China's Nanya Yanjiu (South Asian Studies Quarterly) Issue No. 2, 2021, published an article by Li Tao
and Yuan Xiaojiao assessing the theory and practice of the Modi administration’s economic diplomacy.
They assess that under the Modi administration, India’s economic diplomacy seeks to attract FDI, build
relationships with the global Indian diaspora, and elevate India’s status in regional and multilateral forums.
Stating that India’s economic diplomacy is grounded at a theoretical level in a mixture of neoliberal
institutionalism and nationalism, Li Tao and Yuan Xiaojiao argue that India’s economic diplomacy is
grounded at a theoretical level in a mixture of neoliberal institutionalism and nationalism. On the one hand,
Modi has pursued a pragmatic strategy of cooperation via bilateral and multilateral agreements. Through “selective multilateralism,” India can participate in global multilateral forums while placing some
limitations on the impact of globalization and India’s integration into a free and open global economy. At
the same time, Modi’s economic diplomacy reflects Hindu nationalism, urging citizens to limit their
material consumption and protect the domestic economy. In this view, India’s economic development is a
“duty” of both the Indian individual and the Indian government. According to Li and Yuan, this mixture of
neoliberal institutionalism and Hindu nationalism is evident in India’s economic diplomacy. They say that
at the core are India’s interests. India’s relations with its South Asian neighbours reflect “defensive
economic nationalism,” as India uses its influence to protect its national economic interests, and its
economic diplomacy is characterized by asymmetric interdependence. As the largest economy in South
Asia, India seeks to increase its neighbours’ economic dependence on India by encouraging the adoption
of a common market and offering commercial aid. In its relations with great powers such as China, the
United States, Russia, and Japan, India mixes neoliberal institutionalism with economic nationalism; it
balances and free rides in an attempt to maintain strategic autonomy and assert regional leadership. For
example, India has accepted the US “Indo-Pacific” strategy as a way to fend off pressure from China’s Belt
and Road Initiative. With regard to China, India’s policy has shifted from “soft checks and balancing” to
“comprehensive decoupling” in the wake of the 2020–2021 skirmishes in the Galwan valley. At these
peripheral and global levels, India adopts liberal economic policies by seeking to expand economic
partnerships. Modi has focused on building relations with Asian countries to attract foreign capital and
provide employment opportunities for India’s vast working-age population. Farther afield, Modi has
pursued military, energy, and trade deals with Australia and countries in Western Europe and promised
credit lines and aid to much of the African continent. Modi has also affirmed India’s commitment to
multilateral economic institutions by pursing leadership roles and seeking to reshape global economic
governance to reflect a multipolar world order.
(Comment: Nanya Yanjiu, also called "International Forum", was founded in 1999 as a bimonthly by the
University of International Studies at Beijing Foreign Studies.)
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