Updated 18 February, 2014
- The application of the influence of political and economic geography on the politics, national power, foreign policy, etc, of a state.
- Politics as they affect the whole world.
China appears to be adept at playing geopolitics. India, as in most things, is playing catch-up. Indian geopolitics, unlike China’s, seems to be ‘organic’ rather than planned and deliberate; as is the case when comparing the two countries in other areas.
Significant differences in approach and positioning
Whereas China seems to have deliberately gone to woo Africa and Latin America, partly because of the need for natural resources and partly for covert political reasons, India has not done so. Rather, Indian private sector firms have been actively seeking wider markets. Many of India’s larger firms are well known outside of India. Some, like Tata and Mittal have taken over ailing Western firms and made great successes of them.
Over 25% of Fortune 500 firms have R&D facilities in India and over 75% have outsourced either technology or business operations to India. The world-renowned Indian Institutes of Technology (IIT) produce engineering graduates practically on a par with MIT, Stanford and Imperial College in the Anglo-American sphere. The IITs are complemented by the Indian Institutes of Management (IIM). Some would regard the IIMs on a par with Harvard and London Business School or London School of Economics.
Many IIT’s alumni have become entrepreneurs, including N.R. Narayana Murthy (co-founder and chairman of Infosys), Rajendra S. Pawar (Co-founder and Chairman of NIIT), Vinod Khosla (co-founder, Sun Microsystems), Anurag Dikshit (co-founder of PartyGaming) and Suhas S. Patil (founder and Chairman Emeritus Cirrus Logic Inc.). Other alumni have achieved leading positions in corporations, such as Rajat Gupta (former Managing Director, McKinsey), Arun Sarin (former CEO, Vodafone), Vijay K. Thadani (Co-founder and CEO of NIIT), Victor Menezes (Senior Vice Chairman, Citigroup), and Kanwal Rekhi (CTO, Novell).
Whereas China’s cultural influence is spearheaded by the Confucius Institutes, India’s is led by Bollywood, a more ‘user-friendly’ medium. And, of course, trading with, or living in, India does not mean needing to learn Hindi. English will do nicely, even if one has to get used to ‘Hinglish’!
India’s global reach
Everyone has heard of Tata and Mittal and Ranbaxy Pharmaceuticals; and the technology firms Infosys, Wipro and TCS. But not everyone has heard of the other Indian companies making waves abroad. Amongst these are:
Reliance Industries Limited, is second to Tata in global brand recognition. It the largest private sector company in India and is a Fortune Global 500 company, with businesses in the energy and materials value chain. Group’s annual revenues are in excess of US$ 44 billion. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration – in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production – to be fully integrated along the materials and energy value chain. Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products.
State Bank of India is the largest commercial bank in India with over 11,500 branches and offices in 32 countries with a network of 93 branches/offices spanning all the time zones. State Bank of India is the 50th largest bank in the world and the only Indian Bank to feature in Fortune 500.
ICICI Bank is India’s second-largest bank, with a network of 2,044 branches and about 5,546 ATMs in India and presence in 18 countries, including the United Kingdom, Russia, Canada, the United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia.
Bharat Petroleum: In 1976, the Burmah Shell Group of Companies was taken over by the Government of India to form Bharat Refineries Limited. On 1st August 1977, it was renamed Bharat Petroleum Corporation Limited. It was also the first refinery to process newly found indigenous crude (Bombay High), in the country. It is one of the Fortune 500 companies.
Kingfisher Beer is an Indian beer brewed by United Breweries Group. With a market share of over 36%, it is India’s largest selling beer, with 1 out of every 3 bottles of beer sold in India being a Kingfisher brand. It is currently available in 52 countries outside India.
Indian investments abroad
Indian companies are increasingly buying up companies abroad as strategic acquisitions. India retained its position as the second highest foreign employer in the UK, after the US, according to the 2009 UK inward foreign direct investments (FDI) official data released in June 2009. In 2008-09, Indian investors created 4,149 new jobs, with 108 new projects, up 44 per cent from 2007-08. The outward FDI in joint ventures and wholly-owned subsidiaries stood at US$ 8.4bn during the period April-December 2009. Large as this is, it is fairly small compared to Chinese FDI for 2009 of $246bn.
Courtesy: India Brand Equity Foundation
Increasingly, Indian firms are acquiring assets abroad. Early in 2011, Essar Energy acquired a major British oil refinery from Royal Dutch Shell for £800.
India and Africa
Like China, India is interested in Africa’s resources. At the first India-Africa Forum Summit in 2008, it abolished duties to cover 94% of inbound goods from 34 African countries and credit lines of $5.4bn over five years and $500m state aid was announced. Although India has increased its bi-lateral trade more than 30-fold, it is still only half of that achieved by China. The summit produced The Framework for Co-operation covering agreements in education, technology, food security and health. Another summit was held in March 2010 in New Delhi and the next one scheduled for 2011 in Africa.
And one mustn’t forget that despite anti-Indian campaigns in Uganda and to a degree in Kenya, there are still large Indian communities in Africa, often in important commercial positions and sometimes in politics. The largest contingent being in South Africa with over 1m, and around 90-100k in Kenya, Tanzania and Uganda. Most of these Indians are descendants of Indian workers imported by the British c200 years ago.
According to an Economist article, October 2013: Elephants and Tigers - http://www.economist.com/news/middle-east-and-africa/21588378-chinese-businessmen-africa-get-attention-indians-are-not-far although Chinese merchants are well-spread across Africa, Indians are not far behind.
Although, once again behind China, Indian auto parts, drugs, textiles and machinery are making their mark on Latin America, which has ascended to the top of India’s radar. Thousands of Indian companies seeking to expand their global footprint, while obtaining needed commodities to sustain India’s 1 billion-plus population, now recognize the strong potential for growth in Latin America.
India is amking concerted efforts to engage with South America – see http://www.erewise.com/current-affairs/india-and-south-america-relations_art525988856b42b.html#.UwMudpL0GSo
India’s total investment into Latin America and the Caribbean reached upwards of $12 billion, while trade with the region is around $30 billion in 2013.
Although this figure is minimal compared to Sino-Latin American trade, it illustrates that a bridge has begun between these two emerging regions.
The Indian government is encouraging movement into Latin America through the signing of multiple regional Free Trade Agreements. India is currently a member of Mercosur, a trading block including Argentina, Brazil, Paraguay and Uruguay. The Indian Government, with a continuing view to promote economic cooperation between the regions, has also set up Joint Commissions with other important trading partners in Latin America.
Indian companies continue to develop operations in Latin America in everything from technology, pharmaceutical manufacturing, energy and mining. India’s top software service exporter, Tata Consultancy Services, which currently employs over 7,500 Indian professionals in Uruguay, Argentina, Chile, Ecuador and Mexico, expects its Latin American sales to double to upwards of $1 billion within the next three years.
Jindal Steel & Power has already spent more than $3 billion to develop more iron-ore mining in South America, with strong interest
stemming toward the agricultural front. Technology firm Mahindra-Satyam’s Chief Executive has repeatedly stated his firm’s strong interest in merging or acquiring Latin American companies.
Courtesy: Miami Herald.
Education and health
Two surprises in education:
- British parents are starting to use Indian ‘cram schools’ electronically to improve their child’s chances of moving to the top. This is a clear role reversal from the old British Raj days.
- Japanese send their kids to Indian international schools for young children in Tokyo. These use Indian texts and methods. A first for Japan where self-pride permeates all activities (until now, it seems).
Distinctly different approach to the Confucius Institutes of China! But it should be noted these are localised incidents that may (or may not) signal a new trend!
On the other hand, ‘Health tourism’ is definitely on the increase. Western patients go to India to have hip joint operations, laser eye treatments, heart valve replacement and all manner of other treatments (not counting Ayurvedic care). The long waiting lists in places like Britain means for a cost of less than half that paid for private care, a patient can be operated on and stay in the equivalent of a first-class hotel and be back within days or weeks rather than wait months to get on top of the list in the home country. The activity is so big, it has developed its own congress: Health Tourism India Congress 2010!
Finally, India is stretching beyond its borders in non-economic terms. Although India has been a steadfast supporter of UN peace keeping, it is only recently (October 2011) that it has decided to share its expertise by agreeing to train and equip Afghanistan’s security forces. This is in addition to over £1bn spent on economic projects so far. Such action takes India into territory previously ‘managed by Pakistan and increasingly, at least on the economics and infrastructure side, by China.