‘first past the post’ voting system. The Rajya Sabha is not subject to dissolution; one third of its members retire every second year. One third of Rajya Sabha members are elected every two years by the legislative assemblies of the Indian states.

BJP is the current Government

The 2019 Indian national election for the Lok Sabha saw the Bharatiya Janata Party (BJP) win a second consecutive term with 303 out of 543 seats.

bjp

 

 

India and Australia are perfectly placed to become closer allies in the post-Covid19 world

The relationship between India should flourish in strategic and defence areas plus trade and investment.

Both Australia and India are significant powers in the Indian Ocean region.

India, the world’s largest democracy, is a major power.

The trade relationship

India was Australia’s eighth-largest trading partner and fifth-largest export market in 2018-19, driven by coal and international education. Two-way goods and services trade with India was $30.3 billion in 2018-19, and the level of two-way investment was $30.7 billion in 2018.

Strategic relations much closer now

Australian Prime Minister Scott Morrison has worked hard on the India relationship and his personal connection with Indian PM Narendra Modi.

On 4 June 2020, Prime Minister Scott Morrison and Prime Minister of India, Narendra Modi, participated in the Australia-India Leaders’ Virtual Summit. At this meeting, the two Prime Ministers elevated the bilateral Strategic Partnership concluded in 2009 to a Comprehensive Strategic Partnership (CSP).

The CSP is based on mutual understanding, trust, common interests and the shared values of democracy and rule of law. Through the CSP, both countries have committed to work together across a range of areas.

The CSP also marks a step forward in the two countries’ ambitious agenda to expand our trade and economic relationship, as outlined in the India Economic Strategy (IES), which was released in July 2018 and endorsed by the Australian Government in November 2018.

India’s growing economy and young population need Australian goods and services

Over the next 20 years, a growing India will need many of Australia’s goods and services, including agriculture, education and skills training, and healthcare. There will of course be growth across most areas – but these are the standouts.

Since 2000, India’s GDP has grown seven-fold to reach USD3 trillion. India’s economy is forecast to become the third largest by 2030 (currently seventh) in market exchange rate terms. India already has the third largest economy in PPP terms and is set to maintain this ranking. The two-way stock of investment was valued at AUD30.7 billion in 2018. In 2018, Australia’s investment in India was valued at AUD15.6 billion and India’s investment in Australia was valued at AUD15.1 billion. India was Australia’s 18th largest investment destination.

The Aussie “India Economic Strategy”

Australia’s economic engagement with India is underpinned by the India Economic Strategy (IES), which was commissioned by the Australian Government in 2017 and led by Mr Peter Varghese, former Secretary of the Department of Foreign Affairs and Trade (2012-2016) and High Commissioner to India (2009-2012). This document is the guide for future growth.

Education is huge but facing challenges

Education is Australia’s largest service export to India, valued at AUD5.5 billion and accounting for around 85 per cent of the total. Indian students in Australia number almost 110, 000 (year to date September 2019), which marks a 33 per cent increase over the previous year. These students made 132,079 enrolments in Australia, comprising 15 per cent of international enrolments. As an education export market, India is second only to China, with exports valued at AUD12.1 billion in 2018-19 and 246,454 enrolments in Australia. Adapting to post-Covid19 education market changes will be a challenge for Australian universities.

Austrade is showing and creating the way

The Australia-India Business Exchange (AIB-X) is a new, Austrade-led, Australia-India business marketing platform that will build on the success of Australian Business Week in India, last held in 2017. This multi-month campaign included a coordinated program of activities and events. Minister Birmingham led a business mission to India in late February as part of AIB-X, with sectoral events and workshops to be held in five cities.

This will provide an opportunity to deepen trade and investment ties, focusing on small and medium across the IES’ priority sectors. Further information can be found on the Austrade website.

Plus Austrade has set up The Australian Store at Amazon India – primed to take off over the next few years.

amazon2

People-to-people links

Australia and India are building strong and lasting ties through our people-to-people links.

The Indian diaspora (comprising both Australians of Indian origin and Indians resident in Australia) is now Australia’s fastest growing large diaspora. According to the most recent (2016) Census, the number of people born in India amounts to 592,000, representing 2.4 per cent of the Australian population, or 1 in 50 people. Around 700,000 people claim Indian ancestry.

India remains Australia’s largest source of skilled migrants and the second largest source of international students. Hinduism is our fastest growing religion and Punjabi is our fastest growing language.

The Australia India Council

The Australia-India Council is also advancing Australia’s foreign and trade policy interests with India. Each year it provides grants for programs linking the two countries. I was fortunate to support the Genesis Horticulture Services research mission to India in November – part funded by AIC.

(Thanks to DFAT for lots of the above information)

world3

 

 

 

Britain’s invasion of India, the power of the Muslim rulers and Ayodhya

Indian PM Modi’s emotion in Ayodhya, “British” rule and the power of the Mughals – how can we understand what is happening today?

moditemple6

To understand modern India and even PM Modi, I feel we need to turn to Swami Vivekananda – who said:

swami-vivekananda

We talk about the British conquering India and this defines today, but as William Dalrymple writes in The Anarchy, the seizing of power in India was done by a private company – probably the first outsourced act of violence in history.

That company was the East India Company and as Dalrymple writes: “The Company’s conquest of India almost certainly remains the supreme act of corporate violence in world history.” Worth reading that line again!

It is hard to know and even relate to how my Indian friends feel about the two major invasions of their country in recent centuries – first, the Mughal empire and then this East India Company.

Which brings me to Ayodhya.

moditemple4

Indian Prime Minister Narendra Modi sprinkled sacred water and flowers into a small hole on Wednesday, part of a ritual marking the start of construction of a grand Hindu temple in the city of Ayodhya.

With emotion Modi said: “Today centuries of waiting are over.” For many of my Indian friends, this was a shared emotion.

Western media persists with the line that all this is “Hindu nationalism”. I am not so sure.

It will be up to Indians – and not to people like me or the media – to define what is happening under PM Modi and what the national motivation is. Most change is painful at first but in lifting people out of poverty and restoring confidence, he has brought great optimism to India.

Now India faces another struggle – Covid 19 – which makes arguments about history seem like something of an indulgence.

From our hearts to yours, we wish India success in this life and death battle against the virus.

With Covid19 we are seeing the vast and deep truth of that classic Indian saying Vasudhaiva Kutumbakam – meaning “the world is one family”.

vasudhaiva2