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Paradiplomacy: New Dimension of Indian Foreign Policy

Paradiplomacy is deemed to be the future of diplomacy. The increasing usage of terms like ‘town twinning’ or ‘sister cities’, etc. displays its growing trend. Paradiplomacy refers to the diplomacy that non-central governments undertake. In simple words, when sub-national governments such as states, provinces, or even cities conduct international affairs to further their interests, it is known as paradiplomacy.

Paradiplomacy is gradually gaining ground in India. The process has accelerated, especially since 2014 when PM Modi assumed power. With many countries adopting it and reaping its benefits, several questions too have come to the fore. This article explores the various dimensions of paradiplomacy while also tracing its trajectory and achievements in India so far.

From a scholarly perspective, paradiplomacy is a recent phenomenon. The terms substate diplomacy, decentralized cooperation, people-to-people diplomacy, and intermestic affairs are also used synonymously. Its study began as a subset of the study of federalism in countries like Australia and Canada.

Conventionally, diplomacy and international relations have been the sole prerogative of nation-states across the world. But, with the wave shifting towards increased federalism, diplomacy too is being redefined. Thus, diplomacy, too, was an indivisible and non-transferable function of the sovereign state.

Since it involves greater autonomy of the substate governments, federal countries naturally take a lead in it. For example, Canada and Australia have taken huge strides in this direction. However, this is not to suggest that it is alien to quasi-federal or even non-democratic countries. The impressive FDI performance of China owes its success to paradiplomacy, which combines central coordination with municipal diplomacy.

However, beginning in the 1970s, scholars began studying federalism, especially that of Canada or Australia. This gave a new impetus to the study of diplomatic role of the substate governments.

Canadian scholar, Panayotis Soldatos, while describing the essence of paradiplomacy, says that it “is a result of a crisis at the level of the nation-states’ systemic process and foreign-policy performance.” Thus, according to him, paradiplomacy is an attempt to remedy the crisis. He holds that “decentralization could enhance unity and efficiency in external relations” because “actor segregation does not become policy segregation and a subnational paradiplomacy helps to rationalize the whole foreign policy process.”

Thus, the discussion around paradiplomacy revolves around the ideal of federalism. According to Stefan Wolff, limited external relations powers is a precondition for an autonomous substate unit.  However, paradiplomacy cannot be said to be an essential attribute of federalism, although federalism is undoubtedly a key contributor to the growth of paradiplomacy.

Paradiplomacy serves various purposes on the ground that make it desirable. Usually, regional governments depend on the Union’s resources for their functions. But, any government has limited resources. Thus, through substate diplomacy, a regional government can attract FDI. Also, for a diverse country like India, paradiplomacy offers regional governments alternatives to develop a growth model that caters to its local needs. Thus, scholars often say that paradiplomacy leads to the ‘globalisation of local issues.’

The major forces behind the rising trend of paradiplomacy are the twin phenomena of globalisation and liberalization. With the growth of an integrated world economy, even state governments are impacted by global phenomena. Thus, to further their interests, state governments too engage in foreign diplomacy.

Paradiplomacy is strongly supported both among academic circles as well as among the practitioners in the world of diplomacy.

If we look around the world, several countries are adopting and benefitting from economic paradiplomacy. It allows States to promote and attract Foreign Direct Investment (FDI). For example, the city of Sao Paolo in Brazil is the richest city in Latin America. Municipal paradiplomacy helped it witness a meteoric rise. China, although an autocratic state has been able to attract impressive FDI with the help of policy that combines

In India, there is an increasing involvement of state governments in the realm of diplomacy, especially economic diplomacy. India is a federal state with a unitary bias. Thus, the Indian Constitution puts foreign relations and defence in the Union list mentioned in the Seventh Schedule. Nonetheless, states are increasingly participating in foreign diplomacy.

In India, paradiplomacy came into play post-1967, when regional coalition governments led to an increase in states’ autonomy. However, it remained lacklustre. It gained impetus post-liberalisation in the 1990s. For example, in 1992, when the power sector was first opened to private foreign investors, the government of Maharashtra entered into an agreement with Texas electric giant, Enron, and General Electric to finance its Dabhol Project. The project operationalized only after the then Central government actively supported it.

At present, several states are increasingly willing to utilise this opportunity to pursue economic reforms and outreach. Gujarat, for example, organised the ‘Vibrant Gujarat Global Investor’s Summit (2003).’

Other states, too, are taking steps in this direction, with the governments of Maharashtra, Tamil Nadu, Kerala, Punjab, Haryana, etc. actively engaging in paradiplomacy. Border states are incidental in promoting trade with neighbouring countries. Punjab, for example, has built additional trade routes at the Wagah border. Tripura has excelled in organising border haats.

The foreign diplomacy of substates, however, is not limited to economy. They are also important in subjects such as security, environment and resource management.

The MEA has risen to the occasion and set up State Divisions. However, more institutional setup is required to fully harness paradiplomacy in India.

Paradiplomacy also brings with it some difficulties. We have seen incidents when the Union and state governments differ on a policy, jeopardising the nation’s interests. For instance, Mamta Bannerjee, the CM of West Bengal, stopped then PM Dr. Manmohan Singh from signing the Teesta Water Agreement with Bangladesh. Similarly, Tamil Nadu had insisted that India should not support the US resolution against Sri Lanka in the UNHRC. Also, Kerala had insisted on punishing the Italian marines who killed two fishermen, souring relations between India and the EU.

Such incidents, however, do not negate the benefits offered by paradiplomacy and can be resolved by establishing formal institutions and framing clear guidelines. Currently, paradiplomacy is still in a nascent phase in India. For India to harness the full potential of the opportunity, an ample institutional setup needs to be established. The centre should act as an observer and a monitor to ensure that the foreign policy goals of the states and the Union are in sync, especially in non-economic matters.

Paradiplomacy holds immense potential, especially for a diverse country like India. With clear policies and institutions, it has the potential to accelerate India’s growth.

Posted in IR Current Affairs

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