Program and Batch: PGDM 2016-18

Term: VIII

Course Name: International Business (IB)

Name of the faculty: Prof. K.L.C Chawla

Topic/Title: International Diplomacy is ruling Global Business

Original or Revised Write-up: Original

Group number: 4

Contact No. and email of Group Coordinator: 9986920650, ft16mohammedjunaids@imt.ac.in

Group Members:
Sl. Roll No. Name

1 160101130 Vivan Venkat Kirpal

2 160103103 Anuroop Pulavarthy

3 160103118 Sandeep PBS

4 160101093 Sasank KNV

5 160101146 Mohammed Junaid S

 Executive Summary

This project examines the effect of International Diplomacy on Global Business by looking at
situations from the real world in which diplomacy has resulted in the enhancement or
termination of Global Business. The report begins by examining the definitions and the scope
of diplomacy in business, the types of diplomacy and the several types of diplomatic tools and
strategies used by countries across the world.
Next, we look at economic diplomacy and commercial diplomacy in detail and observe how
different nations have used them to generate trade and business opportunities for themselves
across the world. We also analyse the role played by businessmen and multi-national
corporations in dictating diplomatic agendas. We examine if large corporations can influence
the diplomatic relations between two nations and quote specific instances where businessmen
or MNCs have been able influence policy decisions.
Towards the end, we examine the foreign policy and diplomacy extended by India to developed
nations like The United States, Russia, Japan and the crisis-laden countries like Israel and Iraq
with whom India has very crucial trade relations. We conclude by learning how India and other
solved their issues with their foreign counterparts by successfully practicing the art of
diplomacy and we appreciate how diplomacy has been ruling global business especially in this
globalized world
 Acknowledgements

We are extremely thankful to Prof K.L Chawla, under whose guidance we carried out this
study. He has been the guiding light for us through out the project. We also express our
gratitude to our friends at IMT Ghaziabad who helped us during the course of this project. We
thank our college, Institute of Management Technology, Ghaziabad, for providing us with
access to reports and research papers which helped us immensely while completing the project
 Table of Contents
Executive Summary................................................................................................................................. 2
Acknowledgements................................................................................................................................. 3
Introduction ............................................................................................................................................ 5
Types of Diplomacy ................................................................................................................................. 6
Objectives of the Study ........................................................................................................................... 7
Methodology........................................................................................................................................... 7
Project Analysis ....................................................................................................................................... 8
Economic Diplomacy ........................................................................................................................... 8
Three Elements of Economic Diplomacy ............................................................................................ 9
Strategies by State .............................................................................................................................. 9
India: ............................................................................................................................................... 9
Brazil:............................................................................................................................................. 10
China: ............................................................................................................................................ 10
United States:................................................................................................................................ 11
Commercial Diplomacy: .................................................................................................................... 12
Businessmen as Intermediaries: ....................................................................................................... 15
Indian Diplomacy and its role in International Business:.................................................................. 17
Indian Diplomacy under the Narendra Modi Government: ............................................................. 19
India & The United States: ................................................................................................................ 20
India & Israel: .................................................................................................................................... 24
India & Canada .................................................................................................................................. 24
India & Malaysia................................................................................................................................ 26
Conclusion: ............................................................................................................................................ 29
References ............................................................................................................................................ 30
Introduction
Diplomacy is one of the vital instruments in the foreign policy of a nation, which enables the
management of external relations of a state by communication with foreign authorities and
public, as well as through the process of networking and negotiations. It is the art and practice
of conducting negotiations between representatives of states. International Diplomacy refers to
the conduct of international relations through the intercession of professional diplomats with
regard to a full range of topical issues. International treaties are usually negotiated by diplomats
prior to endorsement by national politicians. Diplomatic activities may take place on the
international level (bilateral, regional or multilateral) or within the host state (for example,
relations with government departments, civil servants, parliament, NGOs, business
organizations, corporations or so on).
Some of the earliest known diplomatic records are the Amarna letters written between the
pharaohs of the Eighteenth dynasty of Egypt and the Amurru rulers of Canaan during the 14th
century BC. Following the Battle of Kadesh in c. 1274 BC during the Nineteenth dynasty, the
pharaoh of Egypt and the ruler of the Hittite Empire created one of the first known international
peace treaties which survives in stone tablet fragments, now generally called the Egyptian–
Hittite peace treaty. Ancient India, with its kingdoms and dynasties, had a long tradition of
diplomacy. The oldest treatise on statecraft and diplomacy, Arthashastra, is attributed to
Kautilya (also known as Chanakya), who was the principal adviser to Chandragupta Maurya,
the founder of the Maurya dynasty who ruled in the 3rd century BC. It incorporates a theory of
diplomacy, of how in a situation of mutually contesting kingdoms, the wise king builds
alliances and tries to checkmate his adversaries. The envoys sent at the time to the courts of
other kingdoms tended to reside for extended periods of time, and Arthashastra contains advice
on the deportment of the envoy, including the trenchant suggestion that 'he should sleep alone'.
The highest morality for the king is that his kingdom should prosper.
The ancient Greek city-states on some occasions sent envoys to each other in order to negotiate
specific issues, such as war and peace or commercial relations, but did not have diplomatic
representatives regularly posted in each other's territory. However, some of the functions given
to modern diplomatic representatives were in Classical Greece filled by a proxenos, who was
a citizen of the host city having a particular relation of friendship with another city – a
relationship often hereditary in a particular family. In times of peace diplomacy was even
conducted with rivals such as the Achaemenid Empire of Persia, though the latter eventually
succumbed to the invasions of the Macedonian king Alexander the Great. The latter was also
adept at diplomacy, realizing that in order to conquer certain territories it was important for his
Macedonian and subject Greek troops to mingle and intermarry with native populations. For
instance, Alexander even took a Sogdian woman of Bactria as his wife, Roxana, after the siege
of the Sogdian Rock, in order to quell the region (which had been troubled by local rebels such
as Spitamenes). Diplomacy was a necessary tool of statecraft for the great Hellenistic kingdoms
such as the Ptolemaic Kingdom and Seleucid Empire, who fought several wars in the Near East
and often negotiated a peace treaty through alliances through marriage.
In Europe, early modern diplomacy's origins are often traced to the states of Northern Italy in
the early Renaissance, with the first embassies being established in the 13th century. Milan
played a leading role, especially under Francesco Sforza who established permanent embassies
to the other city states of Northern Italy. Tuscany and Venice were also flourishing centres of
diplomacy from the 14th century onwards. It was in the Italian Peninsula that many of the
traditions of modern diplomacy began, such as the presentation of an ambassador's credentials
to the head of state.

Types of Diplomacy
There are a variety of diplomatic categories and diplomatic strategies employed by
organizations and governments to achieve their aims, each with its own advantages and
disadvantages.
Preventive Diplomacy: Preventive diplomacy is action to prevent disputes from arising
between parties, to prevent existing disputes from escalating into conflicts and to limit the
spread of the latter when they occur. Since the end of the Cold War the international community
through international institutions has been focusing on preventive diplomacy.
Public Diplomacy: Public diplomacy is exercising influence through communication with the
general public in another nation, rather than attempting to influence the nation's government
directly. This communication may take the form of propaganda, or more benign forms such as
citizen diplomacy, individual interactions between average citizens of two or more nations.
Technological advances and the advent of digital diplomacy now allow instant communication
with foreign publics, and methods such as Facebook diplomacy and Twitter diplomacy are
increasingly used by world leaders and diplomats
Soft Power: Soft power, sometimes called hearts and minds diplomacy, as defined by Joseph
Nye, is the cultivation of relationships, respect, or even admiration from others in order to gain
influence, as opposed to more coercive approaches. Often and incorrectly confused with the
practice of official diplomacy, soft power refers to non-state, culturally attractive factors that
may predispose people to sympathize with a foreign culture based on affinity for its products,
such as the American entertainment industry, schools and music
Economic Diplomacy: Economic diplomacy is the use of foreign aid or other types of economic
policy as a means to achieve a diplomatic agenda
Counterinsurgency Diplomacy: Counterinsurgency diplomacy or Expeditionary Diplomacy,
developed by diplomats deployed to civil-military stabilization efforts in Iraq and Afghanistan,
employs diplomats at tactical and operational levels, outside traditional embassy environments
and often alongside military or peacekeeping forces. Counterinsurgency diplomacy may
provide political environment advice to local commanders, interact with local leaders, and
facilitate the governance efforts, functions and reach of a host government
Gunboat Diplomacy: Gunboat diplomacy is the use of conspicuous displays of military strength
as a means of intimidation in order to influence others. It must also be stated that since gunboat
diplomacy lies near the edge between peace and war, victory or defeat in an incident may foster
a shift into political and psychological dimensions: a standoff between a weaker and a stronger
state may be perceived as a defeat for the stronger one. This was the case in the Pueblo Incident
in which the Americans lost face with regard to North Korea.
Appeasement: Appeasement is a policy of making concessions to an aggressor in order to avoid
confrontation; because of its failure to prevent World War 2, appeasement is not considered a
legitimate tool of modern diplomacy
Nuclear Diplomacy: Nuclear diplomacy is the area of diplomacy related to preventing nuclear
proliferation and nuclear war. One of the most well-known (and most controversial)
philosophies of nuclear diplomacy is mutually assured destruction (MAD)

Objectives of the Study

The objectives of the study are to:
 Analyse and examine in detail the various kinds of diplomacy and diplomatic tools that are
being used by countries across the world to spur their International Business
 Analyse how diplomacy has been impacting trade and other relations between different
countries

Methodology
The study on ‘Is International Diplomacy Ruling Global Business’ is based on secondary data
sources. The data in this study has been collected from sources such as Centre for Monitoring
Indian Economy (CMIE); Ministry of Commerce and Industry, Government of India and
Ministry of External Affairs, Government of India. The other source of data information has
been Economic Survey of India and India Stats. The other sources referred to for the completion
of this study are newspaper articles from prominent newspapers like The Hindu, The Economic
Times, Business Standard etc.
Project Analysis
Economic Diplomacy
Economic Diplomacy is a form of diplomacy in which the state uses its full spectrum of
economic tools to achieve its national interest. Economic Diplomacy includes all the economic
activities, including but not limited to export, import, investment, lending, aid, free trade
agreements etc. Economic diplomacy is concerned with economic policy issues, e.g. work of
delegations at standard setting organizations such as World Trade Organization (WTO).
Economic diplomats also monitor and report on economic policies in foreign countries and
give the home government advice on how to best influence them. Economic diplomacy
employs economic resources, either as rewards or sanctions, in pursuit of a particular foreign
policy objective. This is sometimes called "economic statecraft"
Economic diplomacy is traditionally defined as the decision-making, policy-making and
advocating of the sending state-business interests. Economic diplomacy requires application of
technical expertise that analyse the effects of a country's (Receiving State) economic situation
on its political climate and on the sending State's economic interests. The Sending State and
Receiving State, foreign business leaders as well as government decision-makers work together
on some of the most cutting-edge issues in foreign policy, such as technology, the environment,
and HIV/AIDS, as well as in the more traditional areas of trade and finance. Versatility,
flexibility, sound judgment and strong business skills are all needed in the execution of
Economic Diplomacy.
a. Scope: International and Domestic economic issues – this includes the “rules for economic
relations between states” that has been pursued since the World War II. And owing to the
increased globalization and the resultant interdependence among state during the 1990s obliges
“economic diplomacy to go deep into domestic decision making” as well. This cover “policies
relating to production, movement or exchange of goods, services, instruments (including
official development assistance), money information and their regulation” (Bayne and
Woolcock (eds) 2007)
b. Players: State and non-state actors – As all government agencies that have economic
mandates operate internationally and are players in economic diplomacy though they do not
describe them as such. Further, non-state actors such as NGOs that are engaged in economic
activities internationally are also players in economic diplomacy (Bayne and Woolcock (eds)
2007). Businesses and investors are also actors in the process of economic diplomacy,
especially when contacts between them and governments are initiated or facilitated by
diplomats.
Berridge and James (2003) state that “economic diplomacy is concerned with economic policy
questions, including the work of delegations to conferences sponsored by bodies such as the
WTO” and include “diplomacy which employs economic resources, either as rewards or
sanctions, in pursuit of a particular foreign policy objective” also as a part of the definition.
Rana (2007) defines economic diplomacy as “the process through which countries tackle the
outside world, to maximize their national gain in all the fields of activity including trade,
investment and other forms of economically beneficial exchanges, where they enjoy
comparative advantage.; it has bilateral, regional and multilateral dimensions, each of which is
important”.
The broad scope of this latter definition is especially applicable to the practice of economic
diplomacy as it is unfolding in emerging economies. This new approach involves an analysis
of a nation's economy, taking into account not only its officially reported figures but also its
grey, or unreported, economic factors. An example might be the new Republic of Kosovo; in
that emerging nation, widely regarded as a candidate for "poorest nation in Europe", an
enormous amount of economic activity appears to be unreported or undocumented by a weak
and generally ineffectual central government. When all economic factors are considered, the
so-called "poorest" nations are demonstrably healthier and thus more attractive to investment
than the raw statistics might otherwise show.
Emerging economies have learned that they are not flowers and businesses are not like bees;
in other words, a nation that wants to attract business must be proactive rather than passive.
They must seek out opportunities and learn to bring them home. Tax and other concessions
will likely be necessary and in the short term costly. However, creative support of new business
opportunities can generate major chances for success. This sort of activity is also a part of
economic diplomacy.
The sort of economic diplomacy that utilizes a nation's already-deployed corps of diplomats to
promote the nation and seek business opportunities is not traditional, but its effectiveness is
apparent. Emerging nations seeking to conserve scarce personnel and financial resources
immediately benefit from multitasking.
Three Elements of Economic Diplomacy
1. Commercial diplomacy and NGO's: The use of political influence and relationships to
promote and/or influence international trade and investment, to improve on functioning of
markets and/or to address market failures and to reduce costs and risks of cross border
transactions (including property rights).
2. Structural policies and bilateral trade and investment agreements: The use of economic assets
and relationships to increase the cost of conflict and to strengthen the mutual benefits of
cooperation and politically stable relationships, i.e. to increase economic security.
3. International organizations: Ways to consolidate the right political climate and international
political economic environment to facilitate and institute these objectives
Strategies by State
India:
India has engaged in economic diplomacy primarily through the use of trade and aid. For
example, in order to build a stronger, more stable relationship with Bangladesh, India granted
it an $800 million soft loan, and provided $200 million in aid.
India set up a development wing in its government in January 2012. The Development Partners
Administration (DPA), is a primary way India uses economic diplomacy, in this case
development aid, as a way to engage diplomatically. The DPA is building 50,000 housing units
in Sri Lanka, a large transmission line in Puli Khumri, Afghanistan, and extends Lines of Credit
projects globally, particularly in Africa.
Economic diplomacy and the DPA are very important to Indian foreign policy. As the former
Indian Foreign Secretary Lalit Mansingh stated: "The fact that the DPA division is located in
the ministry of external affairs shows it is in sync with our foreign policy objectives of
transforming India into a global player”
Brazil:
Brazil has made a concerted effort to engage in economic diplomacy with the developing
world. Brazil has made it a priority to be a leader in sharing technological knowledge in areas
such as education and the all-important agricultural sector.
One example of Brazil's economic diplomacy strategy is the Brazilian Cooperation Agency
(ABC), which is affiliated with the Brazilian Ministry of External Relations. The ABC has the
mandate to negotiate, coordinate, implement and monitor technical cooperation projects and
programs with countries, primarily in the developing world, that Brazil has agreements with.
As Brazil States:
"Brazil has been investing in agreements with both developed and developing countries to
acquire and disseminate knowledge applied to social and economic development. We have
practiced the concept of not simply receiving knowledge from developed countries, but also
sharing our own experiences with others in effective partnerships towards development.
South-South cooperation contributes to consolidating Brazil’s relations with partner countries
as it enhances general interchange; generates, disseminates and applies technical knowledge;
builds human resource capacity; and, mainly, strengthens institutions in all nations involved.
Taking these goals into account, ABC has defined focal partners that include African
Portuguese-speaking countries (PALOPs), East Timor, Latin America and the Caribbean. In
this context, we have started cooperating trilaterally with developed countries as well.
The ultimate goal of technical cooperation – exchanging experiences and knowledge –
materializes reciprocal solidarity among peoples and does not only benefit recipient countries,
but Brazil as well." The ABC is a primary example of how Brazil is using economic diplomacy
to fit into its larger national strategy of providing leadership in the developing world.
China:
Economic diplomacy is a central aspect of Chinese foreign policy. During China's remarkable
economic rise, it has used economic diplomacy primarily through trade, and the use of carrots
as a means to accumulate or attract soft power. This was a part of the broader strategy
formulated by think tanks in the PRC during the 1990s titled the new security concept. It is
referred to in the West as the period of "China's Peaceful Rise".
Recently, China has changed its strategic doctrine and begun to use economic diplomacy as a
coercive tool. After 10 years or so of a policy based primarily on economic carrots, China has
begun to show a willingness to use economic diplomacy for coercive means. This is evidenced
in the September 2010 incident that blocked shipments of rare earth minerals to Japan. Another
incident took place in 2012 in the Philippines, where China sent a gunboat in to enforce trade
restricts. China's willingness to use bring in warships during trade disputes is reminiscent to an
earlier era of American gunboat diplomacy.
Recent history shows that as China grows more confident, we will see it gradually move away
from an economic diplomacy policy of carrots, to sticks.
United States:
The United States has a long history of economic diplomacy dating back to the dollar
diplomacy of William Howard Taft. The United States was also central to perhaps the most
important economic diplomacy event, the Bretton Woods Conference where the International
Monetary Fund and International Bank of Reconstruction and Development were created. The
United States was involved in one of the more notable acts of economic diplomacy in history
with the Marshall Plan.
Though it has always played a key role, Economic diplomacy took on increased importance
during the first term of President Barack Obama under the leadership of Secretary of State
Hillary Clinton.
During a major policy speech as Secretary of State, Clinton stated that economic statecraft is
at the heart of (the American) foreign policy agenda.
Secretary of State Clinton saw economic development and democratic development as
inextricably linked. In her speech, she explained the importance of its success: "we happen to
believe that our model is not only the best for us; we think it embodies universal principles,
human aspirations, and proven results that make it the best model for any country or people.
Now, there can be variations on how it’s implemented, but we are in this competition to win it.
We want to make clear that it’s not only good for America but it’s good for the rest of the world
to pursue democratic and economic reform.”
Clinton laid out the stakes as such: "If people don’t believe that democracy and free markets
deliver, then they’re going to be looking elsewhere for models that more readily respond to
their daily needs."
Secretary Clinton saw pursuing mutually beneficial trade between the United States and other
areas of the world as central to the American diplomatic agenda. She went on to detail the
American strategy for several significant regions.
Secretary of State Clinton's regional economic diplomacy strategies:
On Russia: "Even in a U.S.-Russia relationship dominated for decades by politics and security,
we are now focused on helping Russia join the World Trade Organization, and we are putting
a special premium on protecting freedom of navigation and a rules-based approach to resource
development in places like the South China Sea and the Arctic Ocean."
On Europe: "Together, America and Europe account for half of the world’s economic output,
but just one-third of global trade. We can and we should be trading more. At the Transatlantic
Economic Council, too often we re-litigate regulatory differences when we ought to be
resolving them and avoiding new ones. And this frustrates companies on both sides of the
Atlantic. The Transatlantic Economic Council is the forum where we try to resolve these
differences, and I believe harmonizing regulatory schemes between the United States and the
EU is one of the best ways we can both enhance growth, enhance exports, and avoid duplicative
costs. But if you spend weeks arguing about the size of a jar for baby food, that’s not exactly
facing up to the potential of the payoff that comes from resolving these issues."
On China: "We also need to promote the free flow of capital, too. Investment in both directions,
backed by well-enforced rules, is vital to creating growth and jobs here at home. For example,
last year, the Kentucky-based company that owns KFC and Pizza Hut, two iconic American
brands, actually made more money selling pizza and fried chicken in China than in the United
States. But this creates jobs at headquarters in Louisville and it creates jobs as well in China.
When Tom Friedman warns that the Chinese will “eat our lunch,” I’m not sure that’s what he
had in mind."
On the Middle East: "Consider the transitions underway in Egypt, Tunisia, and Libya. If we
want to see democracy take root, which we do, we have to bring advanced tools to bear to help
countries reform economic systems designed to keep autocrats and elites in power. And we
know that aid alone, no matter how generous, is not enough. We need a sophisticated effort to
integrate the region’s economies, to promote investment, and to assist in economic
modernization. This is the logic behind the Middle East proposals that the President laid out in
May, which I have been urging Congress to support. To succeed, the Arab political awakening
must also be an economic awakening."
On Latin America: "we are also making it a priority to engage with the Latin American jaguars,
if you can call them that, which grew by more than six percent last year. Our free trade
agreements with Panama and Colombia move us closer to our ultimate goal of a hemispheric
trade partnership reaching from the Arctic to the tip of Argentina."
On the Pacific Basin: "...we will continue to use the Asia Pacific Economic Cooperation Forum,
which President Obama will host next month in Hawaii, to push the envelope on open, free,
transparent, and fair trade across the Pacific basin."
Commercial Diplomacy:
Commercial Diplomacy is a method of diplomacy that concerns an activity conducted by public
and private actors with diplomatic status to support business promotion between a home and
host country. It aims at generating commercial gains in the form of trade and inward and
outward investment by means of business and entrepreneurship promotion and facilitation
activities in the host country. Commercial diplomacy is pursued with the goal of gaining
economic stability, welfare, or competitive advantage. In the literature, the concepts of
Economic diplomacy and commercial diplomacy are often used interchangeably. Definitions
of both concepts vary, and consequently the relationship between them is also described
differently. Some authors argue that commercial diplomacy is a subset of economic diplomacy.
It is certain, however, that both kinds of diplomacy are "irrevocably intertwined" and thus
"distinct [but] obviously closely related to [each other]".
Commercial diplomacy emphasizes the government's role, being defined as "a government
service to the business community, which aims at the development of socially beneficial
international business ventures". It is "the work of diplomatic missions in support of the home
country's business and finance sectors and includes the promotion of inward and outward
investment, as well as trade". Commercial diplomacy thus includes "all aspects of business
support and promotion" including investment, tourism, R&D, and intellectual property.
Commercial diplomacy is designed to influence foreign government policy and regulatory
decisions that affect global trade and investment. It is concerned with government regulations
and actions that affect international commerce—including standards in areas such as health,
safety, the environment, and consumer protection; regulations covering services such as
banking, telecommunications and accounting; competition policy and laws concerning bribery
and corruption; agricultural support programs; and industrial subsidies. Potter (2004) argues
that commercial diplomacy is a value-creating activity due to its usefulness in dealing with
managerial and government concerns.
In this context, commercial diplomacy is profitable in that it makes exporting and operating
abroad easier; it is a valuable instrument for export promotion and operating abroad; it enables
companies to perform tasks abroad more quickly and increases the amount of exports and
company results by providing information about rules, regulations, culture, public tenders and
the market of the host country; by providing support during the partner search; and by providing
assistance in trade disputes, fairs, and missions. Especially for companies that have financial
limitations, access to reliable information and a broad network abroad are essential.

Commercial Diplomacy is a value creating activity. By value is meant the utility combination
of benefits delivered to the beneficiaries minus the cost of those benefits to business and
government (Porter, 1980). The commercial diplomacy’s services may be thus presented as a
value chain disaggregated into strategically relevant articles as shown in the figure above. Two
types of activities are distinguished: 1) Primary Activities (relating to trade and FDIs, research
and technology, tourism and business advocacy) and 2) support activities which provide the
inputs needed for the primary activities to occur (intelligence, networking, involvement in
made-in image campaigns, support for business negotiations, contract implementation and
problem solving).
The attraction of FDIs is a growing activity because they stimulate the home country’s
economic growth and employment in priority sectors or regions, as well as complementing co-
operation in science and technology. Advocacy in favor of the national business community
means the commercial diplomat’s involvement in public affairs for the benefit of national
companies and business associations in their dealings with the host country government,
parliament or main publics (Kostecki, 2005). It also signifies that commercial diplomats react
to host country proposals for regulations and international trade agreements.
The main support activity of commercial diplomacy is intelligence, which includes information
search and dealing with business enquiries from the home and host country firms. A Central
American commercial diplomat considers that ‘about 95% of clients do not ask for elaborate
services but mainly for basic information on legal issues, political situation, etc’. A typical
question might be: ‘is there a market for product X in country Z?’ Such simple activities mainly
provide benefits for SMEs rather than larger firms. In Switzerland, economic reports of
embassies follow standards set by Seco (belonging to the ministry of economy) and are
prepared in co-operation with bilateral chambers of commerce. ‘In small embassies the basic
service may be even assumed by such chambers’.
Intelligence from commercial diplomats most frequently concerns reporting on opportunities
resulting from calls for tenders, development projects or the needs of leading industrial
customers, information on changes in regulations affecting exporters and so on. Information-
gathering is progressively changing its character due to the improved transparency brought
about by the WTO and Internet based information systems such as the EU centralized database
http://ec.europa.eu. ‘Trade promotion experts invite commercial diplomats to suggest business
solutions instead of providing information’. Reporting becomes more business specific. ‘One
finds today business information on the Internet and in the Financial Times. Companies hate
reports; reports should be short and to the point’. As a consequence, commercial diplomats
may focus more on searching out more specific information on ‘real-life’ issues. Such ‘tailor-
made’ information is often presented in confidential reports. ‘The ambassador receives all the
information and decides with whom to share it. Staff distribute the information accordingly
thereafter’.
An illustrative list of comments on business-support functions of commercial diplomats is set
out below:
• Business is conducted by companies but governments may open doors (Australian
industrialist).
• We introduce business people but we stop there. Doing business is not our responsibility
(commercial diplomat, South America).
• It (commercial diplomacy) is largely about personal relationships and networking
(commercial diplomat, Anglo-Saxon country).
• Commercial Diplomacy is essentially about selling consulting services. Companies should be
charged for it. (Trade promotion expert).
• Mostly manufacturing SMEs used trade promotion services. We deal with a number of
Fortune 500 companies mainly to provide advocacy services. (commercial diplomat, Anglo-
Saxon country).
• A trade representative needs time to become a player and to be taken seriously; at least 18
months (former commercial diplomat from New Zealand).
• Our ambassadors and commercial diplomats are in regular contacts with multinational
corporations in order to encourage them to invest in our country (commercial diplomat from
Central Europe).
• Commercial diplomatic services are particularly useful for newcomers to a given market or
for SMEs with no experience in exporting (business person from France).
Networking is needed to bring together high-tech start-ups with venture capitalists or other
partners. Public relations are strategic for FDI promotion and may involve ambassador’s
contacts with CEOs of large companies and attendance at business fora in the host country.
Assistance in ‘match making’ is particularly frequent for the commercial diplomats from the
UK, Brazil, Canada, China and Switzerland. Such activities refer both to trade issues and
foreign direct investments. In the latter case, the partner search may be also conducted on behalf
of a particular region in the home country (Blili and Sermet, 2006).
Support for national firms involved in negotiations with the authorities or corporations from
the host country are an important form of support by commercial diplomacy services, which
favor a hands-on approach to business. A commercial diplomat’s public relations activities
essentially aim at maintaining good contacts with business leaders and authorities and cover
advocacy efforts aimed at the protection of the home country’s business interests in public
hearings or consultations in the host country’s legislative process. The representatives of some
Anglo-Saxon countries suggest that such activities are particularly frequent in the case of
Fortune 500 companies. As noted by a former ambassador ‘hierarchy may be very important.
The trade representative is not always received, when alone, by managers of large corporations
and the Ambassador has to go along as well to gain access to top management’. In the UK,
Australia, Canada and the European Union commercial diplomats are only too well aware of
the important influence that an ambassador’s contacts may have for promoting foreign direct
investments. As an Australian businessman puts it, ‘certain investments would have never
taken place without a close contact between our ambassador and a CEO of a major foreign
company’.
The commercial diplomats also act as advisers in contract negotiations, provide support for
problem-solving in business or in corporate-government relations, and become involved in
dispute settlement cases. The problem- solving activities frequently refer to the protection of
intellectual property rights (Kostecki, 2006), tax issues, assistance to national companies which
have suffered losses and wish to obtain compensation as well as various forms of support
provided as diplomatic protection. Many of these kinds of problems are discussed during
periodic bilateral consultations with government of the host country. Support for problem-
solving is well illustrated by Asian commercial diplomats’ efforts to deal with the European
health authorities ‘when a food product suffered from export ban to Europe’s market’.
Commercial diplomats also assist in the finding of a ‘” friendly” solution without judicial
procedures when business conflicts arise’.
Commercial diplomacy continues to play a leading role in international business development;
there are some 20,000 commercial diplomats and their staff across the world and no fewer than
500 million US dollars are spent on such activities annually. The value chain analysis indicates
that among the primary activities of commercial diplomacy the most important are trade
promotion and – for a cluster of economies strongly prioritizing foreign direct investments –
FDI-related functions. Among the secondary activities most time is spent by the commercial
diplomats on information search and analysis and on responding to requests for information
made by companies
Businessmen as Intermediaries:
The link between the business of diplomacy and the diplomacy of business is as old as the link
between trade and flag. More recent diplomatic history is replete with examples of businessmen
building bridges between leaders of adversarial nations. Be it David Rockefeller carrying
messages between the U.S. government and Chinese Premier Zhou Enlai, or German and
Russian businessmen trying to narrow differences between Vladimir Putin and Angela Merkel,
business has helped oil the wheels of diplomacy, just as diplomacy seeks to oil those of
commerce. To be sure, individual business interest is not always the only motive for business
involvement in diplomacy. Such informal outreach has value for politicians in power because
of its deniability. Businessmen know how to keep secrets and so are often better non-official
interlocutors than other professionals. Which is one reason why the most effective way in
which business can promote diplomacy would be when it is below the radar.
The Indian diplomatic and political community has always been uncomfortable dealing with
the delicate relationship between government and business for a variety of reasons, ranging
from the fear of those in government being accused of granting favours to business for a price,
to concerns about protocol and official secrecy. Quite apart from the fact that a large part of
diplomacy has always been about promoting national business interests — “trade follows the
flag” — in the modern era of globalisation, national interest has often been promoted by
business — “flag follows trade”.
A very good example of the latter phenomenon is that of the role Hyundai played in getting
South Korean nationals out of Kuwait in 1990, when Saddam Hussein’s forces invaded that
country. A couple of hundred Korean nationals were holed up in the South Korean embassy in
Kuwait and had to be transported to the airport to be flown out on a couple of Korean airliners
waiting on the tarmac. The Kuwaiti government could not assure their security. A Hyundai
executive decided that everyone would be transported on buses flying the company flag,
confident that invading Iraqi soldiers would not fire at a bus sporting a Hyundai company flag.
They made it. A company flag was safer than a national one, under the circumstances.
There are two very different kinds of role that business can play in the cause of diplomacy. It
can be purely altruistic and expect no monetary reward in return, but hope to empower its
corporate image and brand equity; or, it can seek pecuniary benefit. Neither is illegitimate.
Heads of government do feel it is sometimes their duty to help their national firms.
Much was made in India in 2006 during the visit of French President Jacques Chirac about
whether or not Prime Minister Manmohan Singh had taken up the issue of official French
reticence to Indian businessman Ratan Tata’s attempt to buy the steel company Corus. While
some of Dr. Singh’s advisers felt it would be wrong for the government to express a view on
the matter, he had no inhibition letting the media know that he did in fact raise the matter with
Mr. Chirac.
Western leaders rarely feel inhibited promoting the interests of their businesses. For example,
at a luncheon hosted by the Prime Minister of Finland for the visiting Indian Prime Minister in
October 2006, the Finnish guest seated to the immediate right of the host was none other than
the president and CEO of the Finnish company, Nokia. Through most of the luncheon, the
conversation across the table was between Nokia’s chief and the Indian Prime Minister.
Apart from individual businessmen playing their part in promoting bilateral relations, business
associations have come to play an increasingly important role in foreign affairs. Impressed by
the role that the World Economic Forum has been able to play as a facilitator of business-
government contact through its annual Davos Forum in Switzerland, the Chinese launched their
Boao Forum for Asia. Closer home, business associations like the Federation of Indian
Chambers of Commerce and Industry (FICCI) and the Confederation of Indian Industry (CII)
have hosted events at which leaders of business and government interact, both formally and
informally.
Successive governments have used individual businessmen and business lobbies to promote
Indian national interest around the world. During the debate in the United States Congress on
the U.S.-India civil nuclear energy agreement, several business leaders and Non-Resident
Indian businesspersons in the U.S. actively lobbied American Congressmen and women. In
countries as diverse as China, Russia and Japan, business leaders have become an active
constituency who woo and get wooed by foreign governments.
Part of the reason why public opinion is often suspicious of such intimacy between business
and government is because of the concern with cronyism and corruption. There is that risk at
all times. This is at least one reason why politicians in office always deny any such contact,
and politicians out of office are critical of such contact. However, not all such contact is
suspect.
Going beyond the role of diplomatic facilitators, many Indian business leaders have emerged
as de facto “national ambassadors” given their growing global footprint and the access they
enjoy in foreign capitals. Some Indian business leaders find it easier to meet heads of
government in countries where the Indian ambassador has to often wait longer to secure an
audience.
An interesting consequence of this role of globalised business leaders is that large firms with a
global footprint invest in securing information on geopolitical trends and risks. Indeed, some
have even invested in crafting what may be called “corporate foreign policy” based on an
independent assessment of developments in countries they are invested in.
Several Western think tanks now offer geopolitical risk consultancy to corporate leaders. This
is as yet a nascent discipline in India. Some Indian business leaders have set up their own global
advisory groups manned by geopolitical and geo-economic analysts who keep them abreast of
economic, political and diplomatic developments in countries of interest to the firm concerned.
Indian Diplomacy and its role in International Business:
India has formal diplomatic relations with most nations; it is the world's second most populous
country. India is a vast country and is connected to lots of countries for economy, the world's
most-populous democracy and the fastest growing major economy. With the world's sixth
largest military expenditure, third largest armed force, sixth largest economy by nominal rates
and third largest economy in terms of purchasing power parity, India is a regional power, a
nascent global power and a potential superpower. India has a growing international influence
and a prominent voice in global affairs.
India is a newly industrialised country, has a history of collaboration with several countries, is
a component of the BRICS and a major part of developing world. India was one of the founding
members of several international organisations—the United Nations, the Asian Development
Bank, New Development BRICS Bank, and G-20—and the founder of the Non-Aligned
Movement. India has also played an important and influential role in other international
organisations like East Asia Summit, World Trade Organisation, International Monetary Fund
(IMF), G8+5 and IBSA Dialogue Forum. India is also a member of the Asian Infrastructure
Investment Bank and the Shanghai Cooperation Organisation.
Regionally, India is a part of SAARC and BIMSTEC. India has taken part in several UN
peacekeeping missions and in 2007, it was the second-largest troop contributor to the United
Nations. India is currently seeking a permanent seat in the UN Security Council, along with
the other G4 nations.
Even before independence, the Government of India maintained semi-autonomous diplomatic
relations. It had colonies (such as the Aden Settlement), who sent and received full missions,
and was a founder member of both the League of Nations and the United Nations. After India
gained independence from the United Kingdom in 1947, it soon joined the Commonwealth of
Nations and strongly supported independence movements in other colonies, like the Indonesian
National Revolution. The partition and various territorial disputes, particularly that over
Kashmir, would strain its relations with Pakistan for years to come. During the Cold War, India
adopted a foreign policy of not aligning itself with any major power bloc. However, India
developed close ties with the Soviet Union and received extensive military support from it.
The end of the Cold War significantly affected India's foreign policy, as it did for much of the
world. The country now seeks to strengthen its diplomatic and economic ties with the United
States, the European Union trading bloc, Japan, Israel, Mexico, and Brazil. India has also
forged close ties with the member states of the Association of Southeast Asian Nations, the
African Union, the Arab League and Iran.
Though India continues to have a military relationship with Russia, Israel has emerged as
India's second largest military partner while India has built a strong strategic partnership with
the United States. The foreign policy of Narendra Modi indicated a shift towards focusing on
the Asian region and, more broadly, trade deals.
India's relations with the world have evolved since the British Raj (1857–1947), when the
British Empire monopolised external and defence relations. When India gained independence
in 1947, few Indians had experience in making or conducting foreign policy. However, the
country's oldest political party, the Indian National Congress, had established a small foreign
department in 1925 to make overseas contacts and to publicise its independence struggle. From
the late 1920s on, Jawaharlal Nehru, who had a long-standing interest in world affairs among
independence leaders, formulated the Congress stance on international issues. As a member of
the interim government in 1946, Nehru articulated India's approach to the world.
India's international influence varied over the years after independence. Indian prestige and
moral authority were high in the 1950s and facilitated the acquisition of developmental
assistance from both East and West. Although the prestige stemmed from India's nonaligned
stance, the nation was unable to prevent Cold War politics from becoming intertwined with
interstate relations in South Asia.
In the 1960s and 1970s India's international position among developed and developing
countries faded in the course of wars with China and Pakistan, disputes with other countries in
South Asia, and India's attempt to balance Pakistan's support from the United States and China
by signing the Indo-Soviet Treaty of Friendship and Cooperation in August 1971. Although
India obtained substantial Soviet military and economic aid, which helped to strengthen the
nation, India's influence was undercut regionally and internationally by the perception that its
friendship with the Soviet Union prevented a more forthright condemnation of the Soviet
presence in Afghanistan. In the late 1980s, India improved relations with the United States,
other developed countries, and China while continuing close ties with the Soviet Union.
Relations with its South Asian neighbours, especially Pakistan, Sri Lanka, and Nepal, occupied
much of the energies of the Ministry of External Affairs.
In the 1990s, India's economic problems and the demise of the bipolar world political system
forced India to reassess its foreign policy and adjust its foreign relations. Previous policies
proved inadequate to cope with the serious domestic and international problems facing India.
The end of the Cold War gutted the core meaning of nonalignment and left Indian foreign
policy without significant direction. The hard, pragmatic considerations of the early 1990s were
still viewed within the nonaligned framework of the past, but the disintegration of the Soviet
Union removed much of India's international leverage, for which relations with Russia and the
other post-Soviet states could not compensate. After the dissolution of the Soviet Union, India
improved its relations with the United States, Canada, France, Japan and Germany. In 1992,
India established formal diplomatic relations with Israel and this relationship grew during the
tenures of the Bharatiya Janata Party (BJP) government and the subsequent UPA (United
Progressive Alliance) governments.
In the mid-1990s, India attracted the world attention towards the Pakistan-backed terrorism in
Kashmir. The Kargil War resulted in a major diplomatic victory for India. The United States
and European Union recognised the fact that Pakistani military had illegally infiltrated into
Indian territory and pressured Pakistan to withdraw from Kargil. Several anti-India militant
groups based in Pakistan were labelled as terrorist groups by the United States and European
Union.
After September 11 attacks in 2001, Indian intelligence agencies provided the US with
significant information on Al-Qaeda and related groups' activities in Pakistan and Afghanistan.
India's extensive contribution to the War on Terror, coupled with a surge in its economy, has
helped India's diplomatic relations with several countries. Over the past three years, India has
held numerous joint military exercises with US and European nations that have resulted in a
strengthened US-India and EU-India bilateral relationship. India's bilateral trade with Europe
and United States has more than doubled in the last five years.
India has been pushing for reforms in the UN and WTO with mixed results. India's candidature
for a permanent seat at the UN Security Council is currently backed by several countries
including France, Russia, the United Kingdom, Germany, Japan, Brazil, Australia and UAE.
In 2004, the United States signed a nuclear co-operation agreement with India even though the
latter is not a part of the Nuclear Non-Proliferation Treaty. The US argued that India's strong
nuclear non-proliferation record made it an exception, however this has not persuaded other
Nuclear Suppliers Group members to sign similar deals with India. During a state visit to India
in November 2010, US president Barack Obama announced US support for India's bid for
permanent membership to UN Security Council as well as India's entry to Nuclear Suppliers
Group, Wassenaar Arrangement, Australia Group and Missile Technology Control Regime.
Indian Diplomacy under the Narendra Modi Government:
Mr. Narendra Modi, 15th Prime Minister of India, began his diplomatic drive with invitations
being sent to the leaders of all SAARC countries and Mauritius for the swearing-in ceremony
of the new government. This unprecedented move created positive vibes, which experts
considered to be a ‘masterstroke’.
From the very beginning the Modi led government made it ample clear that India would focus
more and more on improving relations with ASEAN and other East Asian countries as per
India's Look East policy which was formulated during PM Narasimha Rao's government in
1992 for better economic engagement with its eastern neighbours but successive government
later successfully turned it into a tool for forging strategic partnership and security cooperation
with countries in that region in general and Vietnam and Japan in particular. In her recent visit
to Hanoi, Vietnam Sushma Swaraj has stressed on the need for an Act East Policy that she said
should replace India's over two decade-old Look East Policy emphasizing a more proactive
role for India in this region
One of the major policy initiatives taken by Modi government is to focus back on its immediate
neighbours in South Asia. Even before becoming the Prime Minister, Narendra Modi hinted
that his foreign policy will actively focus on improving ties with India's immediate neighbours
which is being termed as neighbourhood first policy in the media and he started well by inviting
all heads of state/heads of government of South Asian countries in his inauguration and on the
second day on office he held bilateral talks with all of them individually which was dubbed as
a mini SAARC summit by the media. Later during a launch event at ISRO he has asked Indian
scientists to take the endeavour to develop a dedicated SAARC satellite to share the fruits of
the technology like tele-medicine, e-learning etc. with the people across South Asia to
complement the currently operating Indian Technical and Economic Cooperation Programme
program in the region.
India & The United States:
Historically, United States gave very strong support to the Indian independence movement in
defiance of the British Empire relations between India and the United States were lukewarm
following Indian independence, as India took a leading position in the Non-Aligned Movement,
and received support from the Soviet Union. The US provided support to India in 1962 during
its war with China. For most of the Cold War, the USA tended to have warmer relations with
Pakistan, primarily as a way to contain Soviet-friendly India and to use Pakistan to back the
Afghan Mujahideen against the Soviet occupation of Afghanistan. An Indo-Soviet Treaty of
Friendship and Cooperation, signed in 1971, also positioned India against the USA.
After the Sino-Indian War and the Indo-Pakistani War of 1965, India made considerable
changes to its foreign policy. It developed a close relationship with the Soviet Union and started
receiving massive military equipment and financial assistance from the USSR. This had an
adverse effect on the Indo-US relationship. The United States saw Pakistan as a counterweight
to pro-Soviet India and started giving the former military assistance. This created an
atmosphere of suspicion between India and the US. The Indo-US relationship suffered a
considerable setback when the Soviets took over Afghanistan when India overtly supported the
Soviet Union. Relations between India and the United States came to an all-time low during
the early 1970s. Despite reports of atrocities in East Pakistan, and being told, most notably in
the Blood telegram, of genocidal activities being perpetrated by Pakistani forces, US. Secretary
of State Henry Kissinger and US President Richard Nixon did nothing to discourage then
Pakistani President Yahya Khan and the Pakistan Army. Kissinger was particularly concerned
about Soviet expansion into South Asia as a result of a treaty of friendship that had recently
been signed between India and the Soviet Union, and sought to demonstrate to the People's
Republic of China the value of a tacit alliance with the United States. During the Indo-Pakistani
War of 1971, Indian Armed Forces, along with the Mukti Bahini, succeeded in liberating East
Pakistan which soon declared independence. Nixon feared that an Indian invasion of West
Pakistan would mean total Soviet domination of the region, and that it would seriously
undermine the global position of the United States and the regional position of America's new
tacit ally, China. To demonstrate to China the bona fides of the United States as an ally, and in
direct violation of the Congress-imposed sanctions on Pakistan, Nixon sent military supplies
to Pakistan, routing them through Jordan and Iran, while also encouraging China to increase
its arms supplies to Pakistan.
When Pakistan's defeat in the eastern sector seemed certain, Nixon sent the USS Enterprise to
the Bay of Bengal, a move deemed by the Indians as a nuclear threat. The Enterprise arrived
on station on 11 December 1971. On 6 and 13 December, the Soviet Navy dispatched two
groups of ships, armed with nuclear missiles, from Vladivostok; they trailed US Task Force 74
into the Indian Ocean from 18 December 1971 until 7 January 1972. The Soviets also sent
nuclear submarines to ward off the threat posed by USS Enterprise in the Indian Ocean.

Though American efforts had no effect in turning the tide of the war, the incident involving
USS Enterprise is viewed as the trigger for India's subsequent interest in developing nuclear
weapons.[225] American policy towards the end of the war was dictated primarily by a need
to restrict the escalation of war on the western sector to prevent the 'dismemberment' of West
Pakistan.[226] Years after the war, many American writers criticised the White House policies
during the war as being badly flawed and ill-serving the interests of the United States. India
carried out nuclear tests a few years later resulting in sanctions being imposed by United States,
further drifting the two countries apart. In recent years, Kissinger came under fire for comments
made during the Indo-Pakistan War in which he described Indians as "bastards." Kissinger has
since expressed his regret over the comments.
After the Cold War
Since the end of the Cold War, India-USA relations have improved dramatically. This has
largely been fostered by the fact that the United States and India are both democracies and have
a large and growing trade relationship. During the Gulf War, the economy of India went
through an extremely difficult phase. The Government of India adopted liberalised economic
systems. After the break-up of the Soviet Union, India improved diplomatic relations with the
members of the NATO particularly Canada, France and Germany. In 1992, India established
formal diplomatic relations with Israel.
Pokhran tests
In 1998, India tested nuclear weapons which resulted in several US, Japanese and European
sanctions on India. India's then defence minister, George Fernandes, said that India's nuclear
programme was necessary as it provided a deterrence to some potential nuclear threat. Most of
the sanctions imposed on India were removed by 2001. India has categorically stated that it
will never use weapons first but will defend if attacked.
The economic sanctions imposed by the United States in response to India's nuclear tests in
May 1998 appeared, at least initially, to seriously damage Indo-American relations. President
Bill Clinton imposed wide-ranging sanctions pursuant to the 1994 Nuclear Proliferation
Prevention Act. US sanctions on Indian entities involved in the nuclear industry and opposition
to international financial institution loans for non-humanitarian assistance projects in India.
The United States encouraged India to sign the Comprehensive Nuclear-Test-Ban Treaty
(CTBT) immediately and without condition. The United States also called for restraint in
missile and nuclear testing and deployment by both India and Pakistan. The non-proliferation
dialogue initiated after the 1998 nuclear tests has bridged many of the gaps in understanding
between the countries.
Post–September 11
India's contribution to the War on Terror has helped India's diplomatic relations with several
countries. Over the past few years, India has held numerous joint military exercises with United
States and European nations that have resulted in a strengthened US-India and EU-India
bilateral relationship. India's bilateral trade with Europe and US has more than doubled in the
last five years.
However, India has not signed the CTBT, or the Nuclear Non-Proliferation Treaty, claiming
the discriminatory nature of the treaty that allows the five declared nuclear countries of the
world to keep their nuclear arsenal and develop it using computer simulation testing. Prior to
its nuclear testing, India had pressed for a comprehensive destruction of nuclear weapons by
all countries of the world in a time-bound frame. This was not favoured by the United States
and by certain other countries. Presently, India has declared its policy of "no-first use of nuclear
weapons" and the maintenance of a "credible nuclear deterrence". The USA, under President
George W. Bush has also lifted most of its sanctions on India and has resumed military co-
operation. Relations with USA have considerably improved in the recent years, with the two
countries taking part in joint naval exercises off the coast of India and joint air exercises both
in India as well as in the United States.
India has been pushing for reforms in the United Nations and in the World Trade Organisation
with mixed results. India's candidature for a permanent seat at the UN Security Council is
currently backed by several countries including United Kingdom, France, Germany, Japan,
Brazil, African Union nations, United States and China. In 2005, the United States signed a
nuclear co-operation agreement with India even though the latter is not a part of the Nuclear
Non-Proliferation Treaty. The United States agreed that India's strong nuclear non-proliferation
record made it an exception and persuaded other Nuclear Suppliers Group members to sign
similar deals with India.
On 2 March 2006 India and the United States signed the Indo-US Nuclear Pact on co-operation
in civilian nuclear field. This was signed during the four days state visit of USA President
George Bush in India. On its part, India would separate its civilian and military nuclear
programmes, and the civilian programmes would be brought under the safeguards of
International Atomic Energy Agency (IAEA). The United States would sell India the reactor
technologies and the nuclear fuel for setting up and upgrading its civilian nuclear programme.
The US Congress needs to ratify this pact since US federal law prohibits the trading of nuclear
technologies and materials outside the framework of the Nuclear Suppliers Group (NSG).
Indo-USA relations got strategic content in the early 1960s. The rise of the People's Republic
of China worried the policymakers in Washington. Chinese assertion in Tibet, its role in the
Korean War and other such acts concerned Washington. As the relations between India and
China were heated during the late fifties, the Americans found a golden opportunity to take
advantage of this situation to promote India as a counterweight to China. But any
unidimensional alliance is bound to be short-lived and this alliance was no exception to this
general rule. As China ceased to be a headache for the American policymakers by the late
sixties, this unidimensional alliance disappeared into thin air.
The end of the Cold War necessitated as well as facilitated the infusion of strategic content to
Indo-USA relations–this time multidimensional. In the post-Cold War era, the strategic
objectives of India and the United States converges on a number of issues and not just one–as
well as the case earlier. These issues include, inter alia, containment of terrorism, promotion of
democracy, counter proliferation, freedom of navigation in the Indian Ocean, Asian balance of
power, etc.
One of the very interesting features of Indo-USA relations of recent times is the changes on the
terms of engagement between the two countries on the issue of nuclear proliferation. While
earlier, in the USA strategic thinking on nuclear proliferation, India figured mainly because of
American concern about latter's nuclear and missile programmes, in the twenty-first century,
however, American strategic thinking on the issue of nuclear proliferation has undergone major
reorientation. Now, the Americans are increasingly realising the futility of insisting on a
rollback of India's nuclear programme. They, rather, want to leverage India's growing power
and influence in favour of their broader non-proliferation and counter proliferation objectives.
Being the world's oldest democracy, the promotion of democracy around the world is one of
the most important foreign policy objective of the United States. India —as the largest
democracy of the world— can hardly be overlooked by the United States. This is the reason,
co-operation in promotion of democracy in the world has become one of the most important
facets of Indo-USA relations in recent times. India is a founding member of the "Community
of Democracies"—a prominent endeavour of the United States on promotion of democracy.
However, India rejected the suggestion of the USA about setting up a Centre for Asian
Democracy.
Agriculture is another important part of co-operation between India and the USA in present
times. Considering the fact that both the nations at present have a vast pool of human resources
adept at knowledge economy, it is only natural that the best course such partnership can aim at
is harnessing these human resources by concentrating on development and dissemination of
agricultural knowledge through research, education and training etc. An initiative to forge such
a partnership is the "India-USA Knowledge Initiative on Agriculture" (KIA).
Indian Prime Minister Manmohan Singh was the guest of honour at the first state dinner, which
took place on 24 November 2009, of the administration of US President Barack Obama. Obama
later visited India from 6–9 November 2010, signing numerous trade and defence agreements
with India. He addressed the joint session of the Indian parliament in New Delhi, becoming
only the second US President to do so, and announced that the United States would lend its
support to India's bid for a permanent seat in the United Nations Security Council, signifying
the growing strategic dimension of the relationship between the world's two largest
democracies.
India & Israel:
The establishment of Israel at the end of World War II was a complex issue. Based on its own
experience during partition, when 14 million people were displaced and an estimated 200,000
to 500,000 people were killed in Punjab Province, India had recommended a single state, as
did Iran and Yugoslavia (later to undergo its own genocidal partition). The state could allocate
Arab- and Jewish-majority provinces with a goal of preventing partition of historic Palestine
and prevent widespread conflict. But, the final UN resolution recommended partition of
Mandatory Palestine into Arab and Jewish states based on religious and ethnic majorities. India
opposed this in the final vote as it did not agree with the concept of partition on the basis of
religion.
Due to the security threat from a US-backed Pakistan and its nuclear programme in the 1980s,
Israel and India started a clandestine relationship that involved co-operation between their
respective intelligence agencies. Israel shared India's concerns about the growing danger posed
by Pakistan and nuclear proliferation to Iran and other Arab states. After the end of the Cold
War, formal relations with Israel started improving significantly.
Since the establishment of full diplomatic relations with Israel in 1992, India has improved its
relations with the Jewish state. India is regarded as Israel's strongest ally in Asia, and Israel is
India's second-largest arms supplier. Since India achieved its independence in 1947, it has
supported Palestinian self-determination. India recognised Palestine's statehood following
Palestine's declaration on 18 November 1988 and Indo-Palestinian relations were first
established in 1974.s This has not adversely affected India's improved relations with Israel.
India has entertained the Israeli Prime Minister in a visit in 2003, and Israel has entertained
Indian dignitaries such as Finance Minister Jaswant Singh in diplomatic visits. India and Israel
collaborate in scientific and technological endeavours. Israel's Minister for Science and
Technology has expressed interest in collaborating with the Indian Space Research
Organisation (ISRO) towards using satellites to better manage land and other resources. Israel
has also expressed interest in participating in ISRO's Chandrayaan Mission involving an
unmanned mission to the moon. On 21 January 2008, India successfully launched an Israeli
spy satellite into orbit from Sriharikota space station in southern India.
Israel and India share intelligence on terrorist groups. They have developed close defence and
security ties since establishing diplomatic relations in 1992. India has bought more than $5
billion worth of Israeli equipment since 2002. In addition, Israel is training Indian military units
and in 2008 was discussing an arrangement to give Indian commandos instruction in counter-
terrorist tactics and urban warfare. In December 2008, Israel and India signed a memorandum
to set up an Indo-Israel Legal Colloquium to facilitate discussions and exchange programmes
between judges and jurists of the two countries.
Following the Israeli invasion of Lebanon in 2006, India stated that the Israeli use of force was
"disproportionate and excessive."
India & Canada
India set up political relations with Canada in 1947. In Canada, High Commission of India
represents India in Ottawa and the Consulate General of India in Vancouver and in Toronto.
Canada is represented by the Canadian High Commission in New Delhi; the Consulates
General of Canada in Mumbai, Bangalore, Chandigarh and Kolkata. India and Canada have
longstanding two-sided relationship in light of shared just esteems, pluralistic social orders and
solid individuals to-individuals contacts. As of late, the two nations have been attempting to
upgrade reciprocal collaboration in various regions of shared significance. A few abnormal
state visits have occurred amid late years including at PM levels: Dr Manmohan Singh, Prime
Minister of India, went to Canada in 2010; Prime Minister Stephen Harper of Canada went by
India in 2009 and 2012; and the Governor General David Lloyd Johnston went to India from
22 February to 2 March, 2014. The inaugural India-Canada Strategic Dialog was held in
September 2013 co-led by External Affairs Minister Shri Salman Khurshid and Minister of
Foreign Affairs Mr. John Baird. The main India Canada Ministerial Energy Dialog was held in
Ottawa in October 2013 which was co-led by ShriMontek Singh Ahluwalia, Deputy Chairman
of Planning Commission, and Mr. Joe Oliver, Minister of Natural Resources, from the
Canadian side.
India and Canada seek after reciprocal relations through the instruments of yearly Foreign
Office Consultations, Ministerial level Strategic Dialog, Ministerial Level Energy Dialog,
Security Dialog, Trade Policy Consultations, Economic and Financial Sector Policy Dialog,
Joint Working Group on Counter-fear mongering, Science and Technology Committee,
Environment Forum, Energy Forum, Steering Committee on Mining and Earth Sciences; and
Joint Working Groups on ICTE, Education, Pulses, Plant Protection, Health, Agriculture and
SPS issues.
India and Canada have consented to a few arrangements including the Air Services Agreement,
Extradition Treaty, Mutual Legal Assistance Treaty and Agreement on Patents. As of late the
two sides have consented to Arrangement on Cooperation in Agriculture, Agreement on
Science and Technology and Environment Cooperation, Nuclear Cooperation Agreement,
Social Security Agreement, and Audio-Visual Co-Production Agreement. There are MOUs on:
Cooperation in Energy, Cooperation in Space, Cooperation in Mining and Earth Sciences,
Cooperation in Higher Education, Cultural Cooperation, Cooperation in Intelligent Transport
Systems, Cooperation in ICTE, Cooperation in the Field of Petroleum &Natural Gas,
Cooperation on Global Health Challenges, and Cooperation on Skill Development. Other
understandings incorporate MOU amongst Indian and Canadian Public Service Commissions
for sharing encounters and ability in Civil Services matters, MOU between Indian Council of
Medical Research (ICMR) and the Canadian Institute of Health Research (CIHR) to set up new
or potentially reinforce existing coordinated efforts in exceptional wellbeing related fields of
research. Isolate MOUs on Mines and Mineral Resources have been marked with the Provinces
of Saskatchewan, British Columbia, Ontario, and Quebec. Branch of Research and
Development Organization (DRDO)has marked MOU with York University for R&D in E-
Warn. A Social Security Agreement has likewise been marked with the Government of Quebec.
Trade Relations
The two-sided exchange amongst India and Canada, at its present level, don't mirror the
genuine capability of the business relationship. In the Joint Statement issued on the event of
the State visit of Prime Minster Harper to India in November 2012, the two sides repeated the
common need to see the respective exchange reach $15 billion by 2015. While the two-sided
exchange 2012 was US$ 5.2 billion, in 2013 it expanded to over US$ 5.7 billion, enlisting an
expansion of7.69%.
Major item of Indian exports in 2013: Jewelry, organics, pharmaceuticals, oil based goods,
materials, ocean food, iron and steel, electrical gear, apparatus and vehicle parts, calfskin and
footwear items, and so forth.
Major item of Canada's exports in 2013: Peas and bean, minerals& metals, papers, aviation
items, gold and silver metal, restorative instruments, elastic, oil and gas extraction, industry
apparatus, press and steel, and so forth.
[Figures in billion US Dollars]
Details 2007 2008 2009 2010 2011 2012 2013 2014 (Jan-May)
India’s Exports 1.841 2.065 1.754 2.064 2.561 2.858 2.982 1.149
India’s Imports 1.667 2.268 1.881 2.024 2.658 2.357 2.760 0.965 (million)
Total 3.508 4.333 3.635 4.088 5.219 5.215 5.742 1.150 (approx)
[Source: Statistics Canada]
FDI
The combined Indian FDI in Canada has been more than Canadian FDI inflows into India.
Indian interest in Canada has increased relentlessly in the current years, particularly in the data
innovation, programming and common assets divisions, however has somewhat declined in
2013. A Bilateral Investment Promotion Agreement is under arrangement. Canadian
speculators are available in the Indian managing an account; protection and budgetary
administrations segments, as likewise in building and consultancy administrations
An annualized Trade Ministers Dialog has been standardized to survey exchange and monetary
relations. The two sides are occupied with arrangements for a Comprehensive Economic
Partnership Agreement (CEPA) covering exchange products, administrations, venture and
exchange help. Isolate MOUs exist to propel relations in the fields of vitality, mining and
agribusiness.
State Bank of India, ICICI Bank, Government of India Tourist Office, Air India, ONGC Videsh
Limited and Jet Airways have workplaces working in Canada. Fly Airways work air
administrations to Canada. Air India operation to Canada has been suspended. Driving Indian
organizations have nearness in Canada, for example, Tata Steel, Aditya Birla Group, Reliance,
Wipro, Infosys, TCS, Mahindra Satyam, Essar Group, Jubilant, IFFCO and GSFC.
Canada has built up Trade Offices in Ahmedabad, Chennai, Hyderabad and Kolkata. Rumored
Canadian organizations, for example, Bombardier, SNC Lavalin, and CAE Inc. have a solid
nearness in India.
India & Malaysia
India set up strategic relations with the Federation of Malaya (ancestor territory of Malaysia)
in 1957. India is spoken to in Malaysia through the High Commission of India situated in Kuala
Lumpur. Malaysia is spoken to in India through their High Commission in New Delhi and
Consulates General in Mumbai and Chennai.
ECONOMIC AND COMMERCIAL COOPERATION
Monetary and business relations are the pillar of the respective relationship. India and Malaysia
consented to Comprehensive Economic Cooperation Arrangement (CECA) on 1 July 2010,
which came into compel from 1 July 2011. India has consented to the Free Trade Arrangement
(FTA) in administrations and speculations with the 10-part Association of Southeast Asian
Nations (ASEAN) in September 2014. In the first place CECA survey meeting occurred in
New Delhi in December 2014.
An India-Malaysia CEOs Forum, including 18 CEOs from the two sides, has likewise been set
up in October 2010 to create improved association and collaboration at the business level. The
seventh gathering was held at Kuala Lumpur in August 2015.
Malaysia is our third biggest exchanging accomplice in ASEAN and India is the biggest
exchanging accomplice for Malaysia from among the nations of the South, barring China. Two-
sided exchange was enlisted at US$ 12.02 billion of every 2015 as against US$ 13.84 billion
of every 2014 and US$ 13.38 billion out of 2013. According to most recent insights, two-sided
exchange amid January-September 2016 remained at US$ 8.71 billion. Exchange is essentially
one-sided for Malaysia.
According to official figures (DIPP), Malaysia is at present the 25th biggest financial specialist
in India with FDI inflows of US$ 827.88 million from April 2000 to September 2016.
Malaysian Foreign Direct Investment in India is principally centered around Roads and
Highways, Telecommunications, Oil and Gas, Power plants, Tourism and Human Resources.
The most astounding speculation recommendations have been in the Telecommunications,
trailed by Power Sectors, Oil Refining and Roads and Highways. Remarkable among these are
speculations by organizations like Maxis Communications in Aircel, Axiata in IDEA Cellular
Ltd, Khazanah in IDFC and Apollo Hospitals, AirAsia in common flight and a few different
ventures. Malaysian development organizations' biggest nearness outside Malaysia is in India.
There has been a surge in Malaysian private segment activities in India, especially in the
framework division. As indicated by Malaysia's Construction Industry Development Board
(CIDB), as on date, Malaysian organizations have finished 53 interstate and street ventures
worth RM 9.3 billion (US$ 2.84 billion) in India. What's more, there are 7 ventures esteemed
at RM 1.1 billion (US$ 0.34 billion), which are still under development. There are around 87
Malaysian organizations including joint wander organizations working in India which
incorporates conspicuous substance like IJM (India) Infrastructure Limited, GMR Hyderabad
International Airport Limited, Malaysia Airline System (MAS), Khazanah India Advisors
Private Limited, AirAsia (India) Private Limited, Petronas Lubricants (India) Private Limited,
Eversendai Construction Private Limited, Genting Lanco Power (India) Private Limited,
Sunway Opus International Private Limited, and so on. Under an association with Malaysian
Airports, GMR finished airplane terminal in Hyderabad in 2008, and the second one in Delhi
in July 2010. Scomi fabricated the Mumbai monorail. A MoU on Cooperation identifying with
the Provision of Technical Assistance Services on Highway Management and Development
was marked in December 2010.
Then again, according to Malaysian Investment Development Authority (MIDA), Indian total
speculation into Malaysia from 1980-2014 has been around US$ 2.31 billion. At exhibit, there
are more than 115 Indian organizations including 61 Indian joint endeavors, 7 Indian Public
Sector Undertakings and 60 Indian IT organizations working in/from Malaysia. Their regions
of operation are fabricating of Textiles and Yarn, Drugs and Pharmaceuticals, Glass holders,
Automobile related exercises, Specialty Chemicals, Steel Furniture, Rubber Products, Services
in Information T echnologies, Education, Biotechnology, Healthcare, and so on. Recron
Malaysia Sdn Bhd (claimed by the Reliance gathering) is the biggest Indian organization in
Malaysia, which is one of the biggest Synthetic and Textile coordinated plants on the planet.
Ballarpur Industries Limited of the Avantha Group-possessed Sabah Forest Industries, Larsen
and Toubro Group's Tamco Switchgear are other real Indian organizations in Malaysia.
Mahindra Satyam has moved to another premise, situated at a 15-section of land site in
Cyberajaya, offered by the Malaysian Government for its Global Solution Center (GSC)
operations. Dependence Capital Limited's Malaysian unit to fill in as a worldwide center point
for syariah-consistent money related items, extension undertaking of Melaka Manipal Medical
College to build up a college grounds in Negeri Sembilan with an expected venture of RM 659
million (US$ 215.4 million), propelled investigate unit at Ampang Hospital in Kuala Lumpur
by Veeda Clinical Research Organization, Ahmedabad, Biocon speculation worth US$ 161
million to set up its first abroad assembling and research office in Malaysia in association with
Biotech Corporation of Malaysia are among late private area speculations from India. Indian
open area endeavors especially IRCON, HMT, EIL, BHEL, and IOC have been locked in with
the Malaysian mechanical part since the 1970s. Legislature of India substances, for example,
General Insurance Company of India, Air India and EdCiL are likewise dynamic in Malaysia.
The India International Bank, set up in 2012 in Malaysia, is a consortium of Bank of Baroda,
Indian Overseas Bank and Andhra Bank.
Building Export Promotion Council of India (EEPC) took part in a designing item show,
'Metaltech' from 25-28 May 2016 at Kuala Lumpur with interest of 12 noticeable exporters
from India and set up an India structure at the display. Indian Pavilion was introduced by the
High Commissioner. Diamond and Jewelry Export Promotion Council of India (GJEPC) sorted
out a Roadshow in Kuala Lumpur on 7 June 2016. The Chemical and Allied Export Promotion
Council of India (CAPEXIL) composed a purchaser dealer meet on 27 September 2016 at
Kuala Lumpur in which 10 driving India's fare organizations from centered industry segments
(Oil and Gas, Printing, Construction Material, Stainless Steel, Rubber Products, Recycling,
Natural Stones and Metal Powder Fields) took an interest. Clothing Export
Advancement Council of India (AEPC) sorted out a purchaser merchant meet at Kuala Lumpur
on 17 October 2016 to advance fares of readymade articles of clothing from India to Malaysia.
Conclusion:
The once market dominant economies of the United States and West European economies are
now struggling to reverse negative economic growth. By contrast large previously peripheral
underdeveloped economies in Africa and Asia are enjoying remarkable and sustained growth
rates and their exports and investments now fuel an overall growth in the global economy.
These structural, economic and political developments in the global economy go a long way to
explaining the expansion of commercial diplomacy activities by nations. On the one hand,
nations use commercial diplomacy to expand trade and investment in the context of declining
economic policy sovereignty. The creation of the WTO in 1995 led to an extension of the rules
and regulations of international trade and trade-related matters (including the financial services
industry). This leaves national economic policy-making severely restricted. Expanding
commercial diplomacy to secure new export markets and new inward investments becomes a
necessary political tool for nations competing for new markets. When these new markets are
in nations where the formal institutional context for doing business is underdeveloped or non-
existent or where much of the economy is under state control, the need to expand and develop
commercial diplomacy is all the more important. Hence, we can conclude that International
Diplomacy through its various forms and flows is truly ruling Global Business
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