Context

The Gati Shakti National Master Plan will have an important economic multiplier effect at home, it must also be leveraged to have an external impact by aligning it with India’s regional and global connectivity efforts.

Main components of the Gati Shakti National Master Plan

• The Gati Shakti plan has three main components, all focused on domestic coordination.
• Increase information sharing: The plan seeks to increase information sharing with a new technology platform between various ministries at the Union and state levels.
• Reduce logistics’ costs: It focuses on giving impetus to multi-modal transportation to reduce logistics’ costs and strengthen last-mile connectivity in India’s hinterland or border regions.
• Analytical tool: The third component includes an analytical decision-making tool to disseminate project-related information and prioritise key infrastructure projects.
• This aims to ensure transparency and time-bound commitments to investors.

How Gati Shakti Plan can strengthen India’s economic ties with its neighbours

• The plan will automatically generate positive effects to deepen India’s economic ties with Nepal, Bhutan, Bangladesh, Myanmar and Sri Lanka, as well as with Southeast Asia and the Indian Ocean region.
• India’s investment in roads, ports, inland waterways or new customs procedures generate positive externalities for these neighbours, who are keen to access the growing Indian consumer market.
• Any reduction in India’s domestic logistics costs brings immediate benefits to the northern neighbour, given that 98 per cent of Nepal’s total trade transits through India and about 65 per cent of Nepal’s trade is with India.
• In 2019, trade between Bhutan and Bangladesh was eased through a new multimodal road and waterway link via Assam.
• The new cargo ferry service with the Maldives, launched last year, has lowered the costs of trade for the island state.
• And under the South Asia Subregional Economic Cooperation Programme, India’s investments in multimodal connectivity on the eastern coast is reconnecting India with the Bay of Bengal and Southeast Asia through integrated rail, port and shipping systems.
• Whether it is the alignment of a cross-border railway, the location of a border check post, or the digital system chosen for customs and immigration processes, India’s connectivity investments at home will have limited effects unless they are coordinated with those of its neighbours and other regional partners.
• While India recently joined the Transports Internationaux Routiers (TIR) convention, which facilitates cross-border customs procedures, none of its neighbouring countries in the east has signed on to it.

Suggestions for Gati Shakti Plan to have maximum external effect

• First, India will have to deepen bilateral consultations with its neighbours to gauge their connectivity strategies and priorities.
• Given political and security sensitivities, India will require diplomatic skills to reassure its neighbours and adapt to their pace and political economy context.
• A second way is for India to work through regional institutions and platforms. SAARC’s ambitious regional integration plans of the 2000s are now defunct, so Delhi has shifted its geo-economic orientation eastwards.
• The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) has got new momentum, but there is also progress on the Bangladesh, Bhutan, India, Nepal (BBIN) Initiative.
• Finally, India can also boost the Gati Shakti plan’s external impact by cooperating more closely with global players who are keen to support its strategic imperative to give the Indo-Pacific an economic connectivity dimension.
• This includes the Asian Development Bank and the World Bank, but also Japan, the US, Australia, EU and ASEAN.

Conclusion

Gati Shakti plan must also leveraged to have an external impact by aligning it with India’s regional and global connectivity efforts.

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