The year 2021 has seen a rapid change of scenario in India's neighborhood with situations in Afghanistan and Myanmar getting more intense day by day.  

In the east, the February 1 military coup in Myanmar has certainly put India's long-term investment goals in the country in a state of jeopardy. And to the west, with the Taliban wresting power, concerns arise over the future of India's huge investments in the country during the past two decades.
 
So the question that naturally arises is should India be more prudent in conducting its overseas investments? Time and again India has invested huge sums in risky ventures in Afghanistan and Myanmar. In the process, India has not been able to utilize its next-door-neighbor Bangladesh properly. The amount of foreign direct investment (FDI) from India to Bangladesh has remained comparatively low, though it has increased in recent years.

In Myanmar, now there are over 100 Indian companies operating with investments estimated to be over USD 1.2 billion, according to official statements from the Indian embassy in Yangon.  When Indian Foreign Secretary Harsh Vardhan Shringla and Indian Army Chief Manoj Mukund Naravane visited Myanmar last October, India declared that it will invest USD 6 billion to build a petroleum refinery in the country.

Min Aung Hlaing, the Burmese military ruler, announced in a speech marking six months following the coup that the state of emergency declared after the coup will last until August 2023. But continued political turmoil in the country certainly risks the future of Indian investments.  

In the past, Myanmar has dealt with economic sanctions imposed by different international actors. Financial aid cuts, asset freezes, and investment restrictions have all been part of previous economic sanctions on Myanmar. Any sort of investment restrictions certainly has the probability of paralyzing Indian investments in the country.

India’s risky Afghan ventures

In Afghanistan, India has spent USD 3 billion on a number of infrastructural and commercial initiatives. It has also completed over 400 projects throughout Afghanistan. The most noteworthy among these is the Afghan-India Friendship Dam project (also known as the Salma Dam project), with a 42 mw capacity The 218 km long Zaranj-Delaram highway project is another noteworthy mention. This highway built near the Iran-Afghanistan border provides access to Iran’s Chabahar port.

Other projects include the newly built parliament building in Kabul, restoration of the Stor palace and many others. But with the Taliban in effective control of the country, India faces an uncertain situation. In the case of the most catastrophic scenario, India may even lose its diplomatic presence in Afghanistan.

Despite being well aware of the risks associated with investing both in Myanmar and Afghanistan, India took the 'long way home', and as such there are now serious doubts about the future of these investments.

Avenues unexplored

In the case of India-Bangladesh relations, it is often argued that much of the opportunities which can be mutually beneficial for both parties have often remained unexplored. India’s lack of farsighted attitude can be regarded as a prime reason here.

India is yet to explore its next-door neighbor properly. Bangladesh, despite being India’s largest trade partner in South Asia, receives only around 1 percent of India’s outward FDI. Bangladesh is the largest beneficiary of India’s lines of credit (LOC), but that project is also lagging behind. Since 2010, India has only given USD 739 million of the total USD 7.36 billion promised.

The geographic location of Bangladesh bestows on it all the ingredients necessary to become a regional economic hub. With the vast Indian subcontinent in the west, China in the north and entire Southeast Asia on the east, Bangladesh is located at a crossroads of a combined market of 4 billion consumers.

According to a 2021 World Bank report, smooth transport connectivity between Bangladesh and India can increase nationwide revenue in India by up to 8 percent. But India's poor record of implementing infrastructure projects in its neighboring countries has pushed Dhaka even more towards China.

Unlike Afghanistan or Myanmar, Bangladesh is an excellent investment destination, thanks to a stable government, astute policies, and a vibrant business community. Two special economic zones (SEZ) at Bagerhat and Chattogram, dedicated entirely for Indian investments, clearly show the positive attitude of the Bangladesh government.  

So it is high time the Indian government and policymakers re-evaluate their priorities and act more prudent in pursuing overseas investments. From a policy perspective, India’s investments should be aimed at more plausible destinations and Bangladesh, in the current political-economic scenario, is more suitable than any other country.

(The writer is a Dhaka, Bangladesh, based researcher of South Asian affairs. The views expressed are personal. He can be contacted at sinhaanup1990@gmail.com)