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China-Mauritius FTA: A setback for India?

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The China-Mauritius trade pact shows yet again that New Delhi has failed to understand the aspirations of its smaller territorial and maritime neighbors. With this [China-Mauritius FTA], India risks losing its economic and military influence over Mauritius,” says former Indian Navy officer Seshadri Vasan. Mauritian economist,  Pierre Dinan, explains that Mauritius should not interfere in their quarrel but to try and benefit from it.

China has given big incentives to Mauritius to help it obtain access to its market of 1.4 billion people under the current Free Trade Agreement (FTA) which went into effect on the 1st of January 2021. On the other hand, the FTA between India and Mauritius, the  Comprehensive Economic Cooperation and Partnership Agreement (CECPA), remains unsealed. 

According to former Indian Navy officer Seshadri Vasan, India’s inability to seal a comparable trade deal with the Indian Ocean Island would damage its geopolitical interests. With the FTA, China has also secured a military presence in the Indian Ocean, making it a challenge for the Indian Navy’s dominance around Mauritius.  

Mauritius was India’s primary recipient of FDI in 2018 and 2019, making the latter the country’s largest trading partner. However, with $2 billion in FDI raised, Mauritius fell to fourth place in terms of India’s highest FDI donor during April-September 2020. 

With India’s close-knitted relationship with Mauritius, signing a similar FTA first would have seemed more plausible. However, given that India failed to approve the FTA with Mauritius in time, China acted faster and gained a strategic foothold in the Indian Ocean, causing India a major strategic setback. 

In an interview with Sputnik News, Vasan, present Director of Indian think-tank Chennai Centre for China Studies said: 

“It is definitely a failure on part of our policy-making,” as India’s Prime Minister Narendra Modi made sure to cultivate a relationship with Mauritius ever since he took office in 2014, the Mauritian Prime Minister at that time, Navindchadra Ramgoolam, was the only non – SAARC (South Asian Association for Regional Cooperation) leader to be invited to witness the swearing-in ceremony of the new government in New Delhi in May 2014. During his visit, they also held wide-ranging discussions on matters of mutual interest. 

In return, Prime Minister Narendra Modi visited Mauritius from 11-13 March 2015, as Chief Guest for Mauritius’ National Day celebrations. During his visit, PM Modi commissioned the OPV Barracuda, built by an Indian shipyard and financed by a GoI Line of Credit, into the Mauritian Coast Guard. He also launched the construction works of the World Hindi Secretariat and addressed a large and enthusiastic public gathering at a Civic Reception held in his honor. 

Besides the political relationship between the two countries, Mauritius also has a major part of its population coming from Indian ancestry amongst other cultural ties. 

Mauritius and India’s relationship goes way back with diplomatic relations being established in 1948. Mauritius also maintained a connection with India through the Dutch, French and British occupation. During this period, there were many events that marked Mauritius’ relationship with India such as the 2nd November 1834, whereby the ship ‘Atlas’ docked in Mauritius carrying the first batch of Indian indentured laborers. Following several batches of incoming Indian indentured laborers, many of them settled permanently in Mauritius, resulting in Mauritius’ major part of its population being of Indian descent. 

Concerning the Chinese military presence, Vasan expressed that the greater the economic engagement of these smaller Indian and South Asian countries with China, the Chinese expanded military presence in these countries is to be expected. Thus, Beijing is expected to expand the involvement of its Navy in the waters of Mauritius in the coming years to defend its commercial interests. 

This would directly challenge India’s Navy’s dominance around Mauritius, which played a key role in guarding the Mauritian waters.

Where does Mauritius stand?

Amidst China and India’s attempt to use Mauritius to gain a strategic foothold, Pierre Dinan, Economist, explains that Mauritius should not interfere in their quarrel but to try and benefit from it. 

Mauritius has to be careful. It can try to take advantage of the fight between the two superpowers and get us certain favors, such as these trade agreements, but without selling them our soul,” he said. 

He further added that Mauritius, as its symbol suggests, is the star and key of the Indian Ocean and that Mauritius should be careful and act intelligently. An indication of Mauritius’s geographic position whereby it occupies an Exclusive Economic Zone of 2.3 million square kilometers, which is recognized by the United States. 

India and China, which are fighting for reasons that we do not want to get into, want to have a foothold in the Indian Ocean,” 

Let’s welcome them and if we manage to have two valid trade agreements for us, so much the better. We play elbow to elbow to be at best with these two superpowers,” he explained. 

He also mentioned that India however is better positioned to benefit from Mauritius as most of its population are of Indian ancestry.