INDIA AND SOUTH ASIA: MAY 2016 DOSSIER

INDIA AND SOUTH ASIA: MAY 2016 DOSSIER The May 2016 Dossier highlights a range of domestic and foreign policy developments in India as well as in the wider region. These include a detailed account of the recent Assembly elections in five states and an ensuing analysis of the consequences for the national level, Prime Minister Modi s visit to Tehran post sanctions, and President Pranab Mukherjee s visit to China. Dr Klaus Julian Voll FEPS Advisor on Asia FEPS STUDIES MAY 2015 With Dr. Joyce Lobo

Part I India - Domestic developments Assembly Elections 2016: Messages beyond the results Part II India - Foreign Policy Developments Modi visits Tehran post sanctions President Pranab Mukherjee visits China 2

Part I India - Domestic developments Dr. Klaus Voll gives a detailed account of the recent Assembly elections in five states and highlights also the consequences for the national level. Assembly Elections 2016: Messages beyond the results The elections to the State Assemblies in Assam, West Bengal, Kerala, Tamil Nadu and Puducherry led to different results: 1.The BJP and its alliance partners Asom Gana Parishad (AGP) and Bodo People's Front (BPF) won an absolute majority in Assam, distancing the Congress, which was voted clearly out after three governments since 2011, and the All India United Democratic Front (AIUDF). 2.Jayalalitha could against the traditional trends win again in Tamil Nadu and keep at bay the DMK/Congress alliance, although with a reduced majority. The much- hyped DMDK- led People's Welfare- alliance turned out to be a veritable flop without any seat. 3.The Trinamool Congress won clearly with a landslide majority against the CPI/M/Congress- alliance in West Bengal. The Congress is irrespective of small losses the second strongest party ahead of the decimated CPI/M, which ruled West Bengal for more than 30 years till 2011. Interestingly the BJP could win some seats. 4.Kerala experienced the traditional change of government between the United Democratic Front (UDF) and the Left Democratic Front (LDF). The CPI/M- led alliance with a good performance by the CPI gained a clear absolute majority. The BJP gained together with its alliance partner a remarkable vote- share of about 15 %. 5.In Puducherry the Congress - together with its junior partner DMK - forms the government. Assessment The big loser in these elections is certainly the Congress, which was voted out of power in Assam and in Kerala. The Congress is threatened to become the new Untouchable in Indian politics. The party which faces an existential crisis and the crumbling of its social coalitions, for instance amongst the tea- plantation workers in Upper Assam became a mill- stone at the neck of the DMK in Tamil Nadu. The BJP overcame its debacle in Bihar and won for the first time in Assam. With this victory the BJP opened the doors to other states in the Northeast and aquired a veritable pan- Indian basis, also with its fairly good vote- shares in Kerala and West Bengal. With Mamata Bannerjee and Jayalalitha, two strong regional leaders maintained and even improved their positions and could this applies more for Bannerjee move into a national role in the years to come. Dr. Shashi Tharoor, a Congress MP and former minister, conceded, that there is a need for change in the Congress. Yet he opined, that these elections have been no referendum on its national leadership. Mani Shankar Aiyar, who favoured an alliance with the AIUDF in Assam, sees as the primary challenge defeats of the BJP in future elections. In his opinion this is more important than a a victory 3

for the Congress, even if the party would perform as a B- Team. Dr. Chandan Mitra, BJP- MP, stated, that with the results of these elections his party nearly reached its aim, to create an India free of the Congress. Assembly Elections Results These elections strengthened clearly the positions of Prime Minister Narendra Modi and BJP- President Amit Shah at the national level. The victory in Assam the Gateway to the North- East - contributes definitely to make the BJP a truly national party. I: Assam The BJP in alliance with the Asom Gana Parishad (AGP) and the Bodo People's Front (BPF) could dislodge the Congress, ruling since 2001 in Assam. The BJP drew lessons from its defeat in Bihar and presented the Union Minister for Sport, Sarbanda Sonowal, as a candidate for the office of Chief Minister. The Congress lost 8.3% of the votes compared to 2011 and is still narrowly ahead of the BJP, which gained 18.1% compared to 2011. The BJP- led alliance won 86 seats 60 alone for the BJP and distanced clearly the Congress and the AIUDF. In a first statement after the election Sonowal stated, that his government would protect 'bonafide citizens' of Assam and seal the border to Bangladesh. People illegally staying in Assam would be deleted from the electoral rolls. Sonowal conceded, that it would be rather impossible to deport them. It is his aim, to make Assam India's No. 1 state. Yogendra Yadav, once India's leading election analyst, argued, that this electoral victory of the BJP would change for the next 25 years the hitherto prevailing patterns of politics in Assam and reminded, that parts of the approximately 6 Mio. tea- plantation- workers switched their loyalties from the Congress to the BJP. Besides the strong RSS- unit in Assam, the former Congress- Minister Himanta Biswa Sarma contributed decisively to the BJP- victory with his tremendous organizational power. Sarma had tried to dislodge Chief Minister Tarun Gogoi and lead the Congress into the campaign. This attempt was rejected by Rahul Gandhi, with the result, that Sarma together with several Members of the Legislative Assembly switched over to the BJP shortly before the elections, leading its campaign. 4

Appendix: Assam Legislative Assembly Elections, 2011 & 2016 Party 2011 2016 Seats Won Vote share% Seats Won Vote share% BJP 05 11.47 60 29.5 INC 78 39.39 26 31.0 AIDUF 18 12.57 13 13.0 AGP 10 16.29 14 8.1 BPF 12 6.13 12 3.9 IND 02 9.17 01 11.0 Total 126 126 Source: Election Commission of India Abbreviations: BJP, Bharatiya Janata Party (National Party) INC, Indian National Congress (National Party) AIDUF, All India United Democratic Front (State Party) AGP, Asom Gana Parishad (State Party) BPF, Bodoland Peoples Front (State Party) IND, Independent Partywise vote share: INC: 31.0% BJP: 29.5% AIDUF: 13.0% IND: 11.0% AGP: 8.1% BPF: 3.9% CPM: 0.6% NCP: 0.3% CPI: 0.2% 5

BGanP: 0.2% AITC: 0.2% NOTA: 1.1% II: West Bengal West Bengal witnessed a land- slide victory of the Trinamool Congress (TMC) with 211 seats (2011: 184) and 44.9% of the votes, 6% more than in 2011. The CPI/M declined from 30.08% to 19.7% of the votes and won 26 seats (2011: 40). The CPI/M is after the TMC and the Congress only the third- largest party in the Assembly. The Congress 2011 with 42 seats and 9.09% in alliance with the TMC improved minimally to 44 saets with 12.3%. The party gained contrary to the CPI/M slightly from the disputed alliance with the Left Front. The BJP improved to 10.2% (2011: 4.06%) with three seats, but could not repeat its excellent performance in the 2014 Lok Sabha elections with about 17%. Appendix: West Bengal Legislative Assembly Elections, 2011 & 2016 Party 2011 2016 Seats Won Vote share % Seats Won Vote share % AITC 184 38.93 211 44.9 INC 42 9.09 44 12.3 CPM 40 30.08 26 19.7 RSP 07 2.96 03 1.7 GOJAM 03 0.72 03 0.5 BJP 00 4.06 03 10.2 AIFB 11 4.80 02 2.8 CPI 02 1.84 01 1.4 DSP(P) 01 0.35 - - 0.3 SP 01 0.74 - - - - SUCI 01 0.44 - - 0.7 IND 02 3.13 01 2.2 Total 294 294 6

Alliances for 2016 West Bengal Assembly Party/Alliance Seats Won Vote share % TMC 211 44.9 Left* 76 37.9 BJP^ 06 10.7 IND 01 2.2 Total 294 *The Left alliance comprised of CPM, INC, RSP, CPI and the AIFB. ^ The BJP alliance comprised of the GOJAM. Abbreviations: INC, Indian National Congress (National Party) BJP, Bharatiya Janata Party (National party) CPM, Communist Party of India (Marxist) (National party) CPI, Communist Party of India (National party) AIFB, All India Forward Bloc (State Party) AITC, All India Trinamool Congress (State Party) RSP, Revolutionary Socialist Party (State Party) SP, Samajwadi Party (State Party- Other state) DSP(P), Democratic Socialist Party (Prabodh Chandra) (Registered [Unrecognized] Party) GOJAM, Gorkha Janmukti Morcha (Registered [Unrecognized] Party) SUCI, Socialist Unity Centre of India (Communist) (Registered [Unrecognized] Party) IND, Independent Party- wise vote share: AITC: 44.9% CPM: 19.7% INC: 12.3% BJP: 10.2% AIFB: 2.8% IND: 2.2% 7

RSP: 1.7% CPI: 1.4% SUCI: 0.7% BSP: 0.5% GOJAM: 0.5% DSP(P): 0.3% NOTA: 1.5% III: Kerala The Congress- led UDF had to concede power to the LDF. Irrespective of light vote losses from 28.18% in 2011 to 26.5% in 2016, the CPI/M gained 58 seats compared to 45 seats in 2011. Its partner CPI climbed from 13 to 19 seats, although also with light vote losses. Compared to 2011 the Congress lost 16 seats and gained with a vote- share of 23.7% (2011: 26.4%) only 22 mandates (2011: 38). The LDF altogether reached 91 seats compared with 47 for the UDF. The BJP improved from 6.03% to 10.5% and could for the first time in Kerala gain a mandate. The BJP gained votes from the Congress, not from the CPI/M. This could harm the Congress in the long- term. Appendix: Kerala Legislative Assembly Election, 2011 & 2016 Party 2011 2016 Seats Won Vote Share % Seats Won Vote Share % CPM 45 28.18 58 26.5 INC 38 26.40 22 23.7 CPI 13 8.72 19 8.1 IUML 20 7.92 18 7.4 8

KEC(M) 09 4.94 06 4.0 JD(S) 04 1.52 03 1.4 NCP 02 1.24 02 1.2 BJP 00 6.03 01 10.5 CMPKSC 00 0.65 01 0.6 C(S) - - - - 01 0.3 KEC(J) 01 0.91 01 0.4 KEC(B) 01 0.72 01 0.4 NSC - - - - 01 0.6 IND 02 5.66 06 5.3 Total 140 140 Source: Election Commission of India Party 2011 2016 Seats Won Vote share% Seats Won Vote share% LDF^ 66 45.32 91 Above 40 UDF* 73 43.5 47 35.5 BJP~ 00 6.03 01 10.5 Total 140 140 *The United Democratic Front (UDF) alliance comprised of INC- Indian National Congress, IUML- Indian Union Muslim League, KEC(M)- Kerala Congress (Mani), RSP- Revolutionary Socialist Party, KEC(J)- Kerala Congress (Jacob), KRSP- Kerala Revolutionary Socialist Party and the SJ(D)- Socialist Janatha (Democratic) with the INC leading it. ^The Left United Democratic Front (LDF) alliance comprised of CPM- Communist Party of India 9

(Marxist), CPI- Communist Party of India, JD(S)- Janata Dal (Secular), NCP- Nationalist Congress Party, IC(S)- Indian Congress (Socilist), KEC(B)- Kerala Congress (Balakrishna Pillai), RSP(L)- Revolutionary Socialist Party (Leninist), CMP- Communist Marxist Party, and 5 LDF supported Independent (IND) candidates. ~The BJP alliance comprised of parties like the Bharath Dharma Jana Sena, Kerala Congress (Thomas), Janadhipathya Samrakshana Samithi (Rajan Babu) and Janadhipathya Rashtriya Sabha. 2016 Kerala Assembly Results The LDF alliance members Party Seats Won Vote % CPM 58 26.5 CPI 19 8.1 JD(S) 03 1.4 NCP 02 1.2 C(S) 01 0.3 KEC(B) 01 0.4 RSP(L) or NSP 01 NA CMP(A) or CMPKSC 01 0.6 IND 05 NA Total 91 UDF alliance members Party Seats Vote % 10

Won INC 22 23.7 IUML 18 7.4 KEC(M) 06 4.0 KEC(J) 01 0.4 Total 47 35.5 2011 Kerala Assembly Results UDF alliance members Party Seats Won Vote % INC 38 26.40 IUML 20 7.92 KEC(M) 09 4.94 RSP 02 1.31 KEC(J) 01 0.91 SJ(D) 02 1.65 KRSP 01 0.37 Total 73 43.5 The LDF alliance members Party Seats Vote % 11

Won CPM 45 28.18 CPI 13 8.72 JD(S) 04 1.52 NCP 02 1.24 IND 02 5.66 Total 66 45.32 Abbreviations: BJP, Bharatiya Janata Party (National party) CPM, Communist Party of India (Marxist) (National party) CPI, Communist Party of India (National party) INC, Indian National Congress (National party) IUML, Indian Union Muslim League (State party) Also called as MLKSC, Muslim League Kerala State Committee KEC (M), Kerala Congress (Mani) (State party) JD(S), Janata Dal (Secular) (State party) NCP, Nationalist Congress Party (National party) KEC(B), Kerala Congress (Balakrishna Pillai) (Registered [unrecognised] party) KEC(J), Kerala Congress (Jacob) (Registered [unrecognised] party) CMPKSC, Communist Marxist Party Kerala State Committee (Registered [Unrecognized] Party) C(S), Congress (Secular) (Registered [Unrecognized] Party) NSC, National Secular Conference (Registered [unrecognised] party) Partywise vote share: CPM: 26.5% INC: 23.7% BJP: 10.5% CPI: 8.1% 12

IUML: 7.4% IND: 5.3% KEC (M): 4.0% BDJS: 3.9% JD(U): 1.5% JD(S): 1.4% NCP: 1.2% RSP: 1.1% NSC: 0.6% SDPI: 0.6% CMPKSC: 0.6% INL: 0.6% KEC(B): 0.4% KEC(J): 0.4% WPOI: 0.3% C(S): 0.3% PDP: 0.2% BSP: 0.2% KEC: 0.2% ADMK: 0.2% KCST: 0.2% NOTA: 0.5% IV: Tamil Nadu The voters in Tamil Nadu proved the majority of Exit Polls wrong, since these had with one exception predicted a victory for the DMK- Congress alliance. Although the AIADMK - led by Jayalalitha ('Amma') - lost 16 seats compared to 2011, the party could increase its vote- share by 2.4% to 40.8%. The DMK added 66 seats and won altogether 89 seats also its vote- share increased from 22.39% to 31.6% - but this was not enough for the required majority. The DMK did not fully make use of the undoubtedly existing anti- incumbency - factor. Its partner Congress - the DMK conceded according to experts too many constituencies - only gained 6.4% (2011: 9.3%), but it could improve from 5 to 8 seats. 13

The DMDK, 2011 in alliance with the AIADMK with 29 seats and 7.88%, became with 2.4% and not even one seat under its actor- leader Vijaykanth an absolute flop from hero to zero. Also the PMK although with 5.3% of the votes - and the BJP with only 2.8% drew a blank. Tamil Nadu Legislative Assembly Elections, 2011 & 2016 Party 2011 2016 Seats Won Vote share% Seats Won Vote share% AIADMK 150 38.40 134 40.8 DMK 23 22.39 89 31.6 INC 05 9.30 08 6.4 IUML - - - - 01 0.7 DMDK 29 7.88 - - 2.4 CPI (M) 10 2.41 - - 0.7 CPI 09 1.97 - - 0.8 PMK 03 5.23 - - 5.3 MAMAK 02 0.49 - - 0.5 PT 02 0.40 - - 0.5 AIFB 01 0.24 - - - - Total 234 232/234 Source: Election Commission of India (ECI) Alliances for 2016 TN Assembly Party/Alliance Seats Won Vote share% ADMK 134 40.8 14

DMK* 98 38.7 Total 234 * The DMK allies are the INC and the IUML. The l34- Aravakurichi Assembly Constituency & l74- Thanjavur Assembly Constituency in Tamil Nadu voting will take place on 23rd and counting on 25th May. The postponement is due to complaints in large numbers with regard to the distribution of money and other gifts in the form of consumable items, etc., to the electors, as per the ECI directive. Abbreviations: INC, Indian National Congress (National Party) ADMK, All India Anna Dravida Munnetra Kazhagam (also in some places referred to as AIADMK) (State Party) CPI (M), Communist Party of India (Marxist) (National Party) CPI, Communist Party of India (National Party) DMK, Dravida Munnetra Kazhagam (State Party) DMDK, Desiya Murpokku Dravida Kazhagam (State Party) PMK, Pattali Makkal Katchi (State Party) MAMAK, Manithaneya Makkal Katchi (Registered [Unrecognized] Party) PT, Puthiya Tamilagam (State Party) IUML, Indian Union Muslim League (State Party- Other state) AIFB, All India Forward Bloc (State Party- Other state) IND, Independent Partywise vote share: ADMK: 40.8% DMK: 31.6% INC: 6.4% PMK: 5.3% BJP: 2.8% DMDK: 2.4% IND: 1.4% NTK: 1.1% MDMK: 0.9% 15

CPI: 0.8% VCK: 0.8% IUML: 0.7% CPM: 0.7% TMC(M): 0.5% PT: 0.5% MAMAK: 0.5% KMDK: 0.4% BSP: 0.2% SDPI: 0.2% NOTA: 1.3% V: Puducherry The Congress could win in Puducherry, once under French colonial rule at the coast south of Chennai (Madras), and will form the government together with its alliance partner DMK. Puducherry Legislative Assembly Election, 2011 & 2016 Party 2011 2016 Seats Vote share% Seats Vote share% Won Won INC 07 26.53 15 30.6 AINRC 15 31.75 08 28.1 ADMK 05 13.75 04 16.8 DMK 02 10.68 02 8.9 IND 01 10.12 01 7.9 Total 30 Source: Election Commission of India (ECI) 16

Abbreviations: INC, Indian National Congress (National Party) ADMK, All India Anna Dravida Munnetra Kazhagam (also in some places referred to as AIADMK) (State Party) AINRC, All India N.R. Congress (Registered [Unrecognized] Party) DMK, Dravida Munnetra Kazhagam (State Party) IND, Independent Partywise vote share: INC: 30.6% AINRC: 28.1% ADMK: 16.8% DMK: 8.9% IND: 7.9% BJP: 2.4% CPI: 1.1% PMK: 0.7% VCK: 0.5% NTK: 0.5% CPM: 0.4% NOTA: 1.7% ***** A wider assessment of the results: These elections underlined that local political leaders in various Union states are of a decisive importance. Dr. Prannoy Roy, since decades an election analyst and owner of the New Delhi Television (NDTV), stated after his intensive trips with experts and journalists, that Delhi is nearly irrelevant in these states, which went into elections. National leaders have to concede space to local leaders. Roy observed, that in these states a new BJP- leadership is emerging, being undoubtedly secular and not open to bans, like for instance beef, by BJP- politicians from states of the cow- belt. Roy envisages a major shift in Indian politics. 17

The Congress is a junior partner in nearly all the states. Shekhar Gupta, India Today: The decline of the Congress seems to be terminal. Kissing Congress is kissing death. Dr. Shashi Tharoor, Congress MP and a former minister, demanded instead an infusion of young blood into the Congress, particularly at the national level. The CPI/M is in West Bengal also in a free fall and is plagued by internal differences about its direction. Dr. Amit Mitra, finance minister of West Bengal and after Mamata Bannerjee the most important politician of the Trinamool Congress, envisages after the landslide victory of the TMC - the new Left, so Shekar Gupta - the development of a new paradigm that will lead to a true federalism and most probably to a Federal Front. Mitra indicated, that the TMC will - on the basis of principles and merits - support legislation like the General Service Tax (GST), but at the same time will oppose the land bill. The TMC would decide on a case to case basis. It is assumed, that Mamata Bannerjee will oscillate between accountability and challenge to Modi. The moderate BJP- and RSS- ideologue Seshadri Chari expects in future a change from confrontation to accommodation with the centre. The BJP hopes - after the clear defeat of the CPI/M- led Left Front in West Bengal to occupy the existing political vacuum, but Dr. Amit Mitra opined, that the BJP does not understand West Bengal. Experts are asking the question, if Mamata Bannerjee possibly even Jayalalitha could become the new pivot of an anti- BJP- alliance. Others argue, that both parties don't have a second leadership. Finance minister Arun Jaitley one of the major BJP strategists - doubts, if for instance AIADMK and DMK or SP and BSP as well as TMC and the Left could ever come together. Will the BJP, which in West Bengal contrary to Tamil Nadu with only 2.8% of the votes could add 6% to its previous vote- share and reach altogether 11%, fill the vacuum left by the CPI/M, which has no charismatic politician? In Kerala the BJP gained 9% and reached together with its alliance partner 15%. The BJP could win support from parts of the traditional Congress- camp and possibly will be in a position also thanks to the intensive RSS- presence to become a veritable political force there. In sum: these elections strengthened the NDA- government in Delhi and leave the oppositional space at the central level and in various states wide open, particularly after the weak performance of the Congress. The results of these elections certainly will favour reforms and respective legislation in the Upper House by the central government. The relatively bad performance of the Congress although altogether still better than the BJP does not favour a coordinated approach by the various regional parties vis- a- vis the NDA- government. 18

The Congress with its parliamentary strategies of boycotts in Parliament which are not shared by various regional parties seems to have maneuvered itself into political isolation. The Congress could become the new Untouchable of Indian politics, particularly because of its still not convincing Vice- President Rahul Gandhi. He is Modi's best ally - and the biggest loser of these elections. Congress- general secretary Digvijay Singh demands a major surgery within a party. A so- called federal front of regional parties seems unlikely in the near future, because of divergent ideologies and interests and the lack of numbers, besides the weakness of the Congress. Even if the BJP will not reach in 2019 an own absolute majority, it will have still options to co- opt other parties. The BJP has increased its presence throughout the country. The BJP- victory in Assam and its effects for the rest of the Northeast are of tremendous importance. The BJP managed a Hindu- consolidation of Assamese, Bengalis and tribal Hindus in Assam. The BJP leadership demonstrated, that it is capable to learn from faults like in Bihar and projected successfully a candidate for the office of Chief Minister. Given the socio- economic conditions and the gap between the electoral promises of the BJP and the ground realities creation of jobs, drought and water shortages the BJP cannot give up popular anti- poverty measures and can only gradually implement economic reforms, also shedding its image as a pro- entrepreneur party. Irrespective of its gains, the BJP is still quite a distance away from an absolute dominance throughout India. After the Congress is at least currently and in the near future not anymore a true national alternative, it is in the interest of the BJP not to antagonize unnecessarily important regional parties and to involve them in a framework of 'constructive federalism'. 19

Part II India - Foreign Policy Developments Dr Joyce Lobo analyses PM Modi s visit to Iran post sanctions and how India and Iran have moved towards new frontiers of cooperation connectivity, infrastructure development, combating terrorism, cyber security etc. Modi visits Tehran post sanctions After the trips to Saudi Arabia (April 2016) and the UAE (October 2015), Prime Minister Narendra Modi visited Iran. The delay has been due to working on modalities and clearing of key agreements, which were signed when Modi met his counterpart President Hasan Rouhani on May 23. In terms of understanding the balancing act that India intends to maintain between key powers in the Middle East, one important point to note is that New Delhi has good relations with key regional players be it Saudi Arabia, Iran or Israel. Modi has altered course in his diplomatic cruise towards the Persian Gulf during his second year in office. He became the first premier to visit Tehran after a gap of 15 years. Bilateral Talks During his visit Modi called on the Supreme Leader of Iran, Ayatollah Ali Khamenei. The bilateral meeting with Rouhani resulted in the signing of key agreements and issuing of a media statement. These agreements suggest that the visit has been highly successful and will act as a game changer in terms of India s role in the Middle East and making inroads in Eurasia. Energy security and connectivity to the Central Asian regions through Afghanistan remain two important factors in the context of India- Iranian relations that are being explored in all earnest. Trade and investment is the third factor that both sides have shown keen interest to deepen cooperation. Given the lull in India- Iran relations during the sanctions period, India is attempting to hasten to increase oil imports and build connectivity with Iran. In order to sustain this connectivity, trade and investment between both countries, both sides have agreed to jointly cooperate against terrorism, radicalism and cyber crime. Hence both sides agreed to cooperate on intelligence sharing as a way to combat terrorism. Both have common interest in Afghanistan and had in fact shown support to the Northern Alliance that tried to fight the Taliban in the past. Chabahar: Out of the 12 agreements signed, the contract on Chabahar Port enables India to develop and operate two terminals and five berths with cargo handling capacities for ten years. Also for about two years India is exempted from providing guarantee to any cargo. To supplement this contract, a MoU was signed between India s EXIM Bank and Iran s Ports and Maritime Organization to extend a credit of US$ 150 million for Chabahar port. The port development will begin in Phase I and be finished within 18 months. The relations between both countries were given the necessary push by former Prime Ministers P. V. Narasimha Rao and A. B. Vajpayee. The strategic partnership that has evolved over these years between India and Iran has been given continuity in the form of economic linkages rather than solely relying on oil trade. The Chabahar Port development today has become a reality. Since 2013 modalities have been worked out to upgrade the Chabahar Port. The importance of the port manifests itself in many ways. First, it is the main route through which many transport corridors can pass. India gains access to Afghanistan and other Central Asian countries in the Eurasian region through the Chabahar. This Port when connected to the International North South Transport Corridor 20

(INSTC) allows India to access up to Russia and Europe. India intends to transit goods to Central Asia through Nhava Sheva (Mumbai), Bandar Abbas (Iran), Tehran, Bandar Anzali (Iran) and Astrakhan (Russia) in order to cut down cost and time by about 50%. Thus the Chabahar is part of the grand strategy to make INSTC a reality. Second, it can bypass Pakistan, which has so far acted as a spoiler, in order to give continuity to trade and connectivity with Afghanistan, Central Asia and Iran. Apart from the port development contract that was signed, both countries were joined by Afghanistan wherein President Ashraf Ghani and his counterparts signed the agreement to establish the Trilateral Agreement on Transport and Transit Corridors (Chabahar Agreement). This creates an alternative route for India and Afghanistan to trade with each other through the Iranian port than use the land route via Pakistan. Gaining access to the Central Asian region and Russia is another positive outcome of this agreement. Goods from India after reaching Iran will enter Afghanistan and via the rail and road links reach up to Russia. Pakistan has lost this opportunity considering the fact that it did not want India to be part of the Pak- Afghan transit trade agreement. Afghanistan wants India to be part of its economic connectivity and has slown the pace in materialising the Preferential Trade Agreement (PTA) with Islamabad. The latter does not so far allow Afghan trucks the use of its land route to connect with India through the Torkham- Wagah Border route. Kabul wants Islamabad to reciprocate as it allows the latter to enter Central Asia via its territory. The Chabahar is the best route for Afghanistan as it provides time saving free access with no hurdles involved for its exports. Third, as the Port opens to the Gulf of Oman, India has been planning an undersea 1400 kms Iran- Oman- India pipeline from Chabahar to the Gujarat coast, thus building its strategy for the Indian Ocean Region. If the requisite approvals and sale and purchase agreements of gas are finalised then this pipeline would be built in two years to carry about 31.5 million standard cubic metres gas per day. India has refused to be part of the 1,036 kms Iran- Pakistan- India gas pipeline since 2007 due to security and commercial problems with Islamabad. Fourth the Indian involvement in the Chabahar Port development enables it to invest and participate in the Chabahar Free Trade- Industrial Zone (CFZ). Modi in his media statement announced that India has US$ 500 million available for port development and infrastructure development in the CFZ. India has conveyed its interest in investing in gas cracker unit, petrochemical, fertilizer and liquefied natural gas (LNG) facilities in Iran with an aim to import them back to the country. So far negotiations are on for these purposes. However, the MoU was signed between the National Aluminium Company Limited (NALCO) and the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) to jointly explore the possibility of manufacturing aluminum metal by setting up of a smelter. Other Indian firms are seeking to build urea plants once the gas price is fixed preferably at less than US$ 2 per mmbtu. India stands to benefit, as the cost of Iranian gas will be roughly half the cost that it pays on the spot market. The urea plants will bring down the price and subsidy of Rs. 45,000 crore (per annum) by half within India. Largely the Chabahar port development contract also exhibits rivalries between India and China played out in third countries. Pakistan built the Gwador port with Chinese financial support and both ports are parallel to each other, only to be separated by about 72kms. Oil and gas: India which is looking at options round the world for extraction or developing of oil and gas blocks has set its sight on the Farzad- B gas field in the Persian Gulf discovered by ONGC Videsh Ltd., in 2008. Respecting India s request for rights to the field, Iran decided not to include this field in 21

the auction process. Rather India may sign the US$ 3 billion contract for the first phase of its development by October this year. Rail connectivity: India and Iran signed an agreement to build the 500 kms rail link between Chabahar Port and Zahedan. This will connect with the rest of the Iran's railway network and join the transit and transportation corridor as part of the trilateral agreement between India, Iran and Afghanistan. India through this will gain access to Afghanistan and Central Asia. Already the Zaranj- Delaram 218k ms road constructed by India in 2009 gives access to Afghanistan s Garland Highway that connects by road to four major cities Herat, Kandahar, Kabul and Mazar- e- Sharif. Other agreements signed between India and Iran were on Cultural Exchange Programme, between respective institutes for cooperation in Science and Technology, between think tanks, training of diplomats etc. Both sides have agreed to increase interaction between defence and security institutions on regional and maritime security. India has made a part payment of US$ 6.4 billion to Iran through Turkey's Halkbank which had been stopped during the sanctions period. However, both sides are silent on the second part of the payment. Iranian woes The lull in bilateral relations during the sanctions period and India s policy of practicing patience while committing to major projects like the Chabahar port upgradation or the international energy pipelines has been a point of irritation to the Iranians. Gholamreza Ansari, the current Ambassador of Iran to India, in his speech in January this year at the India International Centre said, In the past, India often advised patience on important projects. In the changed circumstances in the West Asian region, India cannot follow the policy of patient waiting any more. In its relationship with Tehran, what is noteworthy is that India did not bandwagon to support the West- led sanctions. However it has bowed to the USA pressure to lower its oil imports. What seems to be the need of the hour is to make good of the time in order to implement the decisions taken and agreements signed in new frontier areas of connectivity, investments and trade in non- oil and gas items. President Pranab Mukherjee visits China President Pranab Mukherjee s visit to China (May 24 to 27) comes in the backdrop of some adverse incidents that have taken place recently, be it at the UN, or with the issuing of a visa to an Uighur activist by India or incursions in the border. These incidents give continuity to the years of rivalry that have manifested themselves onto the global stage between New Delhi and Beijing. From border disputes, the rivalry of both countries has reached the global stage wherein China recently blocked India s proposal at the UN to impose a ban on Jaish- e- Mohammed head Masood Azhar. Citing technicalities, it has likewise blocked India s earlier bid on the Mumbai terror attack mastermind Zaki- ur- Rehman Lakhvi. However, unlike with Pakistan, India has been able to maintain a steady relationship and carry on a meaningful dialogue even in disputed areas like visa and border talks. Also the bilateral trade between India and China has increased from US$ 2.91 billion many years ago to US$ 71 billion in 2015 which stands testimony to the fact that economic relations have not been impacted despite India having a huge trade deficit. 22

Sino- India Business Meet in Guangzhou: Mukherjee s first stop was to the industrial city of Guangzhou. He attended and addressed the Sino- India Business meet. This province is known for strong trade links with India and is home to about 3,000 Indian businessmen, who are third in terms of ranking after Japan and South Korea. Also in 2014, a sister- province relationship between Gujarat and Guangdong was established. Mukherjee in his address and meeting with important persons at Guangzhou emphasised on the investment opportunities and invited Chinese Foreign Direct Investment (FDI) into India. He also highlighted India s growth story wherein the economy was growing at a current rate of 7.5% - 8% and that growth would be sustained and continued for the next quarter of the century. In his meeting with the Communist Party of China s party secretary of the Guangdong province Hu Chunhua he discussed the issues of trade and investment, cultural relations and China s federal system. At Peking University: In his address titled "India- China Relations: 8 steps to a people- centric partnership" at the Peking University, Mukherjee outlined his 8- pillars on which India- China relations should rest. These were enhanced political communication, youth interactions, collaborative visual media production and development, cultural exchanges, collaboration on sustainable and environment friendly urban development, increasing public awareness about multilateral cooperation, and lastly though trade and investment. He reminded China of India s past support to China with regard to its UN membership and restoration of its permanent membership of the UN Security Council. Also MoUs were signed between Indian and Chinese universities for academic cooperation in areas like science, engineering, management studies, urban planning and ecology. Mukherjee- Xi Talks: Mukherjee held talks with his Chinese counterpart Xi Jinping in Beijing on May 26. They discussed bilateral, regional and global issues. However, Mukherjee focused on the aspect of terrorism by reminding China that there was "no such thing as good terrorists and bad terrorists". This meant that terrorism has to be fought on a common stand while avoiding double standards or approach. This statement is a veiled reference to China s blocking of the Masood Azhar issue at the UN. India is seeking membership of the Nuclear Suppliers Group (NSG) and the MTCR. In preparation to the NSG plenary to be held in June, Mukherjee discussed ways to expand cooperation on civilian nuclear energy. China has maintained its stand that signing of the Nuclear Non- Proliferation Treaty (NPT) should be the criteria for NSG membership and not exception the norm. Other issues: Other issues that were given importance were investment, trade and tourism. China has promised cooperation in areas like railways, industrial zones, energy and space. Chinese investors have shown interest in new schemes like Smart Cities, Digital India and Make in India. The talks have not led to any change in the stances adopted by both countries on the issues discussed between Mukherjee and Xi including the border dispute. The visit comes after the 19th India- China border talks wherein National Security Advisor Ajit Doval and his counterpart Yang Jiechi focussed their negotiations on the framework settlement to work out a plan that is acceptable to both sides. However, this visit is to lay the ground for Modi s upcoming visit to China in September and Xi s visit in October to India. These regular political exchanges can make the Closer Developmental Partnership that both countries have initiated to become a reality. 23