News Behind the News.Pdf

inthisissue

POLITY OPINION FACE TO FACE CONGRESS: LACKING DIRECTION, SOWING INTERVIEW CHARGÉ D’AFFAIRES OF THE CONFUSION p2 EMBASSY OF THE REPUBLIC OF TOGO p33 Few serious observers of the political scene will accept Sonia Asia News Agency interviewed H.E. Mr. Akakpo Koffi, Chargé Gandhi’s explanation that factionalism is responsible for the d'Affaires of the embassy of the Republic of Togo to discuss Congress’s poor showing in the recent elections. If this is... areas of bilateral interests between the two countries. Excerpts...

INDIAN POLITICAL DEFENCE OPINION p8 MAINSTREAM p3 IT’S TIME TO MELT FROST IN STATE OF THE CONGRESS SIACHEN The death of about 140 With the Congress having suffered in the Pakistani army personnel in... recent assembly polls on account of...

FOUNDING EDITOR Late Sh.F.C.Ahluwalia, M.A., C.I.S. DEFENCE AND SPACE SPECIAL FEATURE p14 Formerly News Editor, A.I.R. DIARY p9 ARMY: BATTLE FOR MANAGING DIRECTOR Jasreman Walia STRATEGY: DEFENCE PREPAREDNESS: CHANGE SENIOR EDITOR Amulya Ganguli ACTION NEEDED TO END CRITICAL General V K Singh, the Chief DEFICIENCIES of the Army Staff (COAS)... EDITOR Harjit Singh The Army Chief’s leaked letter to the Prime CONSULTING EDITOR: J. Mohan Malik Minister and the CAG’s recent report have... SPECIAL FEATURE p17 ASSOCIATE EDITORS Arjan Singh, Ved Parkash, INDIA AND ITS PRECISION WEAPONS IN AERIAL Kunal Walia, Karishma W Bhatia NEIGHBOURS p23 WARFARE ART DIRECTOR Nalini Malik INDIA-PAK ECONOMIC COOPERATION Precision in warfare has been a much sought after capability... GRAPHIC DESIGNING Surender Kumar, Krishna Kant MEET A two-day second Indo-Pak Economic SALES & MARKETING Daman Juneja alias Neetu Singh Conference, meeting of Indian and Pakistani... INTERNATIONAL OPINION p32 18, Amaltas Marg, DLF-I INDIA IN THE INTERNATIONAL US PRESSURE TO DOWNGRADE Gurgaon 122002 (Haryana) KALEIDOSCOPE p35 TIES WITH IRAN Phone: 0124-4003770, Fax: 0124-4003772 HILLARY CLINTON VISIT: ASKS INDIA Hillary Clinton’s visit under- Mobile: 9899200616 (Mrs. J. Walia), lines the fact the US is... 9810622100 (Ms. Neetu Singh), TO STOP IRANIAN OIL IMPORTS E-mail: [email protected], The US Secretary of State, Hillary Clinton [email protected], who came to India on a three-day visit,... [email protected] ECONOMY OPINION p42 INDIAN ECONOMIC BUDGET CORRECTION: RIGHT For any accounts related queries kindly mail to : [email protected] PANORAMA p43 SIGNAL TO FOREIGN BUDGET EFFECT: LOK SABHA PASSES INVESTORS! © Asia News Agency (P) Ltd. All rights reserved. This publication is for individual use and not for FINANCE BILL 2012-13 At a time when the govern- wider dissemination or use without the prior Concluding debate on the Finance Bill, ment is dragging its feet on... permission of Asia News Agency (P) Ltd. 2012 which was passed last week...

News behind MAY 14, 2012 the News 1 indianpoliticalpoliticalmainstream mainstream polityopinion

AMULYA GANGULI CONGRESS: LACKING DIRECTION, SOWING CONFUSION ew serious observers of the political weakness, especially in U.P., allegations of dysfunctional government has not only led scene will accept Sonia Gandhi’s corruption in Goa, and an arrogant local to a fall in investment, it has also disillusioned explanation that factionalism is leadership in Punjab. the electorate, which no longer feels that the Fresponsible for the Congress’s poor showing Congress is a party worth supporting. But, these are also not the main reasons. in the recent elections. If this is true, then The main cause is that the Congress has lost This wasn’t so in 2009 when a surge of the phenomenon denotes a failure of its elan, its sense of mission, its inspirational support took the Congress’s tally of leadership on Sonia’s part, for, evidently, she edge. And, this has been compounded by LokSabha seats beyond 200 and demoralized had not been able to eradicate this threat to the dynasty’s fading charisma. Neither Sonia the BJP. Behind the gains was the belief that the party’s prospects apparently because no nor Rahul has the popular appeal or the the government will at last be able to one listened to her. vision of even Indira and Rajiv, not to implement big ticket reforms since the Left That, in turn, denotes that she lacks the mention Jawaharlal Nehru. Indira was has been routed and some of the allies, like force of personality to root out groupism. described as Goddess Durga by AtalBehari the DMK, which earlier opposed Since the Nehru-Gandhi dynasty has been Vajpayee after India helped Bangladesh win disinvestment, have been weakened. It was compared with a zamindari household, the its liberation in 1972, and Rajiv’s promise the belief that the country was now set on a squabbling lower down the line suggests that of taking the country into the 21st century new course of economic development, which the feudal dominance is weakening. enabled the Congress to secure a two-thirds boosted the Congress. The truth, however, is that factionalism majority in the LokSabha – 415 out of 543 But, if the brakes on reforms were earlier is not the “single most important reason”, as seats in 1984. In contrast, Sonia and Rahul being applied by the Left, they were now Sonia said, for the party’s failures. For a start, have not been able to forcefully articulate being pressed by the Sonia-led National such internal rifts have long been a part of their ideological outlook. Advisory Council with its left-oriented the Congress’s DNA. From the clashes What is worse, Sonia has sowed an members. As the NAC floated populist ideas, between the “extremist” BalgangadharTilak element of confusion about the economic of which the food security bill is one, and and the “moderate” Gopal Krishna Gokhale direction by favouring Soviet-style state seemingly inspired ministers like Jairam in 1907 to the confrontation between paternalism via essentially profligate Ramesh to block development projects in Mahatma Gandhi and Subhas Chandra Bose measures like the rural employment scheme, the name of protecting the environment, the in the 1940s to the tussle between Indira which creates no permanent assets, or the reforms process stalled. Gandhi and the so-called “syndicate” proposed food security bill which aims at The fallout is obvious. The economic comprising, among others, the so-called feeding more than 60 per cent of India’s one growth curve has slowed down and the party reactionary old guard, infighting has always billion people with subsidized grains. While is unable to move either in the direction of been a feature of the party’s functioning. the effect of such benevolence on the market-driven policies or return to the old In fact, during her heyday, Indira Gandhi exchequer will be disastrous, the mammoth ideas of a controlled economy. It is the was credited with encouraging factionalism task of procuring, storing and transporting clouded outlook which has disheartened the in the state units so that no one leader could such huge amounts of food will be an voters. As the Delhi municipal results acquire enough importance to challenge her. administrative nightmare. showed, the BJP was able to retain its The weakness of the present crop of Congress While Sonia does not seem to have any position despite a fall in its numbers of seats chief ministers has been seen as a legacy of idea of the fiscal and administrative problems and a rise in the Congress’s because the voters Indira’s devious tactics. which her utopian schemes will create, the could not vote wholeheartedly for the latter It isn’t factionalism, therefore, which can fact that her socialistic approach runs counter despite the good work done by Sheila be seriously blamed for the party’s electoral to the government’s pro-market outlook is Dikshit’s Delhi government to bring about setbacks. Instead, some of the more potent largely responsible for the present policy vast improvements in the national capital. causes are self-evident – organizational paralysis. The resultant impression of a Its finally perception that counts.

News behind 2 the News MAY 14, 2012 coverstory indianpoliticalmainstream

3 STATE OF THE CONGRESS 4 60 YEARS OF INDIAN PARLIAMENT 6 POLITICAL NOTES SECTION SECTION SECTION SECTION SECTION THIS THIS THIS THIS THIS IN IN IN IN IN

STATE OF THE CONGRESS With the Congress having suffered in the recent assembly polls on account of bitter infighting and wrong policies, its president Sonia Gandhi this week sent a stern message to party cadres to present a “united face” as they prepare for the next round of elections over the next two years ahead of the 2014 general election. Addressing Congress MPs for the first time after the party’s dismal performance in the recent state polls, Sonia admitted that the results in Punjab and Goa were “very disappointing”. She urged partymen to draw lessons from these elections. Making a pointed reference to the internal strife in the party, she underlined, “We must shed all manner of factional behaviour and fight as one disciplined team Congress President Sonia Gandhi at all levels. This will be the single most important factor to decide whether we win Sonia remarked, “We increased our vote to support the government, was sharp in its or lose.” share quite considerably and were seen as a critique. The party, Sonia stated, has to show serious player for the first time in 22 years.” “Not one hard question, not one signal commitment and unity to convert people’s As demoralisation in the party ranks runs to ensure accountability, no indication of a sentiments into electoral victories. high and the UPA government comes under reshuffle, no message of a beleaguered government. Its hard for political parties to Her remarks come a few days after a increasing criticism for policy paralysis, the face up to truth after poll defeats, particularly three-member committee, headed by Congress president attempted to boost the in public, and there is little to be expected Defence Minister A.K.Antony, submitted a morale of workers and prepare them for the by way of thoughtful or actionable report to her on the party’s poor showing in next round of electoral battles. introspection. But even by these standards, the recent polls which emphasised the need Stating that it had become fashionable Sonia Gandhi, in her attempt to deny the for instilling “discipline and compliance” to criticise the UPA government, Sonia asked mistakes, missed an opportunity. among the cadres. the rank and file to project its It said a high-powered committee, While expressing her disappointment accomplishments and expose the headed by Union Defence Minister A K with the results in Punjab and Goa, the Opposition’s “doublespeak.” Antony, a Sonia loyalist, that went into the Congress president put a gloss on the Uttar Having been at the receiving end on the causes of the poll debacle had submitted its Pradesh poll verdict, which was viewed as a twin issues of corruption and mis- report to the Congress president. personal defeat for AICC general secretary governance, the Congress president urged and Gandhi scion Rahul Gandhi who led a the workers to go on the offensive and pin “But if the Congress president’s speech high-voltage campaign in this electorally down the opposition-ruled states on the is any indication, that report is unlikely to crucial state. same issues. seriously looking within,” the paper said sceptically. Agreeing that the party did not perform But the media was not enamoured of her as well as it had hoped in Uttar Pradesh, address. The Indian Express, that once used “As the party stumbles from from one

News behind MAY 14, 2012 the News 3 indianpoliticalmainstream setback to another, she should have been the Alex Paul Menon, the 32-year-old with business people who want to “loot the one asking the tough questions, instead of collector of Chhattisgarh’s Sukma district, resources from mineral-rich parts of east and taking refuge in cliche,” the paper added. was taken into captivity from the Manjhipara central India”. ‘CHIDAMBARAM IS BIGGEST area. He was also released later after Chief “Chidambaram is more violent than MURDERER OF DEMOCRACY’ Minister Raman Singh agreed to appoint a Maoists. He is the biggest murderer of high-power committee to look into Maoist Saying the government has “done democracy,” said Agnivesh, recalling how top demands. nothing” to address the rights of poor tribals, Maoist leader CherukuriRajkumar alias Azad noted social activist and former peace Insurgents had demanded release of their was “killed in a cold- blooded murder”. negotiator Swami Agnivesh blames Home cadres from jails but none was set free with Agnivesh had started talks with Azad in Minister P. Chidambaram, whom he calls the government claiming that they were May 2010 and had sought his consent to the “biggest murderer of democracy”, for the looking into the demand. initiate a dialogue with the government. But spurt in violence and abductions by Maoists. Agnivesh doesn’t call it the defeat of just when the process was to kick off Azad “The government has done nothing to Maoists. “They never intended to kill them. was gunned down in a shootout with Andhra address the issues of rights of poor tribals It is for you to decide if it is their defeat or Pradesh police that was alleged to be staged. peacefully and lawfully. I feel disappointed. greatness.” But the government denies this. I doubt Chidambaram’s intentions, if he is Asked if he was justifying abduction or “He was shot at in point-blank range. really serious in ending the problem as he killing people by Maoists, the activist said Encounters don’t happen at such a short claims,” Agnivesh told IANS in an interview. nobody endorses violence. “I condemn every distance,” Agnivesh said. The saffron-clad activist, who in 2010 incident of violence, be it killing or His petition for an independent judicial was appointed by the government as an kidnapping. But you should also look at what probe was rejected by the Supreme Court interlocutor for the now-broken down peace is happening to impoverished tribals. Some recently but the activist has not given up. talks with Maoists, said the recent spurt in 1,700 of them are in jails without any “We will travel through the country and abductions and violent incidents was “only charges.” tell the people the truth. We will mobilize due to the government’s non-seriousness” in Agnivesh expressed his “utter disgust” youth and expose this government of corrupt resolving the issue. over the widespread “military operations” in people who serve interests of none but Left-wing extremists in Odisha Maoist-infested areas in the name of security. business houses.” kidnapped two Italians in March, released “This operation Green Hunt... it is a one after 11 days and the second almost a military operation, but the real intent is to month later. Another Maoist group abducted grab the natural resources and distribute March 24 Odisha’s ruling BijuJanata Dal them to a few corporate houses,” he said, 60 YEARS OF INDIAN (BJD) legislator who was also released later. alleging that Chidambaram was in “cohort” PARLIAMENT Has the quality of debates in the Indian Parliament declined over the decades and is politics no longer a mission to serve the people? Are parliamentarians adequately fulfilling their role in the highest forum of country’s democracy? Has the functioning of the Indian parliament been able to foster democratic values and strengthen participatory institutions down the line or has it been a failed experiment? This is the question being asked as this Westminster-modelled parliamentary democratic system celebrates its 60th anniversary. Analysts and lawmakers say the atmosphere in parliament has become more fractitious over the years, with issues concerning states and sectional interests rather than broad legislative issues often driving its agenda. Parliament will Sunday observe the 60th Home Minister P. Chidambaramjpg anniversary of the first sittings of the

News behind 4 the News MAY 14, 2012 indianpoliticalmainstream

LokSabha and the RajyaSabha, the lower and “There is much less real debate now, followed and question hour was rarely upper houses. Senior politicians reminisce much more of noise and disturbance... rarely suspended. about days when disruptions were infrequent is there a good speech now,” he said. She said members used to speak as and ruckus, sloganeering and rancour were Nihal Singh said there is less respect for representatives of the entire country, but state almost unheard of. parliamentary democracy though everybody issues were increasingly being raised now. Union Minister of Micro, Small and swears by it, adding that the frequent Former RajyaSabha chairperson Medium Enterprises Virbhadra Singh said disruptions lead to wastage of public money. NajmaHeptullah said there were fewer that disruptions in parliament are much “Earlier, there was much more tolerance disruptions of the two houses in the earlier more frequent now than in the past. of other viewpoints. Now, the atmosphere years, adding that adjournments were being “Disruptions on small issues never is much more fractitious,” he said. noticed more due to the advent of TV news. happened earlier. They (the members) Nihal Singh said one reason for regional Heptullah, who is into her sixth term as strongly expressed their differences of opinon issues coming to the forefront in a much a RajyaSabha MP, said many of the but there was hardly an ocassion when bigger way than in the past was that no single parliamentarians in the first few years after parliament was disrupted. Now this is the party was dominating the country, adding independence were freedom fighters and rule rather than the exception,” Virbhadra that regional parties have their own issues values and issues had changed over the years. Singh said. and agenda. “From the panchayats, nagarnigams to A five-time chief minister of Himachal Former LokSabha secretary general the assemblies and the two houses of the Pradesh and a five-time MP, Virbhadra Singh Subash C. Kashyap said that the composition parliament you only have rabble rousers, said that parliament had many stalwarts of parliament was also a reflection of the playing to the galleries. One does no longer when he became an MP for the first time in moorings of society. hear enlightened debates interspersed with 1962, an aspect missing now. “They (MPs) are representatives of wit and sarcasm, as was the case till the 1977 He termed 60th anniversary of the first people that we are... Of our weaknesses, of Janata Party experiment,” says political sitting of the two houses as “a very proud our culture, of sense of values, of our commentator ParasNathChoudhary. moment.” indiscipline...If there is indiscipline in During the 1960s and 1970s, the “There have been ups and downs but by society, it is bound to be reflected,” he said. performance of parliamentarians was and large the parliamentary system has come He said that in the earlier years, lawyers generally of a high order and the media to stay and has consolidated in the last 60 formed the largest group of LokSabha relished the quotable quotes. years,” he said. members. RamjiLalSuman, former deputy minister in Chandra Shekhar government, says: “In BharatiyaJanata Party (BJP) MP “For some time now, the largest group is SumitraMahajan said that members in earlier 1977 there were so many heavyweights, each of agriculturists. In that sense, there is a an institution in himself. Today’s parliament decades reflected a national perspective in fundamental shift,” he said. their thinking. is no match. One finds pathetic lack of Kashyap said people earlier came to ideological commitment today, espcially the “A national perspective was expected of politics on the back of sacrifice. “Now, it has younger elements in the houses. They hardly members and they had a pan-India approach become a profession. People want to be go to the library and prepare notes. Shocking to issues. Now, the state perspective has rich... People look for returns on their qualitative degeneration in the democratic become more pronounced,” Mahajan said. investment.” institutions at all levels.” Mahajan, who is into her seventh term “There are still good people but people In sharp contrast to the composition of as a LokSabha MP, said there was respect for with a background of sacrifice are getting the two houses in the 1960s or the 1970s, senior leaders in the past and if any of them fewer and fewer... There is more self-interest, the present house is dominated by amateurs stood up to speak, members would listen family interest and group who are better fighters than debaters. Many without creating a disturbance. interest,” Kashyap said. make public speeches rather than try “There used to be silence if (former Kashyap said there was more discussion debating a point. prime ministers) Chandershekharji or Atalji on international affairs when Jawaharlal “If we have a parliament we must also (A. B. Vajpayee) stood up to speak. In later Nehru was prime minister. have able parliamentarians who not only days, even Atalji had to face disturbances,” expose the scams but also contribute to the she said. “Now local issues and regional issues which should be taken up in state policy making and enliven the proceedings Mahajan said a positive aspect of present- legislatures, sometimes fit to be taken up in through literary quotes and witticisms. day politics was that more youths were being panchayats, are taken up in parliament,” he Giving speeches like one was addressing a elected to parliament. said. street corner gathering, is easy but to hit the headlines in the next day’s newspapers or Senior journalist and political analyst S. Congress RajyaSabha MP making valuable contribution to debates Nihal Singh said the standard of debates in MohsinaKidwai said that there was more requires a lot of mid-night oil-burning and the earlier decades of parliament was very dignity, decorum and discipline in a professional approach,” says social activist high. Parliament in the earlier decades. Rules were

News behind MAY 14, 2012 the News 5 indianpoliticalmainstream

Shravan Kumar Singh. here, convicted him of misuse of official AtalBihari Vajpayee may have been out of Clearly, the functioning of the machinery last Saturday. active politics for almost eight years, but that parliament in the past decade particularly has Tota Singh was held guilty of forging the has not dented Himachal Pradesh Chief been affected by the quality of people that log book of an official car belonging to the Minister Prem Kumar Dhumal’s devotion. have been elected. Many are believed to have Punjab School Education Board (PSEB) Such is the kind of idol worship and criminal background, if reports released by while he was Punjab’s education minister sycophancy that goes on Indian politics, various pressure groups are to be relied upon. (1997-2002). irrespective of parties involved. Those who thought introduction of TV Though the court spared Tota Singh on Regardless of Vajpayee’s waning political cameras to cover the proceedings would the more serious charges of assets importance (he is reported to be suffering usher in desirable changes in performance disproportionate to his known sources of from Alzheimer’s), Dhumal is still ‘signing’ feel cheated. income and forgery, he was sentenced to one in praise of his ‘idol’ by naming scheme after year’s imprisonment. He was allowed bail by scheme after him. the court immediately. In over four years at the helm, he has In fact, Tota Singh waited for over three dedicated about a dozen schemes and POLITICAL NOTES full days before finally handing over his projects to Vajpayee, the latest being the Atal resignation. School Uniform Scheme that provides free PUNJAB: MINISTERS TAKE HIGH school uniforms twice a year to all students ‘MORAL GROUND’ AFTER “He had offered to resign after the court from Class 1 to 10 in state-run schools. CONVICTION verdict. However, I had asked him to wait,” Chief Minister Badal told reporters in At the launch of the school uniform This could be termed the height of irony, Mohali Tuesday. scheme in Nahan town May 9, where BJP even in the strange world of Indian politics. chief NitinGadkari was also present, Dhumal But not everyone is buying the high Two ministers in Punjab’s Parkash Singh said: “Shradhey (respected) Atalji has special “moral grounds” stand of the ex-ministers. Badal-led government, convicted in separate love for the people of the state. We have cases and even handed down prison “What moral ground are they talking launched various schemes in his honour.” sentences, have resigned on high “moral about? They have been convicted by courts He said his government had earlier grounds”. after following the due process of law. The launched the AtalBijliBachatYojna under simple truth is that they have been convicted Cabinet minister JagirKaur, who was which four CFLs (compact fluorescent and are like any other convicted criminals. handling the rural water supply and lamps) were provided to 1.65 million They should have been, instead, sacked from sanitation and defence services portfolio, was domestic electricity consumers free of cost their posts by the chief minister,” a former found guilty on counts of forcible abortion with the provision that the defective bulbs minister in the Congress government said. of her daughter HarpreetKaur as well as would be replaced within 18 months. JagirKaur, who is lodged in the modern wrongful confinement, abduction and CONGRESS CHALLENGES US Kapurthala Jail, which is in her home district criminal conspiracy. And agriculture JURISDICTION IN 1984 ANTI-SIKH of Kapurthala, and has been enjoying VIP minister Tota Singh was convicted of misuse RIOTS of official machinery. status right from the moment she was arrested, has now moved the Punjab and India’s Congress party has challenged the Interestingly, both ministers claimed to Haryana high court against her conviction. jurisdiction of a US court to hear a case filed hold the high “moral ground” while finally against it by a Sikh advocacy group for its resigning from their plum posts. Tota Singh too is moving the high court alleged role in the November 1984 anti-Sikh against his conviction. JagirKaur was forced to resign March this riots. year after a Central Bureau of Investigation With the exit of these two ministers, both During oral arguments in the US federal (CBI) special court in Patiala convicted and considered close to the chief minister, the court here last week, Judge Robert Sweet also sentenced her to five years’ rigorous strength of the Badal government has been noted that the Congress had only challenged imprisonment. The lone woman minister in reduced to 16 from 18. The chief minister the court’s jurisdiction to hear the case and the Badal government, she was, however, has not indicated whether he will induct two not filed any defence on the merits of the cleared by the court of the charge of murder new ministers or wait for the verdict of the allegations against it. Sikhs for Justice (SFJ) of her 19-year-old daughter HarpreetKaur. higher court on the appeals of both ex- had filed a complaint against the Congress ministers against their conviction. Harpreet had angered her mother and in March 2011 under Alien Tort Claims Act other family members by secretly marrying There are murmurs within the ruling (ATCA) and Torture Victim Protection Act a youth, Kamaljit Singh, who belonged to a ShiromaniAkali Dal that the chief minister (TVPA). lower caste. She had died under mysterious should uphold the “political moral ground” According to SFJ, attorneys for the circumstances April 2000. and get in new replacements. Congress argued that service of summons on The latest ‘fall’ guy in the Badal cabinet HIMACHAL PRADESH: DEVOTED the Congress through Hague Convention is is Tota Singh. He was forced to resign after a TO ATAL flawed as the party’s headquarters in New vigilance court in Mohali town, 10 km from Senior BharatiyaJanata Party (BJP) leader Delhi did not receive the summons and the

News behind 6 the News MAY 14, 2012 indianpoliticalmainstream complaint. Congress party lawyers also success story. of the people has given birth to Maoism and argued that it cannot be sued as a per a He is planning to pen down a memoir it is gradually expanding,” reecent appellate court decision (Kiobel v. on his political life and the 56-year-old said Commander-in-Chef of the anti-talk Royal Dutch Petroleum), that a claims he has enough fodder to make it to faction of the outfit PareshBaruah in an “corporation” cannot be sued under Alien the bestseller list. email statement on Thursday. Tort Claims Act for human rights violations “Although there are some ideological by its members. “I am now thinking of writing a book and I am sure it will be a bestseller because I differences with the Maoists, they have our As the Congress is taking the defence that have had access to so much ‘comedy’ when I moral support in their struggle,” said the a political party cannot be sued under Alien was in politics and in government,” Parrikar statement. Tort Claims Act, SFJ will amend its announced. “While the government had been complaint to include the names of Congress compromising with the Maoists rebels and President Sonia Gandhi and the party’s The tough-talking IIT-Mumbai alumnus is seen by some as a silver lining on Goa’s releasing their leaders in other parts of the national leadership, SFJ legal advisor country like Orissa and Gurpatwant Singh Pannun said. jaded political canvas, populated by either ageing, overtly corrupt and petty Chattishgarh, in Assam the believers of CLINTON CALLS MAMATA machinating leaders or power-hungry local the same ideology are being killed by the MEETING ‘REMARKABLE’ satraps who mushroom in one election and government,” he said and said that this also US Secretary of State Hillary Clinton disappear in the next. indicates the hatred of ‘Indian rulers’ towards recalled two “remarkable experiences” in While Parrikar over the last two decades the people of Assam. India including a meeting with West Bengal has been the only acceptable, educated and MUSLIM YOUTH IN INDIA Chief Minister MamataBenerjee to focus on engaging face within the state BJP who cuts DISSOCIATE FROM TERROR: SUFI efforts for the upliftment and empowerment ice across regions and communities in Goa, CLERIC of women. his failings have perhaps been his ability to Therealisation that jihadis are using put his foot in the mouth coupled with a “I try, whenever possible, to find time to Islam to create an environment of terror is touch of arrogance. meet with women who are trying to do, often leading Muslim youth in India to dissociate under very difficult circumstances, what we The chief minister claims that his book, themselves from violence and radicalism, celebrate here today,” she said Thursday as when published, would have its readers in says a leading Islamic scholar and cleric. she received the Century Award at the New splits because the stories about Goa’s “The followers of Islam have no link with York Women’s Foundation breakfast in New dynamic power corridors are hilariously the minions of terror,” said HazratMaulana York City. comic. Syed Mohammed Ashraf During her visit to West Bengal last “When you read that book you will keep SahabKichhouhhawi, general secretary of the week, Clinton recalled she “had two laughing. The things I have seen in the All-India Ulama and Mashaik Board. remarkable experiences - meeting the newly government are so comic!” Parrikar said. elected chief minister, a woman who, on her Addressing a gathering on “Sufism and Perhaps one such tragic-comic moment own, started a new political party and built Indian Islam” at the Vivekananda in the recent past for Parrikar was when, as that political party over many years.” International Foundation late Monday, he one of the top contenders for the post of said, “The Wahabis (ultra-orthodox Muslim) Banerjee, she noted, had “just BJP national president in 2009, he likened were using biased literature to propagate their successfully ousted the incumbent then party president L.K. Advani to rancid theorised monotheism which has currently Communist Party that had been in office pickle. become the reservoir of terrorism the world for 30, 34 years or so, and who is trying now Parrikar’s comment triggered a furore in over.” to govern a state with 90 million people in the party ranks and he lost out in the it.” Kichhouhhawi said “his organisation is presidential race to the less cavalier carrying the message of peace to Muslims in “And then I met with a group of women NitinGadkari. the grassroots”. - mostly Indian, some American - who, along NORTH EAST: ULFA CONFIRMS He said they were visiting places “to tell with some of the men who were running MORAL SUPPORT TO MAOISTS organizations to rescue girls from having people that they cannot act against the been trafficked into prostitution.” A day after the security forces killed four country or people. Terrorists cannot disrupt Maoist cadres in Assam, the anti-talk faction Hindu-Muslim amity because they are not GOA CHIEF MINISTER TO PEN of the Ulfa said that the ‘red > rebels’ has the our people. We have told them to hand ‘HILARIOUS, BESTSELLING’ moral support of the outfit. terrorists to police,” the cleric said. MEMOIR ”Everyone has the right to protest and He said “altogether 20 lakh people in Chief Minister ManoharParrikar, who it is the circumstances that decides on places like Moradabad, Bareilly in Uttar single-handedly scripted the BharatiyaJanata whether the protest would be armed one or Pradesh and in Bhagalpur in Bihar had Party’s (BJP) victory in the recently held Goa unarmed. The failure of the so called responded positively to this appeal for non- polls, may soon be ‘scripting’ yet another democracy in India to fulfill the aspirations violence”.

News behind MAY 14, 2012 the News 7 defenceindianpoliticalmainstreamandspacediary defenceopinion

GURMEET KANWAL

IT’S TIME TO MELT FROST

Siachen Glacier IN SIACHEN

he death of about 140 Pakistani be maintained only by helicopters that air- into effect is carefully analysed, it will be army personnel in an avalanche at drop supplies with attendant losses, as found that Pakistan is in no position to the battalion HQ at Gyari in the recoveries are often less than 50%. The occupy any of the posts vacated by India. TSiachen conflict zone has again brought to frequent turnover of troops adds to the costs At a recent India-Pak Track 2 meeting at the fore the dangers of prolonged as a battalion can be stationed at the Saltoro Bangkok, organised by Ottawa University deployment on both sides of the actual Ridge for a maximum of six months. jointly with the Atlantic Council and the ground position line, despite the fact that Stephen Cohen, a well-known and National Defence University, Washington, an informal ceasefire has been holding up respected Washington-based South Asia it was agreed by both sides that the present quite well since November 25, 2003. In mid- analyst, has described the Siachen conflict military positions should be “jointly March 2007, too, five Pakistani soldiers had as a fight between two bald men over a comb. recorded and the records exchanged” as a perished in an avalanche. In his view, “Siachen... is not militarily prelude to the disengagement and Even at the peak of fighting in the 1980s important... They (Indian and Pakistani demilitarisation process. While this falls and 1990s, maximum casualties on both the armies) are there for purely psychological short of the Indian demand for demarcation, sides occurred because of the treacherous reasons, testing each other’s ‘will’.” it should be politically acceptable. terrain, the super-high altitude - which Both governments have been finding it However, India should insist on building affects the human body adversely, and the difficult to overcome deeply entrenched a clause into the demilitarisation agreement extreme weather. The lack of oxygen at mindsets and are unable to look for that in case the agreement is violated, both heights between 18,000 and 20,000 feet and innovative and creative approaches. India sides reserve the right to take whatever action prolonged periods of isolation are a lethal insists that the present forward positions of they deem fit, including offensive military combination and result in pulmonary both the armies on the Saltoro Range along measures. Simultaneously with the oedema, frostbite and other serious the AGPL should be demarcated after a joint withdrawal of its troops from the glacial complications. Besides, prolonged survey so that there is a reference point in heights, India should create and maintain deployment at such heights takes a heavy case a dispute arises in future. Pakistan’s suitably structured reserves for counter- psychological toll. While these casualties are position is that by suddenly occupying the action across the LoC at a point of its now better managed due to early evacuation, Saltoro Range west of the Siachen glacier, choosing. These reserves would also be handy improvements in medical science and the India violated the 1972 Shimla agreement for intervention on the Line of Actual establishment of forward medical facilities, and must, therefore, undo its “aggression” Control (LAC) with China should it ever they can never be completely eliminated. without insisting on legitimising its illegal become necessary. The economic cost of maintaining an occupation through the demarcation of The demilitarisation of Siachen will act infantry brigade group at Siachen to guard present positions. as a confidence building measure of immense the desolate mountain passes and approaches After Pakistan’s intrusions into Kargil in importance. For India, it is a low-risk option leading to them from the western slopes of 1999, the Indian Army’s advice to the to test Pakistan’s long-term intentions. It is, the Saltoro Ridge has been estimated to range government that the AGPL must be jointly therefore, an idea whose time has come. between Rs 3-3.5 crore per day - Rs 1,000- verified and demarcated before Indian and Pakistani leaders need to find the 1,200 crore annually. The costs are high demilitarisation begins, is operationally political will necessary to accept ground because the logistics tail is long, the only road sound and pragmatic military advice. realities. It is time the Indian government ends at the base camp close to the snout of However, if Pakistan’s military capacity to began the process of building a national Nubra River where the almost 80-km glacier grab and hold on to vacated Indian positions consensus around this important ends. A large number of infantry posts can after the demilitarisation agreement comes confidence-building measure.

News behind 8 the News MAY 14, 2012 defenceandspacediary

9 STRATEGY: DEFENCE PREPAREDNESS: ACTION NEEDED TO END CRITICAL DEFICIENCIES 10 COUNTER TERRORISM: CENTRE FAILS TO CONVINCE DISSENTING CMS ON NCTC 11 NCTC: A VANITY PROJECT OR A NECESSITY TO FIGHT TERROR? 11 ACQUISITIONS: INDIA CLEARS $600-MN DEAL FOR AIR FORCE TRAINERS 12 DEFENCE PRODUCTION: ‘REVISED DEFENCE OFFSETS POLICY WILL ENCOURAGE INDIAN SME SECTOR’ 12 NAVY: INDIA NATURAL LEADER OF INDIAN OCEAN REGION: ANTONY SECTION SECTION SECTION SECTION SECTION 13 ENERGY SECURITY: US STRATEGIC THINKING IN AN ERA OF ENERGY SELF SUFFICIENCY 21 AFGHANISTAN: THE US-AFGHAN STRATEGIC PARTNERSHIP AGREEMENT: NOTHING MORE THAN SYMBOLIC 22 INDIA - US: INDIA, US SEND STRONG SIGNALS TO PAKISTAN, IRAN THIS THIS THIS THIS THIS 22 DEFENCE NOTES IN IN IN IN IN

STRATEGY DEFENCE PREPAREDNESS: ACTION NEEDED TO END CRITICAL DEFICIENCIES GurmeetKanwal The Army Chief’s leaked letter to the Prime Minister and the CAG’s recent report have revealed that the state of defence preparedness is a cause for serious concern. The Chief’s letter has brought into the public domain what has been known for long to army officers in service and those who have retired. What has happened will certainly have an adverse impact on national security as it has given undue advantage to India’s military adversaries by publicly disclosing sensitive information about the deficiencies in weapon Prime Minister Mahmohan Singh systems, ammunition and equipment in known as the “war reserve”. As the Army service in the Army. Now that these facts are unprepared for war. Chief’s letter and the CAG report bring out, in the public domain, surely these will help Perhaps the country’s precarious financial not enough new stocks were apparently to focus the nation’s attention on the need to condition in the early 1990s did not allow procured to make up for even the speedily make up the shortages and give the NarsimhaRao to provide the necessary funds ammunition expended during the Kargil Army the wherewithal that it needs to fight to immediately handle the shortage. A few conflict. Stocks of several critical varieties of and win future wars. years later the Kargil conflict took place and ammunition for tanks and artillery guns have the whole nation heard the COAS, Gen V.P. General V. K. Singh is not the first COAS fallen to as low as less than 10 days’ war Malik, make the chilling statement on the to have apprised the Prime Minister about reserves. Also, ammunition has a shelf life of national TV, “We will fight with what we the poor state of preparedness; his about 12 to 15 years, at the end of which it is have.” predecessors had done so as well. Gen K. M. no longer usable for combat but can still be Cariappa had gone to Pandit Nehru to ask It is well known that India had to used for training. Hence, the shortages for additional funds for military scramble to import 50,000 rounds of 155 continue to increase every year if action is not modernisation and was reported to have been mm ammunition for its Bofors guns, besides taken to constantly remove the deficiency. told, “India does not need an army; it needs other weapons and equipment. Stocks of tank The other major issue highlighted in the a police force.” Well, the ignominy of 1962 ammunition and that for other artillery and letter written by the COAS pertains to the followed. air defence guns were also low, and it was just continuation in service of obsolescent as well that the fighting remained limited to The late Gen Bipin Joshi had written to weapons and equipment and the stagnation the Kargil sector and did not spill over to the Prime Minister NarsimhaRao to urge him to in the process of military modernisation rest of the LoC or the plains. help the Army to make up for the long- aimed at upgrading the Army’s war-fighting standing large-scale shortage of ammunition. Approximately, 250,000 rounds of capabilities to prepare it to fight and win on While the shortage was worth over Rs 10,000 artillery ammunition were fired in that 50- the battlefields of the 21st century. While the crore, Army HQ had reportedly identified a day war. The government has authorised the COAS has pointed out several operational “bottom line” figure without which the stocking of sufficient ammunition to fight a deficiencies, the most critical ones include the COAS said the Army would remain large-scale war for 50 to 60 days. This is complete lack of artillery modernisation since

News behind MAY 14, 2012 the News 9 defenceandspacediary the Bofors 155mm Howitzer was purchased India is to build the defence capabilities that distributed to the media at the venue, told in the mid-1980s, “night blindness” of the it will need to face the emerging threats and an altogether different story with many of Army’s infantry battalions and mechanised challenges and discharge its growing them asking for the immediate withdrawal forces, and the fact that the air defence guns responsibilities as a regional power in South of the NCTC notification. and missile systems are 97 per cent Asia. The government will do well to appoint However, the government assured them obsolescent. The inadequacy of the a National Security Commission to take stock that it was open to the new ideas and would intelligence, surveillance and reconnaissance of the lack of preparedness of the country’s sincerely consider them. Chidmabaram also systems, with an adverse impact on command armed forces and to make pragmatic indicated the government will now go back and control during war, adds to the Army’s recommendations to redress the visible to the drawing board before arriving at a final difficulties. inadequacies that might lead to yet another decision. military debacle. This sorry state of affairs has come about This effectively means the government because of the flawed defence planning and will maintain the status quo on NCTC, defence acquisition processes in existence, a keeping its operationalisation in abeyance. grossly inadequate defence budget and the Earlier, Manmohan Singh, who was the inability to fully spend even the meagre funds second speaker after the home minister, that are allotted. Funds are surrendered quite COUNTER TERRORISM denied there was any attempt to disturb the often due to bureaucratic red tape — civilian CENTRE FAILS TO CONVINCE policing domain of states or the country’s as well as military, scams in defence DISSENTING CMS ON NCTC federal structure. “It is not our intention in procurement and the frequent blacklisting of The Indian government Saturday failed any way to affect the distribution of powers defence firms accused of adopting unfair to convince dissenting state chief ministers, between states and the union that our means to win contracts. including some of the United Progressive constitution provides,” he said on the Long-term defence planning is the charter Alliance (UPA), on its proposed anti-terror formation of NCTC, a pet project of of the apex body of the National Security hub despite the over two-month effort to Chidambaram. Council which meets very rarely due to the explain its contours, raising doubts over the Manmohan Singh said the NCTC “is not preoccupation of the Prime Minister and agency’s operationalisation any time soon. a state versus centre issue” because its main other members of the Cabinet Committee At a day-long meeting here this week, purpose was to “coordinate counter-terrorism on Security (CCS) with day-to-day crisis Prime Minister Manmohan Singh and Home efforts throughout this vast country”. management. As such, the 15-year Long- Minister Chidambaram heard in silence as Term Integrated Perspective Plan (LTIPP) Chidambaram also put up a strong the chief ministers - including Congress ally and the five-year Defence Plan do not receive defence and said the NCTC would be an Mamata Banerjee - fired volleys at the the attention that these merit. important pillar of the security infrastructure National Counter Terrorism Centre to thwart terror threats from outside India The 11th Defence Plan, which (NCTC), saying it undermined the states’ and in cyber space. Banerjee and non- terminated on March 31, 2012, was not powers. Congress chief ministers were not convinced. formally approved by the government and Chidambaram came under vicious attack Jayalalithaa accused the home ministry hence did not receive committed budgetary from Tamil Nadu Chief Minister J. support that would have enabled the three of trying to “belittle” the state governments Jayalalithaa, who accused the home ministry and treating them as “pawns on a chess board” Services to plan their acquisitions of weapons of treating her government with contempt. and equipment systematically, rather than instead of addressing “gaps and deficiencies” being left to the vagaries of annual defence The chorus against the NCTC grew in counter terrorism capabilities. budgets. louder as the meeting progressed. Within She said the move to accumulate the hours it became clear that the chief ministers’ counter-terrorism powers with the central Consequent to the leakage of the Army fears on NCTC had not been allayed. agency “is preposterous and reveals total lack Chief’s letter and the major uproar in of understanding of ground realities”. Parliament that resulted, the Defence The chief ministers, who had opposed Minister is reported to have approved the NCTC notification in February this year, Gujarat’s NarendraModi too made a 12th Defence Plan 2012-17. While this is stood their ground on two key issues - not strong plea for a rollback of NCTC, but undoubtedly commendable, it remains to be having the agency under the Intelligence expressed happiness that the central seen whether the Finance Ministry and, Bureau (IB) and against providing it government acceded to have the chief subsequently, the CCS will also show the overarching powers to operate in the states. ministers’ meeting on the issue. same alacrity in according the approvals Of the 24 chief ministers and three states’ “The NCTC makes state units totally necessary to give practical effect to these plans. ministers, the NCTC invited “outright subservient and kills local initiative. It will rejection” from three, “qualified support” The defence budget has dipped below 2 create a draconian covert agency with police from many and “strong support” from many per cent of the country’s GDP despite the fact powers,” he said. He accused the central others, a disappointed and tired-sounding that the Service Chiefs and Parliament’s government of behaving like “viceroys of Chidambaram told the media at the end of Standing Committee on Defence have yore”, saying the constitution of agency was the deliberations. repeatedly recommended that it should be a “conscious strategy” casting “the central raised to at least 3 per cent of the GDP if But the speech copies of chief ministers, government in the role of omnipresent,

News behind 10 the News MAY 14, 2012 defenceandspacediary omniscient ruler with the states portrayed like intelligence agencies were not getting the cannot IB do what that you want the NCTC dependent vassals.” broader picture that complicated the do?” Banerjee, whose Trinamool Congress is situation. Sahni said there were already some 20 big the second biggest constituent of the “But I don’t know what situation and small central intelligence and security Congress-led UPA, also spoke against prompted (the government) to come up with agencies - including the Intelligence Bureau NCTC. She said policing should remain with the idea to give police powers to search, seize (IB), the Central Bureau of Investigation states. “I would, therefore, strongly urge the and arrest to the NCTC. You know even the (CBI) and the National Investigation Agency union government to withdraw the order for IB doesn’t have the police powers.” (NIA) - apart from state police intelligence setting up the NCTC.” The former Delhi Police commissioner, wings. “There are gaps that need to be filled. Jammu and Kashmir Chief Minister who also had a stint with the Central Bureau Work on the existing system. Modernise Omar Abdullah, an ally of the ruling UPA, of Investigation (CBI), stated that “lack of police forces, improve their intelligence too was against “mandating” the NCTC with consultation” with state governments had gathering, link police stations with centralised raiding and arresting powers. complicated the matter that ultimately led to intelligence database and improve your police AkhileshYadav of Uttar Pradesh, a deadlock over the NCTC. public ratio,” he said. whoseSamajwadi Party also supports the The anti-terror organisation could not be But former home secretary G.K. Pillai, central government from outside, said the formed despite a government order issued in who is considered to be one of the main agency was unacceptable in its “present form” February 2012 because many non-Congress architects of the NCTC, is disappointed over because “misuse of clauses (in NCTC) cannot ruled states feared its perceived misuse and the proposed one-stop anti-terror intelligence be ruled out”. Other chief ministers who that their policing powers would be clipped. hub getting stalled. spoke against NCTC included Naveen “You are waiting for another terror attack Patnaik (Odisha), Raman Singh Commodore (retd) UdayBhaskar, a noted security expert, said the state governments like the Mumbai 2008 then you will agree (Chhattisgarh) and Parkash Singh Badal that we need the NCTC,” Pillai said. (Punjab). “had a reason to worry” even as he called the stalling of the NCTC as a “worrisome He said state governments were playing development” given the nature of threats to politics over terror. “There should not be any the nation’s internal security. “Their (state politics when it comes to fighting terror,” he government’s) argument is not devoid of stressed. Pillai rejected the contention of its NCTC: A VANITY PROJECT OR A reason, especially the states that have had being misused. “Anything can be misused. NECESSITY TO FIGHT TERROR? tricky relations with the central government,” Tell me which law cannot be misused. But he said. that doesn’t mean we should do nothing.” The rejection of the National Counter Ajay Sahni, an author and expert on Terrorism Centre (NCTC) by the state counter-terrorism, questioned the logic to governments on the grounds that it goes have the NCTC at all, arguing that not having against the country’s federal principles has it would “mean nothing for the country’s evoked mixed response. While a former home security”. ACQUISITIONS secretary said there should not be any politics INDIA CLEARS $600-MN DEAL FOR over terror, a former IB official said giving “It was a vanity project that would have police powers to the proposed agency was like undermined the existing capabilities,” feels AIR FORCE TRAINERS creating an Indian version of the KGB. Sahni. Asked about the existing gaps in India’s The Indian government has given its nod anti-terror capacity as pointed out time and Former Intelligence Bureau chief to the Indian Air Force to buy 75 basic trainer again by Chidambaram, Sahni argues that ArunBhagat is of the opinion that the NCTC planes from a Swiss firm under a long due “generalisations cannot be arguments”. “New doesn’t need police powers because it was deal worth $640 million (Rs.2,900 crore), an structures cannot work. Existing system designed as a single agency to coordinate official said. should be given the capacity to fight terror. counter-terrorism operations across the The Cabinet Committee on Security, the Can NCTC do that?” country, country’s highest defence and security Sahni, executive director of the Institute “Democratic nations don’t give police decision-making body, gave the clearance for for Conflict Management that focuses on powers to intelligence agencies. Only the Indian Air Force (IAF) to sign the deal internal security research in India, pointed oligarchies or monarchical governments do with Swiss manufacturer Pilatus for its PC-7 out that the Intelligence Bureau, India’s that. It reminds you of the organisations like turbo trainer plane, the official said here. premier intelligence agency and nodal KGB,” Bhagat said. The defence ministry had cleared the counter terrorism body, has less than 5,000 plane as the winner of the contract late last He said the purpose of the NCTC was to field agents to gather ground information year following a rigourous flight trials. collate and analyse intelligence inputs with from a population of 1.2 billion. experts from all disciplines, including Pilatus’ PC-7 beat Korean Aerospace KT- “Can NCTC do anything about that? In diplomatic, financial, investigative, judicial 1 and American Hawker-Beechcraft T-6C fact the NCTC will draw these field officers and police. Texan-II planes in the contest to win the deal. for its desk work and further complicate the “They were to examine leads because our things. What is the problem with the IB? Why The Pilatus planes are to replace IAF’s fleet

News behind MAY 14, 2012 the News 11 defenceandspacediary of 125 Hindustan Piston Trainer-32 (HPT- DEFENCE PRODUCTION work from Indian MSMEs, a foreign vendor will be able to discharge offset liabilities worth 32) planes, along known as Deepak, from the ‘REVISED DEFENCE OFFSETS Hindustan Aeronautics limited stable. ‘REVISED DEFENCE OFFSETS $1.5 million, Frost and Sullivan added. POLICY WILL ENCOURAGE INDIAN India had grounded the fleet of HPT-32 in 2009 following a series of crashes. The SME SECTOR’ plane had persistent fuel supply system A major portion of the defence offsets problem that could not be sorted out, opportunity for Indian companies is in the NAVY resulting in 108 engine cuts, claiming the lives areas of engineering outsourcing, of 23 pilots. maintenance, repair and overhaul, with the INDIA NATURAL LEADER OF INDIA CLEARS $660 MN DEAL FOR revised policy encouraging development of INDIAN OCEAN REGION: ANTONY ARTILLERY GUNS small and medium enterprises, consultancy India has positioned itself as a natural firm Frost and Sullivan said this week. The Indian Army got a shot in the arm leader of the Indian Ocean region in view of with the defence ministry this week clearing “Majority of the offset opportunity in its strategic location and operational its long-pending $660 million India lies in engineering service outsourcing capability, even as its navy was asked to be (Rs.3,000crore) proposal to buy 145 ultra- (ESO), maintenance, repair and overhaul prepared to meet eventualities in view of the light howitzer guns to add teeth to its ageing (MRO), enterprise resource planning (ERP), complex emerging security matrix in the inventory. information technology, control systems, region. research and development,” said Frost and This is the first time the army is buying “India’s strategic location in the Indian Sullivan in a statement. artillery guns in 27 years, since the Bofors Ocean and the professional capability of our guns payoff scandal broke out in the late Under the defence offsets policy, 30 navy bestows upon us a natural ability to play 1980s, defence ministry sources said here. percent of all military hardware deals have to a leading role in ensuring peace and stability be ploughed back into India’s defence, in the Indian Ocean region,” Defence The Defence Acquisition Council aerospace or homeland security sectors. Minister A.K. Antony told the conference of (DAC), headed by Defence Minister A.K. Indian Navy commanders here this week. Antony, cleared the deal for the M777 BAE Referring to the revised defence offset Systems guns that will be bought through the policy announced by the government last “We have a well-established material and Foreign Military Sales (FMS) route of the US month, Frost and Sullivan said the changes training assistance programme with Indian government. will encourage development ofthe Indian Ocean region countries for their capacity- private, small and medium enterprises in building and enhancement,” he noted. The purchase comes in the wake of Indian procurement of defence equipment and will Army chief Gen. V.K. Singh writing to Prime Indian Navy chief Admiral NirmalVerma help these firms accelerate their specific Minister Manmohan Singh in March and other top naval commanders were present business units. highlighting the gaps in its preparedness. at the conference. Describing the emerging According to the consultancy firm, over security matrix in the Indian Ocean region as Being light in weight, the 155mm 39- the last five years, India’s defence ministry has “really complex”, with “some political calibre guns can be easily airlifted and will be been spending aggressively towards developments” and “worrisome factors”, deployed in the high altitude mountainous upgrading and modernising its assets with Antony also asked the navy top brass to areas in the northeast and in the Ladakh more technologically advanced alternatives. maintain high levels of preparedness at all region of Jammu and Kashmir bordering times. China. “However, 70 percent of India’s procurement needs are still met by foreign “Today, the security situation in our A couple of weeks ago the defence imports rather than by domestic production. immediate neighbourhood has become really ministry had approved infrastructure The easing offset norms may help in reversing complex. Considering the challenges in the development projects in the northeast, this ratio and promote the growth of Indian Indian Ocean region, it is essential to maintain including strategic roads and rail lines that domesticplayers,” predicts the firm. high levels of operational preparedness at all will enable easy and quick mobilisation of times,” he said. troops. The revised offset norms are expected to create a win-win situation for all the major “On the one hand, there are some political The DAC cleared the M777 gun stakeholders in the offsets programme, that developments, and on the other hand, a following a favourable report by a committee is, the government, original equipment number of other factors are a cause for worry headed by Defence Research and manufacturers (OEM) and local industry, and need to be factored into our preparations, Development Organisation (DRDO) chief Frost and Sullivan said. both in the short-term and long-term,” he V.K. Saraswat that studied the suitability of added. Stressing the importance of security the weapon system. The revised offset guidelines provide an incentive to SMEs by allowing foreign of maritime activity through the sea-lanes in The army had recommended the gun vendors to select micro, small and medium the Indian Ocean for economic prosperity of following a series of rigorous trials. enterprises (MSMEs) as their offset partners India and that of the world, the defence by introducing a multiplier of 1.5 for all minister said free movement of trade and offsets discharged through them. energy supplies and various economic This implies that by sourcing $1 million activities such as fishing and extraction of

News behind 12 the News MAY 14, 2012 defenceandspacediary mineral resources is equally crucial for in fine-grained sedimentary rocks can be oil production. Imports by the United States economic security. On the navy’s extracted using a process known as hydraulic fell from 65 per cent of total domestic modernization programme, Antony said the fracturing—or ‘fracking’—which involves demand, or 13.5 million barrels a day, their induction of the nuclear powered submarine, drilling long horizontal wells in shale rocks peak in 2005, to 9.8 million barrels a day in INS Chakra, last month had ushered in a new more than a kilometre below the surface. 2011, or 52 per cent of demand. Oil industry era of submarine operations for India. Massive quantities of water, sand and experts predict that US imports would keep “It has placed us in a select group of navies chemicals are pumped into the wells at high falling, reaching 4.5 million barrels a day— that operate such a platform. We must ensure pressure. This opens up fissures in the shale or just a quarter of domestic oil demand—by that INS Chakra is utilised effectively to rock formations, which are then held open 2015. By 2020, they forecast, the United harness its real potential and also evolve by the sand, enabling the trapped gas and oil States would not need to import foreign oil operational concepts for future platforms,” he to escape to the surface for collection. anymore. This very welcome situation has also said. Antony said the navy is on course to President Obama has strongly endorsed the developed due to better performance and less acquire potent platforms to add to its blue new production technology as a boon to the guzzling of ‘gas’[Petrol/Diesel] by new model water capability. US economy and energy security. Last month, automobiles/trucks manufactured in the Obama ordered the creation of an inter- United States. Further, with the advent of the “The induction of INS Vikramaditya in agency task force to streamline federal internet, there is considerably less urge among the near future, the potent MiG-29K combat regulation of natural gas drilling and the Americans to travel. planes as well as P8-I long-range maritime Environmental Protection Agency issued reconnaissance aircraft would strengthen the If such forecasts come true, there will revised air quality rules for oil and gas wells navy further. Recently, the Light Combat undoubtedly be a huge impact on American that gave drillers extra time to comply and Aircraft (LCA) for the navy made its successful strategic thinking, particularly in the political lowered their costs. The US government also maiden flight,” he said. and economic spheres. For one, a United agreed to allow companies to reveal the States not dependent on foreign imported oil Commending the navy’s commitment to contents of drilling fluids only after the would mean that there would be very little indigenisation, Antony said, “this is amply operation had been completed. US industry incentive for it to undertake foreign military borne by the fact that 44 out of 48 ships and officials praised both moves. adventures of the type witnessed in the Middle submarines, presently on order, are being Geologists in the United States have long East, particularly in Iraq. As it is, of the top constructed in India.” known that shale basins across the United five countries that export oil to the United The public sector shipyards, he said, must States, like the Bakken field in North Dakota, States, only one is in the Middle East, namely, speed up construction of warships and Eagle Ford and Barnett in Texas, and the Saudi Arabia. It is for this reason also that the submarines and further modernise the Marcellus in the northeast, held tremendous United States can put pressure on other infrastructure and technology of ship- oil and gas reserves. But energy companies had countries such as India and China to production. Stressing on self-reliance in no economic way to collect them until new drastically cut their imports of oil from Iran. critical technologies, Antony said the navy and technology recently changed all that. The Clearly, the United States is not as vulnerable the Defence Research and Development results have been impressive. Production from as other countries are and therefore can afford Organisation (DRDO) needed to put in more the Bakken region alone has gone from to take a much tougher attitude. Hitherto, efforts to meet time lines. negligible quantities to 500,000 barrels of oil successive US administrations have made it “This requires a synergy and active a day in the last few years. Similarly, oil clear that any disruption in the flow of oil from cooperation between the navy and all other production at Eagle Ford had been negligible; the Middle East would be considered a concerned agencies. Such synergy is it was estimated at just about 787 barrels in strategic challenge and would be met with full imperative for achieving self-reliance and 2004. Last year, however, its production force, if necessary. All that might change in ultimately reducing our dependence on reached 30.5 million barrels according to local the future. Countries such as India, Japan, foreign suppliers, particularly in areas of state regulators, and it is still growing. Natural South Korea and to some extent China that advanced technology,” he said. gas production there went from nothing to had relied on the security umbrella of the 243 billion cubic feet in just three years. Some United States Navy to ensure the free flow of experts are even more bullish and have forecast oil from the Gulf region, that is so vital to that North American oil production could their economic wellbeing, might now have to reach an astounding 27 million barrels a day think afresh. ENERGY SECURITY by 2020, almost twice the rate of production Thus, during Secretary of State Hillary US STRATEGIC THINKING IN AN of 15 million barrels a day at the end of 2011. Clinton’s ongoing visit to India, the issue of ERA OF ENERGY SELF SUFFICIENCY Production from the United States could grow the oil embargo on Iran and the general to 15.6 million barrels a day by 2020, up from instability of states west of India, particularly R. S. Kalha nine million barrels a day in 2011. Afghanistan and Pakistan, would be According to well placed oil industry As it stands today, the United States is contentious issues for discussion. For India, sources, the arrival of new technology and already in a position to reduce the demand the choice is rather stark given that the West innovative methods of drilling are opening up for oil imported from abroad to fulfil its Asian region is in its close proximity. India new vistas hitherto thought impossible. domestic needs. Presently, the United States cannot afford poor relations with Iran. Dubai Natural gas and oil stored deep underground consumes nearly 25 per cent of the total world Cont.. on Page....21

News behind MAY 14, 2012 the News 13 defenceandspacediary specialfeature

GURMEET KANWAL

ARMY: BATTLE FOR CHANGE

General V K Singh

eneral V K Singh, the Chief of the – from sub-conventional to conventional Army corps commander in his field Army Staff (COAS) said on Army state-on-state warfare under a nuclear headquarters will have instant access to a Day on January 15, 2012, that his overhang – in positional, attritional, live, three-dimensional image of the entire Gtask is to transform the 1.13 million strong manoeuvre, asymmetric and virtual warfare. battlefield displayed on a computer screen, army into an “agile, lethal and networked The armed forces across the world an image generated by a network of sensors, force.” readily accepted Admiral William Owens’ unmanned aerial vehicles, reconnaissance During an earlier interview, while concept of following a “system of systems” aircraft, and special operations soldiers on speaking about modernisation of the army, approach (Lifting the Fog of War, 1995). the ground. The commander will know the he had said, “The primary areas that are This led to the Revolution in Military precise location and activity of enemy being addressed are aimed at greater Affairs (RMA), which is nothing but the units—even those attempting to cloak their battlefield transparency, increasing the application of information technology to movements by operating at night, in poor lethality and precision of firepower warfare to increase the prospects of weather, or hiding behind mountains or capabilities, overcoming night blindness eliminating the “fog and friction of war” – under trees.” and achieving network centricity.” All of a concept made famous by Carl von The RMA’s real significance in modern this is in the context of preparing to fight Clausewitz. Admiral Owens had written: warfare emerged when, on November 5, and win across the full spectrum of conflict “In a future conflict,” says Owens, “an 2002, a missile launched from a Predator

News behind 14 the News MAY 14, 2012 defenceandspacediary drone killed several terrorists in a moving in acquiring Geo Information System making process is laborious and the vehicle in Yemen. The operation was (GIS) capability, which provides the spatial proverbial red tape is difficult to throw off. controlled from the US Central Command orientation and context to the Operational The key elements in a NCW environment HQ in Florida, satellite and UAV imagery Information System (OIS) and the are intelligence, surveillance and was used to track a moving vehicle in real Management Information System (MIS) reconnaissance (ISR) in real-time; a fully time after ground operatives had tipped off system. It forms the base over which the integrated and seamless automated decision the CIA about the presence of terrorists in other functionalities and applications ride. making system based on a responsive and it, and a precision strike air-to-surface The modern GIS system includes features flexible, multi-channel communications missile was used to successfully destroy the of network analysis, 3D visualisation, fly- system with high band width for data target without causing collateral damage. through & simulation. A few of them also transfer; and, firepower assets that provide The technologies proven in the RMA led possess image processing and change adequate precision strike capability. to a ‘transformation’ in force structures, detection capabilities. Army Strategic Seamlessly integrated ISR systems for doctrines, training methodology and the Operational Information Dissemination target acquisition and tracking and management of human resources. System (ASTROIDS) is a secure powerful weapons platforms with precision information dissemination system which Recent wars fought by American and strike capability are necessary for military connects Army Headquarters with other Western armed forces have shown domination and deterrence and Command and Corps Headquarters for time and again that information superiority development in these has been sluggish. exchange of terrain, operations intelligence leads to enhanced combat effectiveness. The armed forces still do not have the and logistics information.” Network Centric Warfare (NCW) is a military satellites that hey need for concept enabled by information superiority Maj Gen D V Kalra, former ADG continuous surveillance and UAVs are few that synergises combat power by the real- Information Systems at Army HQ, said in number. The stocks of precision strike time networking of sensors, decision- during the CLAWS seminar: “The weapons held in the air-to-ground and makers and shooters to achieve shared Command Information and Decision artillery arsenals are low in numbers and situational awareness, enhanced quality of Support System (CIDSS) is the hub centre need to be increased by several orders of decision making, faster tempo of of tactical C3I which connects Corps magnitude. However, supremacy in the operations, focused application of fire and headquarters down to infantry battalions. battles of the 21st century will hinge on increased survivability. All of this leads to It has computer nodes linked through sophisticated command, control and enhanced mission effectiveness. NCW suitable communication media and communications systems that link the exploits information superiority and provides processed information to ‘shooters’ and ‘sensors’ together to achieve transforms it into combat power by commanders and staff on terrain, synergy through network centricity and effectively linking all decision makers and operational, intelligence and logistics effects-based operations. It is in this field firepower entities in the battle space. By functions for decision making. Battlefield that modernisation has been grossly making it possible to generate precise war Surveillance System (BSS) has been inadequate, particularly in the Indian Army. developed to provide an automated data fighting effects at high tempo According to Lt Gen Noble Thamburaj fusion of surveillance devices and simultaneously across the full battle space, (Retd), former VCOAS, the modernisation operational information system to it blurs the distinction between the focus in the 11th Defence Plan, which ends commanders at field force level so as to operational and the tactical levels of war. on March 31, 2012, is on “precision fire facilitate decision making in battle in near NCW acts as an enabler that focuses on power, air defence, aviation, Future real-time. Artillery Combat Command and the speedy attainment of operational level Infantry Soldier as a System (F-INSAS), aims, thus leading to the early achievement Control System (ACCCS) and Air Defence infrastructure development, network of strategic objectives. Control and Reporting System (ADC&RS) are in an advanced stage of development. centricity and achieving battlefield THE INDIA NCW STORY The Indian Army is making conscientious transparency through improved As usual, India has been slow to catch efforts to overcome various challenges surveillance, night vision and target up with the latest developments in NCW thrown up by the fielding of new systems.” acquisition… Considering the receding technologies and concepts. It was brought Except for the ACCCS artillery fire control span of technological cycle (sic), the right out during the Centre for Land Warfare system that is being fielded quite balance has to be maintained between state- Studies (CLAWS) seminar on NCW in extensively, the others are at various stages of-art, current and obsolescent April 2011 that the “Information of development. technologies.” Despite this clear realisation about achieving the right balance, the Technology (IT) vision of the Indian Army Noble intentions do not necessarily includes transformation into a dynamic army’s communications systems are still translate into concrete achievements as based mostly on obsolescent technologies. network centric force, achieving immediate operational considerations information superiority through effective Software-based radios and cognitive radios invariably override long-term capability are not even being seriously considered. management of information technology. development while allocating budgetary The Indian Army has made some progress priorities, the defence acquisition decision Though some modern frequency

News behind MAY 14, 2012 the News 15 defenceandspacediary hopping radio sets with integral encryption and yet the programme has not seen the networked, mobile warriors with a high devices have been introduced into service light of day. degree of situational awareness and the in recent years, networked The Battlefield Management System ability to operate in all weather conditions communications, which form the (BMS) is meant for communications from in all types of terrain. The programme “backbone” of an effective command and the battalion headquarters forward to the envisages equipping infantrymen with control system, need substantial companies and platoons. It will enable the light-weight integrated helmets with a ‘head upgradation. The Plan AREN system that Commanding Officer to enhance his up’ display that has a built in is designed to “roll forward” and keep pace situational awareness and command his communication system and night vision with offensive operations in the plains, has battalion through a secure communications goggles, hand-held computer display, been in service for almost three decades and network with built-in redundancy. BMS Global Positioning System (GPS) receiver is based on outdated and bulky involves big numbers and will be fielded and lethal fire power, including Laser- technologies. It is based on outmoded both in the plains and the mountains. The guided weapon systems at appropriate second generation radio relay hubs and has number of infantry battalions alone is levels. The design and development little capacity for data transmission. about 350. To this can be added 60 responsibilities for both these programmes Requests for Information (RFI) were Rashtriya Rifles and 45 Assam Rifles need to be clearly defined in order to avoid floated for a Tactical Communication battalions. When armoured, artillery, turf wars between the Infantry Directorate System (TCS) for offensive operations and engineers and signal corps regiments, as also and the Information Systems Directorate a Battlefield Management System (BMS) aviation squadrons and the logistics in the Army. for communication at the tactical level in battalions are added, the numbers are really TRI-SERVICE INTEGRATION defensive operations a few years ago, but huge. ISSUES since then the acquisition process has Both TCS and BMS have been meandered along and this has resulted in Little progress has been made towards categorised as ‘make’ programmes by the prolonged delays in introducing both these addressing inter-Service interoperability systems into service. Defence Acquisition Council headed by the challenges in the communications field. A Defence Minister. This implies that the two tri-Service Defence Communications The new optical fibre network being systems must be designed and developed Network (DCN) is now under laid as an alternative to the 3G spectrum in India. The leading contenders are Bharat development and the proposals which have surrendered by the armed forces will go a Electronics Limited, Tata Advanced been received are being evaluated. Cyber long way in providing modern land-line Systems and WIPRO, among others. security and offensive cyber warfare are communications. However, future Indian companies need to invest in other areas that do not appear to have communication systems will need to developing the required technology and the received the attention that they deserve. provide wide-band data capabilities to ability to design and implement robust With China moving rapidly towards facilitate the real time transmission of tactical communications systems. creating “one million laptop warriors”, images and battlefield video while on the About 70 per cent of the required neglecting this field will prove to be very move. technology will have to be acquired from costly in the long term. The BMS will be integrated with the abroad and overseas companies will play a According to Brig ArunSahgal (Retd), Army Static Communications (ASCON) significant role. MNCs with suitable “The Indian Army is following what can system, which is the backbone technologies and the right experience to be termed as a “bottom up” approach for communication network of the army. help as system integrators include General developing NCW capability, rather than an ASCON provides voice and data links Dynamics, Thales and EADS, among evolutionary model adopted by both the between static headquarters and those in others. Indian companies planning to bid Americans and more recently the Chinese… peace-time locations. It is of modular for these contracts must carefully evaluate In the absence of integrated and synergistic design and can be upgraded. the technological capabilities of these oversight that could only happen if there is The TCS is a system that is meant for MNCs and how their systems have fared a Chief of Defence Staff or Permanent offensive operations – a mobile system that during recent combat operations, the type Chairman Chiefs of Staff Committee, there can ‘leapfrog’ forward as the operation of experience they have in integrating is little tri-service integration with each progresses into enemy territory. The tactical communications systems and service evolving its own path… Lack of top offensive operations echelons of the ‘pivot’ whether they are likely to bring a long term down evolutionary approach has serious or ‘holding’ Corps deployed on the commitment to the Indian projects. ramifications.” Lt Gen PC Katoch (Retd), international boundary and the three Strike The BMS communications system former DG Information Systems, gives the Corps will be equipped with TCS. The must also be compatible with the Future example of the Defence Communications TCS programme has been delayed by more Infantry Soldier as a System programme. Network (DCN), “While this is being than ten years – the project was originally The F-INSAS project focuses on enhancing developed, virtually nothing is happening to have been started in the year 2000 and the lethality and survivability of soldiers. on how to achieve the Services hand-shake was hence called TCS 2000; now it is 2012 It seeks to transform soldiers into fully that would ride the DCN.”

News behind 16 the News MAY 14, 2012 specialfeature defenceandspacediary

VIVEKKAPUR

PRECISION WEAPONS IN AERIAL WARFARE

recision in warfare has been a much INTRODUCTION achieve the desired end of incapacitating or sought after capability that was Precision in aerial warfare came into killing the enemy combatant. With realised when modern technology prominence and entered the common man’s advancements in the technology of war maturedP adequately. Precision has changed fighting, longer range weapons such as the mind-space during and after the First Gulf the very nature of aerial warfare in War of 1991 when the electronic media bow and arrow came into use. The bow and particular. Today modern air forces have the brought live images of modern precision arrow likewise required the projectile, the ability to put a bomb through a chosen targeting into our homes through coverage arrow, to impact the intended target at very window with confidence. However, trends of the US led air-campaign against Iraq. specific parts for maximum effect. Still later, indicate that in future precision weaponry However, precision has remained a central advancements in the technology of war could migrate towards directed energy desire in war fighting since times required weapons to defeat body armour weapons that have the potential to deliver a immemorial. In ancient times the wielder worn by combatants through impacting on degree of precision that lies in the realm of of a sword and spear required to apply the the known or presumed weak points of the science fiction today. It is important for all business end of his weapon at specific parts armour. aspirants towards viable military power to of the opponent’s body for the desired effect. In the naval arena ships initially fought work towards operationalising these energy If the application was precise enough, too primarily through launching projectiles at weapons in the near future. much force would not be required to each other. In the early era of muzzle loading

News behind MAY 14, 2012 the News 17 defenceandspacediary cannon when technology did not allow the “ring and bead” sights for aircraft guns along the advantage of requiring no launch aircraft path of the projectile to be accurately with the theory of deflection shooting. support post missile launch and swiftly predicted ships resorted to “shot gun” style During the Second World War “reflector” became very popular. The first such missile attacks. Cannons were arrayed in large gun sights were developed as were basic gyro to enter service was the AIM-9A/B numbers along the side of warships. gun sights. Both these new devices made “Sidewinder” of which the AIM-9L and Through turning the side of their ship the firing of aircraft guns more accurate. later variants continue in front line service towards the enemy the cannons were fired The results obtained however were greatly today. Advances in sensor and guidance in full side firing together salvos, using the dependent upon the pilot’s skills. A few technology have made the more modern “shotgun” principle, with the aim that out gifted pilots were able to put the bulk of variants of such missiles extremely accurate of a full broadside of cannons fired an their bullets fired from a moving platform and difficult to evade. Radar guidance has adequate number of cannonballs may hit into the small manoeuvring targets. The evolved towards active radar homing the opponent and cause catastrophic majority, however, found this an missiles. These missiles carry their own radar damage. In later years, when the trajectories unachievable task. Technology finally came transmitter and receiver and after of shells fired from more modern ship to the rescue with the development of air- approaching within their onboard radar’s cannons became more predictable, to-air guided weapons. The first of these range from the target are totally broadsides were dispensed with and guns was the Luftwaffe’s X-4 wire guided air-to- independent much like IR guided passive were now fired for the impact of individual air missile, developed and inducted in the missiles are. shells on the enemy vessel. This led to the last few months of World War-II.1 Traditionally IR guided missiles were path towards precision in weapon delivery The wire guided German X-4 was close combat or Within Visual Range at sea, finally progressing towards guided found impractical beyond fairly short ranges (WVR) weapons while radar guided missiles ship-to-ship missiles. due to wire length (just four miles) were Beyond Visual Range (BVR) weapons. The discussion above makes clear that limitations. An alternate means of guidance However, a few modern IR missiles such as far from being a new military desire, was sought in the 1950s and 1960s. This the Israeli Python5 and Russian R-73E IR precision in weapon delivery has always alternate guidance method was achieved missiles boast maximum launch ranges been a human endeavour. What was through the use of radar. This guidance tending towards BVR. The initial missiles different in earlier times was that the system required the guided missile carrying exemplified by the US IR WVR AIM-9A technology then available did not allow the aircraft to illuminate the intended target and B Sidewinder variants and BVR radar degree of precision available to modern with its airborne radar. The missile semi-active AIM-7 Sparrow had limited military forces. incorporated a radar receiver tuned to the capabilities and quite poor “in use” results. PRECISION IN THE AIR same frequency. On picking up radar energy More recent missiles such as the AIM-9L reflected from the target a relatively simple and AIM-9X, Russian R-73, Israeli Python- Precision in Air-to-Air Engagements: electromechanical autopilot onboard the 4 and 5 in WVR and US AIM-120 Soon after the induction of aircraft for war missile controlled its control surface Advanced Medium Range Air-to-Air fighting, military commanders saw the deflections to guide the missile on an Missile (AMRAAM), French Missile utility in being able to use the third interception path towards the target. Such d’Interception et de Combat Aérien dimension to gain intelligence on enemy missiles required launch aircraft support (MICA), Russian R-77, Israeli Derby in the dispositions and movement while denying throughout their flight path as guidance BVR radar guided category field much the enemy similar information. Aircraft depended upon the launch aircraft better capabilities. The trend is towards the proved so effective that denying the enemy continuously illuminating the target on increasing ability of these modern missiles the use of his aircraft soon became a military radar, for getting the required radar to operate in a dense Electronic Warfare necessity. The arming of aircraft to shoot reflections, till missile impact. This guidance (EW) environment, and to increase their down other aircraft commenced during was dubbed Semi-Active radar homing engagement envelopes. The trend towards World War-I with pilots carrying personal (SARH) and the first US missile of this type higher precision in air-to-air warfare firearms aloft and using these to shoot at to enter service was the Air Intercept Missile continues still. opposing aircraft. This, predictably, gave (AIM)-7 “Sparrow”, more advanced variants The change in the recent past has been fairly poor results as the pilot had to fly at of which can still be found in the that while in earlier years earlier precision the same time as using his handheld firearm. inventories of a few air forces. lay in the skills of individual aircrew, today The next step was the fitting of guns and An alternate technology utilisedinfra red this has been transferred to the equipment machine guns to the aircraft itself. The (IR) emissions from target aircraft engines. itself. Even a relatively inexperienced and development of interrupter gears enabled In this technique the missile carried a unskilled pilot firing a modern air-to-air these guns to fire forwards through the suitable IR seeker that detected and locked missile has a very good chance of hitting propeller disk without causing catastrophic onto the enemy aircraft’s IR emissions and his target very precisely. This transfer of self damage. In the years between the two then guided the missile through the precision from man to machine makes World Wars, advances in sighting generation of control surface deflections to precision much more ubiquitous in the techniques led to the development of basic impact the target. This guidance system had battle-space. Great strides have been made

News behind 18 the News MAY 14, 2012 defenceandspacediary in air-to-air precision weapons. These are rudimentary sighting devices leading battleship Roma off Sardinia to prevent its broadly classified in terms of their ranges progressively to better sighting techniques, surrender to the Allies.9 The first in-service (BVR) and (WVR) and also by the kind of which all shared the characteristic of the modern air-to-ground precision weapon guidance utilised, Infra Red (IR) homing, individual pilots’ handling of the sighting was the US Air to Ground Munition active Radar homing or SARH. The Astra system having a major effect on weapon (AGM)-12 “Bullpup”. This weapon used missile being developed indigenously by delivery accuracy. A few gifted pilots radio command guidance wherein the DRDO is an active radar homing BVR achieved surprisingly accurate results which launch aircraft crew tracked the weapon missile. evaded the bulk of pilots. Once again through sighting a flare on its rear and PRECISION IN GROUND-TO-AIR precision vested in individuals and so was through small joystick generated radio WEAPON DELIVERY not easily replicable or widespread. command signals to make the weapon Precision weapon delivery has had a manoeuvre towards its target.10 Other As aircraft became more effective in much greater impact in the air-to-ground guidance means included the AGM-62 shaping the battlefield their destruction by domain. During World War-II, bombers “Walleye”’s optical guidance using a camera ground forces became more sought after. carried a specialist bombardier tasked to in the bomb’s nose to pick up the target Initially simple guns already in use in land operate intricate bombsights designed to and lock it on to self guidance towards the battles were adapted for this task. achieve accurate delivery of the weapon load subject in the centre of the camera screen. Shortcomings led to multiple barrel guns on target. Despite this the technology then The Guided Bomb Unit (GBU)-8 had a for higher rates of fire etc. Despite this, in available did not give particularly similar guidance principle as the Walleye. World War-II it required hundreds of encouraging results. For instance, in 1944, The first laser guided bomb was the Texas rounds to be fired for each aircraft kill.2 47 US B-29 bombers raided the Japanese Instruments developed Bomb, Laser, and Radar guided guns were developed to Yawata steelworks and only one aircraft hit Terminal Guidance (BOLT) -117, later re- increase the success rates, but, this the target with just one of its 500 lb bombs designated as GBU-111. Here the launch development coincided with rapid increases and that too in a relatively less important aircraft illuminated the target with a laser in aircraft speeds brought about by the jet part of the target; this single bomb hit beam. The bomb incorporated a laser engine and the round to hits ratio stayed represented just 0.25 per cent of all bombs energy receiver that picked up laser energy stagnant and even at times worsened in the dropped on that mission.6 In World War- reflected by the target and homed onto it. 1950s and 1960s. Further searches for an II, to hit a 60 foot by 100 foot target with a Its successors are today’s Paveway-I, II, III effective solution led to the development of 90 per cent probability of success with dumb and IV laser guided bombs.12 The later surface to air guided weapons (SAGW). (unguided) bombs required 9070 bombs Paveway variants also incorporate a GPS Early models of these also suffered from low carried on 3024 aircraft. These figures receiver to supplement the laser guidance, success rates. In Vietnam dozens of Soviet reduced to 1100 bombs from 550 aircraft which is especially useful in conditions of Surface to Air Missile (SAM)-2s had to be in Korea and further reduced to 176 bombs low atmospheric transparency caused by fired per aircraft kill.3 More modern from 44 aircraft in Vietnam7 illustrating not dust, smoke or moisture. missiles such as the KBP 2K22/2K22M/M1 only the advances in sighting systems, but Tunguska SA-19 “Grison”, S-300 PMU1/ While, as is evident, several different also bringing out the immense effort needed 2 SA-10 “Grumble”, Akash, Osa AK SA-8 guidance methods have been tried out in to hit small targets from the air.8 These “Gecko”, Patriot PAC-3, reportedly have the electromagnetic spectrum, the most figures highlight the very heavy effort much better success rates and have become popular remain electro-optical, laser, and IR required to destroy a ground target through so lethal4 that most air forces have been for their benefits of desired accuracy aerial attack using unguided bombs. forced to add a new mission, that of combined with ease of use in acquiring and Suppression of Enemy Air Defence Technology was pursued to give viable engaging targets especially from single seat (SEAD), as an essential component of all solutions to this problem. Once again, the aircraft where the pilot has other pressing air attacks against targets known to be Germans showed great innovation in tasks to perform as well. defended by SAMs. developing the world’s first air-to-surface AN ASSESSMENT precision weapon in form of the Fritz-X or PRECISION IN AIR-TO-GROUND PC-1400X. This was a 3450-lb glide bomb Precision weapons especially in air-to- WEAPON DELIVERY intended for use against ships and was ground delivery derive several benefits that The development of attack on ground designed with the ability to penetrate up to are pertinent to look at especially as there is forces from aircraft followed a similar story 28 inches of armour. The bomb featured a often an acrimonious debate about the high to that of air-to-air. The first air-to-ground flare on its tail through visual sighting of cost of such weapons and thus the question air attack took the form of four 4.5 pound which the operator on the bomb’s launch of their affordability. It is true that precision (lb) grenades dropped manually by Italian aircraft sent radio commands to the bomb weapons cost a great deal. A single US pilot Lt. GiulioGavotti on Turkish ground to make relatively minor corrections to its Paveway-II GBU-10 weapon reportedly forces on 01 November 1911.5 Later trajectory towards the intended target. This costs US $23,700 in a large production bombs were fixed on the aircraft and precision guided bomb was used on 9 batch. But this weapon gives a circular error dropped through the utilisation of September 1943 to sink the Italian probable (CEP)13 of just nine meters.14

News behind MAY 14, 2012 the News 19 defenceandspacediary

Bombers are expected to be challenged by aspiring to field modern military power in the higher command organisation off from the enemy’s air defence fighters as well as the 21st century to carry out focussed the fighting forces while at the same time ground based anti-aircraft defences. In such research and development into DEW, as denying the field forces information a situation, a few bomber aircraft are likely these are likely to cause a change in the required for their effective action. If utilised to be lost to enemy action. It is reasonable character of warfare as major as that brought against a highly networked Air Force like to expect that the more bombers one sends about by gunpowder. DEW have the that of the US, cyber attacks could across the border the more aircraft may potential to be very precise as they mainly potentially sever the communication links potentially be lost. We have seen that comprise very tightly focussed beams of between higher command and fighting historically a very large number of aircraft electromagnetic energy, thus bringing a new forces. The latter would be ineffective in the were required to get even a small number level of high precision in aerial and other absence of inputs on the commander’s plans of unguided bombs close to the target. With warfare. and task inputs. Likewise, the field forces precision weapons, even a single aircraft IMPACT OF DEW ON AERIAL could be deprived of intelligence and carrying just one bomb may be able to WARFARE situational awareness inputs through cyber destroy the target, thus removing the need attacks on their data networks. Such DEW developments are likely to have a to send large numbers of aircraft. Given that deprivation could make these aircraft very great affect on the conduct of aerial warfare. even with high precision weapon costs of vulnerable to enemy action. The fact that Currently aircraft are limited in their upwards of $23,000 modern fighter- most modern air forces including the Indian effectiveness by the weapon load carried on bombers cost more than $50-60 million, Air Force (IAF) and the People’s Liberation board. Developments aimed towards precision weapons actually work out much Army Air Force (PLAAF) are moving producing more compact DEW could lead more cost effective.15 This is without towards becoming network-enabled in a big to incorporation of these on board aircraft. considering the human factor, of loss of way makes addition of this aspect to the DEW armed aircraft would be limited only highly trained aircrew killed or captured, study of precision in aerial warfare vital. The by the ability to generate the power required which consideration would tilt the balance earlier requirement was to target the enemy’s for multiple firings of their DEWs. As even more in favour of the widespread use command and control structure through aircraft engines develop considerable power of precision weapons. delivery of bombs on their physical and also drive on-board alternating current Precision weapons have shifted the locations. Through intelligent use of cyber and direct current electricity generators, the assessment of military action from counting warfare, these physical attacks could be firepower carried on aircraft could see an the number of bombs or tonnage delivered replaced with a very precise cyber weapon exponential increase. DEW have the in earlier years to assessments of the politico- that is inserted into the enemy’s cyber potential to be employed against multiple military effect or result achieved. This has network where it effectively disables the types of targets unlike today’s specialisation led to offshoots in military thought such as enemy’s higher command and control. of weapons into air-to-air and air-to-ground Effect Based Operations (EBO) etc. Aircraft could form the carrier of such cyber categories. For instance, a MiG-29 could weapons as the enemy’s cyber network; FUTURE TRENDS today carry two air-to-ground 250 kg however protected it may be on the ground bombs and four air-to-air missiles. Thus, Given the great change that precision through physical protection, encryption and its weapons load is split between air-to-air weapons have brought to aerial warfare, it use of buried and secure fibre-optic cables, and air-to-ground use. If it encounters is projected that efforts will continue it would still require operating in wireless targets in a particular domain exceeding its towards the development of even more modes for networking with the airborne weapons carriage tailored towards that effective precision weapons in future. elements. This wireless part of the adversary’s domain, it would be forced to forego Considerable research effort is now being cyber network could be penetrated by cyber engaging it. With DEW on board, this directed towards the development of weapons carried on friendly fighters that fly limitation is unlikely to exist as, for instance, directed energy weapons (DEW).16 These within the footprint of the enemy’s wireless a microwave- or laser-based DEW is likely weapons comprise means of directing cyber transmission and reception space. The to be as effective against an aircraft as against energy precisely towards a target. As these cyber weapons could be inserted into the a tank or against a ship. Thus, the weapons direct electromagnetic (EM) enemy’s computer network through his incorporation of DEW is likely to make energy of different wavelengths towards wireless network where and when required. targets, they have characteristics of very fast aerial warfare more lethal and aircraft more impact on target as EM radiation travels at capable against multiple target types. The potential of cyber weapons as precision weapons in aerial warfare is the speed of light and can be focussed into PRECISION BY CYBER MEANS very narrow beams (read precision). Lasers, probably at the heart of the US Air Force microwave radiation, particle beams etc. are It bears considering that cyber warfare forming and running the Cyber warfare part of this category.17 The US and Russia can also offer great precision if utilised Command. In view of the PLAAF’s rapid lead in these new weapons technologies.18 properly. Against an opponent who has a “informationaslisation”, it is prudent for the China is believed to be putting in an very information-enabled war fighting IAF as well to seriously examine the appreciable research and development effort structure, a carefully executed cyber attack potential of cyber warfare techniques in into this field as well. It behoves any nation can be devastating as it could potentially cut aerial warfare.

News behind 20 the News MAY 14, 2012 defenceandspacediary

Cont.. from Page....13 happens in the United States has an impact slashed by half as compared to its budget in is nearer to Mumbai than it is to Cairo or even that is world-wide. 2010 and is likely to face further tightening Amman. Muscat is only 967 miles away from by Congress. Similarly, the NATO budget for Mumbai. Access to and the ability to import funding Afghan security forces has also been oil unhindered from this region is an reduced by about two thirds. From a budget important facet of national security. As the of USD 11.2 billion for 2012, it was recently Indian Commerce Minister remarked in AFGHANISTAN announced that post-2014, the US and its 2006, ‘the Gulf region is a part and parcel of THE US-AFGHAN STRATEGIC allies would be able to pay only USD 4.1 India’s economic neighbourhood’. About 3.5 PARTNERSHIP AGREEMENT: billion annually. million Indians live and work in the Gulf NOTHING MORE THAN SYMBOLIC Such budgetary constraints are likely to region and are the largest expatriate have an impact on the plans to develop both community there. Indians remit about US AryamanBhatnagar civil society and governmental capacities to $12 billion annually to India. The Gulf region Barack Obama’s recent surprise visit to fill the vacuum post-2014 and ultimately is the third largest destination for Indian Kabul was marked by the signing of the enable Afghanistan to achieve self-sufficiency. exports behind only North America and the Strategic Partnership Agreement (SPA) Similarly, it would also impact the quality and EU and accounts for nearly 16 per cent of between the US and Afghanistan. The pact quantity of military training the US is required India’s total exports. The test for Indian commits the US to provide long-term to provide. It may end up imposing significant diplomacy is at hand. assistance – military and financial – to quantitative and qualitative restrictions on the Apart from a general disinterest in the Afghanistan, even after the bulk of the size and equipment of Afghan National affairs of the Gulf Region, public opinion in coalition forces withdraw from the country Security Forces (ANSF) while saddling them the US is likely to sharply veer towards in 2014. with vastly greater responsibilities. isolationism. This under-current of Shaida M Abdali, the Deputy National Apart from problems with the financial isolationism is never far from American Security Advisor to President Hamid Karzai, clauses, the pact does not commit the US to thinking and the penchant for ‘fortress in an article for Foreign Policy, claimed that any specific troop levels either. More America’ may just gain further adherents. Afghanistan could now realistically expect to importantly, aside from providing training to Nevertheless, the United States is also deeply achieve stability in the region based on the ANSF, the role US troops would play in conscious that the scourge of terrorism and ‘credible, long-term international counter-insurgency operations post-2014 has support by some states to non-state actors has commitments’. However, the optimism been kept out of the purview of the pact. This to be effectively met. It cannot be done on surrounding the pact may be slightly is to be decided at a later date through separate the basis of isolationism or by individual premature as a number of crucial details have agreements. However, it is unlikely that US states, for the malaise is deep- rooted and either not been finalized or been kept out of troops would play a significant role in counter- requires collective action by like minded the purview of the pact. insurgency operations. They have already states. Similarly, the spread of nuclear For starters, the ‘commitment’ of the US ceded operational command of night raids – technology for weaponisation whether done has not been specified. The pact requires the considered an extremely effective counter- surreptitiously or otherwise also requires US to provide assistance in developing the insurgency tool by the US – and the Bagram collective action and therefore the US may Afghan economy and public institutions for prison to the ANSF. These were significant opt for further strengthening of international another decade without committing to concessions by the US against the backdrop institutions. specific funding levels. But, at the same time, of rising anti-Americanism, which had tilted At the economic level as well, there could it would be wrong to assume that the US is the balance at the negotiating table in favour be significant changes within the United capable of maintaining high levels of financial of Karzai. It is thus possible that the US may States. Cheaper energy costs—particularly for assistance to Afghanistan for another decade. be forced to make further concessions, which natural gas—would benefit a variety of The increasing unpopularity of the war in the along with the shortcomings of the ANSF and domestic industries, like chemicals, US - as indicated by recent surveys – and the their inability to manage on their own, may pharmaceuticals and fertilizers. The rise in growing financial crisis may not hinder undermine the tactical integrity of future natural gas production has already led many American resolve to stay on in Afghanistan, counter-insurgency efforts. utility companies to shift their electricity but it is likely to undermine the magnitude The SPA’s significance, for now, lies more production away from coal. Some economists of support that the US can provide to in its symbolic value. It can dispel the concerns feel that with ample gas supplies available Afghanistan. Moreover, the fact that the US of Afghans who feared abandonment from the resurgence in American manufacturing might Congress is required to annually authorize the US come 2014, and restore their faith in the just be in the offing. funding, it essentially holds funding hostage endurance of US-Afghan relations. However, There is no doubt that with the United to public opinion and domestic politics as the pact, at present, is even more important States possibly becoming self sufficient in oil opposed to need and strategic necessity. for President Obama. Given the accusations and natural gas, a profound change in its Evidence of substantial curtailment of US of lack of clarity and direction in his Afghan strategic thinking is bound to take place. We spending in Afghanistan in the long-run - for policy, Obama would want to head into the in India should be aware of the possibilities both development and security - is already US Presidential elections in November having and should undertake serious studies to assess noticeable. For instance, the budget for the quelled the notion that he is bungling the impact of any such changes. What development agency USAid has already been America’s future role in Afghanistan. The

News behind MAY 14, 2012 the News 21 defenceandspacediary timing of the pact certainly seems to indicate is not used as launching terrorist attacks The critical issue of forwarding economic that this was a significant motivating factor. anywhere, including inside Pakistan,”. ties was discussed too. Krishna said India was Signed just days before the kick-off his re- Krishna noted that the recent violent strikes committed to providing a “level playing field” election campaign and on the eve of the first by Taliban on diplomatic missions in and for US companies in nuclear commerce and death anniversary of Osama bin Laden, around Kabul had once again highlighted the expressed the hope that the talks between US President Obama would like to send out a need for elimination of terrorist sanctuaries and Indian companies will soon result in strong message as to how the West is ‘winning’ in the neighbourhood and “for stronger action contracts. Krishna also pointed out the the war on terror. from Pakistan” on terrorism, including difficulties faced by Indian IT companies in bringing to justice the perpetrators of the the US. Clinton returned to the US later in Mumbai attack. the day after her swing through China, Clinton noted that terrorism was Bangladesh and India where she visited obviously “incredibly important question” on Kolkata and New Delhi. INDIA - US the minds of both the US and India. INDIA, US SEND STRONG SIGNALS “We both know the tragedies and losses TO PAKISTAN, IRAN that come with terrorism on our soil. So we have increased our cooperation between India India and the US have signalled common DEFENCE NOTES and the US. We are going to continue to do intent and purpose, asking Pakistan to take INDIA CONCERNED AT CHINA- everything we can, not only to prevent stronger action against terror, advising Iran PHILIPPINES STAND-OFF terrorists from doing evil acts of violence, but to desist from its nuclear weapons programme also try to convince people not to get recruited With Chinese government-controlled and pledging support to Afghanistan’s peace into terrorism,” she said. Asked about the media warning of a war against the Philippines and prosperity. terror groups, like the Haqqani network, over disputes in the South China Sea, India Visiting US Secretary of State Hillary operating out of Pakistan, the US and the has expressed its “concern” over the emerging Clinton and Indian External Affairs Minister international community was committed “to situation over differing territorial claims in the S.M. Krishna were critical of Pakistan on its going after those who pose a direct threat to region and urged both nations to exercise handling of terror groups operating from its the US, Afghanistan and to our allies”. restraint. soil and asked it to take “strong and more “We are also cooperating closely with “India (is) following with concern recent concerted” action against these outfits that India regarding the threats that emanate developments involving China and the threaten peace and security of the US, India against them,” she said. On the sanctions Philippines in the South China Sea,” external and the world at large. The two leaders had against Iran over its nuclear weapons affairs ministry spokesperson Syed their bilateral meeting here over a breakfast programme, Clinton said the US and India Akbaruddin posted on his official Twitter of idlis and vadas at the Taj Palace Hotel. “share the same goal” of preventing Tehran account. “India urges both countries to They also affirmed that they were on the from from acquiring nuclear weapons. exercise restraint and resolve issue same page on preventing Iran from acquiring diplomatically according to principles of “India is a strong partner in urging Iran nuclear weapons, though Tehran remains a international law,” he said in the tweet. to adhere to its international obligations,” key supplier of oil to meet New Delhi’s energy “Maintenance of peace and security in the Clinton said. Krishna, noting that he needs. On Afghanistan, the two nations region is of vital interest to the international discussed the importance of a peaceful committed to assist Kabul in handling its community,” Akbaruddin added. settlement of the Iranian nuclear issue, said it security, development and governance on its must be based on the position that Iran has The China-Philippines territorial dispute own, without interference from outside, even its rights as a member of the nuclear Non- over the Scarborough Shoal, small islands in after the International Security Assistance Proliferation Treaty (NPT). the South China Sea that both nations claim Force moves out of the embattled nation in as their own, has generated over the last “But it must also abide by its obligations 2014. month. as a non-nuclear weapon state under the At a joint press conference after their NPT,” he said, asserting that “this issue, A China Daily editorial echoed warnings meeting, Clinton said the $10-million bounty however, is not a source of discord” between in the state-run media that China was ready on 26/11 Mumbai attack mastermind Hafiz India and the US. The best way to achieve a to use military might to crush the Philippines’ Saeed was an unmistakable sign of US diplomatic solution that the international claim over the shoal. Since April 8, the two “solidarity” with India on bringing the community seeks was to keep up the pressure countries have anchored their non-military perpetrators of the audacious attack to justice. that brought Iran to the negotiating table. ships at the shoal as a means to assert their Clinton said the US had every reason to right and sovereignty. China claims almost the On Afghanistan, the two leaders said their believe Saeed was the “principal architect” of entire South China Sea as its territorial waters. respective strategic partnership agreements the Mumbai terror strikes that claimed 166 India has always maintained that will pave the way for “stability and security” people, including six Americans. in the region. Clinton said US consultations territorial disputes in the South China Sea have to be resolved by the nations in the region “Combating violence and extremism is with India on Afghanistan was “very diplomatically, though it has asserted that one we all agree on and we need to do more. substantive and useful” and that the And we look to the government of Pakistan international community will remain engaged international shipping and navigation rights in the region should be upheld. to do more. It needs to make sure its territory with Kabul on its future.

News behind 22 the News MAY 14, 2012 indiaanditsneighbours

23 INDIA-PAK ECONOMIC COOPERATION MEET 25 PAK FOR SIACHEN TALKS BEFORE SIR CREEK 26 BANGLADESH FOREIGN MINISTER’S VISIT: LOAN WRITTEN OFF BUT TEESTA TANGLE REMAINS 27 RESOLVE TURMOIL: HILLARY’S ADVICE TO BANGLADESH LEADERS 27 PAKISTAN: GILANI FACES FIVE YEARS OF DISQUALIFICATION 28 US BILL FOR CONDITIONAL AID TO PAK: US ENVOY TO PAK TO QUIT SECTION SECTION SECTION SECTION SECTION 29 AFGANISTAN: AMERICA SECRETLY FREEING TALIBAN PRISONERS 29 CHINA: INDIA LIKELY TO WITHDRAW FROM SOUTH CHINA SEA, CHINA-PHILIPPINES STAND-OFF 30 MYANMAR: PM’SVISIT, SEVERAL PACTS TO BE INKED THIS THIS THIS THIS THIS 31 MYANMAR: THE MILESTONES AHEAD IN IN

IN 31 NEPAL: BHATETARAI FORMS NATIONAL GOVT IN IN

INDIA-PAK ECONOMIC COOPERATION MEET A two-day second Indo-Pak Economic Conference, meeting of Indian and Pakistani business leaders under the aegis of Aman Ki Asha(Craving for Peace), a joint initiative of Times of India and Jang newspapers group of Pakistan was held in Lahore to discuss opening of more doors for business and trade. The Aman ki Asha initiative has seen industrialists of both the countries working together in a number of areas of mutual interest and benefit, in particular information, technology, textiles, healthcare, among others. It also saw the presence of Pakistan Commerce Minister, Makhdoom Amin Faheem and Foreign Minister Hina Rabbani Khar. The Indian delegation included India’s leading lights – Rahul Bajaj, chairman of Bajaj neighbours, at $2.76 billion in 20-10, are a upon any of the sensitive chords. Speakers at Auto, Sunil Kant Munjal, chairman of Hero fraction of their potential and can touch $10 the conference highlighted the fact that Corporate Services, Rakesh Bharti Mittal, billion by 2015 with the right steps. improved economic relations between India vice chairman of Bharti Enterprise and Hari Observers at the conference called the and Pakistan would lead to peace and Bharia, CMD of Jubilant Life Sciences, Dr. two-day event a great leap forward in easing prosperity. But, a few delegates said, they were Naresh Trehan, CMD of Medanta Medicity tensions between the two countries. In the worried that offering the Most Favoured and Charanjit Banerjee, director general of past, several efforts have been made to sort Nation [MFN] status to India in Pakistan CII and others. out differences and strike out on the path of might result in highly skewed trade relations The first meeting was held in New Delhi peace. But, this time, it was different. Unlike with the balance tilting in favour of India and in 2010. The Lahore conference was in the past, none of the participants touched the Indian FDI damaging Pakistani industry. inaugurated by Pakistan Prime Minister, Yousuf Raza Gilani and addressed, among KRISHNA DEMANDS PROTECTION FOR HINDU MINORITY others, by Opposition leaders Nawaz Sharif India has urged Pakistan to protect the constitutional rights of its minorities by and Imran Khan. The 45-member Indian ensuring their safety, security and well-being. Replying to questions raised by BJP delegation, led by Confederation of Indian leader, Murli Manohar Joshi in the Lok Sabha on May 8, Mr. Krishna hoped that Industry [CII] President and Godrej Islamabad would discharge its constitutional duties towards its minority communities. chairman, Adi Godrej, besides attending the Mr. Joshi had alleged ill-treatment of Hindus – particularly women – in Pakistan many meeting, held talks with Pakistani of whom were abducted and forced to marry Muslims against their wishes. He said, businessmen, ministers and officials. The based on the reports of persecution of minority groups in Pakistan, India has taken up Indian CEOs had one-on-one meetings with the matter with Pakistan in the past. Pakistan Prime Minister Gilani, Foreign and Finance Ministers as well as opposition Recently, in separate incidents, three Hindu girls in the Sindh province had reportedly leaders like Imran Khan. The Confederation been abducted and marries against their will to Muslim men after being forcefully of Indian Industry [CII] believes that the converted to Islam, the Minister said and referred to a Pakistan Government press release present trade flows between the two which had stated that the Pakistan President had taken serious note of these reports.

News behind MAY 14, 2012 the News 23 indiaanditsneighbours

VIEWS FROM PAKISTAN those irritants which hamper trade and HILLARY’S ADVICE TO PAK ON These worries were addressed by Pakistani economic relations. He recalled, it was in TERRORISM business leaders like Mian Muhammed April 2011 when the two countries In remarks that India will welcome, Mansha, chairman, MCB Bank. They were announced their intention to normalize visiting US Secretary of State, Hillary unequivocal in saying that more trade would bilateral trade relations. And by April 2012, Clinton affirmed that Pakistan has not only benefit the Pakistani people Industry they had made huge strides in this direction. done as much as the US and India would would benefit from greater completion in the Pakistan decided to scrap the positive list like it to do to fight terrorism. She said long run. Seeking to allay fears of Indian regime for imports from India and replace it this after talks with Prime Minister with a negative list and the Wagah-Attari investments[FDI] would harm the interests Manmohan Singh and External Affairs Trade Gate, which opened recently, will go a of the Pakistani industry, a member of the Minister S.M. Krishna in New Delhi on long way in boosting the volume of trade, he Indian business delegation said, May 8. She said, the JuD chief and LeT said. strengthening of economic ties would be a founder, Hafiz Saeed was one of the win-win situation for both countries. Suggesting that Indo-Pak disputes should “principle architects” of Mumbai terror Pakistani industry will continue to be be settled through dialogue, the Pakistan attacks and that the $10 million bounty protected through the sensitive list Prime Minister warned that “non-State actors on him was an “unmistakable message” of maintained under the South Asia Free Trade from both sides of the border are determined solidarity with India. “We wanted to raise Agreement [SAFTA] after the negative list to harm relations.” “Such forces are present the visibility and make it very clear that regime for trade with India is eliminated by on both sides of the border and we have to the United states has reason to believe that the end of this year, the Pakistani Commerce remain vigilant that they are not able to derail Hafiz Saeed had been one of the principal Ministry has assured in a letter to automobile our hard-earned gains”, he said. architects of the attack against Mumbai”, manufacturers, assemblers and vendors who The warning was reiterated in the evening she said, referring to the reward for any had expressed concern over free trade with by Foreign Minister, Hina Rabbani Khar, information leading to his arrest. India. who also urged both countries to introspect the betterment of our nations.” In his keynote address while inaugurating whether the way the two had dealt with each Cricketer-turned-politician, Imran the two-day Aman Ki Asha conference on other over the past 64 years had yielded any Khan, leader of Tehrik-e-Insaaf, who is seen May 7, Prime Minister Yusuf Raza Gilani dividend. Calling it a relationship of lost as a strong candidate for Prime Minister in hoped, the meeting will boost the peace opportunities, she made out a case for next elections, envisaged a US-Canada style process. He said, poverty, disease and exchanging course. trade ties between India and Pakistan, but at ignorance should not become the fate of the Former Prime Minister and PML[N] the same time said, his top priority would be region. “Our people have suffered because of leader Nawaz Sharif said that Pakistan should not trade but to start dialogue to resolve the the policies of the past. They deserve better. unilaterally abolish the visa regime with India Kashmir issue. Imran Khan, who was a star No more time should be wasted”, he said. as people-to-people contacts can accelerate speaker on the second and final day of the He described Industry captains at the the bilateral peace process. He urged the conference on May 8, said, “We need strong conference as the “best ambassadors of peace” government to “take the initiative” even if leadership in Pakistan to resolve the Kashmir for both countries. “The world is marching India is hesitant, believing that India will be issue.” He added there should be intense on and it is time for us to shed the baggage of forced to follow suit. His brother and Punjab rivalry between India and Pakistan to see who the past and grab the opportunity at hand Chief Minister, Shahbaz Sharif said, “We have reduces poverty fastest. Entirely supportive and act with urgency to build relations of fought wars, seen destruction, there is of enhanced trade relations, Mr. Khan said, mutual interest”, he said.He said, in sectors growing realization that war between the two “The new generation of Indians and like information technology, education, nuclear-armed neighbours is not an option. Pakistanis want new relations. They want to health engineering, there is huge scope for We need to engage in mutual trade and change the way we look at each other. Seventy cooperation. He said, improved relations investment and to utilize our resources for per cent of Pakistanis are less than 30 and with India are important for Pakistan as it they want a new way of governance.” He said, offers a billion-plus market to the Pakistani LIBERALISED VISA: BOOST TO TRADE with a combined population of 1.6 billion, exporters. Stating that a liberal trade regime Later this month, Indian and it is such a huge market. ensures flow of cheaper imports for both Pakistani Home Secretaries are expected Leader of the Indian delegation and CII countries due to their geographical proximity to sign off an agreement that will liberalize President, Adi Godrej, head of the Godrej and resultant lower freight costs, he said, just the business visa regime. In the works are Group, said the two largest economies of as Pakistani textiles had a huge market across multiple entry visas, abolishing police South Asia should work together to ensure the border, similarly, India could get buyers check-posts and multi-city visas. These that bilateral trade touches $10 billion in the for its chemicals, pharmaceutical items and measures are expected to give a fillip to near term. Textile, agriculture, engineering, engineering goods and cement, among many Indo-Pak trade which today is IT, education and health care are sectors other commodities. languishing at below $3 billion. Indian which can see immediate traction, he said. The Prime Minister said, over the past Commerce Ministry believes that trade The Indian High Commissioner to 12 months, the two countries had moved fast between the two countries can touch $12 Pakistan, Sharat Sabharwal, told the not just to normalize relations but remove billion in 5the next five years. conference, India is willing to look at opening

News behind 24 the News MAY 14, 2012 indiaanditsneighbours more land border crossings with Pakistan, for Secretary-level talks on Siachen which are Indian troops have stood sentinel on the instance, at places like Munnabao in held as part of the composite dialogue process. 21,000 foot glacier, described as world’s Rajasthan. This, according to him, was a shift in the New highest battle ground, since April 13, 1984. Incidentally, India is developing nearly a Delhi’s position, as earlier the term being used There are now 3000 of them. The guns have dozen more international-standard was “authentication of the ground position been silent since a November 2003 ceasefire. Integrated Check Posts along its borders with in the area north of NJ 9842” – the north- But, the harsh weather has proved a more Bangladesh, Myanmar and Nepal on the lines most point of the LoC. lethal killer. India lost 26 soldiers in the last of the one which opened last month at the The Defence Minister, Mr. A.K. Antony, one year. Soldiers have to trek almost 28 days Attari border with Pakistan for boosting trade has told Parliament that there is no change over 128 km to reach some of the farthest and economy apart from facilitating trans- in India’s stand on Siachen. According to Mr. pickets. The daily cost of holding on to the border passenger traffic. Antony, during his meeting with Prime glacier is around $5 billion. Yet, strategic Minister Manmohan Singh in New Delhi on experts say the battlefield is crucial as its May 8, a day after an avalanche killed more occupation stops the Pakistan army from than 100 Pakistan army personnel, Pakistan linking up with the Chinese and posing a President Zardari realised the issue and threat to Ladakh. PAK FOR SIACHEN TALKS BEFORE appealed for demilitarizing the Siachen The Army is believed to be opposed to SIR CREEK glacier. withdrawal from Siachen and has warned the Pakistan, keen on resolving the Siachen India made it clear at the last Defence Government that if the Pakistani army issue first after having lost 139 soldiers who Secretary-level meeting, the Indian side made occupied the positions it is now holding in were buried alive in an avalanche in the it clear that withdrawal of troops could be case of demilitarization, it would be an Glacier early last month, has called off talks disuses only after the Line of Control had impossible task even at the cost of a great on Sir Creek which were scheduled for June been demarcated by both sides. Pakistan felt human life. The Army is scheduled to make 11. Instead, it has suggested, the talks be held that India had toughened its stand because a presentation to the security establishment on June 22. Although the official reason from in the past it had agreed to authentication of and the Prime Minister’s Office this week to Pakistan is the non-availability of a key existing troop positions as sufficient to set down once again the real dangers in negotiator, Indian officials are not buying this implement a withdrawal plan. However, demilitarizing the Saltoro ridge, a feature that argument The assessment in New Delhi is Pakistan found that unacceptable too as it did Indian troops occupied as part of Operation that the message from Rawalpindi must have not want to sign on any document that Meghdoot 28 years ago. Sources say, there is been to sequence the talks in such a way that accorded India’s current troop positions. genuine nervousness within the army about Pakistan does not end up showing flexibility the government’s intentions. To begin with, Army sources reiterated that India could on Sir Creek without an assurance from India the army puts down in no uncertain terms not risk withdrawing from Siachen until on Siachen. Sources said, Pakistan may be that any thought of demilitarization from Pakistan agreed to demarcation of LoC or at thinking they can leverage the Sir Creek Siachen-Saltoro requires a modicum of trust. least authenticated troops positions. resolution for an Indian concession on “Pakistan has done nothing recently or over Siachen. A resolution on Sir Creek is believed to be “doable” and can be used by Prime KASHMIRI MILITANTS SURRENDER Minister Manmohan Singh to justify a visit For the first time, a large group of about 40 persons, including former militants and to Pakistan later this year. their families, fled PoK together and surrendered before Indian authorities last month for The Pak move to rescheduled the Sir amnesty under the Jammu and Kashmir Government’s rehabilitation policy. In a well- Creek Talks, sources say, is intended to put planned coordinated escape from the PoK, along with their wives and children they first pressure on Siachen. With Siachen talks flew to Dubai, from there to Kathmandu where they destroyed their passports, travelled scheduled to be held on June 11-12,m the to the Indian border from where they hired a bus to go to Kashmir. However, they were postponement is being seen as trying to detained at the Sunauli border checkpost. All members of the group claimed amnesty pressure India to concede ground on Siachen. under the Jammu and Kashmir Government’s rehabilitation policy which does provide Twice since the Pakistani army lost over a for waiving any charges. hundred of its men in an avalanche in Siachen After reading about their change of heart, five more men who received terror training th on the 7 of April, the Pakistan army chief in Pakistan gave themselves up to the Maharashtra Anti-Terrorism Squad last month. has accused India of hardening is second on However, the Indian intelligence agencies goofed up on another case. A Pakistani the issue. Talking to newsmen on May 3 after newspaper reported on May 10 that three of the five Pakistanis alleged to be terrorists by his third visit to the Gayari sector where 139 the Intelligence Bureau who were said to have entered Mumbai for a terror attack, were men of the 6Northern Light Infantry went actually Pakistani mobile retailers. These three Pakistani youth who have mobile shops missing, Gen. Kayani said, referred to the in a complex in Lahore approached police there for protection after an alert, along with peaceful resolution of the issue but pointed their pictures was issued by the central intelligence agencies in New Delhi on May 6. out that there had been a regression in the talks after India shifted its goalpost. He said, The alert came from RAW and it was issued to the agencies concerned by the Multi India had asked for demarcation of the Line Agency Centre, part of the IB. After the Pakistani newspaper report emerged, RAW is of Control [LoC] during the last Defence believed to have been asked to explain.

News behind MAY 14, 2012 the News 25 indiaanditsneighbours the years to enjoy the level of trust required In an a newspaper interview with an India and Bangladesh are also moving ahead for any disengagement from the currently Indian English daily, dr. Moni warned, Indo- with the setting up of the 1320 MW coal- held Indian positions”, the assessment says. Bangladesh relations will take a huge hit if based joint venture power plant which is “Such trust would be based not only on India failed to deliver on the Teesta expected to be commissioned in 2016. record, but on tangible assurances and an agreement. “In Bangladesh, there are people LOAN TO BE WRITTEN OFF authentication of India’s actual ground and groups who do not wish to see South Asia positions.” The army’s documented come together or our relations flourish. We Meanwhile, India has announced that it assessment also points to certainty that a should not arm them by withholding Teesta”, will write off $200 million of the $1 billion pullout from Siachen would facilitate a much she said. line of credit offered to Bangladesh and deeper level of engagement between Pakistan The Teesta treaty has been a source of promised to implement all bilateral and China in the Gilgit-Baltistan, Shaksgam tension between India and Bangladesh for agreements including those that have areas. Perhaps most alarmingly, the army has quite some time now. An agreement was on witnessed delay. India had announced in suggested that disengaging from the Saltoro the cards and was expected to be signed 2010 a $1 billion line of credit to Bangladesh, ridge would open the Zanskar and Ladakh during visit of Prime Minister Manmohan the largest it has offered to any country. ranges to infiltration and terrorism and place Singh to Dhaka last September. But, Finance Minister Pranab Mukherjee, who Leh within attacking distance of the army. opposition from West Bengal Chief Minister had gone to Dhaka on a day’s visit on May 6 Mamata Banerjee who dropped out of Prime to attend the concluding session of the Minister’s visit of Bangladesh, led to the treaty celebration of the 150 birth anniversary of not being singed at the last minute, causing poet Rabindranath Tagore, announced at a India a fair amount of embarrassment. press conference before returning to New BANGLADESH FOREIGN Delhi that India will treat the amount as Mr. Krishna told newsmen at a joint press grant, not credit. He said, this amount will MINISTER’S VISIT: LOAN WRITTEN conference with Dr. Moni that the Teesta be used for projects that Bangladesh OFF BUT TEESTA TANGLE REMAINS accord is being discussed since 2009 and that prioritized. The rest $800 million will bear a there is no change in the ground situation, There was little progress on the Teesta one per cent interest instead of previously though the two sides have shared data during water sharing accord which Dhaka is keen to announced 1.75 per cent, he announced. sign, when the Bangladesh Foreign Minister, a technical meeting held in Kolkata in Ms Dipu Moni, came to New Delhi to co- February. Mr. Mukherjee also cited the “ground realities” of coalition politics as the reason for chair the first meeting of the Indo-Bangla On Manipur’s Tipaimukh hydel power India’s failure to seal the Teesta water sharing Joint Consultative Committee on May 7, project, it has been agreed that a sub-group deal during Prime Minister Singh’s visit to although the Finance Minister, Mr. Pranab under the Joint Rivers Commission would Bangladesh last year. Mukherjee, while on a day’s visit on May 6 be constituted to look into all aspects, announced India writing off $200 million out including dr. Singh’s proposal for joint Earlier, during his meeting with of $1 billion line of credit to Bangladesh. participation. Bangladesh Prime Minister Sheikh Hasina, The two sides reviewed the accords signed On another issue, sources say, Mr. he vowed to implement all agreements signed during Prime Minister Sheikh Hasina’s Krishna raised the extradition treaty with with the country during dr. Manmohan historic visit to New Delhi in 2010 and Bangladesh in the context of Indian insurgent Singh’s visit last year. Manmohan Singh’s reciprocal visit to groups operating out of there. Dr. Moni There have been allegations on delays in Bangladesh in September last year when the during the press conference said, the Indian delivering on the promised projects. Mr. two Foreign Ministers met in New Delhi. side has reassured her that there will be no Mukherjee defended the work done so far and But, on the Teesta river treaty issue, it unilateral undertaking of linking the pointed out that five contracts worth $834 proceeded on expected lines with hardly any Himalayan rivers without consultations with million had already been signed. forward movement. Mr. Krishna told her that Bangladesh. ENGAGING DHAKA the Centre was trying to reach a “political The two sides, during their meeting also consensus” on the agreement which it was Referring to the UPA Government falling reviewed the 24-hour unfettered access to to the blackmailing tactics of Mamata committed to sign. He sought to explain the Bangladeshi nationals at Angaram and delay by saying that in keeping with the Banerjee on the Teesta issue, political Angarporta through the Tin Bigha corridor, observers warn, if the Manmohan Singh “tradition of consensual decision-making in the signing of the bilateral boundary strip India’s democratic polity, internal Government does not act decisively, it will maps under which a few areas are still to be inflict lasting damage to one of India’s most consultations are on among stakeholders”. covered, and the coordinated border Indirectly referring to the opposition of important bilateral relationships. Reviving management plan to reduce illegal and Delhi’s political credibility in Dhaka could Bangladesh Chief Minister Mamata criminal activities. Banerjee’s opposition to Teesta accord, he told take decades if the Prime Minister allows the In the power sector, the two sides newsmen, “We are trying to develop a narrow political calculations of the Congress reviewed the progress on the inter-grid political consensus in India”, adding that it Party to override consideration of India’s connectivity. Mr. Krishna hoped that the 500 is important that views of all those who are national interests. MW power would flow from India to dependent on its waters are taken into More than two years ago, Singh and his Bangladesh during the summer of 2013. account and the burden is shared equitably”. Bangladesh counterpart, Sheikh Hasina,

News behind 26 the News MAY 14, 2012 indiaanditsneighbours boldly agreed to resolve all outstanding reluctant to sell natural gas to India for fear he was kidnapped by security forces. She said, bilateral problems and lay the foundation for of being seen domestically as submitting to it is important that in this country which has a new partnership. The hard work that Indian “exploitation”. But, public opinion has such unlimited potential and has proven its followed was to culmination Singh’s visit to shifted significantly. Polls conducted by both ability to sustain the democratic path, people Dhaka last September. Before the celebrations Bangladeshi and foreign researchers have should respect the rule of law. Asking could begin, West Bengal Chief Minister confirmed that hostility towards India is now Bangladesh to exploit its “strategic location”, Mamata Banerjee decided to play party- expressed only by a tiny minority and that Ms Clinton said, the political geography of pooper. She opposed the Teesta water regard for India as well as a significant power, the country, which is situated between rapidly agreement, which was to be one of the main is a widespread sentiment that this is a progressing C India and China, gave it an outcomes from Singh’s visit. By failing to keep welcome change and augurs well for the opportunity for development. She his words on Teesta, Singh exposed Hasina future. appreciated Bangladesh the way it handled to attacks from the many enemies of the This is not to suggest that all is sweetness the maritime issue with Myanmar and for its incipient Indo-Bangladesh strategic and light between the two countries. handling of bilateral issues with India and partnership. Bangladesh has, in the not-so-distant past, suggested that Dhaka exploit its economic One of the most important relationships served as a haven for Islamist fanatic groups opportunities in Myanmar saying “the in India’s neighbourhood, one that was and even terrorists and has provided a transition in Myanmar after 40 years of neglected at India’s own peril, ushered in, with sanctuary for Indian insurgents in the military rule offers a great opportunity. the 2009 elections in Bangladesh, of a Northeast. It has also been a source of illegal Ms Clinton also met the Nobel laureate democratic Government led by Sheikh migration into India – some 20 million Mohammad Yunus and signed a Joint Hasina’s Awami League. It opened a window Bangladeshis are reliably estimated to have Declaration on Bangladesh-US dialogue on of opportunity for both sides to address issues slipped into the country over the last two partnership to hold annual dialogue on of genuine mutual concern in a purposeful decades and disappeared into the Indian bilateral relations and priorities before leaving and focused manner. Soon after coming to woodwork. There are also lingering issues of for Kolkata. power, the Government of Sheikh Hasina border management and transit-related arrested and handed over a pair of wanted questions as well as the controversy over water terrorists who had previously enjoyed sharing which erupted when the West Bengal sanctuary on Bangladesh soil. The hostility Chief Minister, Mamata Banerejee vetoed PAKISTAN: GILANI FACES FIVE of Bangladesh’s few, but vociferous, anti- proposed agreement in 2011 on the river Indian Islamist politicians, has been curbed YEARS OF DISQUALIFICATION Teesta claiming it would deprive her farmers by firm governmental action. India’s decision of adequate water. This was widely seen as a The Pakistan Supreme Court has issued to permit duty-free access to the exports of setback for a relationship that was once again a detailed order in the contempt case against the least developed Countries has benefited beginning to blossom after a long freeze. Prime Minister Yusuf Raza Gilani, holding Bangladeshi trade with India which has him responsible for willfully defying court burgeoned dramatically, with Bangladesh’s directives and bringing it to ridicule. The 77- exports to India recently crossing the $1 page order has been written by Justice Nasirul billion mark in a 12-month period. Issues of Mulk, who headed the seven-member bench road and rail connectivity are on the table, RESOLVE TURMOIL: HILLARY’S that convicted Gilani for refusing to act on trade is being given a new impetus and both ADVICE TO BANGLADESH LEADERS directives to revive cases of alleged money nations are cooperating on combating laundering against President Zardari in terrorism. The US Secretary of State, Hillary Switzerland. The Court ruled that the likely More strikingly, a seemingly intractable Clinton, who paid a 24-hour visit to consequence of its guilty verdict is Prime territorial irritant – the existence of small Bangladesh before heading for Kolkata and Minister Gilani’s disqualification for five years enclaves of each country within the other’s then New Delhi, urged Bangladesh leaders to holding any public office or contest borders – was settled in principle during to pull out of a spiral of political turmoil, elections. It, however, stopped short of Prime Minister Manmohan Singh’s visit to saying the impoverished nation’s democratic categorically disqualifying the Prime Minister Dhaka in September 2011 on terms that even credentials were at stake. She told a press sparking conflicting interpretations by legal Bangladeshis found generous on India’s part. conference after talks with Bangladesh experts. Foreign Minister, Dipu Moni and meetings Of even greater long-term significance is with Prime Minister Sheikh Hasina and The seven-judge bench enumerated a $10 billion project to provide transit Opposition leader Begum Khaleda Zia on reasons for the conviction of the 56-year old through Bangladesh to India’s north-eastern May 5, “In a strong democracy, everybody premier and analysed the evidence that was States, the so-called Seven Sisters, long the has to be rowing in the same direction because presented during his trial in the detailed order sep children of Indian development because you are all in the same boat”. which said, “The highest executive of their geographical remoteness from India’s functionary of the state of Pakistan had booming economy. Before 1947, North East Ms Clinton’s brief visit was shadowed by willfully, deliberately and persistently defied had higher per capita income than the rest of rallies and strikes over the disappearance of a a clear direction of the highest court of the India, but the partition cut it off from the regional Opposition figure Ilias Ali in April country”. It said, such “clear and persistent Indian heartland Bangladesh was very which killed four people. His supporters say, defiance at such a high level constitutes

News behind MAY 14, 2012 the News 27 indiaanditsneighbours contempt which is substantially detrimental US Defence Authorisation Bill places and 16 respectively, official sources in to the administration of justice” and brings conditions on aid to Pakistan. It prohibits the Islamabad said. A Pakistan daily, the DAWN, the judiciary into ridicule. preferential procurement of goods or services quoted a participant at the May 3 meeting Responding Supreme Court threat to from Pakistan till Islamabad reopens the called by Mr. Zardari to say the government disqualify him, while Prime Minister Gilani crucial NATO supply routes to Afghanistan which is demanding an apology from the US has said no one except the Parliament can which were closed in the aftermath of the for the aerial raid last November which killed force him out of office, his party, PPP, has killing of 24 Pakistani soldiers on Nov. 26 in 24 Pakistani soldiers, is considering the decided that he will not quit and utilize all a Nato cross border fire. The Defence possibility of a compromise. Sources said, the legal resources to prove his innocence. “The Authorisation also seeks certification from the meeting discussed various formulations for Prime minister will not quit. He will use all Defence Secretary that Pakistan is committed the demands to be made, including the text the legal resources to prove his innocence”, a to supporting counter-terrorism operations of a possible apology statement that would senior official at the Prime Minister’s office against al-Queda, its associated movements, not only be acceptable to Islamabad but said. Prime Minister Gilani told journalists the Haqqani Network, and other domestic would also help the Americans their who accompanied him on an official visit to and foreign tourist organizations. Further reluctance in apologizing. After developing Britain on May 9, no one could force him certification from the Defence Secretary is consensus in Pakistan, the text of the out of office through unconstitutional means needed on Pakistan’s efforts in dismantling proposed apology will be suggested to the adding that he would exhaust all avenues for IED networks, interdicting precursor Americans and they will be asked to announce affair trial following his conviction of chemicals used in the manufacture of IEDs; it so that the two sides can move on with contempt by the Supreme Court. He said, preventing the proliferation of nuclear-related negotiations on other issues. the Constitution explicitly spelt out the ways material and expertise; and issuing visas in a The first round of talks between the US to remove a Prime Minister and that no one timely manner for US visitors engaged in and Pakistan in Islamabad last week failed could force him out of office through counter-terrorism efforts. because of the US insistence on not discussing unconstitutional means. The matter of A top American senator, John Kerry, who an end to drone attacks and its refusal to disqualification will go to the Speaker of the is chairman of the powerful senate Foreign apologise for the NATO attack. The National Assembly and finally to the Chief Relations Committee, john Kerry has warned Pakistan Defence Minister, Chaudhry Election Commissioner, he said. Pakistan that the US would have no other Ahmad Mukhtar, has warned the BILL TO STOP ARMY, ISI ABUSE OF option but to resort to “self-help” if Islamabad Government that Pakistan might face POWER does not become more cooperative in the war sanctions if it does not open supply routes to against terror. John Kerry, architect of the the US-led Nato forces in Afghanistan Meanwhile, the National Assembly in Kerry Lugar-Berman Bill that allotted $7.5 through its territory. Pakistan has passed a landmark bill for the billion to Pakistan for five years, made these formation of a National Commission for US ENVOY TO PAK TO QUIT remarks at a Congressional hearing convened Human Rights [NCHR], empowered to by him on the upcoming Nato summit in The US ambassador to Pakistan, investigate cases of human rights Chicago. Another Congressman, Dana Cameron Munter, has decided to quit the post infringement, create awareness and make after serving just 18 months although an agencies such as the ISI and the army Rohrabacher, has told President Obama, it is time for Washington to chuck Islamabad American envoy is normally appointed for a answerable to the body in the context of three year period. He is reported to have told alleged human rights violations. The Bill and closely align with New Delhi as part of Afghan peace moves. The US which had his aides he is leaving Pakistan which has moved on May 9 by adviser to Prime Minister proved to be one of Washington’s most on Human Rights, Mustafa Nawaz Khokhar, previously termed Pakistan’s participation at the Chicago summit on Afghanistan later this challenging and difficult partners in the was passed by the senate with some world. amendments before it was passed by the month as critical for the endgame in House with a majority vote. The Commission Afghanistan, has so far not invited Pakistan No reason has been attributed to his will come into action once the President signs to attend the conference. decision, but people close to him say he has been frustrated that the CIA and Pentagon the bill into laws. COMPROMISE ON APOLOGY ISSUE call the shots for the US in Pakistan and that In Islamabad, President Zardari who he feels his job has been only to contain the called a meeting of top civilian and military fallout rather than set policy. Analysts say, his leadership on May 3 to discuss reopening of departure could complicate efforts to repair US BILL FOR CONDITIONAL AID TO Nato supply routes after the first round of alliance with the US and reopen Nato supply PAK: US ENVOY TO PAK TO QUIT talks with US envoy on Pak-Afg, Marc lines into Islamabad. Munter was perhaps the Grossman failed, will hold two more meetings most inclined to accommodate Pakistan’s As the talks last week to reopen the land next month to discuss the issue. President concerns with regard to hot button issues like route for Nato supplies to Pakistan failed, the Zardari who chaired a meeting on May 3, has drone attacks and the Pakistani demand for a US proposes to impose conditional flow of convened back-to-back meetings of the US apology over the Salala attack. During his economic aid to Pakistan subject to Defence Committee of the Cabinet, the 18 months in Islamabad, Munter navigated Islamabad’ highest decision-making body on security some treacherous diplomatic terrain, Successes in the war against terror. The issues, and the Federal Cabinet on May 15 including the Abbotabad raid that killed

News behind 28 the News MAY 14, 2012 indiaanditsneighbours

Osama bin Laden, punitive drone attacks and secretly, the POST added. it disputed the contract given to India in the a standoff over Nato supply route following The American daily said, the “strategic Phu Khanh Basin. They wondered whether the Salala attack. The incidents lacerated US- release” programme has allowed American this was due to pressure from China which Pakistan ties already under strain over attacks officials over the past several years to use was always against any foreign company originating from Pakistan on interests of the prisoners as bargaining chips to reduce conducting oil operations in the South China US and its allies in Afghanistan. violence in restive provinces. Sea. UNFRIENDLY FRIENDS The freed detainees are often fighters who Earlier, after India was warned by China would not be released under the legal system not to undertake off-shore exploration Pak political analysts recall, the trouble for military prisoners in Afghanistan. Officials projects with Vietnam and an Indian naval in Pak-US relations started with the Raymond would not say whether those who have been vessel warned not to enter the South China Davis affair in February last year, plumbed released have later returned to attack US and Sea, India and Vietnam jointly stated: new depths with the US Navy Seal raid to Afghan troops. “Disputes like the East and South China Sea kill Osama bin Laden in Abbotabad in May should be resolved by peaceful means in and hit rock bottom with the Salala incident Releases have come amid efforts to end accordance with universally recognized last November. In each case, the US action the war through negotiations which is central principles, including the 1982 UN notched up anti-Americanism in Pakistan, to the Obama Administration’s strategy for Convention on the Law of the Sea and the severely embarrassed the Government and exiting Afghanistan, the report said. Those 2002 ASEAN-China Declaration on the military and stiffened their resistance to efforts have yielded little to no progress in conduct of parties in the South China Sea”. American unilateralism in the region. A recent years. In part, they have been stymied Parliamentary committee has submitted to by the unwillingness of the US to release five India’s new-found candour on the South the Government its recommendations on a prisoners from Guantanamo Bay – a gesture China Sea could not have been better timed. new policy towards the US following these insurgent leaders have said they see as a China found itself cornered at the November incidents. The sticking point remains precondition for peace talks. 2011 East Asia summit in Bali. While the America’s drone policy. The military is Sources say, what is holding up the release Chinese Foreign Minister expressed the hope opposed to drone strikes against the Haqqani of five senior Taliban leaders from the that the maritime disputes over the South and network in Waziristan because it is viewed as Guantanamo Bay jail is the US demand for East China Seas would not figure at the a long-term “asset”. The public resents it as a the release of an American national in return summit, all but two of 18 participating blatant violation of Pakistan’s sovereignty. The – Sgt. Bowe Bergdahl of the US army. His nations – Myanmar and Cambodia – did raise elected government is unwilling to incur parents in Hailey have been quoted as saying the issue, with Singapore, which is otherwise public wrath in an election year simply to that the focus of secret negotiations between circumspect in references to China, playing appease the US, notwithstanding the US the Obama administration and the Taliban a pr9ominent role from among ASEAN threat to stop military and economic aid, over a proposed prisoner exchange is the members. This approach by the ASEAN weapons and spares for its military and its release their son, the only American soldier countries was adopted despite a warning from support for IMF loans. held captive by Afghan insurgents. He is China’s Global Times that “Any country that chooses to be part of the US chess game will Pakistan’s civil-military leaders are believed to be held by the militant Haqqani lose the opportunity to benefit from China’s grappling with a policy formulation that network in the tribal area of Pakistan’s economy”. The Chinese were clearly out of restores the NATO pipeline, restricts the northwest frontier, on the Afghan border. He touch with regional sentiments, virtually on drones and reduces the US Intel footprint in was captured in Paktika province in their backyard. Pakistan to the minimal satisfaction of the Afghanistan on June 30, 2009. Pakistani opposition and public in exchange CHINA-PHILIPPINES STAND-OFF: for maximum economic and military INDIA ADVISES RESTRAINT assistance coupled with greater American Meanwhile, political observers say, the flexibility vis-à-vis the Haqqani network. CHINA: INDIA LIKELY TO Indian move to withdraw from the oil WITHDRAW FROM SOUTH CHINA exploration in South China Sea offered by SEA, CHINA-PHILIPPINES STAND- Vietnam should relieve Beijing which is locked in another maritime dispute in the OFF AFGANISTAN: AMERICA SECRETLY same sea with the Philippines. FREEING TALIBAN PRISONERS It is understood that India is likely to Commenting on the standoff between withdraw from an oil block in the South China and Philippines in another part of the The United States has been secretly China Sea after hydrocarbons did not show South China Sea, a Foreign Office statement releasing detainees from a military prison in up in an exploratory well, said government in New Delhi on May 10 urged both Afghanistan as part of negotiations with sources in New Delhi on May 10. Vietnam countries to exercise restraint and resolve the insurgent groups, the WASHINGTON plans to terminate operations on commercial issue diplomatically in keeping with the POST reported on May 7. Unlike at considerations, said the sources. Vietnamese principles of international law. In an unusual Guantanamo, releasing prisoners from the diplomats have expressed disappointment statement that signals India’s growing interests Parwan detention centre does not require with India considering that Hanoi had stood in South China Sea, the Foreign Ministry congressional approval and can be done up to Beijing for the past six years whenever spokesman said, “Maintenance of peace and

News behind MAY 14, 2012 the News 29 indiaanditsneighbours security in the region is of vital interest to the but economic as well. One third of the world’s programme of cooperation in science and international community.” shipping transits through its waters and the technology. India has extended lines of credit Over the last few weeks, the stand-off South China Sea is believed to hold huge oil worth $300 million for the development of between China and the Philippines over the and gas reserves beneath its sea beds. railways, transport, power transmission lines, Scarborough Shoal, also known as the oil refinery, and OFC link and announced Huangyan Island, has once again brought the extension of a new concessional facility international attention to the long-pending of $500 million line of credit for specific projects. It will set up an Advanced Centre territorial disputes in the South China Sea. MYANMAR: PM’SVISIT, SEVERAL Over one thousand people were expected to for Agricultural Research and Education in protest in Manila on April 11 against what PACTS TO BE INKED Yezin, a Rice Bio Park in Naypyidaw (new the Philippines calls a sovereignty dispute over Dr Manmohan Singh will be paying a capital of Myanmar), an Information a set of islands described as Huangyan islands three-day visit to Myanmar beginning May Technology Institute in Mandalay, and an by China and Scarborough Shoal by 28, the first by an Indian Prime Minister in Industrial Training Centre at Myingyan. Philippines. 25 years. He is visiting Myanmar at a time Myanmar has agreed to encourage further the country is taking nascent steps towards investments by Indian companies, both The latest standoff between China and public and private, in its oil and natural gas Philippines began around the second week democracy and reforms with pro-democracy leader and her other party leaders taking seats sectors. Both countries have set a target of of April when the Philippines Navy war ship doubling bilateral trade to $3 billion by 2015. intercepted eight Chinese fishing vessels in in Parliament after a landslide win in the the disputed islands, boarded them and forced recent by-elections. It was in early 1990s that the then Prime Minister P.V. Narasimha Rao who declared China to back off. They prevented the Dr. Singh will also participate in the Bay India’s “Look East” policy decided to recast Chinese fishermen from fishing in the waters of Bengal Initiative for multi-Sectoral the policy towards what was known as Burma around the disputed island. Things heated up Technical and Economic Cooperation which was under military rule. The policy so last week when China asked Philippines to [BIMSTECH] meet. withdraw all its vessels from the island. far was to back the democratic forces against New Delhi hopes the visit will be a the ruling military junta and support Ms Suu This was followed by joint naval exercises substantive one with several agreements on Kyi’s fight for democratic rule. Narasimha by the US and Philippines naval ships which cooperation in oil and gas exploration and Rao sent ambassador J.N. Dixit to Myanmar received some criticism from China although mining likely to be inked. Myanmar has also in 1993. That visit was helpful but did not Shoulder-to-Shoulder is an annual exercise sought Indian help in setting up micro- create the necessary thaw between the two held around the Palawan Islands. The Chinese economic projects, developing railways and countries. In 1999, Atal Bihari Vajpayee and position is that the US cannot enter the South in civil aviation and banking sectors. National Security Adviser, Brajesh Mishra China Sea, but the US which is not a signatory During the last 12 years, despite criticism took up the task of engaging the military to the UN Convention on the Law of the Sea from several domestic and Western quarters, rulers in Myanmar which meant cold- [UNCLOS] believes that the right to carry Indo-Myanmar relations have travelled a long shouldering the forces fighting for return to out both surveillance and military activities way. A steady stream of high-level visits from democracy for the greater national interests of a peaceful nature is allowed. both sides has enhanced the dialogue and of India. For almost a year now, China has been created mutually beneficial opportunities. Myanmar has a land border with five hardening its position vis-à-vis the South India is involved in a host of infrastructure countries in South and Southeast Asia, China Sea, even backtracking on the and energy projects in Myanmar. It has built straddles busy shipping lanes in the Bay of Declaration on the Conduct of Parties in the the 160-km-long Tamu-Kalewa-Kalemyoa Bengal and is rich in minerals, oil and gas South China Sea which it signed with the road across the Manipur border and is reserves. It shares a 1600 km long porus land ASEAN States in 2002. This must be seen building a 1200 MW hydel project on the border with India’s northeastern States. with a view to the US Secretary of State Chindwin river. Besides, it has provided high- Several insurgent groups from these States had Hillary Clinton’s statement at the Asean speed data link to many cities. Indian firms been using ethnic ethnic and terrain shelter Regional Forum summit in 2010 that the are working to develop Myanmar’s railway in Myanmar. Its long years of military rule South China Sea was a region of US strategic network, including the supply of coaches and and isolation, with China as the only interest. The fact that this statement received locos. Indian companies have acquired a 20 economic and defence hardware partner, had support from several Asean members further per cent stake in an oil block off the Rakhine given Beijing a huge strategic advantage. I pushed the Chinese to assume a hardline coast. The Kaladan Multimodal Transit That notwithstanding, it was crucial for position on the matter. Transport Project and the Rhi-Tiddim curbing militancy and economic Most of the territorial disputes in the projects (on the anvil), when completed, can development of India’s north eastern states South China Sea relate to Chinese show of transform India’s North-East and bordering as well as for land connectivity with the rest aggression and posturing which has not gone region. of South East Asia. down well with countries which also claim Last year, India and Myanmar signed a Meanwhile, there have been important parts of the South China ?Sea – China, number of agreements and MoUs for the political developments in Myanmar in the last Indonesia, Malaysia, Vietnam, Brunei and the upgradation of Yangon Children’s Hospital two years. President Thein Sein’s nominally Philippines. The fight is not just territorial, and Sittwe General Hospital and a civilian government has replaced military rule

News behind 30 the News MAY 14, 2012 indiaanditsneighbours and carried out a number of reforms like the negotiate ceasefire agreements with most Government, inducting 12 Ministers – most release of political prisoners and relaxation of insurgent groups but the Kachin of them from main Opposition parties as part media restrictions. It has suspended China- Independence Army continues in a of a negotiated effort to quell political tumult backed $3.6 billion Myitsone dam hydel combative mode. The fact that talks with and steer the constitution drafting process power project in Kachin State. After the recent various groups include a political dialogue, ahead. by-elections, pro-democracy leader Suu Kyi rather than just operational issues, is certainly Two days after his Cabinet quit to pave and her party leaders have joined Parliament, a big step forward. It addresses the issue of an way for a consensus Government – a major although that continues to be dominated by inclusive architecture but some insurgent demand of the Opposition parties – Bhattarai the military. This shift is an assertion of India’s leaderships dumping their lucrative drug formed a 12-member Cabinet on May 5, that policy of engaging the military government trafficking and smuggling interests is difficult includes two deputy Prime Ministers. of Myanmar. Now, when leaders from the US, to visualise. Myanmar also has to evolve as a the UK, France and Australia are making a federal state with equal opportunities for all. The Premier formed the government as beeline for Naypyidaw and inclined to lift Any assimilationist pressures on its ethnic per a deal reached among the major political sanctions imposed by them earlier, India has minorities will be counterproductive. parties to expedite the peace process and to an advantage and a huge opportunity to move draft a new constitution within the May 27 As far as the release of political prisoners deadline. The Prime Minister inducted into high gear dynamics of its regional and is concerned, there is the requirement of their ‘Look East’ policy. Ministers from the largest party, Communist numbers being authenticated. There are also Party of Nepal [Maoist], the main reports of the release being conditional to Opposition party, Nepali Congress and non-indulgence in certain activities, as also United Democratic Madhesi Front of jail terms having been suspended and not [UDMF] in the Cabinet. The Opposition MYANMAR: THE MILESTONES AHEAD terminated. Given Myanmar’s history, a CPN[UML] is expected to join the validation of the current regime’s claims Government later. The latest craze amongst destinations for would be prudent. the diplomatic community globally seems to The Constituent Assembly has a May 27 Fortunately, no one has as yet been vocal be Myanmar. The deluge started with Hillary deadline to complete the drafting of the about bringing to justice Myanmar’s generals. Clinton flying down in November 2011. Constitution and Bhattarai is likely to remain Aung San Suu Kyi has also skirted the issue However, is all the enthusiasm, easing of in office till that time, following which he will with tact. Any precipitate action against the sanctions and ambassadors being deputed make way for a Nepali Congress-led retired generals can destabilise Myanmar. going to enhance the avowed objective of the Government. The party will then make the Such issues are best addressed at a later date. democratisation of Myanmar? Is there a new Constitution public and also hold the possibility of reforms slowing down with too Possibly the best way to go about the issue first parliamentary elections this year. much being offered too early? of lifting sanctions is as one school of thought Political observers say, the formation of a A combination of America’s focus on the recommends -not lift them as inducements National Unity Government could not have Pacific and the east, disallowing the Chinese to the current leadership for carrying out come a day sooner. Ever since the Maoist-led greater space, and Myanmar’s rich natural reforms, but as a response to further reforms insurgency ended in 2006, followed by the resources may have pushed the pace. that they execute. The lifting of sanctions have abolishment of the monarchy two years later, However, a review of the bigger issues that to also help the nation grow and not just prove the new republic of Nepal led by a fractured need resolution in Myanmar merit a debate. to be a boon for the military’s vast financial body public has struggled to establish empire or its generals’ assets. The current The biggest challenge facing Myanmar is democracy. Against this backdrop, a unity round of sanctions lifted or suspended its 2008 constitution. The provisions of the Government that revives all political provides enough opportunity for economic constitution allow 25 percent military formations equal ownership of, and indeed, activity to surge, and the country has already nominees in the bicameral parliament at the a greater stake in the transition process, is a displayed the courage to not sink any deeper centre and elected houses in the regions/states. step in the right direction. into a Chinese orbit. Undoubtedly, the pace The army-backed ruling party USDP, led by of progress has been rapid keeping in view Incessant and petty political bickering Thein Sein, himself a former military general, the fact that President Thein Sein must have over the past years has meant that Nepal’s is populated with ex-army officers who had to battle the hardliners, however, the road political leadership has failed to deliver to the resigned to join the party before the 2011 ahead is long, arduous and may require people even a Constitution. This is despite election. The Commander-in-Chief (C-in- constant vigil. the fact that the Constituent Assembly has C) nominates the Defence, Home, and had four years and countless extensions to Border Affairs ministers. Further, the prepare a draft. The current deadline expires Myanmar president can also declare an on May 27 and, if there is still no Constitution emergency by following a procedure by that time, then the Constituent Assembly constitutionally laid down and the C-in-C NEPAL: BHATETARAI FORMS will have to be dissolved and fresh elections can take over both executive and judicial NATIONAL GOVT held, according to a ruling by Nepal’s powers. The Myanmar version of democracy, Supreme Court. This would, of course, be so far, is a far cry from text book stuff. Nepal’s Prime Minister Baburam an unmitigated disaster which will totally The new government has been able to Bhattarai has formed a new National Unity derail the peace process.

News behind MAY 14, 2012 the News 31 indiaindiaintheintheinternationalinternationalkaleidoscope kaleidoscope internationalopinion

ARVIND GUPTA

US PRESSURE TO DOWNGRADE TIES WITH IRAN

US Secretary of State Hillary Clinton

illary Clinton’s visit underlines the Iran itself is a prospective large export explore economic cooperation especially in fact the US is determined to get market for Indian goods, more so after it has areas of hydrocarbon. On its part India India on its side in its efforts to come under international sanctions. At underplayed the attack on an Israeli Hcoerce Iran. Unimpressed that India is present, the trade between the two countries diplomat in Delhi by refusing to publically gradually reducing its dependence on oil is to the tune of $13.7 billion. During the name Iran as the culprit. The confidence from Iran, she vowed to send the US energy last financial year, India’s exports went up to between the two has increased after an oil expert, Carlos Pascol to India in the coming about 50 per cent to touch $2.75 billion. payment crisis earlier this year was resolved. weeks to advise India on how from where to There are strategic reasons also. India Under the new oil payment barter source the extra oil it needs. believes there is need to engage Iran in arrangement, India can export what Iran But for India, Iran is important for many Afghanistan post 2014. India and Iran have needs and get oil in return which is mutually reasons. Apart from being an important traditionally consulted with one another and convenient. source for its energy needs, Iran has a key both have interest in seeing that an inclusive The Indian stand so far has been that it place in India’s policy in the Gulf region. government remains in office in Afghanistan cannot accept dictates of the US and that it The Gulf is a critical destination of India’s rather than dominated by extremists such as recognizes coercive actions made by the UN external trade – over 100 billion dollars in the Taliban. through its Security Council resolutions. The exports and over 60 per cent of oil imports This is not the say that India has not US, on the other hand, recognizes that India and a major source of remittances. Iran was made an effort to accommodate US interests. has reduced its oil dependence on Iran but India’s gateway to Afghanistan, Central Asia It dropped out from the ambitious Iran-Pak- wants more results. It is anybody’s guess on and beyond. New Delhi is currently working India gas pipeline and voted at the IAEA whether India will cave in to US pressure on six transport corridors via Iran. against Iran. Despite this, Iran is inclined to finally.

News behind 32 the News MAY 14, 2012 face2face indiaintheinternationalkaleidoscope

FACE TO FACE INTERVIEW CHARGÉ D’AFFAIRES OF THE EMBASSY OF THE REPUBLIC OF TOGO Asia News Agency interviewed H.E. Mr. Akakpo Koffi, Chargé d'Affaires of the embassy of the Republic of Togo to discuss areas of bilateral interests between the two countries. Excerpts of the Face to Face interview are given below.

ANA : India and Togo have had cordial bilateral relations but India billion U.S. in 2015 contrary to the objective set at the first still does not have a resident Indian mission in Togo. There meeting of trade ministers of India-Africa in Addis Ababa is an Indian Honorary Consul in Togo. Togo has opened a in 2011. This is to say that trade between India and Africa resident Mission in New Delhi in October, 2010 headed by follows an exponential growth. a resident Charge d’Affairs. Excellency, how would you assess Our wish is that under the good relations of friendship the status of bilateral relations between the two countries? and cooperation existing between India and Togo, Indian H.E.: Bilateral cooperation between India and Togo is looking companies relocate in Togo and enjoy huge benefits offered good. Besides many advantages that my country draws from by the Free Zone of our country. the ITEC programs of the Indian government, several other ANA : Coming to the economic aspect, India’s has provided th initiatives have been taken - the agreement signed on 26 assistance in the form of tractors (60), water pumps, sewing March, 2008 between Togo and the Committee for the machines, ambulance, transport vehicles, corn-grinding Development of Industry and Construction of the Republic machines, etc. and in the development of human resource. of India (CIDC) to strengthen the capacity building of These are but small initiatives. Excellency what in your human resources; the choice of my country to setup the opinion are the other areas where India can provide similar human settlement center and the establishment of a training support and have such requests been made to the institute of the English language under the implementation Government of India? of the decision of India-Africa Forum of Addis Ababa. H.E.: The efforts deployed by the Indian government to help our ANA : According to our research, economic and trade aspects have country are enormous. The donation of faming equipment dominated bilateral relations. Is this a correct interpretation and the assistance of Indian experts in Togo constitute areas and in your opinion, are their other potential areas that could of cooperation and are well known. However, consultative uplift cooperation between the two countries? meetings need to be organized between technical ministries H.E.: Bilateral trade between India and Africa in 2011 reached 60 of our country and government of India to identify the billion U.S dollars; an increase of 22% over the previous various other programs; these should be financed by the year. According to our expectation, this figure would be 90 Indian government.

News behind MAY 14, 2012 the News 33 indiaintheinternationalkaleidoscope

ANA : Another form of assistance has been extending Line of Credits H.E.: The volume of trade between India and Togo according to (LOCs) to Togo – the first one for US$ 33.04 million and the statistics is increasing these last years. This fact must be another of US$ 13 million. These have been for accelerated by the actors of economic life in our various strengthening the health and power infrastructure. Recently countries to promote bilateral investment flows in potential Togo’s Minister of Economy and Finance, Mr. areas by organizing investment promotion events, visits of AdjiOtethAyassar, signed an agreement with EXIM Bank delegations of businessmen, roundtables for CEOs and trade of India on 12.1.2012 for a LOC of US$ 13.095 million fairs. It is also desirable to strengthen the links between for financing farming and cultivation of rice, maize and Institutional investment promotion agencies and umbrella sorghum in Togo. Exellency, are these your priority areas associations of professionals to help big business for and is your country satisfied with the implementation of commercial cooperation and provide services to the these projects? entrepreneurs of India and Togo H.E.: Recently Mr. AdjiOthèthAyassor signed with Exim Bank of ANA : You are aware of India’s economic and strategic interests in the government of India two financing agreements of 13.095 Africa. Togo’s Prime Minister led the Togolese delegation to million $ US and 15 million $ U.S to finance the cultivation the 12th Regional Conclave on India-Africa Project of rice, maize and sorghum and to strengthen the Rural Partnership held in Accra on 3 June 2010. What is your Electrification in Togo. All these loans have been made country’s opinion of the India China rivalry in establishing effective by Exim Bank immediately after the signatures. themselves in the African continent? Actually we are in the phase of the tendering and look forward H.E.: It is not India-China rivalry but the constant quest for new to the quick evolution of these initiatives. markets for those countries which were able to introduce I take this opportunity to thank the Indian government the dimension of growth in their process of development. for its constant efforts in strengthening bilateral cooperation This state of affairs becomes more interesting insofar as it between India and Togo and request it to kindly help in the puts the companies of these countries in a situation of pure financing of other projects submitted to its consideration and perfect competition. by the authorities of my country. This fund would help more ANA : Of 183 countries, Togo presently ranks 160 on the ‘’Doing in the reconstruction of Togo and improving living business’’ parameter and of the 46 countries in the sub- conditions of our people. saharan African region it ranks 30 on the ‘’Ease of ANA : High-level government and business delegations have doingbusiness’’ parameter. We understand that the main participated in the CII-EXIM Conclaves on ‘India-Africa sectors that have attracted investors’ interest in the last few Project Partnerships’ in the past .Recently, Prime Minister, years are transport, cement manufacturing, Mr. GilberFossounHoungbo, led the 50-member delegation telecommunications and banking.Excellency, at a time when at the CII Conclave in Delhi in March, 2011. What has India is looking for investment opportunities particularly in been your country’s experience of cooperation with the Africa, could you indicate the various incentives for attracting Indian private sector? investments in your country? H.E.: S H.E.: CII-Exim Bank conclaves on India-Africa project partnership everal arguments can be made to attract investors in Togo. has became not only one of the best platforms of meetings They are listed below: between Indian and African governments but also between – The president International Investment Advisory Council the businessmen of the two parts of the world. The mission of Togo demonstrates the commitment of my country’s of a high-level delegation led by His Excellency Gilbert leadership to attract investors; Fossoun HOUNGBO was to make known the investment – The Institutional reforms such as the revising of the opportunities in Togo and learn about new Indian investment code, the reducing of the workload on setting technologies in different areas to take advantage of them. up companies and the establishment of a business court; Following the visit a climate of trust has been developed – The political stability with well-functioning political between the two parties and contacts are tied with the benefit institutions, rule of law and a resolution to improve for our diverse populations. transparency and fight against corruption; ANA : According to available statistics, the trade turnover between – The strategic position of Togo as a country with three the two countries stands at US$ 233 million during 2009- neighbors in West Africa with a deep-water Lome port which 10 and US$ 295.89 million in 2010-11. India’s major also has the potential to become the Singapore of West Africa. exports to Togo include mineral fuels, mineral oils, cereals, ANA : Would you like to say something about the 200 to 300 strong apparel and clothing; iron and steel articles, drugs and Indian community in Togo? pharmaceuticals; machinery & mechanical appliances etc. H.E.: In the eyes of the good behavior of the Indian community Imports from Togo include chemicals, lime,cement, Iron & living in Togo, the Togolese authorities encourage Indian Steel etc. “Excellency, is this an adequate representation of businessmen wishing to settle in Togo to enjoy many trade between the two countries? If not, what are the other advantages offered by the Port of Lomé, Togo’s Free Zone potential areas of growth? and other assets available in my country.

News behind 34 the News MAY 14, 2012 indiaintheinternationalkaleidoscope

35 HILLARY CLINTON VISIT: ASKS INDIA TO STOP IRANIAN OIL IMPORTS 37 INDIA AND THE US: SQUARING THE CIRCLE ON IRAN 40 WORLD BRIEFS SECTION SECTION SECTION SECTION SECTION THIS THIS THIS THIS THIS IN IN IN IN IN

HILLARY CLINTON VISIT: ASKS INDIA TO STOP IRANIAN OIL IMPORTS The US Secretary of State, Hillary Clinton who came to India on a three-day visit, raised uncomfortable issues at her meetings with Indian leaders when she arrived in New Delhi on May 7 after visiting Kolkata. Cutting oil imports from Iran was high on her agenda. The whole gamut of bilateral issues, including terror, defence and civil nuclear cooperation were discussed, when she separately met Prime Minister Manmohan Singh and the External Affairs Minister, S.M. Krishna besides a meeting with the Congress President and UPA chairman Sonia Gandhi on May 7. Unsurprisingly, she drew their attention to the need to act against Iran. She stressed the need for India to reduce oil West Bengal chief minister Mamata Banerjee and US secretary of state Hillary Clinton imports from Iran following the US-led economic sanctions imposed on it over its increased supplies. The new figures were made China, India, Turkey and South Africa, other nuclear programme. available to Clinton though Indian officials major oil importers from Iran. India has not In her talks with Prime Minister said New Delhi did not ask for an exemption. sought exemption. Clinton gave no firm Manmohan Singh on May 7 who was assisted Reports said last month Indian oil companies, assurance to India that the proposed American by Foreign Secretary RanjanMathai and Mangalore Refineries and the private sector sanctions would not apply to it for oil India’s ambassador to US,NirupamaRao, the Essar had been asked to cut imports from Iran. purchases from Iran. Indian side is learnt to have explained to India is understood to have continued to As she lauded steps by New Delhi to Clinton India’s compulsion in buying oil from resist American pressure over the matter. It reduce oil imports from Iran, she told the Iran to meet its domestic requirements. Iran made it clear that the country would abide Indian leadership that the USA will send its fulfills about 12% of India’s petroleum needs. only by UN Security Council sanctions top energy expert to India next week to help It was also pointed out to the US side that against Iran and not those imposed by the country reduce dependence on Iranian oil. India had cut down oil imports from Iran. individual countries. It was further Carlos Pascual, the state Department’s special Clinton, whose trip to India coincided with emphasized that that although Iran was a key envoy and coordinator for International the visit of an Iranian trade delegation to New country for its energy needs, India also needs Energy Affairs, will be in India next week with Delhi, welcomed the steps taken by India but to look at issues beyond energy trade and keep a team of experts for talks with Indian officials wanted it to do more to stop the oil imports in mind its traditional friendly relations with on the Iranian issue. She was quoted by CNN altogether saying there was enough oil that country and its long-term interests in the as saying on May 9, “We are working with available in the open market. stability of the Gulf region. them [Indian Government] to help them in She pressed for India to look at other From June, the US will begin any way that we can offer technical assistance.” sources of oil and cut the oil imports altogether implementing sanctions imposed on countries TALKS WITH KRISHNA in spite of India having reduced its oil supplies that do not end their oil trade with Iran. from Iran from 12% to just over 9%. The gap Washington has exempted Japan and a dozen Hillary Clinton held delegation-level talks has been made up by increased imports from of its European allies from the sanctions, but with External Affairs Minister Krishna on Saudi Arabia, while Iraq and UAE have it has not taken any decision in respect of May 8 and later held a joint press conference

News behind MAY 14, 2012 the News 35 indiaintheinternationalkaleidoscope with him where it was apparent that India was Indo-US Strategic Dialogue to be co-chaired “is not used as launching pads for terrorist sticking to its stand on Iran while the USA by Clinton and Krishna in Washington next attacks anywhere”. She said, the seemed very certain that cutting imports from month. Clinton will seek clarity on the rules announcement of a $10 million bounty placed Iran was the only way to stop it from going for the Nuclear Liability Bill that shapes the on LeT founder and Mumbai attacks ahead with its nuclear programme. In his 80- participation of US nuclear firms GE and mastermind, Hafiz Saeed demonstrates the minute meeting with Hillary Clinton on May Westinghouse in India. While in Kolkata, seriousness of the US in getting information 7, Prime Minister Manmohan Singh told her, Clinton expressed her reservations about the that can stand judicial scrutiny. Stating that India was aligned with international limited nuclear liability legislation. She said, the US believes that Hafiz Saeed was one of community on checking the spread of nuclear “We have made it clear that under the the “principal architects of the attack against weapons, but would be guided by its national legislation that was passed, it will be difficult Mumbai”, the US Secretary of state added, interests on securing its energy supplies. for US companies to participate because we “We wanted to send an unmistakable message Talking to newsmen, Clinton clearly have private companies that are in the market of solidarity with India” and people elsewhere. stated that she looked at India as a partner in place whereas other nuclear companies are Earlier, while speaking at an interactive the increased international effort to prevent backed up by their governments.” session at La Maretiniere School for Girls in Iran from acquiring nuclear weapons. “We She was also keen to get an update on Kolkata on Monday, said, it is in Pakistan’s believe that Iran will not be at the negotiating major economic reforms including the status interest that has lost more people to terror than table unless there is unrelenting pressure of of legislation that will allow FDI in pension India and the US that it should deal with the international sanctions. And the pressure must and insurance. US businesses are upset that problem of terrorism. stay if we want to see progress on a peaceful India’s Parliament has not passed the Clinton claimed the al-Queda leader, resolution”, she said. legislations they seek to enter in the nuclear Ayman Zawahiri was hiding somewhere in Replying to questions, Krishna told and retail sectors. Pakistan. The charge was, however, newsmen, he conveyed to Clinton vital stakes The security situation in Afghanistan is emphatically denied by the Pakistan Foreign of India in peace and stability in the Persian also reported to have figured in talks. With Minister, HinaRabbaniKhar in Islamabad. Gulf and wider West Asian region, given the troops led by the US planning withdrawal Clinton said, the US believed al-Queda’s new six million Indians who live there and the from Afghanistan by 2014, cooperation in leader, al-Zawahiri was in Pakistan. “We want region’s importance to Indian economy. stabilsing the violence-torn country was to disable al-Queda. We have made lots of Clinton appreciated the steps being taken by reported to have been discussed in the progress. Many of its leaders are on the run. India to reduce its dependence on Iranian oil backdrop of Kabul’s request to India for supply Some are in Pakistan. We want to go after while acknowledging that it is hard for New of defence equipment under the bilateral them”, she said. Delhi to do so. Krishna said India’s oil Imports strategic partnership. Krishna during Krishna told newsmen, the recent terrorist are growing on an average of 10 million tones discussions on Afghanistan, stressed the need attacks in Afghanistan’s capital, Kabul, annually and it was dependent on Iranian for sustained international commitment to highlighted the need for elimination of imports upto 12% to meet its energy build Afghan capacity for governance, security terrorist sanctuaries in the neighbourhood and requirements. “Given our growing demand, and economic development and to support for Pakistan to take steps against terrorism, it is natural for us to try and diversify our Afghanistan with assistance, investment and including bringing to justice the perpetrators sources of imports of gas to meet the objective regional linkages. Hillary Clinton told of the 26/11 attacks. of energy security. Iran remains an important Krishna, the US will negotiate a security The presence of a 56-member Iranian source of oil although its shares in our imports agreement with Afghanistan. delegation in the country at the same time as are declining”, he emphasized. The declining Just last week, the US inked a strategic Hillary signals New Delhi’s firmness on oil imports from Iran, he added, reflected the partnership agreement with Afghanistan maintaining its ties with Teheran. Also, this decision of Indian refineries based on when President Barack Obama flew down to March, an 80-member Indian trade mission “commercial, financial and technical Kabul and met Afghan President Hamid had spent five days in Iran and the Iranian considerations”. Karzai. With the US keenly eyeing India as a delegation’s trip is a return visit. Observers however say that Indian entities trade and investment destination, this issue Commenting on Hillary Clinton’s parleys could face US sanctions by June 28 if the was raised by Clinton during her meeting with in New Delhi, political observers say, because Obama administration determines that the Krishna. of its unscheduled nature, her visit provided country has not made enough cuts in imports Pakistan’s role as a spoiler in Afghanistan an unvarnished perspective of the state of under law aimed at cajoling Iran’s petroleum and its refusal to take a firm and visible action India-US relationship. There was no package industry to press the nation to comply with against the perpetrators of 26/11 Mumbai of “deliverables” – no agreements to sign, no international demands over its nuclear terror attack in 2018 also figured in the talks contracts to take home. The speeches were programme. in New Delhi. Clinton gave an inkling of her about themes that had been heard before. But, OTHER STICKING POINTS stand on this issue of concern to India when Ms Clinton and her Indian counterparts did In addition to oil from Iran, there were she addressed newsmen at a joint press get a chance to go over the problems and other sticking points too in Indo-US ties conference after talks with Krishna. She urged potholes in the relationship between the two which were taken up by Hillary Clinton in Pakistan “to do more” to tackle terrorism and democracies. New Delhi or will be discussed at the coming said that it needs to ensure that its territory Inevitably, Iran sanctions, opening up the

News behind 36 the News MAY 14, 2012 indiaintheinternationalkaleidoscope retail sector and other irritants came to State Minister. Fresh from her visit to importation of dual-use items.” dominate the public debate about the visit. Bangladesh where the leaders complained to The US further tightened unilateral Not that some commonality was not evident; her about Mamata Banerjee’s opposition to measures targeting the Central Bank of Iran the US expressed much reduced patience for the Teesta treaty, she tried to persuade the West (CBI) in December 2011. Section 1245 of Pakistan’s terror posture, agreed on the Bengal Chief Minister to give up her hard the US National Defence Authorization Act window of opportunity in Myanmar and stand. New Delhi is looking forward to a quick of 2012, signed by President Obama into law shared an unspoken view that China needs to decision by the chief minister on the Teesta, on December 31, requires countries be ushered down specific path of political especially because it will pave the way for talks importing Iranian oil to ‘significantly’ reduce evolution. The US even made a mild pitch in on many more important issues. their imports within 180 days, i.e. by June favour of the Teesta water agreement on the The US has decided to treat West Bengal 28, 2012, failing which financial institutions off chance that would ease the present Center- as a partner-State and has promised the State in these countries could be the targets of US State girdlock. While this highlighted the investment and all possible cooperation. The sanctions. The provisions of the Act targeting impotence of Manmohan Singh government, Chief Minister sought US investments in IT the CBI followed the US designation of Iran it also underscored how much the two software, manufacturing and deep sea port as a ‘jurisdiction of primary money countries share common interests. among others in the State. She also requested laundering concern’ in November 2011 in the HILLARY’S KOLKATA PARLEYS Clinton for US investment in the tourism light of its contention that the money being WITH MAMATA BANERJEE sector and US collaboration in the social and channelled by the CBI was posing “terrorist Hillary Clinton who was coming to India education sectors. financing, proliferation financing, and money after visits to China and Bangladesh, chose to laundering risks for the global financial break journey in Kolkata for a meeting with system.” The European Union followed the West Bengal Chief Minister Mamata Banerjee US unilateral measure by announcing in on May 6 before arriving in New Delhi. The January 2012 an embargo on Iranian oil to significance of her trip to Kolkata and meeting INDIA AND THE US: SQUARING be effective from July 2012. with Chief Minister Banerjee cannot be THE CIRCLE ON IRAN On March 20, 2012, the US gave overstated. While it is being viewed as a sign S. Samuel C. Rajiv sanctions exemption to 11 countries— of recognition by the US Government of the Belgium, the Czech Republic, France, India’s continuing energy cooperation growing importance of regional players in Germany, Greece, Italy, Japan, the with Iran continues to be a prime area of India’s politics like Banerjee in the national Netherlands, Poland, Spain, and the United foreign policy divergence between India and political scenario, the West Bengal Kingdom—for ‘significantly’ reducing their the United States. Though India has stated Government was keen on seizing this oil imports from Iran. Apart from these 11 time and again that a nuclear Iran is not in opportunity to showcase the state as an countries which got sanctions exemption for its strategic interests and bad for regional attractive destination for US entrepreneurs a period of 180 days (which can be further stability, it has not desisted from sourcing keen to invest in the region. The US is closely renewed), 12 other energy importing much needed energy supplies from Iran. watching developments in West Bengal that countries primarily in Asia including India, barely a year ago witnessed a major political Washington, on its part, contends that a China, South Korea, among others, are transformation with Banerjee assuming power prime source of funding for Tehran’s nuclear currently under the US scanner ahead of the after 34 years of Left Front rule. activities is its oil revenues. This, it asserts, is June 28 deadline. The visiting US Secretary In her meeting with Chief Minister recognised even by extant UN Security of State Hillary Clinton, during her Mamata Banerjee issues like FDI in retail, the Council resolutions like 1929 of June 2010. interactions both at Kolkata and New Delhi, Teesta treaty and US investment in West Sanctioning three oil companies (Chinese impressed upon her interlocutors the need to Bengal came up. But, her administration Zhenrong, Singaporean Kuo Oil and continue to keep the pressure on Iran by denied FDI in retail was on the table. The Sharjah-based FAL Oil) under the provisions helping constrict its oil revenues. At the Delhi denial has not come as a surprise to those who of the Comprehensive Iran Sanctions and press conference with External Affairs have been acquainted with Banerjee’s stand Divestment Act (CISADA) in January 2012 Minister S.M. Krishna, she insisted that Iran on the issue. In 2011, it was her strong for supplying refined oil to Iran beyond the would not have come back to the negotiating opposition which forced the UPA government limits set by CISADA ($5 million worth table “unless there had been the unrelenting to keep the FDI issue on the backburner. The transactions in a 12-month period), the US pressure of the international sanctions. And US sees Mamata, the strongest UPA ally, as State Department noted that UNSCR 1929 this pressure must stay on if we want to see the biggest roadblock in its plans for “recognized the potential connection progress toward a peaceful resolution.” In investments in the multi-brand retail sector between Iran’s revenues derived from its Kolkata, Clinton asserted that there were in India. Teesta water sharing agreement energy sector and the funding of its “adequate supplies” in the international between India and Bangladesh, insurance and proliferation sensitive nuclear activities.” market from countries like Saudi Arabia and investment climate in West Bengal and Earlier sanctioning a Belarussian company Iraq (currently India’s second biggest supplier) potential of US investments in Bengal, with in March 2011 under CISADA, the for India to source its requirements. particular reference to India’s Look-East policy Department charged that Tehran uses its oil Indian policy makers have been insisting were the other subjects discussed, according revenues to “fund its proliferation activities that it is neither feasible nor desirable to cut to a senior Trinamool Congress leader and a as well as to mask procurement for the Cont.. on Page....40

News behind MAY 14, 2012 the News 37 indiaintheinternationalkaleidoscope specialfeature

ARVIND GUPTA

TASKS BEFORE INDIAN FOREIGN South block New Delhi POLICY oreign policy is the tool by which India harbourmany instabilities too. Therefore, India countries. Radical elements in Pakistan do not interacts with the world outside its will need to approach these regions strategically. countenance a prosperous and strong India. borders. The two primary objectives of A rising China will remain a significant How should India deal with Pakistan? Our India’sF foreign policy are: a) protection of India’s policy towards Pakistan must be based on foreign policy and security challenge for India. national sovereignty and territorial integrity; The boundary question is unlikely to be deterrence as well as engagement. Pakistani and b) promotion of the well being of the Indian resolved in a hurry. The uncertainties of power society is getting differentiated and multi- people. Thus, India’s foreign policy is designed transition in China, growth of nationalism, layered. We should be looking for building to promote national security and development. military modernisation, expanding ambitions favourable constituencies in Pakistan Foreign policy is impacted by global, in the Indian Ocean, its forays in South Asia, particularly amongst its civil society and youth. regional and internal developments. India’s China-Pakistan nexus are all likely to remain We should build our capacities to meet the terrorism challenge emanating from Pakistan, global, regional and internal environment has concerns for India. Sino-Indian relations have but a strategy of no-dialogue may not prove to become highly complex, posing several improved in recent years but the mistrust has be effective. We should also understand challenges to India’s foreign policy. not disappeared altogether. India’s policy Pakistan’s internal vulnerabilities and learn to towards China must be nuanced and calibrated The global environment is marked by the exploit them to our advantage. In particular, carefully. India cannot afford to have a hostile re-distribution of power, reflected in the rise of we should highlight the situation in Baluchistan and powerful neighbour on its borders. India new power centres and the relative decline of and GilgitBaltistan. We should ensure that will need to learn to manage China with a the West. India has benefited from globalisation Pakistan does not get any special role in combination of “hard” and “soft” power and economic liberalisation. It is one of the Afghanistan that would harm India’s interests. options. Our diplomatic skills must be of high rising powers in the world. However, in order The Pakistan army appears to be under some order. Sino-Indian economic trade, which is to leverage its strengths and mitigate its pressure as is reflected in General Kayani’s recent growing, still remains asymmetric. India must weaknesses, India will need to think strategically statements about “peaceful co-existence” and look for economic opportunities in China. to navigate the turbulent global order. the importance of democracy. We should be The international order is in a state of flux. South Asia is vital for India’s security and using both negative and positive levers vis-à-vis The uncertainties pertain to the redistribution prosperity. Unfortunately, instability in South Pakistan. We should not hesitate to establish of power, emergence of a polycentric world Asia is endemic. South Asian countries military-to-military exchanges with Pakistan. order, acuter competition for strategic resources, continue to remain sceptical about India’s Trade can be used as a positive lever. At the same unequal distribution of wealth and power, the attitude and behaviour. India can leverage its time, we should guard ourselves against nuclear emergence of non-state actors, changing nature economic strength for bringing South Asian terrorism and possible humanitarian crisis of conflict, threats to human security and state countries closer. Regional integration must be emerging out of spiralling instability in security arising out of climate change, poverty promoted. People-to-people contacts must be Pakistan. pandemics, terrorism, WMD proliferation, etc. facilitated. Connectivity must be improved. India has tremendous strategic interests and However, the problem remains psychological. India can benefit from this uncertainty stakes in West Asia. The region accounts for India must adopt policies that reassure its about two-thirds of our crude imports and $100 provided it maintains its natural strengths which neighbours. India must adopt long term are a strong economy, demography, democracy, billion in trade. Nearly six million Indians living strategies rather than bank on ad-hocism and in West Asia remit over $ 35 billion every year. political cohesion and a tolerant society. If we knee-jerk responses. falter on any of these, we will suffer. West Asia is saddled with seemingly intractable Pakistan is becoming increasingly problems and rivalries. These include the India is located in Asia, which is emerging ungovernable and unstable. Pakistan’s policy of unresolved Israel-Palestinian conflict, Iran’s as the new centre of global power. But Asia is using terrorism as a pressure point on India is a nuclear programme, Iran-Israel and Iran-Saudi home to great power rivalries. Asia has many major challenge for India as is Pakistan’s ‘all Arabia rivalries. The tensions in West Asia are security hot spots which impact India. West weather friendship’ with China. Sino-Pakistan likely to continue. The region is becoming even Asia, East Asia, South Asia, Central Asia and nexus is likely to deepen further as China’s global more complex on account of the onset of the Indian Ocean Region are areas of great profile increases and Pakistan’s own problems political turmoil—-Arab Spring—in many strategic importance for India. But they deepen. Both China and Pakistan are nuclear countries. India’s vote on the Libyan and Syrian

News behind 38 the News MAY 14, 2012 indiaintheinternationalkaleidoscope resolutions at the UN Security Council and Russia remains a time-tested friend of India, nuclear overhang. Hard power is important not India’s handling of Iran shows that Indian policy but over the years Indo-Russian relationship has, only in the context of Pakistan and China but towards its region will also evolve. India cannot to some extent, weakened. This is largely due also in the context of the Indian Ocean where afford to alienate any side in the region. While to the changes in global and regional India should vouch for freedom of navigation. maintaining good relations with all countries environment. Russia is engaging more and more India must develop a significant maritime in the region, we will also need to shore up our with China and is disillusioned with the US and orientation to its military power. Its nuclear capabilities in the maritime domain. Europe. It is also in the midst of a major internal deterrence must be credible. Air power must India has to pay much greater attention to political and economic churning. India has also be developed to neutralise the air assets of the the different regions of the world than has been diversified its foreign policy. The Russians are adversary. Cyber security and space security the case so far. India’s Look East policy has watching the growing Indo-US relationship must be given due attention. brought considerable gains to the country, but with some concern. They are also apprehensive India’s foreign policy challenge also lies in it is still incomplete because of the lack of that their dominance in India’s defence market uncertain domestic politics. A recent example capacity in India to engage deeply with South may be affected. Indo-Russian relations need was India’s inability to sign the Teesta Water East Asia and Asia. US’s Asian pivot strategy to be diversified. Particular attention must be sharing agreement with Bangladesh. India’s Sri and China’s assertive stance in the South China paid to improving the economic content of the Lankan policy is influenced by politics in Tamil sea will heighten tensions. North Korea remains relationship. Nadu. Over the years, the consensus on Indian a state of concern. US security guarantees in The United States remains the single biggest foreign policy has been breaking down. The the region are being doubted by some countries. power and India must have an ever-deepening numerous problems within India, particularly China sees a US ‘return’ to the Asia Pacific with strategic partnership with it. The US is likely on the internal security front, also affect India’s concern. Tensions in the region will grow. India to turn towards India as its relative power foreign policy. The capability of the Indian state needs to enhance its engagement with Myanmar declines. The many commonalities in the value to meet the internal security challenges, which which is now opening up. India’s North-East systems of the two countries will make it can be exploited by external forces, must be built Region must be integrated into India’s Look possible for India to maintain its partnership up. Internal security challenges range from the East policy. India will need to deepen its with the US while retaining its strategic Maoist threat to insurgencies in different parts strategic partnerships with Japan, South Korea, autonomy. of the country. ASEAN, Austria and countries in the South India needs to play an effective role in the India will also need to resolve a number of West Pacific. emergence of global institutions of governance. non-traditional security issues where diplomacy Africa is opening up. There has been strong India’s role in the G20 is a good beginning. will play an important role. These include economic growth in sub-Saharan Africa. India India’s economic engagement with the world energy security, nuclear security, climate change, has sought to enhance its engagement with must improve. India can leverage its vast market, etc. Energy Security will depend upon India’s Africa. The India-Africa Forum has been a good human resource potential and scientific and ability to ensure energy supplies from abroad, beginning. This engagement must be deepened technological infrastructure to engage with the promoting energy efficiency at home, taking a further. In contrast to the Chinese model, which world. India’s defence industrialisation lead in renewable energy and clean technologies. is based upon the exploitation of Africa’s programmes can provide new stimulus for this Nuclear security is emerging as a new issue, resources, India must have a mixed model of engagement. arising out of concerns about the safety and society building and economic engagement. Multilateralism is in a state of flux. Many security of nuclear assets. India needs to Central Asia remains important for India. UN institutions are in crisis. The role of strengthen its national efforts towards nuclear We have not been able to leverage our historical informal non-official communities and regimes security while contributing towards the closeness with the region mainly due to lack of in the fleshing out of the norms of governance emergence of nuclear security standards in the geographical access. India must engage with is increasing. The influence of informal world. Central Asian countries bilaterally as well as institutions on formal institutions is also India’s strengths will emerge from a strong through multi-lateral institutions like the increasing. India has staked its claim to a economy which, in turn, has to be based on Shanghai Cooperation Organisation. India permanent membership in the UN Security sound formation of knowledge and needs to invest more in Central Asia. TAPI, if Council but this may not be forthcoming easily. information. We need to build our education realised, will enhance India’s energy security. India needs to recognise that much of today’s system to world standards. Innovation must be Although Europe is in economic difficulty, global norm-setting is done outside formal given a premium. National security must be an its importance for India cannot be under- institutions, by informal networks of integral part of our education system. estimated. India’s trade with Europe remains professionals. These informal networks have a Strengthening of national security will also significant. Europe can also be a source of profound impact on the functioning of formal depend upon addressing cyber security investment and technology. A large number of institutions. India should ensure that it has challenges. We must leverage ICT in national Indians continue to live and work in Europe. membership of the relevant institutions, both security. In recent years, the strategic content of our formal and informal. India has benefited from India must transform its governance to meet relationship with Europe has been diminishing. its engagement with groupings like IBSA and the coming challenges. Foreign policy is a part This situation must be altered. Europe must be BRICS. India should broaden its options so that of overall governance and can play a role. The encouraged to invest in India. People-to-people its influence increases around the world. key is to back our good intentions in foreign contacts must also be enhanced. Similarly, India India’s foreign policy must be backed by policy with adequate power. At the same time, must look for long term opportunities in Europe hard power. India should be ready for a two- power must be embedded in our values for it to despite the latter’s weaknesses. front armed conflict to be fought under a be legitimate.

News behind MAY 14, 2012 the News 39 indiaintheinternationalkaleidoscope

Cont.. from Page....37 meeting the majority of its energy needs, as Hansen Clare, who is half Indian, is seeking off energy links with Iran. Prime Minister well as its position as an important strategic re-election from Michigan while another Manmohan Singh reportedly told Secretary partner of the United States, should be candidate, MsTulsiGabbard, a Hindu is Clinton during his meeting with her on May prominent guideposts for the State receiving massive support from Indian 7 that though India supports the non- Department to make the upcoming June Americans. The inspiration for these proliferation objectives of the international 2012 decision. Any US decision that could candidates, numbering at least a dozen, comes community vis-à-vis the Iranian nuclear issue, be seen as constricting India’s burgeoning from the phenomenal success of two rising it will be guided solely by its national interests energy requirements could not only negatively stars of the Republican party, Ms Nikki Haley, on issues of energy security. On his part, affect bilateral ties but also create avoidable Governor of South Carolina and Bobby Jindal Foreign Minister Krishna insisted at the press hiccups in India’s growth story. Governor of Louisiana. However, most of the conference that “Iran is a key country for our The US pressure on India to cut back on Indian American candidates are running for energy needs” and stated that both India and its energy links with Iran is in tune with its Congress on a Democratic ticket. the United States have discussed each other’s ‘dual-track’ policy of “sanctions in pursuit of Meanwhile, President Barack Obama “position” and “perspectives on energy constructive engagement,” as stated by heaped praise on Punjab-born Dalip Singh security.” He added that the issue was “not a Secretary Clinton in July 2011. Past Saund, he country’s first Indian-American source of discord between our two countries.” experience however shows that as the scope member of US Congress. In his address at the India’s energy imports from Iran during of sanctions increased, Iran’s behaviour annual gala of the Asia pacific American April 2012 were about 35 per cent less than became more defiant. Iran, for instance, Institute for Congressional studies on May 10, during the previous month—260,000 barrels suspended its implementation of the the US President described the late Saund as per day (bpd) as against about 410,000 bpd Additional Protocol (which it had signed in a “trailblazer”. He came to US at the young in March. During his April 2012 visit to the December 2003) on February 6, 2006 after age in 1920 and stayed to become a farmer. US to attend the meetings of the World Bank its referral to the UNSC in the February 4 He took on the cause of citizenship for all and the International Monetary Fund (IMF), resolution of the IAEA DG. It also went back people of South Asian descent, earned his own Finance Minister Pranab Mukherjee stated on its decision to abide by the provisions of citizenship and stepped up to serve the that Indian imports from Iran currently stood the revised Code 3.1 of its Subsidiary country he loved and became the first Asian- at about 14 million tonnes out of total Arrangement in March 2007, in the American elected to the Congress, he noted. imports of “roughly about 160-170 million immediate aftermath of UNSC Resolution AL QUEDA UNDERWEAR BOMB tones” annually. From about 13-16 per cent 1747. After talks were re-started in Istanbul PLOT THWARTED in recent past, this indeed is a significant in April 2012 after a gap of 15 months— reduction in the overall share, given that which Clinton affirms is a result of sanctions The US intelligence services foiled a plot India’s energy requirements have galloped. pressure, the second round of discussions hatched by a Yemeni affiliate of al-Queda to blow up a plane bound for the US using a The above aspect was also stressed by between Iran and the P5+1 is scheduled to more sophisticated version of the underwear Krishna during his joint press conference with be held in Baghdad on May 23. The nature bomb deployed unsuccessfully in 2009. FBI Secretary Clinton on May 8, where he stated of Iran’s interaction with the IAEA in the said, it is in possession of a device that is similar that “India’s imports are growing on an aftermath of those talks will indicate whether to other s previously used by al-Queda in the average by about ten million tonnes annually. the US (and EU) strategy of increasingly Arabian peninsula. Given our growing demand it is natural for punitive measures will yield ‘constructive’ us to try and diversify our sources of imports results. Given that the Istanbul talks were The would-be bomber, who was actually of oil and gas to meet the objective of energy described as “positive” by all sides involved, a Saudi Arabian intelligence agent was given security.” India’s top supplier Saudi Arabia will it would seem that there is indeed scope for the bomb by al-Queda in Yemen and left the supply 32 million tonnes in 2012-13, as cautious optimism. choice of plane and the timing to him. The against 27 million tonnes in 2011-12. Reports agenda passed on the bomb to the CIA. The also note that Indian refineries processing plot had been conceived to coincide roughly Iranian crude have been asked informally to with last week’s first anniversary of the killing cut back on imports from Iran. of al-Queda chief, Osama bin Laden. In 2009, Umar Farouk Abdulmutallab, a Nigerian, The prospects of India’s interactions with WORLD BRIEFS attempted to detonate plastic explosives Iran on the energy front being seen as better RECORD NUMBER OF INDIANS IN hidden in his underwear on a flight from aligned with US policy objectives/ US POLL RACE Amsterdam to Detroit. He confessed and was prescriptions will be the subject of further A record number of Indian Americans – sentenced in February this year to life prison. discussions. The ongoing efforts by both the at least 12, are in the fray for the November Al-Queda claimed to be behind the plot. countries to square the circle on the issue will 2012 polls vying for a place in the House of continue when US Energy Coordinator Representatives, reflecting the serious effort DEFEAT OF SARKOZY, FRANCE Carlos Pascual visits New Delhi soon to of this fastest growing ethnic community in TURNS LEFT discuss possible ways in which India could the USA to politically empower itself. France has woken to a new era after further cut back on its energy links with Iran. Cutting across party line, these Indian- electing Socialist Francois Hollande as India’s compulsions as an energy-deficient American candidates are spread all over, with President, a Leftist pledging to buck Europe’s developing country dependent on imports for two each from California and Michigan. austerity trend and NATO’s timetable for

News behind 40 the News MAY 14, 2012 indiaintheinternationalkaleidoscope

Afghanistan. Final results show Hollande protests against the two leaders’ grip on power. euro EU-IMF bailout. He has, however, failed narrowly defeated Sarkozy with 51.62 per cent The approval vote, comfortably won by to put together a coalition Government of the vote or 1.13 million of the 37 million Medvedev as Putin looked on, ignored leaving it to leaders of Pasok and New votes cast in the election. Saroky who finished growing concern in the country that keeping democracy to make an attempt. the first round about half a million votes power in the hands of the same men who have JAPAN GOES NUCLEAR POWER FREE behind Hollande, failed in his bid to attract led Russia for the past 4 years, will bring Thousands of Japanese marched on May sufficient votes from supporters of far-right political and economic stagnation. 5 to celebrate the switching off of the last of their leader Marine Le Pen. The result will have GREEK VOTE AGAINST AUSTERITY nation’s 50 nuclear reactors, waving banners major implications for Europe as it struggles MEASURES shaped as giant fish that have become a potent to emerge from a financial crisis and for Athens raised the prospect of reneging the anti-nuclear symbol. Japan will be without France, the Eurozone’s second largest terms of its bailout by EU after Greek voters electricity from nuclear power for the first time economy and a nuclear-armed permanent roundly rejected on Tuesday austerity in four decades when the reactor at Tomari member of the UN Security Council. measures, raising fresh doubts over the nuclear plant on the northern island of PUTIN, MEDVEDEV COMPLETE country’s euro zone membership. The head Hokkaido goes offline for routine maintenance. JOB SWAP of the radical left wing Syriza party charged After last year’s March 11 quake and tsunami Russia’s Lower House of Parliament with forming a government warned in a letter set off meltdowns at the Fukushima Daichi confirmed on May 8 former President Dmitry to Athen’s international lenders that any plant, no rector halted for checkups has been Medvedev as Pm on May 8, completing a job cabinet resulting from his negotiations would restarted amid public worries about the safety swap with Vladimir Putin that has sparked renege on the terms of Greece’s 240 billion of nuclear technology.

KAZAKHSTAN BACKS SCO OBSERVER STATUS FOR AFGHANISTAN Astana backs granting observer status at the that Kazakhstan stands for a peaceful solution Shanghai Cooperation Organization to of this problem. Afghanistan, Foreign Minister of Kazakhstan ”We urge to seek additional ways to resolve Yerzhan Kazykhanov says on May 11, while the issue, including the “five plus one” format speaking at the regular meeting of the Council As a country that has made a major of SCO Foreign Ministers (CFM) that took contribution to the process of nuclear place in Beijing, China. disarmament and strengthening of nuclear ”Kazakhstan is interested in a sustainable to be held in Beijing in June. safety, Kazakhstan, if needed, is ready to provide and stable development of Afghanistan. The key documents that were approved by a platform for holding the negotiations in this Kazakhstan is an active supporter of Kabul to foreign ministers include the draft guidelines for format,” Kazykhanov says. At the sidelines of be involved in the regional integration SCO development strategy in the medium term, the Beijing meeting of the SCO Council of processes. We believe that by providing the a new version of the Regulations on the political Foreign Ministers Yerzhan Kazykhanov and his observer status to Kabul we will strengthen the and diplomatic measures as well as the draft Chinese counterpart Yang Jiechi met on Friday economic and humanitarian cooperation with Programme of cooperation of SCO member morning and voiced readiness to advance Afghanistan,” Kazykhanov says. states in combating terrorism, separatism and bilateral ties to a new level. Yang said China- Expressing concern about the current extremism for 2013-2015. Kazakhstan relations have developed in great situation in Afghanistan and stressing that leaps since the two countries established According to Kazykhanov, the approved peace and stability in the SCO responsibility diplomatic relations 20 years ago. He said the documents will be the basis for the full-fledged zone depends on the internal situation of this two sides had developed a cooperative strategy and solid SCO strategy. “We need to collectively country, the ministers of SCO member states for the 21st century, formed a comprehensive look to the future in order to adequately and decided to submit the issue of the Afghan bid strategic partnership and carried out a series of promptly respond to emerging threats and for observer status to the agenda of the SCO large-scale projects in various areas. challenges,” the Kazakh foreign minister stressed. Council of Heads of States which is to be held Speaking of the cooperation of SCO countries Kazykhanov said the joint efforts of both in Beijing on June 6-7, 2012. in ensuring international information security, sides have brought about all-round The ministers also submitted the issue of Kazykhanov particularly noted the importance development in the bilateral links in recent granting the status of SCO dialogue partner of implementing the initiatives of President of years as leaders have kept frequent contact. to the Turkish Republic for the consideration Kazakhstan Nursultan Nazarbayev to establish China and Kazakhstan established a by SCO Council of Heads of States. the SCO Cyberpol - the body aimed at fighting comprehensive strategic partnership in 2011. Discussion of the preparations for the cybercrime and cyberterrorism. Two-way trade reached US$ 25 billion last upcoming June summit was one of the main In his speech Kazykhanov also pointed out year. The members of the SCO are China, themes of the foreign ministers meeting. that Kazakhstan is closely following the situation Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Addressing his counterparts, Kazykhanov and events in Syria and expressed hope that the and Uzbekistan. The organization was stressed that Kazakhstan supports the draft situation in the country stabilizes in the nearest founded as the Shanghai Five in 1996 and agenda and the list of documents proposed to future. As for the issue of Iranian nuclear changed its name in 2001 after Uzbekistan be signed at the upcoming summit, scheduled programme, the Kazakh foreign minister says joined.

News behind MAY 14, 2012 the News 41 indianeconomiceconomicpanorama panorama economyopinion

BUDGET CORRECTION: RIGHT SIGNAL TO FOREIGN INVESTORS! t a time when the government is dragging Mukherjee has also announced some major out of fear of unpredictable action by the tax its feet on critical reforms like retail FDI changes — shifting some of the burden onto the department. Investor confidence has been while it rages on sensitive decisions like tax authorities from the taxpayer, for example. shaken due to government indecision, annoying generalA anti-avoidance rule (Gaar) and the In addition, the committee evaluating a GAAR- tax proposals in the budget, rising current and retroactive taxation on Vodafone, Finance based tax claim will contain a nominee from the fiscal deficits, a negative rating by Standard and Minister Pranab Mukherjee did well to postpone law ministry, ensuring that a voice from outside Poor’s and slowing growth.Foreign funds implementation of the General Anti-Avoidance the tax administration will be heard. A year touching $540 million were pulled out of stock Rule (GAAR), which was a big irritant to foreign should allow taxpayers and tax authorities some markets in March and April, while the first two entities investing through the Mauritius route time to get used to what is expected from both months of the year had seen inflows of $13 to avail of tax advantages. On the GAAR, which of them. The markets have responded positively billion. has evoked sharp criticism from foreign investors, to these announcements. The government could, however, have the Finance Minister said, "to provide more time However, the controversial proposal to avoided the embarrassment of having to roll back to both tax payers and tax administration to impose retrospective capital-gains tax on overseas GAAR had it been more diligent while preparing address all issues, I propose to defer the deals involving the transfer of an Indian business its taxation proposals. The Union Budget is applicability of the GAAR provisions by one stays. This would still hold Vodafone taxable in closely watched around the world for signals year...(it) will now apply to income of financial India for its 2007 acquisition of a controlling indicating the government’s thinking. year 2013-14 and subsequent years." stake in Hutch-Essar. Yet, he has clarified the With corporate confidence at a new low, the This announcement was made last week provision in some important ways: it will not be government has to ensure genuine investors are while moving the Finance Bill, 2012 for used to reopen closed assessments, nor will it not harassed at the hands of tax officials who consideration and passage in the Lok Sabha. The override existing double-tax avoidance have been armed with wide powers to trigger a GAAR provisions will now apply to income of agreements India has signed. Hopefully, future GAAR scrutiny. And GAAR is only one of Financial Year 2013-14 and subsequent years. discussion of this clause will be somewhat less several irritants that have reduced the flow of The March 16 budget had proposed the General extreme, now that it is clear its impact is so foreign funds to a trickle. The finance minister’s Anti-Avoidance Rules, better known as GAAR, carefully demarcated. assurance that retrospective changes in tax laws which empowered tax officials to open up any Given the state of the Union finances, the would not be applied to cases already assessed is deal they suspected was structured to dodge Finance Minister is justified in trying to mop not enough. There has to be much greater clarity, taxes. The burden of proving innocence/tax up resources. The GAAR amendment, intended and not through bureaucratic circulars and liability was on the taxpayer, which now has been to curb black money, was badly needed, especially notifications, but through detailed, shifted to the tax collector. This move, and the as the double taxation avoidance treaty with unambiguous guidelines. Only this will instil rollback of some other Budget proposals, will Mauritius was being misused by many people, some confidence in the government’s sincerity definitely make life easier for the taxpayer. and certainly not observed in its letter and spirit. and pave the way for restoring domestic The pressure brought to bear by angry Unfortunately, the GAAR proposal was investors’ as well as foreign investors’ confidence investors and traders, depressed stock markets thoughtlessly rushed through without even in the Indian economy. and a rupee in free fall was probably too much perusing how some other countries, such as Alongside, the jewellers' lobby also seems to to bear. Mr. Mukherjee must also have been Canada, Australia and South Africa, have won with Mr. Mukherjee doing away with conscious of the importance of foreign portfolio implemented similar schemes. the 1 per cent excise duty that he imposed on flows to bridge the widening current account It is well known that Indian companies evade non-branded jewellery. It is a double bonanza deficit, estimated to be around 4 per cent for taxes by routing their investments through tax for the trade because branded jewellery will also 2011-12, while deciding to defer the havens like Mauritius. However, foreign funds be exempt from the levy now. More than the implementation of GAAR until the next too use this route and feared the levy of tax in revenue that could have been generated from it, financial year. These were a red rag to foreign violation of an existing treaty with Mauritius. If the duty was important because the jewellery investors, some of whom held back fresh two foreign firms make profits over the transfer business has traditionally been a magnet for investments in the period since the budget. of an Indian asset, their tax liability is unaccounted money and this levy might have Mukherjee’s amendments to the Finance Bill unassailable. Foreign investors are not averse to brought such funds to account. In a related 2012-13, have ensured companies operating paying legitimate taxes. But the move to make relaxation, the threshold limit for TCS (tax their businesses through countries with which retrospective changes in tax laws was seen as an collection at source) on cash purchase of India has double taxation avoidance agreements attempt to undo the tax relief granted by the jewellery will be raised to Rs 5 lakh from the (DTAAs) would continue to enjoy low or no Supreme Court to Britain’s Vodafone and present Rs 2 lakh. It is not clear what impact capital gains tax, as applicable in the country. contrary to international practices. The tax the rollbacks will have on the revenue side of However, once the General Anti-Avoidance Rule regime has to be simple, clear and competitive, the budget arithmetic. (GAAR) is implemented, these would be subject and changes cannot be introduced every year. If in the end, they lead to better sentiment to tax provisions in India. It is unfair to treat legitimate investors as and consequently higher GDP growth, their In a further damage control exercise, Mr potential criminals or driven away from India purpose might have been served.

News behind 42 the News MAY 14, 2012 indianeconomicpanorama

43 BUDGET EFFECT: LOK SABHA PASSES FINANCE BILL 2012-13 44 ESCAP SURVEY PROJECTS GDP GROWTH AT 7.5 % IN 2012-13 44 INDUSTRY: INDUSTRIAL OUTPUT SLUMPS 3.5% IN MARCH 46 PHARMA SECTOR: 'INDIA HAS POTENTIAL TO BE GLOBAL HUB OF BIO-PHARMA SECTOR' 47 VODAPHONE DISAPPOINTED OVER NO CHANGE IN RETRO TAX PLAN 47 RUPEE DEPRECIATION : RBI STEPS IN TO SHORE UP RUPEE: EXPORTERS ASKED TO CUT FOREX KITTY BY 50% SECTION SECTION SECTION SECTION SECTION 48 POLICY INITIATIVES: CABINET POSTPONES INSURANCE BILL 48 MARKETS: SENSEX ON LOSING STREAK, CLOSES 127 POINTS DOWN 49 TRADE: EXPORTS TO GROW SLOWER AT 10-15% IN 2012-13: GOVT THIS THIS THIS THIS THIS 51 INVESTMENT: INDIA ATTRACTS HIGHEST EVER FDI OF $ 8.1 BN IN MARCH IN IN IN IN IN

BUDGET EFFECT LOK SABHA PASSES FINANCE BILL 2012-13 TAX CHANGES MAY MAKE SOME CONSUMER GOODS CHEAPER Concluding debate on the Finance Bill, 2012 which was passed last week, giving effect to all the tax proposal in the Budget, Replying to the debate on the Finance Bill, Finance Minister, Mr.Pranab Mukherjee announced that the chassis for commercial vehicle, ball point pen ink and goods required for solar power projects would now become cheaper with central excise duty concession being extended to them. On the customs side, the exemptions cover wood pulp, goods required for the setting up of solar power projects and certain raw materials for the manufacture of the solar has decided to apply uniform rate of same rate. The Central Board of Excise and cells. abatement for levying excise duty on various Customs (CBEC) has issued a notification With this, the Lok Sabha has completed electronic consumer durables. The rate of in this regard. the three-stage budgetary process. abatement determines the portion of retail The latest development may cheer the The Finance Bill will go to Rajya Sabha sales price or maximum retail price (MRP) durables sector, which is facing tough times. which will return it for Presidential assent. on which central excise duty will be levied. The Budget had raised the general rate Prices of colour televisions, air According to a Finance Ministry official, of excise duty from 10 to 12 per cent. The conditioners and computer monitors may “Now, the uniform rate of abatement would rupee has depreciated almost 10 per cent in come down soon, as the Finance Ministry be 35 per cent.” last two months, raising costs of imported It means if the retail sale price is Rs 100, components. This necessitated the industry then, excise duty will be levied only on Rs to hike the prices last month. 65. If the rate of duty is 12 per cent, then With the latest development, the with the rate of abatement, the effective rate industry might not need to raise prices of central excise duty would come down to anytime soon, especially for colour TVs and 7.8 per cent. air-conditioners. UNIFORM RATE The increase in the rate of abatement is At present, various electronic items have definitely a welcome initiative and will bring various rates of abatement. For example, this us relief in categories like colour televisions rate is 30 per cent for colour televisions, while and split ACs. it is 25 per cent for air-conditioners. It is 20 “Improvement in abatement will bring per cent for monitors and 35 per cent for down the excise element. It is a welcome fridges, washing machines and mobile change for the industry. Benefits would be phones. Now, all these items will attract the passed on to the consumers,” Mr Kamal

News behind MAY 14, 2012 the News 43 indianeconomicpanorama

Nandi, Vice-President (Sales and marketing), The report noted that for the Indian affirmed that he was looking at mild recovery Godrej Appliances said. economy, the 2011-12 fiscal turned out to in growth despite decline in industrial be a difficult one owing to the twin shocks production to 3.5 per cent in March. “Our of a global slowdown and the impact of a outlook for 2012-13 is for a mild recovery severe monetary tightening aimed at in growth. Our projection in the April policy containing inflation. For the entire 2011, indicated that the GDP (gross domestic ESCAP SURVEY PROJECTS GDP inflation remained a major concern and the product) growth would be at 7.5 per cent. GROWTH AT 7.5 % IN 2012-13 Reserve Bank of India had to raise policy We do expect some bottoming out of this rates 13 times in 19 months, which impacted process over the course of the year,” he said. After a spate of negative forecasts by a private consumption growth. number of international agencies on the The monetary policy had to be sensitive health of the country's economy, a United “This affected industrial investment. Yet, enough to other risks and pressures. Global Nations report, on last Thursday, has the Indian economy managed to grow at a conditions are likely to be challenging for projected a faster GDP (gross domestic robust rate of 6.9 per cent,” Dr. Kumar said. some time to come, and oil prices and capital product) growth rate for India at about 7.5 ON INFLATION flow demand greater attention, he said. per cent this fiscal even as most of the Asia- Estimating that the overall inflation in Gokarn said the domestic growth- Pacific economies are expected to see a much India would remain at around 6.5 per cent inflation balance was stabilising even as risks slower pace of expansion. in 2012, the ESCAP survey advocated remained on both fronts. The projection, contained in the increased supply of food items to contain According to the government data ‘Economic and social survey of Asia and the the price rise. released earlier in the day, industrial output Pacific 2012', the flagship publication of the “In line with increased prosperity, the shrunk 3.5 per cent in March due to poor United Nations Economic and Social food habits of consumers have been show of manufacturing and mining sectors, Commission for Asia and the Pacific changing from cereals to proteins, fruits and dampening hopes of an early revival of (ESCAP), may be something to cheer about vegetables, and to contain food inflation, growth. as its growth forecast is just a tad lower than supply of these items has to be enhanced,” it The 3.5 per cent contraction in the Index the government's own estimates of a 7.6 per said. of Industrial Production (IIP) data for March cent expansion for 2012-13. Harping on the economic crises, such as indicated that there was a sort of slowdown, Releasing the report at a function in New the eurozone problem, the report pointed he said. Delhi, ESCAP Chief Economist Nagesh out that the weaknesses of major developed On RBI’s intervention in arresting the Kumar said: “The Indian economy's strong economies pose a major threat to growth in rupee slide, Gokarn said the apex bank fundamentals, namely, high saving and the Asia-Pacific region and this could lead would continue to use instruments within investment rates and rapidly expanding to a lower expansion — from 7 per cent in its ambit to curb volatility in the foreign labour force and middle-class, will ensure a 2011 to 6.5 per cent in 2012. exchange market. steady economic performance with some volatility in GDP growth rates from year to “The higher cost of capital and reduced year. There are indications that the economy demand for regional export, combined with is turning around as core sectors, including loose monetary policies and trade protection manufacturing, show signs of recovery. We measures of some advanced economies, INDUSTRY expect it to expand by about 7.5 per cent in contributes to this slowing of Asia-Pacific 2012-13.” growth in 2012,” United Nations Under INDUSTRIAL OUTPUT SLUMPS Secretary-General Noeleen Heyzer said. 3.5% IN MARCH The launch of the report here — wherein Chief Economic Advisor Kaushik Basu was The Asia-Pacific economies, she said, On the back of a bundle of indicative the chief guest — was part of a series of should try to maintain a growth-inflation woes afflicting the economy such as high simultaneous events organised across the balance, cope with capital flows and inflation, widening current account deficit Asia-Pacific to mark the release of the survey. exchange rate volatility and create jobs to and a depreciating rupee that the Pointing out that the ESCAP survey, over achieve high growth. government is yet to effectively address, has the years, has been combining rigorous Meanwhile Deputy Governor of the come a dismal set of IIP (index of industrial economic analysis with an in-depth social Reserve Bank of India (RBI) has said that production) numbers depicting the sorry perspective in an integral fashion, Dr. Basu India’s economy was likely to witness a mild plight of the manufacturing sector at the end said: “In the current challenging global recovery during this financial year, despite of fiscal 2011-12. economic environment, the Asia-Pacific several financial and external pressures that The IIP data released by the Central region and India, in particular, have a special were strongly influencing the policy Statistics Office (CSO) on Friday last responsibility and a major role to play, as a environment. revealed that for the first time in five months, balancing force to offset risks of economic Speaking on "Monetary Policy industrial production contracted 3.5 per cent shocks from other regions, such as the Challenges in a turbulent world" organised in March, 2012, as compared to a robust Eurozone…” by the CII Southern Region last week, he growth of 9.4 per cent achieved during the

News behind 44 the News MAY 14, 2012 indianeconomicpanorama

0.6% in the final quarter. was just about half of what it was in 2010- In the event, the annual average 11 while in capital goods and intermediate growth in industrial production goods, there was a fall even in the absolute during 2011-12 worked out to a level of production. Only, in the case of basic dismal 2.8% — a far cry from the goods, the trend was gratifying even though, increase of 8.2% during the here too, the momentum had weakened to preceding year and only a shade 5.5% from 6%. better than what was recorded in A slowing economy has resulted in lower 2007-08 (2.5%). tax collections, limiting the government’s The slump in industrial output ability to spend more on welfare schemes, during March 2012 stemmed from upsetting fiscal plans. adverse tidings from mining and The latest data released on Friday jolted manufacturing sectors—which equity markets and the benchmark 30-scrip between them account for nearly sensitive index or Sensex of the Bombay 90% of the weight in the overall Stock Exchange (BSE) ended the day at index — and a let-up in power 16,292.98, down 0.77% or 127.07 points generation. In mining, the growth from its previous close at 16,420.05. rate was negative (-1.3%) unlike Rate cuts: The weaker than anticipated the year ago when it was industrial performance, coupled with stable fractionally better at 0.4%. In the core inflation, has raised the probability of case of manufacturing,the plunge further rate cuts by the Reserve Bank of India was steep, to (-)4.4% from 11%. (RBI), say economy watchers. In electricity, there was a noticeable slackening, to 2.7% from 7.2%. The RBI had sprung a surprise in March with a 50 basis point cut in the repo rate. The pervasive nature of the same month a year ago. Many economists see a gradual pick-up in industrial slowdown during March 2012 is industrial activity only in the second half of What came as a further surprise was the evident from the use-based classification of this year, once the repo rate cuts get fact that the IIP's foray into negative territory the IIP. In the pivotal capital goods segment, transmitted into the system. at the fag end of the fiscal year was preceded from a high of 14.5% a year ago, production by a positive growth of 4.1 per cent in had declined by a steep 21.3% now. The For the full 2011-12, the index of February, which is a clear reflection of a trend was broadly similar in intermediate industrial production (IIP) grew just 2.8 per drying up of the investment tap, ostensibly goods, dropping to (-) 2.1% from 3% a year cent, compared with 8.3 per cent last year. owing to India Inc.'s perception of interest ago.In basic goods, there was deceleration This weak performance prompted India Inc rates being still too high. to 1.1% from 6.4% and in consumer goods, to renew its demand for further rate cuts by the RBI. This is the second time the index has to 0.7% from 13.2%. nosedived in the last fiscal - earlier, there was Both the consumer durables and the FM disappointed: Reacting to the March a fall of 5% in October 2011 - and the non-durable segments of the consumer IIP numbers, the Finance Minister, Mr showing is in marked contrast to the goods sector had fared poorly in March, with Pranab Mukherjee, said the figures were performance a year ago when the growth rate the production of durables up by a measly disappointing. “The IIP figures are was an impressive 9.4%. 0.2% from the year ago level of 14.9% and disappointing... Continued weak global business sentiments are also adversely Shrinking demand has hit companies that of non-durableshigher by just 1% as impacting recovery in domestic private hard at a time when they are looking for against 11.9%. investment,” Mukherjee told reporters. options to keep revenues high, maintain With factory production in the reasonable profits with minimal employee doldrums for the most part of 2011-12, the He said the anticipated revival of layoffs — and since corporate profitability performance for the year as a whole too was manufacturing in the last quarter of 2011- gets hit, investors too shy away. none-too-impressive. Barring electricity, the 12 had not materialised. Industrial tempo was steadily losing rate of growth was well below the levels Both manufacturing and services are hit steam during 2011-12 and tell-tale signs of achieved in 2010-11 in both mining and by the moderation, due to slow growth in the imminent slowdown were not wanting; manufacturing. In respect of the heavyweight exports because of slowing European during the first quarter, the industrial index in the IIP, manufacturing, the average annual economies. The weakest links are the capital had expanded at an average rate of 7% and growth fell to a mere 2.9% in the last fiscal and intermediate goods segments. the pace had slackened to less than half of from almost 9% in the preceding year. Weak investment demand due to tight this in the second quarter (3.2%), which The use-based classification also reveals monetary conditions and slow policy reforms dropped even further to 1.2% in the third the extent of the setback during the last year. have led to a sharp decline in output growth quarter, climaxing in the minuscule rise of In consumer goods, the growth rate, at 4.4%, in these sectors.

News behind MAY 14, 2012 the News 45 indianeconomicpanorama

Output growth in basic goods, which help effect a turnaround. regard. comprise of infrastructure sectors such as Industry body ASSOCHAM made a "There is a lot of potential in India which cement, steel, coal and power, appear to be case for easing monetary policy despite is still untapped," said Maya Said, vice- slowing down considerably. inflation risks. president head of strategy external Mr Mukherjee said domestic innovation and science policy, global HIGH INTEREST RATES, RISING investments remained frail. Uncertainty in research and development of Sanofi, a French COST TWIN CONCERNS FOR THE the global economy coupled with monetary multinational pharmaceutical company. INDUSTRY: CII tightening over the last two years has According to Said there are areas where High interest rates and raw material cost impacted investment recovery, he told India needs to work out in order to realise have been two main concerns of the industry reporters. its full potential, including regulatory in northern region, says a CII survey. Although the RBI reversed its monetary reforms. In its latest business outlook survey, it stance in the last policy announcement, it Academicians and top executives of the was further revealed that stagnancy in will take some time for interest rates to come bio-pharma and healthcare sector argued that reforms is the third most important concern down, he added. it is important for the global community that along while currency risks and inadequate The Planning Commission Deputy India succeeds in its endeavour. skilled labour. Chairman, Mr Montek Singh Ahluwalia, "I think, India has incredible On the inflation front, expectations of said the solution lies in focusing on project responsibility for helping us understand easing down are low, with 34 per cent of the execution, not in providing a stimulus. about what causes diseases .. what I think respondents expecting inflation to surpass He said he did not think the Eurozone India has the need and responsibility to the 9 per cent mark this year, as against 29 problems could be linked to the negative IIP, create the new medicine for the future not per cent in 2011-12. Thus, expectations of adding, however, that: “It (Euro zone) is only for the Indian population, but also that high inflation continue to persist in the clearly an important factor which is of the world too... I think India has a role to economy which is a worrying trend, it said. depressing investment sentiment” help the world in getting drugs.'' The survey is based on responses from Reacting to the IIP data, Finance "If it does not, I think we all are going to 54 organisations across eight northern states minister Pranab Mukherjee said slowdown fail -- India has to be an important partner including Delhi, Haryana, Himachal in global demand and investment activity with all of us," said William W Chin, Pradesh, Jammu & Kashmir, Punjab, has impacted IIP. executive dean for research at the prestigious Rajasthan, Uttar Pradesh and Uttarakhand Harvard Medical School. Chambers call for fast-tracking reforms: and the Union Territory of Chandigarh. Apex industry associations have expressed Participating at a the day-long US-India However, the outlook on business disappointment over weak Index of BioPharma and Healthcare Summit - 2012 conditions for the current quarter (April- Industrial Production (IIP) performance for organised by the USA India Chamber of June) shows signs of moderate recovery. March and made a case for fast tracking Commerce, Chin said one of the key to the reforms to spur growth. "The expectation for the current quarter Indian success is going to be the ability to is much better for the Indian economy, “A coordinated action from the come out with policies that would encourage respective sectors and own companies, with Government and the RBI is called for at this academics to be more eager to commercialise a greater percentage of respondents rating juncture,” they said. their ideas/research. the quarter as 'better', as compared to the The Department of Pharmaceuticals FICCI President, Mr R V Kanoria said previous quarter (January-March)," it said. that the March IIP figures show high degree Joint Secretary Dr Raja Sekhar Vendru said of volatility in industrial performance. that the Government has commissioned a “Growth does not seem to have bottomed study to come out with recommendations out, and unless, the Government acts to make India a global hub of research and immediately, FICCI does not expect an PHARMA SECTOR development in the bio pharma sector. The report, being prepared by Earnest and Young, improvement in manufacturing until the 'INDIA'INDIA HAHAS POTENTIAL TO BE second half of this fiscal when the base effect is expected shortly. would be favourable and the Central Bank’s GLOBAL HUB OF BIO-PHARMA As part of its effort to make India a global rate cut will translate into a positive impact.” SECTOR' hub in R&D by 2020, the 12th Plan Mr. Chandrajit Banerjee, Director Noting that India has the ability to be a proposal of Department of Pharmaceuticals General, CII , said that while economy is 'global hub' in the bio-pharma and are focused on making the National Institute showing early signs of de-growth, on the healthcare sector, industry leaders here have of Pharmaceuticals Education and Research back of high cost and poor availability of said that New Delhi needs to take steps to (NIPERs) as focal institutes for such new capital, high input costs and poor realise huge untapped potential in this field. drug discovery and innovation. sentiments, which have not been helped by Indian government officials, attending a day- There are six NIPERs at present; the the recent change in outlook by S&P, India long brain-storming session in Boston, said proposal is to add 10 more such national is in a position, where domestic actions can that they are taking concrete steps in this institutes across the country, which would

News behind 46 the News MAY 14, 2012 indianeconomicpanorama give impetus to the government objectives Indian Supreme Court unambiguously ruled On Thursday it restricted exporters with in this regard. The 12th Plan also proposes that no tax was payable in India according Export Earners Foreign Currency accounts Department of Pharmaceuticals to Rs. to the laws of India in force in 2007,” In a decisive step to check sliding rupee, 12,000 crores. Vodafone said while adding: “Given this the Reserve Bank of India (RBI) has asked The day-long Summit focused on clarity, there was no legal basis for Vodafone exporters to hold only 50% of the balances overcoming the barriers to building to withhold tax”. in their accounts. The rest has to be collaborative partnerships between the The issue pertains to the amendment in converted into rupee balances and credited Indian and global companies. Income Tax Act with retrospective effect, to the rupee accounts. which would bring Vodafone-type deals It has given a fortnight's time for under the tax net. The amendments to the exporters to follow suit. Also in respect of I-T Act, which were approved by the Lok all future forex earnings, an exchange earner Sabha earlier in the week, would neutralise VODAPHONE DISAPPOINTED is eligible to retain only 50% (as against the the victory of Vodafone in the tax case and previous limit of 100%) in non-interest OVER NO CHANGE IN RETRO TAX the company, according to estimates, would bearing EEFC accounts. The balance 50% PLAN be liable to pay about Rs. 20,300 crore as shall be surrendered for conversion to rupee tax, penalty and interest. Having got a signal from Finance balances. Till now, exporters were allowed Minister Pranab Mukherjee that it there The UK-based telecom major had to keep their entire foreign exchange earnings would be no relief for it, UK-based telecom acquired Hutchison's stake in Hutchison in the EEFC account. giant Vodafone on Wednesday last expressed Essar Ltd for USD 11.2 billion in 2007. Last week’s move, which came after the its disappointment that the government has The tax dispute arose as the Vodafone rupee hit a record closing low of 53.82/83 chosen not address its concerns over the did not deduct tax (TDS) while making to dollar, led to a 94 paise rise in the value of payment of income tax due to it as a result payment to Hutchison. Vodafone had earlier domestic currency in the early trade. of capital gains made on Indian assets. won the tax case in Supreme Court which Reports said the measure would soon Reasserting he had said in his budget overturned the judgement of Bombay High allow India's foreign exchange reserves to speech, Mukherjee made it clear that India Court which was against the company. swell by $2.5 billion as the amount was no tax haven and there would be no Finance Ministry official had already outstanding in the EEFC account amounted rethink on the proposal to allow authorities questioned the decision of the British to $5 billion. The central bank has also to tax older corporate deals. telecom major to invoke India- Netherlands brought in diamond merchants and dealers “There cannot be a situation where investment protection treaty, saying the in precious stones who have another $2 somebody will make money on an asset multi billion dollar deal was signed in billion in the EEFC account thus adding located in India and won’t pay tax either in Cayman Islands. The government expects to another billion dollars into its kitty. India or in the country of its origin,” he said collect an estimated Rs 35,000-40,000 crore The apex bank also directed EEFC in his reply during the Finance Bill debate by taxing older corporate deals. account holders not to purchase foreign in the Lok Sabha today. exchange until they have used up all the The government is looking to get a tax funds available in their accounts. Exporters of over Rs.11,000 crore (US $2.2 billion) with significant forex holdings are known from Vodafone on acquiring the stake of RUPEE DEPRECIATION to speculate in the currency markets and the Hong Kong-based Hutchison held in an central bank is cracking down on this. Indian telecom firm, then called Hutchison- RBI STEPS IN TO SHORE UP RUPEE: Besides, the central bank has also fixed Essar. EXPORTERS ASKED TO CUT FOREX limit for intra-day trading of foreign currency In a statement issued by the company, KITTY BY 50% by banks. However, exporters criticised RBI's move stating that this will impact the fast Vodafone said: “We are naturally Rupee has lost about 8 per cent since dwindling of export margins. Conversions disappointed that, despite very widespread the beginning of March mainly on account charges for foreign exchange will also be on concern in India and internationally, the of withdrawal of investments by foreign the increase impacting fast dwindling of government has not seen fit to propose institutional investors (FIIs), which are facing export margins. amendments to address the uncertainty problems in their own countries. caused by retrospective tax legislation”. Experts say that issues like high Current The Reserve Bank of India has decided Account Deficit (CAD) and outflow of funds “We are studying the legislation as to go in for stronger measures to shore up by Foreign Institutional Investors (FIIs) amended, and will take all possible steps to the rupee. safeguard our shareholders' interests. It because of uncertainty surrounding Rupee has lost about 8 per cent since Eurozone crisis will continue to bear down would be grossly unjust if, on the basis of the beginning of March mainly on legislation passed five years after the event, account of withdrawal of investments by on the rupee's value vis-à-vis the foreign Vodafone were to be charged tax on a gain foreign institutional investors (FIIs), currencies. which are facing problems in their own made by someone else, especially where the countries. This is however likely to be a temporary

News behind MAY 14, 2012 the News 47 indianeconomicpanorama measure since the rupee’s value is driven by POLICY INITIATIVES session of the Parliament. The Bill proposes more fundamental factors including India’s CABINET POSTPONES INSURANCE the Reserve Bank of India as regulator for rising twin deficits. According to RBI deputy CABINET POSTPONES INSURANCE the micro financial institutions (MFIs). BILL governor Subir Gokarn, a widening current This Bill has become important keeping account deficit and negative balance of Putting all the hopes for major financial the current situation of MFIs. These payments are worries for the central bank. reforms aside, the Cabinet has deferred institutions were accused of aggressive These could limit its ability to defend the Insurance Bill. lending and recovery practices and high local currency. “The ultimate determinant However, it has cleared the Micro- interest rates, which attracted calls for of what the exchange rate is going to be is Finance Regulation Bill. regulation. going to be how much capital comes in, in a way that finances the current account deficit The draft Bill, which was circulated for Once-thriving microfinance sector was and also the extent to which we reduce the public comments in July last year, had devastated by a crackdown more than a year current account deficit because that’s really proposed making RBI the regulator for the ago by the Andhra Pradesh, which was the the fundamental driver of the currency,” sector. industry hub and largest market. The State rules resulted in a drop off in loan collections Gokarn said while addressing industry As per the draft, it would be mandatory and a drying up of funding for micro lenders. members in Hyderabad on Tuesday last. for micro finance institutions (MFI) to be CABINET CLEARS MICRO FINANCE After a hands-off approach for nine registered with the Reserve Bank and have a BILL months, RBI sold $20 billion between minimum net-owned funds of Rs 5 lakh. September and February in the spot market, In addition, a Micro-Finance The Union Cabinet today approved a bill the latest data showed. A depreciating rupee Development Council will be set up to advise to regulate the micro finance industry and will also put pressure on inflation, as the the government on formulation of policies, bring the micro lenders under the purview country imports 80 per cent of its crude oil schemes and other measures required in the of the Reserve Bank. requirement. interest. of orderly growth and development "It (Micro Financial Sector Development RBI’s capacity to intervene was also of the sector with a view to promote financial and Regulation Bill, 2011,) has also been limited in view of the country’s depleting inclusion. The council will comprise cleared," Finance Minister Pranab foreign exchange reserves. Since January 1, members not below the rank of Executive Mukherjee told reporters after the Cabinet these have depleted by $1.4 bn, the latest Director of NABARD, National Housing meeting. data released by RBI show. Bank, the RBI and SIDBI. The Bill, which was drafted in the Joint secretaries from the Ministry of backdrop of problems faced by borrowers Finance and the Ministry of Rural of MFIs in Andhra Pradesh and other states, Development will also be its members. would now be introduced in Parliament for Mr.Mukherjee, said that consideration. Insurance Bill has been postponed as he needed more time to study the Standing Committee Recommendations. He also indicated that there is need to raise MARKETS the Foreign Direct Investment SENSEX ON LOSING STREAK, limit. CLOSES 127 POINTS DOWN The Bill introduced in 2008, The BSE benchmark Sensex fell for the proposes hiking FDI limit from 26 fourth straight day on Friday last losing 127 per cent to 49 per cent. But the points after factory output for March Standing Committee on Finance contracted to a five-month low of 3.5 per recommended retaining the 26 per cent, renewing concerns of slowing cent FDI limit. Though the economic growth. Government is not bound to accept any recommendation, but The 30-share Sensex, which had lost 493 with less than required number of points in the previous three-days, fell further members to get the Bill passed, it by 127.07 points, or 0.77 per cent to close will have to take a political call. at 16,292.98, after touching the day's low of 16,233.76. MICRO-FINANCE BILL Brokers said the market had its biggest Meanwhile, the Cabinet weekly loss this year as Index of Industrial approved the Micro Finance Bill Production (IIP) falling in March dampened to be taken up during ongoing investor sentiment amid worries over

News behind 48 the News MAY 14, 2012 indianeconomicpanorama

Among the Sensex pack, 21 stocks closed Indeed, even the recent lowering of India's lower and eight fell, while Sterlite Industries long-term rating outlook by Standard & remained unchanged. Poor's, or the imbroglio over taxing equity On similar lines, the broad-based flows from tax havens, has not really caused National Stock Exchange index Nifty fell by any exodus of these funds. The impression 36.80 points, or 0.74 per cent to 4,928.90 of large outflows appears to have gained led by stocks of Healthcare, Power and ground mainly from the rupee's weakening, FMCG. which is, in turn, attributed to FIIs. The reality is that foreign portfolio — even direct Bucking the general weak trend, a rise investment, for that matter — inflows have in Reliance Industries and Tata Motors been fairly robust. The rupee's significant cushioned the fall today. depreciation in the recent period has less to The BSE-Healthcare sector index do with them as much the current account suffered the most by losing 1.97 per cent to deficit, which has widened beyond levels that 6,574.07 followed by BSE-Power index by even normal capital flows can finance. 1.40 per cent to 1,822.92. BSE-FMCG sector index fell by 1.27 per cent to 4,617.93 while the BSE-Metal index dropped by 1.17 per cent to 10,106.70. FII INVESTMENTS UPBEAT TRADE EXPORTS TO GROW SLOWER AT The general impression about foreign investors losing interest in India is not exactly 10-15% IN 2012-13: GOVT borne out by facts. The current year so far In an indication of tough times ahead, has seen foreign institutional investors (FII) the Indian exports have been hit by the poor pour in almost $9 billion into the country's global economic conditions registering a stock markets. This is not small even when growth of 3.2 per cent in April at $24.5 one compares it to the record $29 billion of billion. Significantly, imports also witnessed inflows in 2010. The latter figure is also for sharp deceleration resulting in trade deficit the entire calendar year, as against just narrowing to $13.2 billion. The drop in the slightly over four months that have gone by balance of trade (BoT) is expected to reduce in 2012. The latest number thus stacks up quite favourably on a pro-rata basis with that of the year 2010. The 2010 numbers were also inflated by the large inflows received on account of Coal India's mega IPO. The available evidence thus suggests that there is a certain momentum in the flow. Of course, one can also attribute the robust FII inflows this year to the sharp decline in stock prices that sent the Sensex crashing by almost a quarter in 2011. That itself may have made valuations more attractive for FIIs to eye buying opportunities and pour in fresh money into India. But again, it is to be noted that the FIIs were not really the ones to have brought down the Indian markets last year: Net withdrawals by them amounted to a mere weakness in the economy. $357 million, which is way below the $12 They also said the falling trend in Asia billion or so that they pulled out during the as well as in European stock markets on global crisis year of 2008. eurozone concerns re-emerged over Greece The upshot of all this is that FIIs are not and Spain and disappointing Chinese as bearish about India as is generally made industrial production data, raising fears that out to be. On the contrary, they appear quite global growth will falter. willing to wait till it is time to buy again.

News behind MAY 14, 2012 the News 49 indianeconomicpanorama pressure on the rupee which has lost value because of lower demand for garment, but in Latin America and Africa has gone down by about 15 per cent against the US dollar same cannot be said about cotton yarn. As to 12% recently owing to difficulty in since September, 2011. there was a ban on cotton yarn till March logistics, including shipping of commodities According to provisional figures released 2011, there was sudden surge in cotton yarn to these regions. on Thursday by the Commerce Secretary, exports in April last year. He admitted that “The exports growth will not be more Rahul Khullar, exports in April, the first the situation in textile sector is not good. than five-six% in the first six month of the month of the fiscal 2012-13 amounted to There is an issue of financial viability and current fiscal,” Ahmed said, adding that $24.5 billion. Imports for the month grew capital stress. This sector has two ASEAN and Asian markets remain the only by 3.8 per cent to $37.9 billion. components and both have their own issues. hope for India which continue to be a major Spinning industry is a capital intensive one Dr Rahul Khullar, said, "April growth destination of the country’s exports. He while garment industry is labour intensive. added that during such difficult times, there rate of 3.2 per cent shows that there is So change in demand affects the garment demand concern. Though India is getting is an urgent need for an affordable export sector while any capital issue hurts the credit at internationally comparable interest an edge in engineering and chemical exports, spinning one, the secretary said. bad news is about export of readymade rates to the exporters. garment, made-ups and cotton yarn." Export IMPACT OF RUPEE DEPRECIATION The cost of credit now exceeds 12% was down by over 5 per cent in March. Dr Khullar said that with the weakening whereas benchmark rates in most countries Interestingly, import in April was lowest rupee, demand for import will be affected. are in the range of 2-6%, Ahmed said, adding during last 12 months (May, 2011-April However, we will have to wait for the number that there is also a need to focus on MSME 2012). Import grew over 3 per cent in for first quarter (April-June) to reach a exporters which are facing problems due to comparison to nearly 25 per cent in March conclusion. In fact, June number will be fluctuation in the rupee value. The MSME 2012. Speaking about the entire fiscal as a more important, he added. sector contributes about 40% to the country’s exports. Ahmed has asked the whole, Mr. Khullar said: "we should be lucky Given the current global economic exporters to explore the Chinese market to to get a growth rate of 10-15 per cent. The scenario and overwhelming protectionist help bridge the widening trade deficit. situation in Europe is disheartening. Export sentiments in India's traditional export data shows there are serious demand markets, the high levels of trade deficit are INDIA'S OIL IMPORTS FROM IRAN problems and constraints in the Western going to create further pressure on rupee and PLUNGE 34% IN APRIL markets.’’ will adversely affect the cost competitiveness India's crude oil imports from Iran Mr. Khullar said if deceleration in of import-dependent exports. declined by about 34 percent in April imports continues, the BoT pressure will be EXPORTS UNLIKELY TO TOUCH compared with March, deeper than expected lower than last year and if it will stay at $13 $350 B THIS YEAR and the first evidence of New Delhi billion for the remainder period of the year, implementing cuts in supplies from the then we will end the year with $156-160 India is unlikely to maintain export sanctions-hit nation under annual deals that billion. In 2011-12, the country's trade growth of 21% this fiscal and may find it began last month. difficult to meet overseas shipment targets deficit jumped to $185 billion, highest ever State-run buyers are at the forefront of in the history. against the backdrop of continuing euro- zone debt crisis, exporters industry body Fieo reductions, leaving privately-owned Essar the Reacting to the foreign trade data, said on Tuesday. biggest Indian client of Iran, tanker discharge Federation of Indian Exporters Organisation data showed, just as the US praised steps (FIEO) president, Rafeeque Ahmed said the The country’s shipments this year may taken by India's refiners to back impact of global contraction in trade is now not even touch $350 billion and the Washington's pressure on Tehran. being felt by India as well. The slowdown in government’s target for $500 billion by 2014-15 too looks impossible because of the The US has already granted waivers to new markets will be more obvious in next the sanctions for Japan and 10 European few months, he added. present global challenges, Federation of Indian Export Organisations (Fieo) countries but has left out China and India, He said the most disturbing news is the president Rafeeq Ahmed said. Iran's biggest clients. sharp decline in exports of labour intensive He said India’s exports to Latin America US secretary of state Hillary Clinton said sectors like gems and jewellery (-25.7 per on Monday India needed to do more and cent), readymade garments (-9 per cent), and Africa are also facing difficulty due to logistics problem. “The outlook for the said a decision on granting a waiver was leather (3.2 per cent), electronics (5.4 per around two months away. cent), plastics (2.7 per cent). "This will have current fiscal looks bleak, a growth of even India's total oil imports from Iran in serious implications on employment and 15-16% would be very difficult to achieve April fell to about 269,000 barrels per day may lead to sharp reduction in additional with slowdown in world demand owing to (bpd) from 409,000 bpd in March and from job creation and even lay offs,’’ he warned. euro crisis and decrease in trade exports to Latin America and Africa,” Ahmed told PTI. about 449,000 bpd in April 2011, the data TEXTILE EXPORT The country’s merchandise exports grew made available to Reuters showed on Explaining about the textile sector, Mr. by 21% year-on-year in 2011-12, to $303.7 Tuesday. Khullar mentioned that export is in negative billion. Ahmed said India’s share of exports Overall in the last contract year to March

News behind 50 the News MAY 14, 2012 indianeconomicpanorama

31, 2012, India's purchases of crude from INDIA, SINGAPORE TO REVIEW 2011-12 amounted to $ 36.50 billion, Iran were expected to be under 340,000 bpd, CECA authoritative sources told. India's foreign secretary Ranjan Mathai said Singapore, the country's largest trading In March 2011, the country received in March. Indian refiners are expected to partner among ASEAN nations, said it will FDI worth $ 1.07 billion. cut volumes from Iran by over 20 percent in review its comprehensive free trade The $ 7.2 billion Reliance Industries- this contract year on average. agreement with India to promote further British Petroleum (BP) deal, announced in trade and investments. The shortfall is being made up with extra February 2011 contributed significantly to barrels from the world's biggest exporter, "We are now in discussion to renew or the inflows, even though funds from the UK Saudi Arabia, as well as Iraq, which has rather have a review of that agreement ( oil major would have come in phases, they leapfrogged Iran to be India's No. 2 supplier, CECA) to strengthen it and make it work said. The BP had picked up a 30 per cent among others. even better," Singapore Minister for Foreign stake in Reliance Industries' 21 oil-fields. Affairs Kasivishwanathan Shanmugam told GILANI FOR 'NEW ERA' IN Earlier, highest FDI of $ 5.65 billion was reporters last week. ECONOMIC TIES WITH INDIA received in June last year. Though the March Pakistan on Monday last called for a Shanmugam was on an four-day official data has been compiled by the Department "new era" in economic collaboration with visit to India. He is here to assess the business of Industrial Policy and Promotion (DIPP), India, as business leaders from the two opportunities in the North Eastern states. it is yet to be released officially. countries met for a trade conference. In 2005, India and Singapore signed the The sectors which received large foreign Pakistan Prime Minister Yousuf Raza Comprehensive Economic Cooperation FDI inflows during 2011-12 include Gilani said the population of Pakistan's giant Agreement (CECA) to enhance trade in services, pharmaceuticals, telecom, neighbour offered his country's exporters a goods, services and investments.The bilateral construction, power and metallurgical "billion-plus market", adding normal trade trade has been growing in double digits since industries, a DIPP official said, adding relations were vital to Pakistan achieving its FTA came into effect, he said, adding there Mauritius remained the top FDI source. is room for further advancement. economic potential. The inflows had aggregated to $ 19.42 He told delegates there were many areas "The bilateral trade during last year was billion in 2010-11, down from $ 25.83 and sectors with huge trade potential, from 35 billion Singapore dollars. From our billion in 2009-10. perspective that is substantive. Given the information technology to engineering, The government move in the Budget for education and health. nature of our economies and growth in Indian economy, there is room for more enabling it to tax Vodafone type multi- "Our textiles, I am told, have a huge growth," the foreign minister said. billion dollar deals had come in for criticism market across the border," he said, adding among some industry associations and that India could find a market in Pakistan The Minister lauded India for being an multi-national companies. They criticised for goods including chemicals, investor-friendly destination and stating it would affect FDI. pharmaceuticals and engineering products. maintaining its growth rate despite global economic slowdown. Singapore is the In terms of sectors, services attracted the Pakistan has decided to grant India "most second-largest investor in India. maximum investment this fiscal as per favoured nation" trading status by the end Department of Industrial Policy and Asked about the impact of the of the year, ending strict curbs on what New Promotion (DIPP) data (April-February). retrospective amendment provision in the Delhi can export across their border. However, in terms of growth, it was drugs Finance Bill, he said: "India is an attractive and pharmaceuticals that saw the maximum At present, Pakistan maintains a list of destination. It is a very large economy that jump, with an over 15-fold increase. In 1,945 items allowed to run from India to is growing strongly and investors will look contrast, the automobile and housing and Pakistan -- but only 108 can be transported at it and will see opportunities. directly by road through the Wagah crossing real estate sectors saw FDI decline. in Punjab. India now also says it is ready to Investment in the petroleum sector jumped end a ban on investment from Pakistan and significantly too. the countries are planning to allow multiple- In contrast to the upbeat FDI sentiment, entry business visas to spur exchanges -- a INVESTMENT foreign institutional investor (FII) flows fell key demand by company executives. INDIA ATTRACTS HIGHEST EVER by around 43 per cent to $16.8 billion vis- à-vis the year-ago period. Investment in Last year India exported goods worth FDI OF $ 8.1 BN IN MARCH $2.33 billion to Pakistan, while its imports Indian Global Depository Receipts (GDRs) from its neighbour were worth $330 million. With an eight-fold increase, India and American Depository Receipts (ADRs) But Adi Godrej, the Confederation of attracted foreign direct investment (FDI) of also fell sharply to $597 million. Indian Industry president who is leading the $ 8.1 billion in March, the highest ever However, the government has stood its Indian delegation, said: "By 2015, we should monthly inflows, despite a brouhaha over Rs ground retaining the provision in the be able to achieve the target of $10 billion 11,000 crore Vodafone tax dispute. Finance Bill approved by the Lok Sabha last mutual trade between India and Pakistan. Cumulative FDI inflows for the fiscal week.

News behind MAY 14, 2012 the News 51 LIST OF SPECIAL STUDIES AND SUPPLEMENTS ASIA NEWS AGENCY PVT. LTD.

May, 2011 Indian Political Scenario present and future - 2011 to 2014 Price: `2000/- Almost two years into the second stint in power of the Congress led United Progressive Alliance, UPA, jockeying for power between the ruling coalition and the opposition parties has already begun. Generally, a party or combine, when it comes to power, enjoys a honeymoon period with the general public for sometime, during which it's wheeling and dealings are not closely questioned by either the opposition or the media. But perhaps because UPA-II is a continuation of UPA-I, the honeymoon period appears to have worn off quite fast. The results of the Assembly elections that took place in the 5 states in 2011 present the latest thinking of the public mind and puts in to focus what analysts have been saying. The Special Study on Indian political scenario, present and future-2011 to 2014 is a 24,000 word research paper that analyses the current political scenario. It assesses the present status, ideology, agenda and strategies of various political parties. The study identifies the critical issues that dominate the current political environment, the current scenario in politically dominant states and assesses the cohesiveness of the main political alliances. Finally, the research paper presents probable scenarios for the 2014 general elections.

May, 2011 Osama's Death: Its fallout on India and India-Pakistan ties Price: `1000/- The pre-emptive midnight raid on the den of Osama bin Laden in Pakistan and his death at the hands of US Special Forces - all without the knowledge of his host country - has sparked blasts of condemnation, justification, approbation and calls for emulation in different world capitals. The action has been widely debated and dissected in Indian government and security circles and its implications analyed. It has led to public reaction from different sections - from political parties to strategic analysts to military circles.

Asia News Agency in their latest Special Study on Osama's death: its fallout on India and India-Pakistan ties, examines the issue from various angles, puts the different factors in perspective and gives an insight into the thinking of India's influential strategic community that plays a critical role in decision making on important issues. Also examined are the Muslim factor, the likely scenario that could emerge in the coming weeks and months and the interplay of different voices that make up the dialectics of India's clamorous democracy. The study is approximately 6,500 words. July, 2010 Sangh Parivar (RSS family)The saffron brigade and the reinvention of Hinduism Price: `2000/- “Sangh” in Hindi stands for the Rashtriya Swayamsevak Sangh, better known as the RSS. “Parivar” means family. Organizations which are inspired by the Rashtriya Swayamsevak Sangh's ideology refer themselves as the members of the Sangh Parivar. The Sangh Parivar has been described in a number of phrases, including an organisation which consisted of “Hindu Nationalists” to "patriotic Hindus". The Special Study takes an in-depth look at the philosophy of the Sangh Parivar including its concept of Hindutva (Hindu chauvinism) and Hindu Rashtra (Hindu nation), its contribution to modern Hindu nationalism; the basic characteristics of the Parivar including their social, cultural, economic and political agenda and whether it has a fascist philosophy. The study traces the origins, growth, agenda and record of the various constituents of the Sangh Parivar including the umbrella organisation RSS, the political arm BJP, the rabidly Hindu VHP (Vishwa Hindu Parishad), the militant Bajrang Dal, the student wing ABVP (Akhil Bhartiya Vidyarthi Parishad), the communal Hindu Munani, the peasant wing BKS (Bhartiya Kisan Sangh) and many more. Importantly, the study analyses the role of the Sangh Parivar in communal confrontations against Muslims and Christians particularly the demolition of the Babri Masjid and its dangerous consequences. June, 2010 Naxalites: the biggest threat to India's internal security Price: ` 1200/-

The Study examines the following important aspects; the history, nature and extent of the Movement-the evolution of the extremist left Wing Movements in the pre-independence and post-independence India; the exergence of different factions within the Communists resulting in the extremist Maoist Naxlite Movement; the rise and fall of Naxalism and its re emergence in its present form; the nature of the present Movement its tactics and modus operandi; thefactors that sustain it; the evolution and ideologies of the various naxalite groups like the Communist Party of India (Marxist-Leninist) Liberation and the People’s War Group (PWG); emergence of the movement and latest developments in states of Andhra Pradesh, Bihar Chhattisgarh, West Bengal, Jharkhand, Maharashtra, Orissa and its increasing influence in new areas of Delhi, Haryana, Uttar Pradesh, Madhya Pradesh and Tamil Nadu; the growing criminalisation of Naxal Movement-extortion, drug trafficking; its linkages with other extremist groups like the Maoists of Nepal, Islamic fundamentalists, insurgent groups in the north-east and with the LTTE; the recent government initiatives-two-pronged focus on the development and law enforcement of the centre and the states to deal with the problem; the road ahead-eradicating the root cause on which Naxalism thrives. Dec, 2009 China's interference in India's internal affairs Price: `2000/- Prime Minister Manmohan Singh acknowledged China's growing assertiveness towards India during his visit to the US in November, 2009. This aggressive attitude is not just confined to China's claim over the entire state of Arunachal Pradesh and also to the visits by the Indian President, the Prime Minister and the Tibetau spiritual leader the Dalai Lama to the State. There has been growing evidence of Beijing's support to insurgent groups in the North East, its plans to restrict the flows of the river Brahmaputra, its aggressive anti India partnership with Pakistan and its changing stand on Kashmir considering it a disputed territory. The special study assesses China's perceptions of India's relations with the US. The 24, 000 word Study also identifies the traditional and new areas of conflict/rivalry between the two Asian giants in an increasingly interdependent world.

Nov, 2009 Emerging political scenario post-Assembly & byelections Challenges faced by major national and regional parties Price: `1200/- The study examines the challenges in the Indian polity and focuses on following issues: Emerging national trends: The Congress and its allies in the UPA demonstrate capability of providing national leadership. The decimation of the BJP and the Third Front. How the wind is blowing: All may not be smooth in future for the Congress. The allies are more assertive; developments have increased the distance between the Congress and UPA allies that include Lalu Prasad Yadav's Rashtriya Janata Dal, Mulayam Singh Yadav's Samajwadi Party and Ramvilas Paswan's Lok Janshakti Party. BJP travails continue particularly its leadership crisis and its equation with the RSS. A weakened BJP is affecting its relations with other constituents of the National Democratic Alliance (NDA) - the Janata Dal United, the Shiromani Akali Dal and the Shiv Sena. Disintegration of Third Front formed by the Left parties with a group of regional parties. The Left parties are on the defensive in their own bastions. The emergence of regional parties like Raj Thackeray's Maharashtra Navnirman Sena (MNS), the Trinamul Congress and Mayawati's Bahujan Samaj Party. Finally the study identifies key forthcoming developments to examine if the resurgence of the Congress will continue unabated.

To place order please contact Ms. Neetu Singh Mobile: +91 9810622100 email id: [email protected]

EDITORIALEDITORIAL SERVICESSERVICES bbyy tthehe ppublishersublishers ooff NNewsews bbehindehind tthehe NNewsews

Custom/contractCustom/contract ppublishingublishing Our editorial and art team conducts research, editing and designing. We also publish newsletters, documents, etc.

OutsourcedOutsourced expertexpert EditorialEditorial servicesservices We extend our 37 year’ of editorial experience for the following services: proof-reading, editing/rewriting, drafting, research, analysis, product specific editorial service, website content, correspondence, etc.

ClippingClipping serviceservice Daily news clippings relevant to your Embassy can be provided after a thorough scan of print, TV and online media.

OnOn demanddemand articles/reportsarticles/reports We prepare “CUSTOMIZED” reports and articles on India related events/issues.

ContentContent syndicationsyndication We provide specialized content for foreign newspapers, websites, magazines, education institutions...

FOR QUERIES PLEASE CONTACT: Ms. Neetu Singh or Mr. Kunal Walia ASIA NEWS AGENCY PVT. LTD. [email protected]; [email protected] AsiaAsia NNewsews AAgencygency ((P)P) LLtdtd 1818 - AmaltasAmaltas MargMarg +91 9810622100, +91 9999318567 DDLFLF 11,, GGurgaonurgaon HHaryanaaryana - 0022