International Relations & Security

Context: India and the ASEAN countries reached an agreement to review their free trade pact for goods and set a 2025 goalpost for concluding the review aimed at addressing the “asymmetry” in bilateral trade.

About

• ASEAN-India trade took over a decade to double the value of trade. The bilateral trade was $57 billion in 2010-11, when the FTA came into effect, and rose to $131 billion only in 2022-23. 
• While India’s exports to Asean increased from $ 25.63 billion in 2010-11 to $ 43.51 billion in 2022-23, its imports also increased from $ 30.61 billion to $ 87.59 billion in the same period. 
• India’s trade balance with ASEAN has deteriorated after the implementation of the FTA.
  • With Vietnam, the surplus in trade balance in 2010 changed to a deficit in 2020, standing at $ 1068.6 million. 
  • After the implementation of the Asean-India FTA, surplus in trade balance has been recorded with Cambodia, Lao PDR, the Philippines and Myanmar. T
• This indicates that Asean has gained a trade surplus on the current account, and India has witnessed a trade deficit. 
• As evident from the below graph, India- ASEAN trade strengthened post the FTA in 2010 however the degree of increase in imports has been much higher than exports to ASEAN. The wedge between import and export from and to ASEAN has increased post the FTA which was intertwined till 2005.

• India maintains a trade deficit with the world which has remained the biggest cause of concern for the country. Approximately more than 10% of the trade deficit that India has with the World is contributed by ASEAN.
• However the trade deficit trend of India-ASEAN has largely remained disintegrated with India’s total deficit trend which shows that India's trade basket with ASEAN is diversified/distinct as compared to India’s major import commodities such as petroleum products, gems and jewellery from the world.

Economic Survey 2016-17 opines that India’s increased trade with FTA countries is not due to diversion of imports from more efficient non-FTA countries. The three major observations are

• Rise in imports of electronic products: As evident from trade figures, imports of electronic products have continued to be at high levels over the years. The electronics industry of ASEAN is the biggest gainer of India-ASEAN FTA.

• Rise in import of minerals and metals: FTA between India and ASEAN has led to a sudden spike in import of copper wire and Bituminous coal from ASEAN especially Malaysia and Indonesia respectively. 
• Trade concentration of top 10 products imported by India from ASEAN: 61% of light vessels that ASEAN exports to the world are destined to India, over 40% of copper wire exported to world by ASEAN is imported by India, coal imports too are over 35%. 

Conclusion

It can be concluded that the premise that FTA has not led to diversion of imports from more efficient non-FTA countries to inefficient FTA countries might not hold true. Export diversification by destination country is a widely accepted indicator of trade competitiveness of a country in a particular commodity.

Context: The upcoming BRICS summit in South Africa marks a crucial test for Indian diplomacy amid global geopolitical complexities. While BRICS past influence is debated, its potential to reshape world politics emerges, given its global representation exceeding the UN Security Council and G7, though less than G20. 

About BRICS

• The term BRIC was first introduced in the 2001 by Jim O'Neill, who was the chairman of Goldman Sachs. It comprised of Brazil, Russia, India and China.
• The BRIC country leaders held their first format summit in 2009 at Yekaterinburg, Russia.
• South Africa was added in 2010.
• BRICS grouping has 42% of the global population, 23% of the global GDP, 18% of the global trade.

The Present scenario of Global Governance

• The failure and undemocratic nature of global governance are widely acknowledged. The ineffective and unrepresentative global governance institutions such as UNSC, G - 7 have led to their downfall. 
• Despite their shortcomings, forums like BRICS are stepping in to fill this void, even if inadequately. In a time of global uncertainty and shifting geopolitical dynamics, countries are looking to platforms like BRICS to navigate these challenges and exert influence. 
• Recent events like the Ukraine conflict and China's rise have revitalized BRICS. While BRICS and similar groups like SCO, won't create fully democratic global governance, they can spark conversations about inclusivity. 
• These forums may not be perfect due to competing interests i.e., Countries like India - China, but they can promote dialogue on more representative global governance. Imperfect institutions that reflect current realities are preferable to a single, outdated structure. 
• International politics should embrace democratic imperfections over hegemonic perfection.

New Delhi’s Dilemma

• India's current geopolitical decisions are complex and not straightforward. The question of where India fits in the global geopolitical landscape is challenging. 
• Western perspectives often interpret India's involvement in groups like BRICS and SCO in the context of the Ukraine conflict and tensions between the West and Russia. 
• India's participation in non-western forums like BRICS, SCO, and the global South is a response to the undemocratic structures of institutions like the IMF, World Bank, and UNSC created after World War II. India doesn't aim to form an anti-US/West bloc either.
• Geographically, historically, and developmentally, India belongs to BRICS, SCO, and the global South. However, India's collaboration with China within these groups poses difficulties, given that China's objectives diverge from those of other developing nations, and it aims to establish its own hegemony.
• Structurally and aspirationally, India is moving towards groups like the G20, G7, and Quad, but gaining significant influence in these forums is a distant goal. India is situated amidst an emerging geopolitical faultline, with interests on both sides, without full allegiance to either. This positioning might make India a bridge between divides or expose it to emerging geopolitical conflicts. 
• One danger in current global geopolitics is the rise of competing blocs. China and Russia are aligning their interests, potentially creating opposition to the US - led status quo. 
• India historically opposes bloc formation, favoring equitable global governance and multipolarity. Yet, India might inevitably become entangled in these dynamics, even if it opposes them.

The China Question

• Amidst its pursuit of a multipolar world and alternative global governance, New Delhi faces a pivotal question: does each step taken contribute to the global ascent of China?
• The need for robust, non-western forums and potential dedollarisation is acknowledged, yet these very mechanisms might inadvertently fuel China's rise and bolster the yuan.
• The notion that dedollarisation would directly strengthen India's rupee is a misconception, as is the belief in substantial shared geopolitical interests between China and India. Their aims may intersect instrumentally in non-western institutions, but their ultimate objectives diverge fundamentally. 
• China's size, economic sway, Belt and Road Initiative, and diplomatic reach assure its impact on an expanded BRICS, overshadowing India's relatively constrained resources. Paradoxically, as India works to fortify non-western frameworks, thus weakening the post-World War II order, it inadvertently aids China's revisionist pursuits. 
• India is confronted with a choice: endorse a China-centric or West-centric world order or navigate the delicate balance between the two. 
• While advocating for a more inclusive global governance and protecting its national interests, India must temper China's influence in non-western forums. This must be done while avoiding alienation of other global South nations attracted to China's expansion efforts. 
• Navigating this geopolitical complexity involves asserting India's position in forums like BRICS and SCO, curbing China's growing influence, addressing western expectations, and securing a role in Eurocentric platforms such as the UNSC and G7 - all concurrently. 

India must tread thoughtfully, ensuring its actions align with its goals while skillfully managing the tensions of a multifaceted global landscape.

Context: Indian Navy Dornier maritime patrol aircraft and an Indian Air Force (IAF) C-130 transport aircraft visited Australia’s Cocos (Keeling) Islands (CKI) in the Southern Indian Ocean.

About Coco Islands 

• CKI is an Australian external territory located in the Indian Ocean, approximately 3,000 km north-west of Perth in western Australia.
• It comprises two coral atolls made up of 27 smaller islands of which only two – West Island and Home Island – are inhabited.
• It is a small archipelago approximately midway between Australia and Sri Lanka and relatively close to the Indonesian island of Sumatra.
• The territory's Malay name is Pulu Kokos (Keeling).
• The Cocos Islands are strategically important because of their proximity to shipping lanes in the Indian and Pacific oceans.
• It can be an important base for refuelling and Operational Turnaround for the Indian military, especially once the runway there is expanded to accommodate large aircraft like the P-8 long range maritime patrol aircraft.