October 12, 2013

Believe in the India Luxury Market


October 4, 2013 8:22 am
Rachna Sharma, Hotelier

India was always a luxury appreciating country from the time of Maharajas to the middle affluent consumer today.

luxury-india-marketI was raised in a small town of Jammu & Kashmir and always thought that the world was mine. However, while growing-up, I started learning the meaning of luxury in my childhood, which kept evolving with time. Sometimes an ice cream from Baskin-Robbins over Mother Dairy became a luxury and sometimes traveling to Kashmir by plane was a luxury when everyone else traveled long hours in public transport over bumpy hilly roads.

Until around 1995 – 2000, I assumed very few Indian kids — I would say only the elites — probably knew the difference and name of luxury brands, be it hotels, automobiles, clothing etc. Times have changed now; ever since luxury brands entered India, the Indian consumer has come a long way.

Enough has been said about India and its current luxury scenario; everyone is jumping on each other’s weakness and every downfall. That’s precisely the reason of our failure.

However, I think the Indian market is starting to accept the presence of luxury; albeit slowly, but we are getting there.

It has a lot to do with policy makers, government substratum and of course all those high-end research firms, which give huge percentage charts and make beautiful presentations. Let me also mention that the luxury giants are busy giving PR interviews, making their scripts impressive and speaking like a well versed politician.

But, the question that I raised before remains unanswered! How many of us really face the reality and accept that India is taking baby steps?

Luxury entered India five years ago compared with China, which interestingly enough, has been a success story for most brands, where luxury entered in 1992 and grew at 27 per cent in its first 10 years.

For example, Louis Vuitton has 35 stores in China against three in India. Also, the Indian buyer is still traditional in his/her preferences (as seen in jewellery and clothing), is price conscious and less brand aware, even when there are more options present in the country than there has ever been. Moreover, the market is younger (luxury re-entered India only five years ago) and China has none of the structural barriers (foreign investment and duties to name a few).

Is it a fear of too much wealth in the market? If yes, then how wrong are we?

Why do we forget our heritage, the culture and traditions of Maharajas and kingdoms? Why do we forget that at one time, a lot of wealth was taken away from India; a proven fact that India was luxurious and wealthy not too long ago!

We had the taste and understood investing in luxury. Who would argue with the fact that we probably have the most beautiful jewels, palaces and fabrics than any other country in the world?

I have heard that Maharaja of Patiala had 21 Rolls Royce …astonishing figure isn’t it?

The scope of luxury has gone beyond our imagination with our generation, which we call MAC (middle affluent consumer), who is aspiring, more knowledgeable and has learned the magic of credit cards and EMI’s that enhances its purchasing power indirectly.

India was always a luxury appreciating country from the time of Maharajas to the middle affluent consumer today. Yes! We are precisely where every other developed nation was a few hundred years ago. In my view, Luxury is a slow process of evolution hugely by default and not design.

As the Indian luxury market enters the next phases of development, the rewards of this potentially massive market will continue to attract investment. However, India is not just another emerging market. The dynamics of the Indian luxury market challenge international luxury players to develop an India-driven strategy.

The ability and willingness to connect with the Indian luxury consumer can make a difference between winning and losing a share of the luxury rupee. A new era beckons international luxury brands to plan strategically for the future and seize the market.

India has often been cited as the next China as international luxury brands enter the market to benefit from the monetary gains of a desire economy. However, the Indian luxury market is not only different compared to other emerging markets, but unique.

It is a market of contrasts, contradictions and extremes. It is these opposing forces that need to be understood and integrated into business strategies if luxury players are to leverage growth opportunities and avoid the pitfalls of market failure.

India today is a case study: it’s projected that the Indian luxury market will reach USD 14.72 billion in 2015 with unprecedented growth rates in categories from fashion to hotels to automobiles and fine dining.

The luxury market in India garners huge attention and is sometimes seen as a sign of India having finally “arrived.”

The talk is about the new-found spending power of the Indian consumers, Indian luxury brands and flashy consumption culture. On the other hand, periodically one hears about another luxury brand exiting the country or a global luxury CEO talking about how China is a better market.

The truth, as always, is somewhere in the middle. India is a huge potential market for luxury, yet players face serious growth challenges and companies make money with great effort.

Yet, Indian luxury brands are no longer a myth. The luxury market has grown at 23 per cent since 2006. The luxury products market (apparel, watches, jewellery, spirits, electronics) have grown at 30 per cent, reaching a market size of $2 billion. The luxury assets market-cars, homes and yachts have grown at 25 per cent, and have a market size of $2.8 billion.

In the last one year, 50 luxury outlets (product stores and car showrooms), have been added to the 200 that existed, a 25 per cent growth in footprint. The market, at 1 per cent of the global luxury market, is still small; the luxury products market in China is $12-13 billion and Europe is 40 per cent of the global market.

Key growth drivers are the 150,000-plus HNIs (high net worth individuals) with a net worth of $600 billion-3.1 million households earning more than Rs.10 lakh in the top 10 cities (Mumbai, Delhi/NCR, Bangalore, Kolkata, Pune, Chandigarh, Hyderabad, Ludhiana, Chennai and Ahmadabad), and a Gini coefficient of 39.9 per cent.

Gini coefficient indicates whether income inequality within countries and rising income inequality within countries leads to a change in spending patterns, creating good business opportunities at opposite ends of the economic spectrum.

All is not well though. Import duties are high (20-150 per cent), foreign investment in luxury retail comes with strings attached-100 per cent FDI in both single and multi-brand retail requires 30 per cent of local sourcing, a clause which luxury players find difficult to comply with-and there just isn’t enough quality retail real estate available.

These issues have been known since the outset.

On the demand side, those who can afford it still suffer from a middle class mindset and those who do spend, don’t spend enough!

Price conscious Indian consumers prefer shopping overseas in the homes of luxury brands to get the best deals. The rich are also highly fragmented and not easy to reach. In addition to the traditionally wealthy who are habitual spenders and the professional elite who are careful spenders, there is a large segment of business giants (entrepreneurs, owners of small and medium enterprises) who have the money, but lack appreciation for fine luxury goods because of no prior exposure.

This group will soon become the largest consumer segment for luxury. And they are not concentrated only in the metros. If one looks at the luxury car showrooms, (15 out of the 18 new showrooms in the last one year have been added in non-metros), one can see that there is a market waiting to be tapped beyond the metros.

Besides all the above, we still notice players talking of India as the next luxury destination! They hope that as growth in the large markets saturates, the BRIC countries (Brazil, Russia, India and China) will be the next growth engines-not unlike what they would expect in most consumer categories.

Deregulation has driven growth in several industries in India-insurance, retail and telecom is notable examples. To get to the next level of growth, deregulation is imperative, not just FDI and import duties, but land regulation that restricts availability of prime real estate is also a key barrier. At $1.5-$2 billion, latent demand in luxury products is equal to the current market size. Industry could grow at 35 per cent from the current 23 per cent if regulatory and real estate constraints are removed.

Thus, while the “buzz” generated by this industry sometimes is disproportionate compared to the size of the market, it does indicate the aspiration value of the sector and a belief in the potential of the market, both of which are difficult to ignore.

Even the luxury brands celebrate the values of Indian heritage, whether it is the sarees by Herm├Ęs or the Bandhgala by Paolo Canali, so why shouldn’t we?

Rachna Sharma is an expert hospitality professional. A gold medalist from Mangalore University with a Bachelors in hotel management, she is proficient in strategic thinking, business planning and development, brand management, marketing communications, sales tactics and identifying & maximizing opportunities across diverse sectors. Rachna is responsible for strategic development of an international hotel company in India. She is also a philanthropist and is working towards urban women empowerment. Rachna is co- author of the book Globalization and Voices from Indian Practitioners. She is brand ambassador for “Red Light to Violence against women in India,” a socio-cultural project supported by UNESCO, UNICEF, Kerala Tourism, ICCR, Instituto Cervantess & Spanish Authorities.

Turkey spymaster pulls the strings in Syria

Source: Gulf News

Istanbul: On a rainy May day, Turkish Prime Minister Recep Tayyip Erdogan led two of his closest advisers into the Oval Office for what both sides knew would be a difficult meeting.

It was the first face-to-face between Erdogan and US President Barack Obama in almost a year. Obama delivered what US officials describe as an unusually blunt message: The US believed Turkey was letting arms and fighters flow into Syria indiscriminately and sometimes to the wrong rebels, including jihadists.

Seated at Erdogan’s side was the man at the centre of what caused the US’s unease, Hakan Fidan, Turkey’s powerful spymaster and a driving force behind its efforts to supply the rebels and topple Syrian President Bashar Al Assad.

In the wake of the Arab Spring uprisings, Fidan, little known outside the Middle East, has emerged as a key architect of a Turkish regional security strategy that has tilted the interests of the longtime US ally in ways sometimes counter to those of the US.

“Hakan Fidan is the face of the new Middle East,” says James Jeffrey, who recently served as US ambassador in Turkey and Iraq. “We need to work with him because he can get the job done,” he says. “But we shouldn’t assume he is a knee-jerk friend of the US, because he is not.”

Fidan is one of three spy chiefs jostling to help their countries fill a leadership vacuum created by the upheaval and by America’s tentative approach to much of the region.

One of his counterparts is Prince Bandar Bin Sultan Al Saud, Saudi Arabia’s intelligence chief, who has joined forces with the Central Intelligence Agency in Syria but who has complicated US policy in Egypt by supporting a military takeover there.

The other is Iran’s Major General Qasim Sulaimani, commander-in-chief of the Quds Forces, the branch of the elite Revolutionary Guard Corps that operates outside Iran and whose direct military support for Al Assad has helped keep him in power.

Rise to prominence

Fidan’s rise to prominence has accompanied a notable erosion in US influence over Turkey. Washington long had cozy relations with Turkey’s military, the second-largest army in the North Atlantic Treaty Organisation (Nato).

But Turkey’s generals are now subservient to Erdogan and his closest advisers, Fidan and Foreign Minister Ahmet Davutoglu, who are using the Arab Spring to shift Turkey’s focus toward expanding its regional leadership, say current and former US officials.

At the White House meeting, the Turks pushed back at the suggestion that they were aiding radicals and sought to enlist the US to aggressively arm the opposition, the US officials briefed on the discussions say.

Turkish officials this year have used meetings like this to tell the Obama administration that its insistence on a smaller-scale effort to arm the opposition hobbled the drive to unseat Al Assad, Turkish and US officials say.

Fidan is the prime minister’s chief implementer.

Since he took over Turkey’s national-intelligence apparatus, the Milli Istihbarat Teskilati, or MIT, in 2010, Fidan has shifted the agency’s focus to match Erdogan’s.

Mixed reactions

His growing role has met a mixture of alarm, suspicion and grudging respect in Washington, where officials see him as a reliable surrogate for Erdogan in dealing with broader regional issues — the futures of Egypt, Libya and Syria, among them — that the Arab Spring has brought to the bilateral table.

Fidan raised concerns three years ago, senior US officials say, when he rattled Turkey’s allies by allegedly passing to Iran sensitive intelligence collected by the US and Israel.

More recently, Turkey’s Syria approach, carried out by Fidan, has put it at odds with the US. Both countries want Al Assad gone. But Turkish officials have told the Americans they see an aggressive international arming effort as the best way.

The cautious US approach reflects the priority it places on ensuring that arms don’t go to the jihadi groups that many US officials see as a bigger threat to American interests than Al Assad.

As radical Islamists expand into northern Syria, Turkish officials have begun to recalibrate their policy — concerned not about US complaints but about the threat to Turkey’s security, say US and Turkish officials.

China’s Interests in Shaksgam Valley

Senge Sering, President of Institute for Gilgit Baltistan Studies
October 10, 2013 6:59 am
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To date, China occupies more than 20,000 square kilometer of Gilgit-Baltistan covering Shaksgam, Raskam and Aghil valleys.
shaksgam-valley-baltistanChinese nationals are once again in the newspapers of Gilgit-Baltistan, this time for smuggling heavy precious metals and gems out of the region.

Similar reports also appeared last year when they tried to smuggle uranium, gold and copper from Gilgit-Baltistan. The Chinese model of mineral exploration fails to support Gilgit-Baltistan’s economy since the corporations do not provide jobs to the locals and deny a share in the revenue to the resource-owners.

To make the situation worse, the Pakistani regime has placed a ten-year ban on local businesses involved in gem extraction and trade. Undue concessions to the international corporations and ban on the locals affect the economic well-being of tens of thousands of people.

Pakistani regimes are notoriously famous for bending over backwards to facilitate China’s involvement in Gilgit-Baltistan.

In 1963, Pakistan handed over 5,800 square kilometers of the territory of Gilgit-Baltistan to China without the consent of the local people. Authorities even threatened the ruler of Hunza, who claimed the valleys up to the Aghil Pass, of imprisonment and torture for objecting to such a deal. China currently occupies more than 20,000 square kilometer of Gilgit-Baltistan covering Shaksgam, Raskam and Aghil valleys.

The Communist Party of China might find it interesting that the Chinese official maps of 1917, 1919 and 1933 recognize the border of Jammu & Kashmir at the Kunlun mountain range. An earlier map of Xinjiang compiled in 1762 at the orders of the Chinese Emperor Chien Lung also acknowledged the southern border of Xinjiang at Kunlun. This comfortably places Shaksgam, Raskam and Aghil valleys within Gilgit-Baltistan.

The majority of the geographical entities in both the Aghil and Shaksgam valleys possess Balti nomenclature demonstrating an ancient socio-economic and political interlinks of these valleys with Baltistan.

For instance, the passes are called Sarpo Lago (yellow top of the pass), Drenmang La (abundant with bears), Shingshol La (pass where tree density is thinning) and Sagang La (pass with earth and ice).

The mountains are named Skyang Kangri (wild donkey), Kyagar Kangri (grey and white) and Skamri (dry rock), while the valleys are Shaksgam (dried up heap of pebbles), Aghil Ldepsang (plain), Marpo Lungpa (red), Salungma (earthen), Khapulung (gateway valley), Kharkhor Lungma (castle surrounding) and Skam Lungpa (dry).

The famous camping grounds include Moni Brangsa (residence of musicians), Balti Brangsa (Balti residence) and Balti Pulo (dwellings of the Baltis).

According to the local historians, the Raja of Shigar established a polo-ground south of the Shaksgam valley in the 5th Century AD. The ground, called Muztaghi Shagaran, the polo-ground of ice-peak, attracted fanfare with players and musicians when the autumn harvest festival was celebrated.

The musicians who accompanied the royal entourage established camps at Moni Brangsa, the residence of the musicians, near the lower reaches of the Sarpo Lago River. It was at this shagaran that the rulers of Shigar and Hotan played polo matches on yearly basis and reviewed their diplomatic relations.

The occupation of these valleys came in the wake of Pakistan and China forming a strategic alliance, which enabled both countries to counter their economic and political adversaries.

As part of the frontier settlement plan, both nations, represented by Pakistani Foreign Minister Zulfikar Ali Bhutto and Chinese Foreign Minister Chen Yi, signed a provisional agreement on March 2, 1963 in Beijing allowing China to occupy Shaksgam, Raskam, Shimshal and Aghil valleys of the disputed territory of Gilgit-Baltistan.

As part of the deal,

“the two parties agreed that after the settlement of the Kashmir dispute between Pakistan and India, the sovereign authority concerned will reopen negotiations with the government of the peoples’ republic of China on the boundary, as described in Article II of the present agreement of Kashmir, so as to sign a boundary treaty to replace the present agreement.”

India protested the matter with China, and registered its concerns with the United Nations. The Chinese authorities guaranteed India that it accepted Gilgit-Baltistan as a disputed territory and that the agreement was only provisional in nature and would be renegotiated once the dispute of Jammu & Kashmir was resolved.

Since then, China has built feeder roads eastward through Shaksgam linking Gilgit with Hotan, which is an important military headquarter situated at the cross-section of the Tibet-Xinjiang Highway and Hotan-Golmud Highway.

The Hotan-Golmud Highway links Xinjiang to Qinghai province and central China. It reduces the distance between Gilgit and Golmud to almost half, while bypassing the longer Urumuqi-Kashgar Highway.

Golmud is a strategically located booming city and functions as one of the largest goods transit point in western China. It is the strategic military headquarter of west China, the national petrochemical base, and home to rich oil wells and minerals.

Likewise, the feeder stretching along the southern rim of East Turkestan connects Gilgit with Aksai-chin and cuts the distance between both regions by more than 800 miles. China’s ability to control the northern valleys of Gilgit-Baltistan has helped connect military and industrial complexes of North-Western Tibet to Pakistani and Persian ports.

Today, not just Shaksgam, Aghil and Raskam, but the entire Gilgit-Baltistan has been placed at China’s disposal.

Reports in local newspapers have emerged of China leasing Gilgit-Baltistan for 50 years. It is because of China’s influence that Pakistani authorities have to think twice before letting Western officials in Gilgit-Baltistan.

In the past, Gilgit-Baltistan politicians have been charged for sedition and local officials have been suspended from their jobs for entertaining US officials. This occurs despite millions in aid sent by the United States each year to Gilgit-Baltistan.

Now China is spending another US $18 billion to construct a 200 kilometer long tunnel in Gilgit-Baltistan which will help run rail service between Kashgar and Gwadar port in occupied Balochistan. The agreement was signed by Pakistani Prime Minister Nawaz Sharif, who has also agreed to establish China led industrial zones along the Karakoram Highway and laying fiber optic across the Karakoram Mountains.

Local politicians challenge such agreements and transfer of land to China because China and Pakistan do not have sovereign rights over Gilgit-Baltistan. They demand absolute autonomy and reinstatement of State Subject Rule to ensure socioeconomic security in Gilgit-Baltistan.

Birjees Tahir, the Federal Minister for Kashmir Affairs and Gilgit-Baltistan, stated that “Gilgit-Baltistan is a disputed area and a province like structure has been created only to improve local governance and decision making power. Gilgit-Baltistan cannot be merged with Pakistan until the resolution of Kashmir issue.”

However the fact remains that local institutions have no right over decision making and implementing laws, and the Minister of Kashmir Affairs is an absolute authority, who governs Gilgit-Baltistan like a viceroy.

Locals claim that the Chinese-Pakistani alliance is gaining legitimacy at the cost of the rights and assets of the people of Gilgit-Baltistan. They believe that the UN granted Pakistan temporary control over Gilgit-Baltistan which was possible only after granting complete autonomy to its residents.

However, Pakistan has failed to keep its promises.

Islamabad is violating the United Nations Declaration on the Rights of Indigenous Peoples by ignoring the legal standards of free, informed and prior consent of the natives to initiate resource extraction and trade and industrial build up. Prime Minister Sharif denied Gilgit-Baltistan a representation during the preparation and execution of agreements with his Chinese counterpart in Beijing.

China’s undue involvement in the disputed area of Gilgit-Baltistan complicates and prolongs the controversy over Kashmir with socioeconomic, cultural and political implications and enhanced vulnerability in an ecologically fragile area. If not understood, it will have irreparable military and strategic implications for all of South Asia.

Senge H. Sering is the President of Institute for Gilgit-Baltistan Studies and hails from a Tibetan speaking region called Baltistan (Baltiyul), which has been declared a disputed area between India and Pakistan by the United Nations. There are about 600,000 Balti people residing in India and Pakistan who profess Islam and speak archaic Tibetan. Read other articles by Senge.

India in the South China Sea: Commercial Motives, Strategic Implications

The Jamestown Foundation

Publication: China Brief Volume: 13 Issue: 20October 10, 2013 04:21 PM Age: 2 days
By: Rup Narayan Das

Although India is not a party to the South China Sea dispute, in recent years—particularly since Secretary of State Hilary Clinton vigorously advocated freedom of navigation in the South China Sea at the Asian Regional Forum meeting in Hanoi in July 2010, and India endorsed the stance—Beijing has grown wary of India’s intentions in the South China Sea. This wariness was further exacerbated in September 2011, when India and Vietnam announced plans to sign an agreement for oil exploration in the South China Sea. Beijing responded by saying that China enjoys indisputable sovereignty over the South China Sea, and that China’s stand was based on historical facts and international law. It was further stated that China was opposed to any project in the South China Sea, without directly referring to India (The Pioneer, September 16, 2011).

The same day, while answering a question raised by a correspondent about Chinese objection to India’s Oil and Natural Gas Commission Videsh Limited’s (OVL) proposed deal, New Delhi said that OVL had been present in Vietnam for quite some time, including in a major oil venture for offshore oil and natural gas exploration, and that they were in the process of further expanding their cooperation and operation in Vietnam (Media Briefing by Official Spokesperson on EAM’s visit to Hanoi).  The OVL is a state owned company under the Ministry of Oil and Natural Gas and as such enjoys diplomatic support of the government. The government, however, does not interfere in its day to day operations.

India already has a stake in Block 06.1, located 370 kilometers south-east of Vung Tau on the southern Vietnamese coast with an area of 955 square km. The exploration license for this block was acquired by OVL in 1988. The field started commercial production in January 2003. During 2010-11, OVL’s share of production from the project was 2.249 billion cubic meters (bcm) of gas and 0.038 million metric tons (mmt) of condensate (Annual Report of ONGC Videsh Limited 2010-11).  Later in 2006, OVL acquired two more blocks in the South China Sea for hydrocarbon exploration. Block 127 is an offshore deep-water Block, located at water depth of more than 400 meters with an area of 9,246 sq. km.  OVL had invested approximately $68 million by March 2010. A location for drilling an exploration well was identified and the well was drilled in July 2009 to a depth of 1,265 meters.  As there was no hydrocarbon presence, OVL decided to relinquish the block to Petro-Vietnam. The second Block 128 was also acquired at the same time. The Company had invested approximately $49.14 million by March 31, 2012. As in the case of Block 127, in Block 128 also the well could not be drilled with the rig, as it had difficulty anchoring on the location. The drilling activity has been kept under suspension. Vietnam has been goading India to pursue drilling in Block 128, asserting that it is very much within its territorial water.

The issue was, however, played out in the media, both in China and India. The Global Times quoted Wu Xinbo, Professor at the Center for American Studies at Fudan University: “As a South Asian country, India actively takes part in East Asian issues through the support of the U.S., which has been advocating for Asian countries to counter China. The U.S. takes every opportunity to counter China, and its joint military maneuvers with Japan and other regional countries has been more frequent in recent years” (Global Times, September 17, 2011). Wu added that this project helps India kill two birds with one stone­—it will bring economic benefits to India while also balancing out China politically. The article quoted another Fudan scholar, Shen Dingli, Director of the Centre for American Studies, who said, “In recent years, China has also been building up relations with countries like Myanmar that neighbor India, not to mention that Pakistan invited China to provide safety protection, and offered China a naval port on the Indian Ocean. All these moves made India feel nervous.”

India, in spite of resistance from China, concluded the agreement with Vietnam during the visit of Vietnamese President Truong Tan Sang to India on October 12, 2011. OVL and its Vietnamese counterpart, Petro-Vietnam, inked a three-year agreement for long-term cooperation in the oil and gas sector. The agreement is intended for developing long-term cooperation in effect for three years. Some key areas in which the companies plan to cooperate are related to the exchange of information on the petroleum industry; exchange of working visits of authorities and specialists in various fields of the petroleum industry; new investments; expansion and operations of oil and gas exploration; and production, including refining, transportation and supply in Vietnam, India, and third countries according to the laws and regulations of their countries.  President Truong said that all disputes with China, including claims in the South China Sea, would be solved peacefully through negotiations and a code of conduct for good relations in the region.

India’s defiance of China further riled Beijing. New Delhi and Beijing, however, did not allow the relationship between the two countries to drift further. Prime Minister Manmohan Singh, in his meeting with his Chinese counterpart Wen Jiabao on the side-lines of the East Asia Summit meeting in Bali in November 2011 in response to Premier Wen Jiabao’s concerns, reiterated that Indian exploration of oil and gas deposits in the South China Sea were purely commercial, and the issue of sovereignty over the South China Sea should be resolved according to international law and practice (The Hindu, November 18, 2011). India’s nuanced position was further clarified by its Defense Minister A.K. Antony in September, 2011 while addressing the Naval Commanders Conference in New Delhi, where he said, “There is no question of India going there in large scale. We will go there for exercise and uninterrupted passage of ships and trade. There is no question of any naval presence there. That is not our intention, our main concern is to protect our core area of interest,” he said (The Indian Express, October 13, 2011).

Although India treats the issue of OVL’s foray into the South China Sea primarily as a commercial venture, its strategic position with regard to its engagement in the Asia-Pacific can be discerned from a statement by its National Security Advisor, Shivshankar Menon, some time back in the United States when he said at the Carnegie Endowment for International Peace, “China has a presence in South Asia. It has been there for a long time… We have had a presence in East Asia for a long time. And that’s a fact.” Emphasizing peaceful cooperation, he said: “We have global interests, Chinese have global interests, all of us do... All the major powers, as I said, are not only inter-dependent on each other, but also are dealing with each other across a whole range of issues—none of which recognizes some artificial constructs like South Asia or East Asia. These are interlocking circles about security or prosperity, whichever way you look at it” (Zee News, October 1, 2010). This succinctly reflects India’s strategic thinking with regard to the Asia-Pacific. India’s strategic interest in the South China Sea can also be attributed to the fact that 40 percent of its trade with the United States transits through the West coast, besides augmenting its energy resources.

India’s foray into the South China Sea can be attributed to many reasons. While it is primarily, as maintained by the Government, for commercial purposes, it also resonates with the government’s “look east” policy of comprehensive engagement with the countries of the region, particularly with Vietnam. The spat between India and China over the South China Sea was also exacerbated also due to India’s support for freedom of navigation in the South China Sea in multilateral forums, which China perceives as containment of China.

India has not been dragged into turbulence over the South China Sea recently, as China has focused its efforts on contesting its disputes with Japan and the Philippines. India in the meantime has also fleshed out further clarity with regard to its stated position on the sea. Indian External Affairs Minister Salman Khurshid recently said, “We are not involved in a dispute in the South China Sea. We believe that it should be settled bilaterally between countries which have different points of view. It should be done peacefully and within four corners of the code of conduct that ASEAN is developing for the South China Sea” (The Hindu, August 15). While this position is an endorsement of Beijing’s stance on the issue, New Delhi consistently stands for freedom of navigation and sea lanes of communication. Answering a Parliamentary Question from Lok Sabha, the popular chamber of India’s Parliament, then-External Affairs Minister S.M. Krishna wrote on August 17 that “India has on several occasions reiterated its position that it supports freedom of navigation, right of passage and access to resources in accordance with accepted principles of international law. These principles should be respected by all. Sovereignty disputes in the South China Sea must be resolved peacefully by the countries concerned in accordance with international law and practice.”

India boldly articulated its position with regard to freedom of navigation at the Commemorative Summit of the ASEAN-India summit held in New Delhi in December 2012 to mark its 20th anniversary. Addressing the Summit Prime Minister Manmohan Singh reiterated the idea of regional security architecture. He urged the member countries to intensify their engagement for maritime security and safety, for freedom of navigation and for peaceful settlement of maritime disputes in accordance with international law, political and security consultations, including in regional forums such as the East Asia Summit, the ASEAN Regional Forum and the ASEAN Defense Minister’s Meeting Plus and proposed that the leaders should work together more purposefully for the evolution of an open, balanced, inclusive and transparent regional architecture (Opening Statement by Prime Minister at Plenary Session of India-ASEAN Commemorative Summit, Strategic Digest, January, 2013) .

It is still unclear as to whether OVL will still pursue oil exploration in Block 128. The annual report of OVL for the year 2009-10 mentioned that the drilling activities in Block 128 would be resumed in 2011. However the report for 2011-12 simply mentions that PetroVietnam has suggested OVL to continue the exploration program in the block for additional two years with effect from 16th June, 2012 by revisiting the geological model with the integration of data likely to be available with the assistance from Petro Vietnam.

Ashton Carter quits, blow to US-India defence ties


By Ajai Shukla
Business Standard, 12th Oct 13

In a setback to the evolving US-India defence relationship, US Deputy Secretary of Defence, Ashton Carter, has announced that he will retire on Dec 4. Since the beginning of this year, when President Obama appointed Chuck Hagel to succeed Leon Panetta as Secretary of Defence, Washington has buzzed with rumours about Carter’s dissatisfaction at not being promoted to the post.

Since Jun 2012, Carter has almost single-handedly pushed US-India defence ties through the Defence Trade and Technology Initiative (DTI), which he co-chairs with India’s National Security Advisor (NSA) Shivshankar Menon. The DTI aims to smoothen the flow of high technology by unlocking US regulatory hurdles to the export of sensitive technologies to India.

With Defence Minister AK Antony disinclined to deepen ties with Washington, Menon encountered severe limitations on what he could do. Carter, however, continued to push the relationship, bulldozing the Washington bureaucracy into moderating its hands-off attitude to India.

As Business Standard first reported, Ashton Carter proposed that US and Indian industry join hands in co-manufacturing a range of defence systems, including the Sikorsky/Lockheed Martin MH-60 Romeo multi-role helicopter; the Raytheon/Lockheed Martin Javelin missile; a scatterable mine system; and the Mk-45 127 millimetre rapid-fire naval gun.

When that evoked no response from New Delhi, Ashton Carter upped the ante, proposing that the two countries cooperate to design and develop the next generation version of the Javelin, already the world’s premier anti-tank missile. The DRDO is understood to be studying this unprecedented proposal.

In contrast to the over-cautious and technically ill-equipped bureaucrats in New Delhi, Carter brought serious accomplishment to the table. He holds a Ph.D. in physics from Oxford, and has long experience in the Pentagon, including almost a decade of service on the Defence Science Board.

Endorsing Carter’s ability, Chuck Hagel said in a written statement last night: “(Carter) possesses an unparalleled knowledge of every facet of America’s defense enterprise, having worked directly and indirectly for eleven Secretaries of Defense over the course of his storied career.”

Carter’s last visit to India was on Sep 17-18, when he advocated a “new and much deeper form of partnership”, with R&D talking place cooperatively between the two countries.

India remains steadfast in refusing to sign what Washington terms the “foundational agreements” for a partnership --- the Communications Interoperability and Security Memorandum of Agreement (CISMOA); and Logistics Support Agreement (LSA). But Carter declared last month that the two countries “have decided to work around that.”

There is speculation about Carter’s successor. “The Obama administration is concentrating power in the White House, so somebody with strong political links would probably succeed Carter. The last time around, Michele Flournoy was one of the contenders. She could be considered again,” said a Pentagon watcher.

Baloch resist illegal occupation by Pakistan


Pakistan’s Home and Tribal Affairs department revealed that 592 mutilated bodies have been recovered from Balochistan since 2010.The official record reveals a half-truth, but it exposes Pakistan’s notorious “pick, kill and dump” policy in resource-rich Balochistan. It clearly reflects the human rights crisis in the region. Baloch political activists based in London recently staged a protest outside Pakistan High Commission on Sept. 28 against Pakistani armed forces.


President, Baloch Republican Party, UK

(Transcription) "It has been highlighting military operations in Balochistan, also killing Baloch people and torturing them and sending their dead bodies to their families. So we are here to protest against Pakistan because it was an illegal occupation of Balochistan in 1948."

Representatives of Baloch Republic Party and Baloch National Movement later marched to 10 Downing Street to seek international intervention for preserving human rights in Balochistan.

They blamed the ethnic Punjabi majority who dominate the Pakistani army, bureaucracy and the government of trying to wipe out their linguistic and cultural identity, and said the Baloch would not settle for anything less than a separate homeland.


Spokesperson, Baloch National Movement

Transcription: We want freedom of Balochistan because we have never been a part of Pakistan. We were forcefully occupied in 1948. Before that we had an independent country. So our actual demand is freedom of Balochistan. Provincial autonomy or anything like that is not our demand. We want complete independence from Pakistan.

Balochistan is recovering from a quake of 7.7 magnitude that claimed more than 500 lives and left over 100,000 homeless.

However, the activists said that they do not want any aid from Pakistan.


Member, Baloch Republican Party, UK

(Transcription) In Balochistan, Pakistan has done really nothing. But even if Pakistan will do anything, the Baloch people will refuse even Pakistan aid. They don't even want Pakistan aid because we want our lands.

Pakistan’s growing interest in resource-rich Balochistan has fuelled the demand for a democratic and independent Balochistan.

The Baloch nationalist, political and social activists continue to raise their voices at international platforms, including the United Nations.

They want an end to the colonial rule imposed by Pakistan.