The concluding  part of foreign Secretary Shyam Saran's address at the Shanghai Institute of International Studies on the 'present dimensions of India's foreign policy.'

Part I: 'Our neighbors have the highest priority'

Our relationship with China is a key component of our 'Look East' policy. There is a strong consensus in India on improving and developing our relations with China. Together with China, we have taken a number of positive measures to improve the quality of our relations across a wide range of areas, without allowing the existing differences to affect the overall development of our ties.

Despite our differences on the boundary issue, peace and tranquillity has been maintained in the India-China border areas, which is by no means a minor achievement. We have an active defence exchange programme and an elaborate matrix of confidence building measures that have helped promote greater trust between our two armed forces. We have a range of dialogue mechanisms through which we are increasingly able to understand and appreciate each other's point of view and address outstanding issues.

PM, China prez to exchange visits in 2006   

There are many who look at India-China relations with the old mindset of 'balance of power' or 'conflict of interests' and see Asia as a theatre of competition between these two countries. Such theories are outdated in today's fast-emerging dynamics of Asia's quest for peace and prosperity and its interconnectedness. So are perceptions in some quarters that India and China seek to contain each other. To the protagonists of such theories, I would only like to say that India and China, as two continental-size economies and political entities, are too big to contain each other or be contained by any other country.

Today India and China are engaged in a positive way to expand their commonalities with extensive dealings in bilateral, regional and multilateral forums. Indeed, the determination of our two countries to qualitatively elevate our ties by establishing a 'strategic and cooperative partnership for peace and prosperity' reflects our shared conviction that India-China relations have now acquired a long-term, global and strategic character and, hence, must be treated as such. Our rapidly growing trade and economic ties are a testimony that we are not just passively bound by our common neighbourhood, but are constantly interacting through a positive and meaningful agenda of collaboration.

'Rise of India, China a wake up call for world'

That from a meager few hundred million dollars in the beginning of the 1990s, our trade was expected to surpass US$18 billion last year should only underline the enormous potential for mutual reward that lies in store if our two countries cooperate. We are determined to take this process further ahead.

The simultaneous emergence of India and China as Asian and global powers in fact makes it imperative for them to be sensitive to each other's interests and aspirations. The prevailing global paradigm of cooperation among major powers also demands from the two countries that they work together to mutually support their rightful place in the comity of nations. We in India believe that there is enough space and opportunity in Asia and beyond for the two countries to grow.

With regard to the resolution of the boundary question, we are committed to carrying forward the process of exploring a political settlement through the mechanism of Special Representatives. We acknowledge the complexity of this longstanding issue but remain confident that a mutually acceptable solution can be reached if both sides show willingness to take bold and pragmatic decisions, accommodating each other's vital interests.

As we move forward through negotiations, it is important for us to look at the boundary question from the long-term and strategic perspective of India-China relations, rather than as a mere territorial issue. There is a historic opportunity in front of us to settle this outstanding issue that we should not miss.

Indo-China border talks in Feb

Ladies and gentlemen, if we are looking at Asia in the coming years, there is no doubt about a major realignment of forces taking place in our continent. Besides the emergence of India and China as two economic powerhouses in this region, there is Japan [Images], the second largest economy in the world, which will retain an influential role in Asia's political and economic future, and with whom our relations are developing on the foundations of 'global partnership' with a strong economic and strategic thrust. With ASEAN as well, our partnership is steadily expanding and deepening. We believe that ASEAN holds the potential to become the fulcrum of economic integration in our region.

The future of Asia is in reality the sum of the success of each of these components and the strength of their inter-linkages. The key to ensuring long-term security and stable equilibrium in Asia lies in the collective ability of Asian countries to build mutual economic stakes in one another. It is with this conviction that we espouse a vision of an Asian Economic Community.

India a powerhouse: ASEAN   

It can be a neighbourhood of peace and shared prosperity in which people, goods, services and ideas can travel with ease across borders. It may perhaps take the form of a dynamic, open and inclusive Pan-Asian Free Trade Area that could offer a third pole of the global economy after the European Union and NAFTA and would, in all certainty, open up new growth avenues for our economies. This will not be easy, but India is willing to associate with other like-minded countries to make it happen.

The recently concluded East Asia Summit has laid the foundations for a cooperative architecture in Asia on an unprecedented scale and we hope, will potentially launch the process towards the possible creation of an East Asian Community. We would be happy to work closely with China towards progressive realization of such an East Asian Community and eventually, a larger Asian Economic Community.

Much has been said in recent months about India's relations with the United States. It is true that this relationship has acquired remarkable maturity and dynamism in recent years. A number of independent developments, some of which I have already noted, have created the climate for this transformation, including the end of the Cold War, India's emergence as a dynamic economic force and an objective assessment of the strategic implications of a world dominated by knowledge-driven societies.

During the visit of Prime Minister Dr Manmohan Singh to the US in July last year, both sides agreed that India-US relations are moving beyond a bilateral partnership towards a global partnership, which is anchored not only on common values but also common interests. The visit served to highlight the strategic dimension of India's relationship with the US and underlined our common interest in combating terrorism, proliferation of weapons of mass destruction and enhancing global peace. There has been a convergence of views on strategic and security issues and on opportunities that exist for the India-US cooperation in defence, science and technology, health, trade, space, energy and environment.

Iran, the US, energy and nuclear issues   

There is also a growing US recognition of India's central and enhanced role in international institutions and processes. The US's economic and political stakes in the growth of the Indian economy and its integration with the global market have provided impetus to India-US cooperation in a way that meaningfully addresses constraints on India's growth, including the deficits of energy and infrastructure.

India has also embarked on strengthening her multi-faceted relationship with Russia [Images], with whom her traditional strategic partnership has been renewed. Recent high-level visits, including that of President Putin to India and the visits of our President and Prime Minister to Moscow [Images] within a little over one year, have added great impetus to this process. We are also encouraged by the emerging contours of the trilateral cooperation between China, Russia and India.

We have also moved forward in rejuvenating our relations with the European Union through our new 'strategic partnership'. There is a growing recognition of India as an indispensable partner within the EU. Indeed, the EU is as reflective as India is of a multi-lingual, multi-religious and multi-cultural society. Our shared values and beliefs in democracy, human rights, pluralism, independent media, and rule of law make India and the EU natural partners as well as factors of stability in the present world order.

Britain for India-EU FTA   

India remains committed to pursuing an independent foreign policy that best serves her national interests and accords with her expected role in the emerging global political and economic order. This policy seeks to promote multipolarity in international relations and to strengthen forces of multilateralism that help protect the interests of the developing countries and reinforce geo-strategic stability in the region and the world at large. To this end, we have sought to build on our traditional links with Africa and to cultivate stronger bonds with the Latin American countries. We believe that as two largest developing countries, India and China can together lend greater voice to the aspirations of the developing world and help the developing countries harness the positive forces of economic globalization. We should continue to work towards shaping a coalition of the developing world.

Today India is on the cutting edge of economic, technological and developmental transformation of significant dimensions. She is regarded as a factor of stability, a model of secularism and plurality and as an economic power that is destined to play a greater role in international affairs. In keeping with this changing image of India, we have adopted a foreign policy, which has a clear focus, a sense of maturity and responsibility, and a vision to make India strong and prosperous in the 21st century.

As we do so, we remain steadfast to the core ideals of India's foreign policy, which were laid down by our first Prime Minister Jawaharlal Nehru and which have guided us since our Independence. At the same time, we also remain vigilant to the new demands and compulsions imposed upon us by a rapidly transforming world around us.

We are confident of our capacity and capability as a nation to respond successfully to these newly emerging challenges and opportunities. We also remain confident that India would continue its journey towards a destiny that was eloquently articulated by Pandit Nehru in 1947, a destiny in which India 'attains her rightful place in the world and makes her full and willing contribution to the promotion of world peace and welfare of mankind'.

(Concluded)