Para-diplomacy: How State Governments Complement India’s Foreign Relations
While the participation of state governments in India’s foreign policy has increased in recent decades, it is important for states to learn from each other’s experiences and emulate successful models
Over the past three decades, the role of India’s states in the country’s foreign relations has grown significantly. As in most countries, the exercise of foreign policy in India is vested in the central government and comes under what is called the Union List of the Constitution, which defines the powers of the central government. Despite this, several economic and political factors have paved the way for states to emerge as key stakeholders in foreign policy, a process commonly referred to in academic literature as para-diplomacy.
The growth of para-diplomacy in India can be looked at in stages. The first push for the emergence of states as key players — especially in economic matters — came with the economic reforms of 1991. In commenting on the role of those reforms as important reasons for the rise of para-diplomacy in India, Grzegorz Bywalec remarks: “It must be acknowledged that the economic reforms implemented at the beginning of the 1990s are the main causative factor of the Indian para-diplomacy, which at the same time constitute its foundations. They brought about the activation of the dormant potential of free competition between states. Regions started to compete for foreign and domestic investors with unexpected energy.”
Coastal states and South Indian states were the first to look outward for foreign direct investment (FDI) after the 1991 reforms. One prominent example is Maharashtra, which sought investment from US power giant Enron. It is also worth noting that even in China it was the coastal provinces that first benefited from the opening and reform policies adopted by Deng Xiaoping. It was later that other provinces benefited.
The second important development that led to state governments emerging as key stakeholders in India’s global outreach was the information technology boom in the late 1990s and early 2000s. South Indian states, especially Karnataka and the erstwhile Andhra Pradesh (in 2014, Andhra Pradesh was split into Telangana and Andhra Pradesh) emerged as important IT centers. The capitals of Andhra Pradesh (now Telangana) and Karnataka states, Hyderabad and Bengaluru, respectively, emerged as competitors and were even referred to as the Silicon Valley of India. The then chief minister of Andhra Pradesh, Chandrababu Naidu, actively wooed foreign investors. Hyderabad was even referred to as “Cyberabad.” Naidu courted foreign investors such as Microsoft’s then-CEO Bill Gates and made an individual PowerPoint presentation to Gates in 1997. Naidu was also among the first Indian chief ministers to attend the Davos Summit of the World Economic Forum.
Apart from these economic reasons, there were also political motivations. The primary one being the rise of regional political parties and leaders who were keen to carve out an independent niche for themselves. Regional parties became especially important with the rise of coalition politics in the 1990s, which gave parties the opportunity to emerge as important players not just in economic outreach, but also on issues pertaining to India’s ties with its neighbors. Naidu, as part of the BJP-led National Democratic Alliance (NDA) coalition from 1998-2004 leveraged his political importance for economic benefits. The current chief minister of West Bengal, Mamata Banerjee, was part of the former Congress-led United Progressive Alliance (UPA) Coalition and it was her objections to the Teesta Treaty — a proposed water-sharing deal between India and Bangladesh — that led to its scuttling. In addition, India’s past Sri Lanka policy, according to many commentators, was hamstrung due to the UPA’s dependence upon the powerful ruling party of Tamil Nadu, Dravida Munnetra Kazhagam DMK.
Here it would be important to flag that on certain issues, the opposition party governments running border states often aligned themselves with the central government. The Shiromani Akal Dal government that ran Punjab (2007-17) was on the same page as the Congress-led UPA government (2004-14) regarding trade and economic opportunities with Pakistan. The inauguration of the Kartarpur Religious Corridor in November 2019, connecting Gurdwara Darbar Sahib, located in Kartarpur, District Narowal, Pakistan to Gurudwara Dera Baba Nanak, in Punjab, India, happened with a BJP government at the central level, and a Congress-led government in the border state of Punjab.
On the eastern borders, Manik Sarkar, chief minister of Tripura (1998-2018), played an important role in strengthening economic ties with Bangladesh. Sarkar ran a left-wing government — Communist Party of India (Marxist) — but there was a broad understanding with the political dispensations — of different persuasions — in New Delhi on the need to improve ties with Bangladesh.
Enhancing the Political Image of Chief Ministers
Several chief ministers across parties have over the years sought to enhance their image not just domestically but also internationally through their visits and events to attract investment. It is argued that many of these ministers have national political ambitions. Current Prime Minister Narendra Modi led investment delegations to China, Japan and Singapore while he was chief minister of Gujarat. Another prominent example of a chief minister burnishing her image abroad include West Bengal’s Mamata Banerjee. While she has often been accused of being a populist, she has focused on highlighting her government’s achievements on infrastructure development and attracting investors during her foreign roadshows. Similarly, the former Chief Minister of Telangana K Chandrashekhar Rao (2014-23) and his son KT Rama Rao, the state’s erstwhile Industries and IT Minister, have also been wooing foreign investors. KT Rama Rao also attended the Davos Summit in January 2023. Revanth Reddy, who took over as Chief Minister of Telangana in December 2023, also attended the Davos Summit 2024 and addressed and interacted with several investors.
In addition, states with a large diaspora population can’t afford to ignore them. For instance, the chief ministers of Telangana and Andhra Pradesh reached out to the Indian diaspora in the US and Southeast Asia, while Kerala Chief Minister Pinari Vijayan, during his overseas visits, especially to the Gulf and US, has asked diaspora members to contribute to the state’s development. Expats from Kerala account for a significant percentage of the overall Indian diaspora in the Gulf and a large chunk of remittances to India. In his address at the Dubai Expo in February 2022, Vijayan highlighted the Kerala diaspora in the UAE, while pitching for stronger links between both places. This outreach is dictated by economics, but in an increasingly interconnected world, it can also influence elections back home.
Tools to Promote Economic Linkages
In the immediate aftermath of liberalization in the 1990s, delegations of state governments were the main driver of investment pitches, but the past decade has seen the rise of investor summits as an alternative. Starting in 2003, Modi hosted the Vibrant Gujarat Summits to showcase the economic potential of the western Indian state.
Initially only a few states took the lead in staging investor summits, but today virtually all states have such events. Even states criticized for following populist policies have begun to use such summits. West Bengal, for example, hosted the Global Investors Summit Nov. 21-22, 2023. Chief Minister Mamata Banerjee sought to woo not just domestic investors, but also foreign ones. Seventeen countries were chosen as partners — the UK, Australia, Germany, Japan, France, South Korea, Malaysia, Bangladesh, Nepal, Bhutan, Luxembourg, Netherlands, Poland, the Slovak Republic, Kenya, Rwanda and Fiji. In September 2023, Banerjee also visited Spain and Dubai to attract investment for her state.
The eastern Indian state of Odisha has also jumped on the bandwagon, hosting an investor summit — the “Make in Odisha Conclave” — in 2016, 2018 and 2022. While Odisha has long languished in the shadow of other states, in recent years it has begun to reach out to Southeast Asia through these summits. It has not just highlighted the economic opportunities of the state and its key economic reforms, it has also stressed its strategic location as a potential gateway to India for Southeast Asian countries.
More important, states have set up separate, specific units for external outreach. While states have long had export councils and investment desks, new tools are being used to enhance outreach. Telangana has set up a department of foreign affairs to bolster coordination with its state diaspora. The government of Kerala had appointed a retired diplomat, as an officer on special duty for external cooperation, to a special position to liaise with India’s Ministry of External Affairs, Indian missions abroad and foreign missions. The key task of the office is to address issues pertaining to the diaspora and tap opportunities for the state.
While state governments have taken several initiatives to enhance their outreach, the Ministry of External Affairs has itself also set up a states division, launched in October 2014, to improve coordination between state governments and Indian embassies and consulates abroad, as well as state governments and foreign embassies and high commissions in India. Before taking over as prime minister, Modi had often flagged the need to ensure that states have more of a say in the sphere of foreign policy.
Another recent trend is that of states having investor events with a sharp sectoral focus. In 2023, both Gujarat and Karnataka hosted “Semicon India” (in July 2023 and September 2023, respectively). The aim was to seek investments in the semiconductor sector. The Semicon India in Gujarat was inaugurated by Modi himself. While inviting investors to invest in India’s semiconductor sector, Modi highlighted some of the benefits that had been extended to the semiconductor industry.
Looking to the Future
While important steps have been taken in the context of assisting para-diplomacy in India, more needs to be done. First, as India signs free-trade agreements (FTAs) with other countries, the central and state governments should work more closely to ensure that states benefit from these. Second, India’s focus on strengthening ties with Southeast Asia — the “Act East” policy — and on the Free and Open Indo-Pacific (FOIP) will mean that closer coordination is required with states. Northeastern states have emerged as important stakeholders in the context of relations between India and Bangladesh, as well as with Southeast Asia.
The role of these states will be significant in initiatives such as the “Bay of Bengal-Northeast India Industrial Value Chain Concept,” which seeks to connect Bangladesh to landlocked northeastern states. In the context of ties with neighboring countries in South Asia, regular discussions between the central government and concerned state governments is even more important given the ever-changing geopolitical landscape in the region.
To give a greater thrust to India’s bilateral relations and ensure that states can play a meaningful role in ties, it is important to enhance air connectivity between tier-2 cities in India and other parts of the world, especially where there is a large Indian diaspora and strong economic links.
Finally, investor summits need not focus only on business ties. States that are strong in sports, for example, should seek linkages based on sports, while those that have the potential for eco-tourism should promote those opportunities.
Conclusion
While the participation of state governments in India’s foreign policy has increased in recent decades, it is important for states to learn from each other’s experiences and emulate successful models. It is also important to understand that not all states need to focus solely on the broad economic dimensions of para-diplomacy. In this arena, states have a dynamic role to play in promoting not only local interests but enhancing India’s overall image abroad. In a changing economic landscape, the importance of para-diplomacy to India is likely to grow significantly.
(Courtesy – Global Asia)
