FYBAF / BBI / BMS

SEM – 1

Indian Economic Policy- II

As Per NEP 2020 W.E.F. – A.Y. 2024-25

 MODULE II – EXTERNAL ECONOMIC POLICY

FOREIGN POLICY OF INDIA

• India's foreign policy is a complex and
dynamic framework that guides the country's
interactions with the world.
• India's foreign policy has evolved significantly
since its independence in 1947, influenced by
its colonial past, non-aligned movement, and
growing economic and strategic stature.
 OBJECTIVES OF INDIA’S FOREIGN POLICY
1. National Security: Protecting India's sovereignty, territorial
integrity, and citizens.
2. Economic Development: Promoting trade, investment, and
economic cooperation to fuel growth.
3. Regional Cooperation: Strengthening ties with neighboring
countries and regions.
4. Global Governance: Active participation in international
organizations and forums.
5. Diaspora Engagement: Connecting with the Indian diaspora
worldwide.
6. Energy Security: Ensuring access to energy resources and
promoting energy cooperation.
7. Food Security: Ensuring access to food resources and
promoting agricultural cooperation.
8. Climate Change and Environment: Addressing global
environmental challenges.
 OBJECTIVES OF INDIA’S FOREIGN POLICY
9. Counter-Terrorism: Combating terrorism and extremism.
10. Cultural Diplomacy: Promoting Indian culture, values,
and people-to-people relations.
11. Strategic Autonomy: Pursuing independent foreign
policy decisions.
12. Influence and Leadership: Enhancing India's global
influence and leadership.
13. Peacekeeping and Humanitarian Assistance: Participating
in international peacekeeping and humanitarian efforts.
14. Science and Technology Cooperation: Promoting scientific
and technological collaboration.
15. Education and Research Cooperation: Fostering
educational and research partnerships.
 PRINCIPLES OF INDIA’S FOREIGN POLICY
❖ Panchsheel (Five Principles of Peaceful Coexistence):
- Mutual respect
- Non-interference
- Equality
- Mutual benefit
- Peaceful coexistence
❖ Non-Alignment: India maintains good relations with all
countries, without aligning itself with any particular bloc
or ideology.
❖ Sovereignty: Protection of India's independence,
sovereignty, and territorial integrity.
❖ Strategic Autonomy: Pursuit of independent foreign
policy decisions.
❖ Neighborhood First: Strengthening relations with
neighboring countries.
 PRINCIPLES OF INDIA’S FOREIGN POLICY
❖Act East: Strengthening ties with Southeast Asian
and East Asian countries.
❖Think West: Strengthening ties with the Middle
East and North Africa.
❖Vasudhaiva Kutumbakam (World is One Family):
Promoting global cooperation and solidarity.
❖Satyameva Jayate (Truth Alone Triumphs):
Upholding truth, justice, and morality in
international relations.
❖Aatmanirbhar Bharat (Self-Reliant India):
Promoting economic self-reliance and reducing
dependence on external powers.
 INDIA AND ITS NEIGHBOUR
• India is a vast and diverse country located in South Asia,
surrounded by several countries that share its borders.
• Neighboring countries have shaped India's history, culture, and
politics, and continue to play a significant role in its foreign policy
and regional dynamics.
Overview of India's neighbors
1. Pakistan (West): Shares a 3,190 km border with India, with the
disputed region of Kashmir being a major point of contention.
2. China (North): Shares a 3,488 km border with India, with
disputes over territories like Aksai Chin and Arunachal Pradesh.
3. Nepal (North-East): Shares a 1,751 km border with India, with
close cultural and historical ties.
4. Bhutan (North-East): Shares a 699 km border with India, with a
close strategic partnership.
5. Bangladesh (East): Shares a 4,096 km border with India, with a
complex relationship due to historical and cultural factors.
6. Myanmar (East): Shares a 1,643 km border with India, with
growing economic and strategic ties.
 SAARC
• The South Asian Association for Regional Cooperation (SAARC) is
an economic and geopolitical union of eight member states set up
to promote economic development and regional integration.
• SAARC was established on December 8, 1985, with the signing of
the SAARC Charter by the leaders of seven South Asian countries:
1. Bangladesh 2. Bhutan 3. India 4. Maldives 5. Nepal 6. Pakistan
7. Sri Lanka.
• Afghanistan joined SAARC in 2007, becoming the eighth member
state.

SAARC's main objectives are to:

1. Promote regional cooperation and understanding.
2. Accelerate economic growth and development.
3. Improve living standards and social welfare.
4. Strengthen regional security and stability.
5. Enhance cultural exchange and people-to-people contacts.
 Historical Background of SAARC
• The historical background of SAARC (South Asian Association for
Regional Cooperation) is rooted in the region's desire for economic and
social development, peace, and stability.
1. Post-Colonial Era (1947-1960s): After gaining independence from
colonial rule, South Asian countries faced common challenges like
poverty, underdevelopment, and geopolitical tensions.
2. Regional Initiatives (1970s-1980s): Several regional initiatives
emerged, including the Bangkok Declaration (1967), the Colombo Plan
(1951), and the Asian Regional Cooperation Conference (1977).
3. Ziaur Rahman's Proposal (1979): Bangladesh's President Ziaur
Rahman proposed a regional organization to promote cooperation
among South Asian countries.
4. SAARC Formation (1980-1985): Foreign ministers of seven countries
(Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka)
met in Colombo (1981) and New Delhi (1983) to discuss the proposal.
The SAARC Charter was signed on December 8, 1985.
5. SAARC's Evolution (1985-present): SAARC has expanded its
membership to include Afghanistan (2007), and has established
various programs, agreements, and institutions to promote regional
cooperation in areas like trade, education, health, and environment.
 SAARC TRADE AGREEMENT
• The SAARC trade agreement has two main components: SAARC
Preferential Trading Arrangement (SAPTA) and the South Asian
Free Trade Area (SAFTA)
1. SAARC Preferential Trading Arrangement (SAPTA):
➢ Signed in 1993
➢ SAPTA aimed to create a preferential trading area among SAARC
member state
➢ Promoting mutual trade and economic cooperation through
tariff concessions.
2. South Asian Free Trade Area (SAFTA):
➢ Implemented in 2006
➢ SAFTA succeeded SAPTA, further reducing tariffs and non-tariff
barriers, with special provisions for least developed countries
(LDCs).
➢ SAFTA recognizes the need for special and differential treatment
for LDCs, providing measures like market access, smaller initial
tariff reduction, and longer implementation periods
 RATIONALE OF SAARC
• The rationale behind the SAARC Trade Agreement
(STA) are:
1. Promote Regional Trade: Increase trade among
SAARC member states, reducing dependence on
external markets.
2. Economic Integration: Gradually move towards a
South Asian Free Trade Area (SAFTA), then a Customs
Union, and eventually an Economic Union.
3. Enhance Economic Growth: Increase economic
activity, investment, and employment opportunities.
4. Reduce Poverty: Improve living standards and reduce
poverty through increased economic activity.
5. Increase Regional Cooperation: Foster cooperation in
areas like trade facilitation, standards, and customs
procedures.
 RATIONALE OF SAARC
6. Improve Market Access: Provide preferential market
access to member states, increasing exports and
competitiveness.
7. Diversify Trade: Reduce dependence on traditional
exports and markets, promoting diversification.
8. Attract Foreign Investment: Create a larger market,
attracting foreign investment and technology.
9. Develop Regional Infrastructure: Enhance regional
connectivity, transportation, and communication
networks.
10. Strengthen Regional Institutions: Establish and
strengthen regional institutions, promoting cooperation
and coordination.
Thank You