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Indian GST: Another Modi gambling for perpetual economic disorder?

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Indian PM Modi is in news again with a new economic project called GST.  GST could mean two big things, one: Global State terrorism and two, Goods and Services Tax.  While Indians are still struggling with the impact of demonetization, the Modi government has come out with yet another shock called GST.

Apparently, Modi is still eager to be in the news and he does things only to promote that goal at a heavy cost for the people of India. His foreign tours, being arranged jointly by PMO, foreign ministry and Indian embassies abroad,  are meant to boost Modi’s image as a fast running PM of India. In fact, Mod runs into wanting state plane to take him for foreign tours. He thoroughly enjoys his foreign tours, meeting big leaders and having food with them and “shake hands” photos with them for Indian media lords.

The Modi government keeps trying various economic strategies, even if for fun, that harms the people at large. But neither Modi nor BJP nor RSS is worried about the consequences of their actions. It seems the BJP regime is targeting the people of India for ignoring them for too long to offer it the mandate to rule the nation. PM Modi is also not sure if people would repose their faith in his party or government when the next general poll take place.

The Modi government thus punishes the people of India while Mod himself keeps visiting big nations as his prime hobby along with big entourage of media lords and  government officals. Modi just ignores the sentiments of Indians by going to Israel against  Indian support for the support for the Palestinians. In order to make his visit to Israel easy without any criticism in India, PM Modi has launched the GST so that people of India and media are busy with the issue while he would enjoy life in Israel. 

The Goods and Services Tax being introduced by Indian regime aiming at a standard tax system for entire country and in every state and region. Either could destabilize the weak nations and common people and could only promote capitalism and support global imperialism. Here we are talking about the second problem of new Indian economic law GST, relating to uniform taxes. PM Modi has called it Good and Simple Tax. But common people are puzzled as they care confused about the consequences of GST. After their disastrous experience with demonetization drive, Indians are scared f of any new shock therapies by the Modi government. Certainly, they want to live with fewer problems.

 One party, one system, one religion, one tax

Taking the one time victory as the permanent vote  by Indian people, the RSS/BJP government is bent upon one  system, one party and one religion system in India. A nationwide Goods and Services Tax (GST), came into effect on Saturday from midnight, has faced criticism for its complex design.  GST, being billed as the biggest tax reform since Independence, will subsume all indirect state and central levies, making India a single market. Under GST law, the producer must have to pass the added benefit of tax reduction. Businesses and their consultants have opposed it and said that it’s against the free market concept.

 Union finance minister Arun Jaitley has likened the roll out of the GST – whose bill was cleared by both houses of Parliament last month after six years of stormy debate – to a revolution and the “most significant taxation overhaul in India.” PM Narendra Modi said the GST reflects the spirit of “one nation, one aspiration, one determination.” Opposition parties oppose it.

 FM Arun Jaitley on June 29 asked opposition parties such as Congress and the Left to reconsider their decision to skip the midnight GST launch tomorrow saying they were all consulted on the indirect tax reform and cannot run away from it. “I hope every political party will reconsider and revisit its decision” on not participating in the launch event to be organised in the Central Hall of Parliament, he said. The government, FM Jaitley said, remains committed to the Goods and Services Tax (GST) as any other reform. “It is single most important taxation reform in 70 years.” All decision on GST, including rules and tax rates, were taken in consultation with states and political parties must display broad shoulder and own up their responsibility, he said.

The leader of Indian opposition Congress decided to keep away from the special midnight June 30 meeting convened by the government on GST implementation. Trinamool Congress has already announced its decision to boycott the event. Left parties also boycott the meeting as they reject the GST. CPI (M) general secretary Sitaram Yechury has already questioned the government on “hurrying” into introducing GST and recalled that the ruling BJP had opposed the system when it was in the opposition.

The Left parties will not take part in the special midnight meeting on June 30 convened by the government to launch the Goods and Services Tax (GST), CPI leader D Raja said today. He said the parties will not take part in the meeting in view of protest by small and medium scale entrepreneurs, traders, weavers and informal sector workers on the way the GST is being implemented. “The Left will not be participating in the midnight GST meeting. People are agitating across the county. ..We cannot be celebrating when people are agitating,” the Rajya Sabha member said.

The Modi government wants smooth rollout of the GST the 30 June in the parliament. A war room will monitor and take immediate action on a complaint. Government officials have specially alerted to thwart any attempt of cartelization or disruption in the new tax regime. The government said it will use the circular-shaped Central Hall to launch the new taxation system that is set to dramatically re-shape the over USD 2 trillion economy. A gong will be sounded at midnight to usher in the GST. Prime Minister Modi will be the key speaker at the function. President Pranab Mukherjee, who is enjoying finals days at Presidential palace with Mogul Garden, , is also likely to attend the function, where former Prime Ministers Manmohan Singh and H D Deve Gowda have been invited too. Central Board of Excise and Customs (CBEC) chief said that “The finance ministry has set up a GST feedback and action room specifically for government officials to approach it with any urgent queries related to problems of GST in any area”.

The PMO and Indian government officials have specially alerted to thwart any attempt of cartelization or disruption in the new tax regime. The government has created a ‘war room’ to monitor GST (Goods and Service Tax) implementation process, a new indirect tax system which will roll out on Saturday. In North Block, the office building of Finance ministry has allotted a space named as ‘GST Feedback and Action Room’. Former Chairman of CBEC said that “The government wants these benefits to reach the consumers through these Anti- Profiteering Rules. On the other hand, its rampant application will create chaos and serious disruptions in business”.

Equipped with multiple phone lines and computer systems and manned by tech-savvy youngsters, a “mini war room” has been set up in the Finance Ministry to deal with crises related to the implementation of GST or goods and services tax. War room is also ready for prompt action from tax evasion to technical confusion on rates to transportation related issues. War room responsibility is more crucial as the anti-profiteering body is still in the process of being.

GST- one tax and several problems

GST is not as simple as Modi and Arun want us believe. It is highly complicated at different levels. BJP, a party of  finical lords,  cannot devise any policy to multiage the poor or common people.

The GST, a worldwide accepted tax system, was first introduced by France in 1954.  Presently, around 160 countries follow the GST or VAT in some form or the other. In some countries, analysts say, VAT is the substitute for a GST, but conceptually it is a destination-based tax levied on consumption of goods and services. However, only Canada has a dual GST model, akin to what India intends doing.

Indian government wants to replace it with a more streamlined nationwide Goods & Services Tax (GST) that is hailed by many as the country’s most pathbreaking tax reform and deplored by others who fear it will turn the economy down. The new system will eliminate India’s notorious complex layers of taxation including purchase, entertainment, excise, luxury and sales taxes (VAT) and others. Analysts predict that the GST, if properly implemented, will likely bolster the country’s GDP by 2 percent.

One of the major objectives of GST is to make the tax incidence on consumers less by reducing compliance costs, removing cascading of taxes, increasing the tax base, reducing logistics costs and reducing the effective rates of taxes from the present level. Other country experiences suggest that GST led inflationary pressures in an economy because producers have refused to pass added profit to consumers.

GST law said, “Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices”. Revenue secretary Dr Hasmukh Adhia had said that “We expect companies to cooperate. We hope we don’t have to use the weapon.”

A unified tax system is likely to remove a slew of indirect taxes as well as the cascading effect of taxes. Manufacturing costs will be reduced; hence prices of consumer goods – cars, phones, FMCG goods – will also likely plummet. A unified tax regime will also be a deterrent to corruption which will benefit the common man. Other benefits include simpler administration which will ensure an easier collection of revenues, widening of the tax net and plugging of leakages and multiple taxations which will boost the government’s revenue stream and efficiency. For the consumer/tax-paying citizens, the GST would mean more transparency, proportionate taxation, relief in overall tax burdens, slightly cheaper goods and services.

India’s gold industry is optimistic that the gold supply chain will be more transparent and efficient. The GST, some hope, will also provide an edge to the travel and tourism industry by reducing costs for customers, streamlining taxes and thus promoting overall growth. Under the GST, rates finalized for air travel, flying economy will attract a 5 percent tax.

India currently has one of the worst tax-to-GDP ratios among major economies at 16.6 percent, less the half the 34 percent average for the members of the OECD and also below many emerging economies. Improved tax compliance should shore up public finances, augmenting resources for welfare and development spending and giving a lift to the $2 trillion economy.

While there is no official estimate of the potential fiscal gain, some tax experts say the measure, after the initial teething trouble, would lift the tax-to-GDP ratio by as much as 4 percentage points as the number of tax filers is estimated to more than treble to 30 million. In future, compliance is going to be extremely crucial

True, not many are interested in paying taxes and as corruption, being religiously promoted by the regime and politicians, has badly affected the tax officials as well, most pay taxes not properly.

The unorganized sector of India’s economy is vast, employing an estimated nine out of 10 workers. While staying outside the GST regime risks losing business, joining it will necessitate an overhaul of firms’ accounting systems and an investment in technology.

The new tax system requires three filing a month plus an annual return – a total of 37 filings – for each of India’s 29 states in which a firm operates. For smaller companies operating on wafer thin margins, hiring accountants and technical staff could substantially dent their bottom line. A head of portfolio management services at financial firm in Mumbai says all consumer-facing industries will be big beneficiaries of the GST

Most of those who argue for GST are also the supporters of BJP government. Only time will let the peole know the real move of GST as India has long ago under the corrupt Congress misrule mortgaged its economic policy to IMF and World Bank and increasingly work to promote American economic interests in order to gain some favors from Washington. The Hindutva fanatics are too eager to promote those “structured” relations with USA.

Of the eight million existing tax payers, 6.6 million tax assesses have already enrolled for GST. And about 1.7 lakh new applications for GST have come in. However, the silence inside the headquarters of Goods and Services Tax Network or GSTN, housed on the fourth floor of an imposing glass building aptly named World Mark I right next to Delhi’s international airport, is misleading. Behind white and blue cubicles, professionals with expertise in IT and taxation are putting in extra hours to ensure that the switch over to GST is a smooth affair. The biggest task for GSTN – a not-for-profit company set up to manage and collect indirect taxes – is to help traders and businessmen migrate to the GST platform.

Indian GST Network has developed a tool where you can work offline and upload when there is connectivity. It will take seconds to upload your returns. As the officials test and retest their programs and applications, our question “when was your last off day” made everyone burst out. “We will have to check our records,” said a former banker who’s “measuring end user results of the GST software.” “This is our national service.”

However, some chief ministers of Indian states have already expressed their dissent. How is one-nation-one-tax good politics for all 29 states and several Union territories and the center given the fact they all have diverse economic strengths and weaknesses?

Observation

GST interferes with federal arrangement and imposes its will on the states and thereby encroaches upon state rights and privileges. In other words, federal government tries to control entire nation and state resources.

One tax indeed means big problems for the people of India.  Conscious people in India feel if India has been purchased by international frauds that play with the psyche of Indians who want to see their nation a super power as soon as possible to challenge both USA and Russia while making China a non-issue.  

GST is likely to harm the common masses. GST is exorbitant. Tax is likely to increase on a massive scale. Traders are not going to reduce the prices.

Who will benefit? Any reform or policy is supposed to help the people of the nation. Corporate lords will have more profits under GST.

Once lauded as path-breaking, which is now causing rancor in the European Union.  Lesser-developed economies like Portugal, Italy, Greece and Spain have had to adopt extreme austerity measures that have sent unemployment soaring all over southern Europe. This has led many of the anti-EU states to consider a referendum on exiting the union a la Brexit.

In India too, there is a strong chance that the GST, the country’s boldest and riskiest tax reform yet, may give the ruling political establishment a greater headache than it may have bargained for.

The country’s biggest tax reform since independence is promising to bring millions of firms into the tax net, boosting government revenues and India’s sovereign credit profile. Until now, all rundown premises and small scale operation has kept the business below the radar of India’s tax officials. Since July 1, however, the party will be over. The new tax will require firms to upload their invoices every month to a portal that will match them with those of their suppliers or vendors. Because a tax number is needed for a firm to claim a credit on the cost of its inputs, many companies are refusing to buy from unregistered businesses. Those who don’t sign up risk losing any customer who has.

The nation is waiting for the real problems of GST to come to fore.

There are serious apprehensions in the minds of people over GST’s implementation. Unfortunately, India is under the grip of international frauds like the BJP MP and IPL boss Mallya. Unless corruption is contained and done away with, a new tax system won’t be fruitful. If the regime let its supporters to loot the nation’s resources and evade taxes, nothing good or positive is going to come of the envisaged tax reforms.

The GST is in fact a regressive tax, which will consume a higher proportion of poor people’s income, compared to those earning large incomes.  Many feel that imposition will also result in a surge in prices of services like telecoms, banking and airlines. If the actual tax benefit is not passed to consumers, and sellers increase their profit margin, the prices of goods will go up instead of down. Even assuming the GST delivers on the revenue front after an initial lag, one has to realize that it goes counter to the long-term trend of devolving greater powers to states.  It centralizes in the GST Council the powers of indirect taxation, and could thus be a constant source of friction between center and states, or between states if some gain or lose more than the others.

One also suspects if the governments of Congress and BJP are trying to eliminate the poor and have-nots from the Indian economic system by GST and other such measures as the IMF and World Bank, committed to capitalism and colonialism, are pressing the third world to do away all subsidies to the poor. .

The BJP government that worships cow and Israel as real gods, has been searching new ideas to boost the image of the Modi led RSS government which is shattered by false promises to the people and issues like black money and demonetization. GST therefore is crucial for the BJP government which has lost the blackmoney issue as part of gigantic demonetization drive that spelt disastrous for the common people for months and the impact is not completely worn out.

Uncertainty cannot be the foundation of any government because people suffer not knowing how to deal with new threats to their ordinary lives.

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1.2 trillion rupees on the move: Modi’s greatest piece of purchase yet

Sisir Devkota

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Last week, the RBI (Reserve Bank of India) was taken aback by more than a surprise. Just when it was dealing with the uncomfortable series of events that led to the transfer of surplus 1.2 trillion rupees into the government of India; social media erupted. It quickly realized that losing the battle regarding the transfer would only add fuel to the hoax of closing down nine commercial banks. RBI enjoys considerable amount of autonomy and independence in the largest democracy, and still, it had to kneel down to Modi’s alleged quick fix.

The RBI would have to vouch for the government in times of need, it is primarily what is expected of the institution; but there was a great deal of discomfort in how the government justified it. A committee set up under the ex-governor, Mr Bimal Jalan, cited how central banks would not need so much of surplus to carry out their affairs. Effectively, it was an order, not a request, which became the underlying discomfort behind RBI’s hesitancy in adhering to the views of capital transfer committee. Not that anyone expected the central lender to protest longer, it did however, request Mr Jalan to reconsider the decision at the face of various consequences. To say the least, it was embarrassing for a premier financial institution to be put under the public eye. The social media hoax was another ridicule of the sickly RBI. In the tales of grand conquests, the victorious army steals the wealth from the losing party. Similarly, the BJP led government in India are redefining all forms of state tools in favour of their interests.

Stolen wealth is most often than not used to correct economic blunders. Just like in the tales of grand conquests, the decision to transfer national wealth from the reserve bank is nothing new. It is nevertheless baffling, that the money transfer is looping in the same direction. While the BJP government in India were imposing a comprehensive GST (Goods and Service Tax) policy, they would not have anticipated complaints from large industries over decreased consumer consumption. For a party that is now known to redefine the legitimacy of governance, falling prey to NBFC’s (Non-bank Financial Companies) incompetence or bankruptcy is a visible defeat. Unlike many other soaring economies, there are large group of subsidiary lenders operating in India. On hindsight, economic policies are barely creating tunnels through which the capital is getting recycled in the same loop. Revenues are not generating further revenues. It is merely closing down on its self-inflicted gap.

The Security and Exchange Board of India (SEBI) almost played with fire. Uncharacteristically, it proposed a framework to work together with the RBI in order to claim outstanding defaults from high value clients. The RBI was never going to agree with a defaming offer as such but the incident did fuel the argument of capital shuffling. It only makes the bluff look more real. A strategic plan to counter all measures that would have blocked the transfer of trillions. As Mr Jalan sheepishly implied how the importance of central bank and what is does is only limited to the public perception, RBI fought a fix in between larger or rather dangerous political agendas. Consolidating requests from SEBI to only fall into the whims of the government shows the lack lustre personality of the central funding institution. For the time being, Narendra Modi has his way, a theft of national treasure-like his opposition colleague Rajiv Gandhi expressed in the media. However, there will also be a far-fetched evaluation of Modi’s actions. A move of 1.2 trillion rupees in the same pot. Not by any means, a cunning cover up.

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Walking the tight rope: India’s Diplomatic Strategy in the Middle East

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India’s diplomatic corps have been resolutely articulating India’s stances and furthering its interests in the international fora where multiple challenges emanating from historical and contemporary contexts are being faced. One important factor which India’s astute foreign policy makers have faced is the complicated and crucial engagement with the Middle East. There are multiple facets to India’s engagement in the contemporary context that add to this complexity. One, India’s old adversary and neighbor Pakistan has upped the ante in its diplomatic blitzkrieg especially within the Muslim world. Second India’s has varied strategic interests in the warring Middle East factions. Third, the economic interdependencies and the crisis in the international trade in the Trump era has further complicated India’s position as an economic actor in the region. While there are various constituent elements of India’s Middle East outreach, the contemporaneous concerns relate more to its relationship with the Kingdom of Saudi Arabia, Islamic Republic of Iran and the Republic of Turkey.

India and Saudi Arabia have historically engaged in deep and multi-dimensional political, economic, cultural, defence and strategic cooperation. Saudi Arabia has long been an important Indian trade partner; the Kingdom remains a vital source of energy for India, which imports almost a fifth of its crude oil requirement from Saudi Arabia. Enhanced security cooperation has added a new dimension in the bilateral ties between New Delhi and Riyadh. Recently, Indian PM Narendra Modi was conferred with the highest civilian award of the Kingdom of Saudi Arabia even as the top leadership continues to send signals of deep comradarie and solidarity.

With the ascent of the crown prince Mohammad Bin Salman, various layers in this important diplomatic relationship have surfaced. This has happened in a particularly peculiar geopolitical and geostrategic context where both countries have faced tough challenges to their internal stability and international position. While Kingdom of Saudi Arabia is still emerging from the consequences of the massive attack in its oil fields as well as the widespread criticism of humanitarian crisis in Yemen at the international fora, India is grappling with international criticism and discourse about the situation in Kashmir in context of dilution of its political autonomy as well as prolonged information and communication blackout.KSA has had a mediating role in the Indo-Pak tussle since Pulwama and how this hyphenation has led to competitive photo-ops of diplomatic support. Even as KSA has stood by Indian leadership’s vital interests. However, the Pakistani leadership has been relentless in its attempts to appeal to the leader of the Islamic world for vital economic and diplomatic support, especially in context of the Kashmir situation. Even as Saudi Arabia has managed this delicate equation with deftness, it has given in to Pakistan’s economic demands while making a symbolic gesture of closeness by offering the private jet to Pakistani Prime Minister for his visit to the West.  It doesn’t help that the Indian economy is going through a rough phase. However, the audacious announcement to invest $100 Billion in the fledgling Indian economy is a bold testament of the veritable and vibrant economic partnership between New Delhi and Riyadh. It is pertinent to note that in the contemporaneous challenges that the countries face, Iran as well as Pakistan emerge as key actors that affect the bilateral engagement in a pronounced manner.

Iran is India’s historic ally and third largest supplier of crude oil. However, the India-Iran relationship transcends oil. India, with an investment of $500 million, aims to develop Iran’s Chabahar port as a transit hub for Afghanistan, Central Asia, and the International North-South Transport Corridor (INSTC). Additionally, India is developing two gas fields, namely Farzad-B gas field located in Tehran and the South Pars field located between Iran and Qatar. These projects clearly highlight India’s long-term engagement with Iran. However, India’s muted response to US pressure has been causing slight tension in the bilateral relationship. Even though the top-level bilateral meeting between Indian premier Modi and his Iranian counterpart Hassan Rouhani was successful to diffuse tensions to an extent. The crisis in Yemen, oil trade and even India’s action in Kashmir continue to affect the relationship.

In this context, the challenges emanating from Turkey are also a sign of worry. Even as Turkey has remained an old ally of Pakistan and a supporter of the ‘Kashmiri’ cause, its open support for a rather lonely Pakistan should cause some worry in India’s strategic circles. This is because India has fine diplomatic relations with Turkey and has considerable economic and trade interests.

However, oil being an important consumer and agricultural good in India’s economy, it is important to secure its interests to have access to reliable and affordable Iranian crude oil. The trade negotiations and engagements with the US haven’t had any headway even as the threat of sanctions for buying oil from Iran continues. India could emerge as a trouble-solver in this context especially since this KSA-Iran conflict in oil supply context has global implications. PM Modi’s personal chemistry with the US leadership could be useful in this context.

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From Ancient Era to Imperial Era: Indian Ocean in Historical Lenses

Rana Danish Nisar

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“Whoever controls the Indian Ocean will dominate Asia, the destiny of the world will be decided on its waters,” Alfred Mahan

Authors: Rana Danish Nisar & Ali Nagri*

Among the oceans of the world, The Indian Ocean is third largest covering 70,560,000 km that is approximately twenty percent of the water on the earth.  This is bounded by Asia on the north, Australia in the east and Africa in the west and the Southern Ocean which is situated in the south.  Its borders were defined in 1953 by Hydrographic Organization.  The average depth of Indian Ocean is 3741 m and the Sunda Trench (earlier known as java trench) is the deepest point of it that has a maximum depth of 7906m.  The important points are Bab el Mandeb, Strait of Hormuz, the Lombok Strait, Strait of Malacca and the Palk Strait.  Its seas are Gulf of Aden, Andaman Sea, Arabian Sea, Bay of Bengal, Great Australian Bight, Gulf of Oman, Persian Gulf and Red sea.  It is artificially connected to the Mediterranean Sea through the Suez Canal. The whole Indian Ocean is lies in the Eastern Hemisphere. It is the warmest ocean of the world and its warming is the largest among the tropical oceans. This essay attempts to discuss the history of Indian Ocean from ancient period to imperial period.

Prehistoric and Ancient Era

It is not easy to date back the human history of the world; same is the case with the Indian Ocean. Early rock art in India as in other places like Africa and South East Asia is very difficult to date to a specific period.  The rock art designs found in caves are believed to be 10,000 and 6,000 years back. This art shows a row of animals outlined in red ochre crayon and filled with crisscross lines. According to scientists, around 8000 years ago the first modern humans left Africa and it was through Indian Ocean. They were originated from a single woman from East Africa and therefore named ‘mitochondrial Eve’ as she was ancestor of many Africans tribes and groups of migrants who populated the rest of the world. Bronze Age is some 3500-1100 BC named after a durable metal made by combining copper and tin together.  In southeast Asia bronze spearheads, bells, axes and jewelry have been discovered and some archaeologists argue that Thailand bay have been one of the first centers of Asian bronze industry. Cowries shells (small, oval mollusks, found in many varieties) are very smooth sea shells only found in Maldives, a chain of islands in Arabian Sea, became very important in world trade as these were used as money around the Indian Ocean.  Cowries have been found in ancient Harappa and in tombs in China in second millennium and later. These were not only used in Asia but also found in West Africa where these were used as money. These also provide proof of seagoing Indian Ocean Trade networks and their connection to land routes. Monsoon Winds blow in Indian Ocean in a regular pattern and are playing its important role in sea trade.  Since the beginning of trade and travel monsoon are very important as in one season a ship could sail from Arabia or East Africa towards coast of India and in other season when the wind change its direction this ship will sail back. Merchants are using monsoon winds roughly since 2000 BC and these winds encouraged regular trade, communication and migration across the Indian Ocean.

Classical and Medieval Era

By the end of Classical Era Sugar was very wonderful luxury for cooking and sweetening in Persia. During the next few centuries, sugar spreader widely in the world through Indian Ocean trade. The Isthmus of Kra is a narrow strip of land that connects the Malay Peninsula to continent of Asia. It separates the Indian Ocean form the China Sea.  Traders of Indian reached the rest of Southeast Asia by crossing the Isthmus of Kra rather making the longer and more difficult journey around the entire Malay Peninsula.  By the first century CE, traders from Arabia and Africa regularly transported across the Indian Ocean, overland through the Isthmus of Kra and up to China.  Merchants even continued to use this trade route when political disputes made land travel dangerous throughout the second and third century.  Muziris was also an ancient port city in today’s Indian state of Kerala.  It was famous trading market for Roman-Indian merchants in India. Around 100-200 CE, in Roman Empire pearl jewelry was very popular.  Pearls which were produced by oysters and fished out of sea were very favorite of wealthy Romans.  Pearls were very ideal trade good because it takes very little room on ships but were very precious and commonly used for jewelry and decoration.  These were also used for medicine.  The world’s best pearls came from the water of the Persian Gulf, near Bahrain, UAE, Qatar and Oman.  

The pearling industry was very important to these countries as to export to Roman Empire. Ibn Battuta a very famous traveler and historian also contribute towards Indian Ocean. He tells a lot about Maldives Islands of Indian Ocean and their exchange of unique resources of their islands that directly lie on the Arabian Sea for necessities and food, metals and brass goods and textiles.  Two products were particularly important one was coconut fiber rope very important for shipping industry and second was cowrie’s shells used as currency at that time.  Cowries are known to have been used as money for Indian Ocean trade from the earliest periods to the 19th century. Ivory was another important product highly traded at that time from India and Southeast Asia but African ivory was highly prized because of shapes and very large tusks of African elephants. These were also very soft for carving.  Greek and Roman geographers reported the trade of ivory from East Africa as early as 4th century BC. 

As trade with east Africa expanded, gold rhinoceros horn, mangrove poles with ivory tusks from the Africa were goods traded through Swahili cities of East Africa.  Interestingly, Bananas have been cultivated since 6000 BC or even earlier in Southeast Asia, and were spread to Indian and China and major sea routes of Indian Ocean by 1000CE. As Islam spread and its contact along the land and water routes, bananas were also spread across the Mediterranean, in Palestine and Egypt, and from North Africa it moved to Muslim Spain and to the West Africa.  Bananas could not be grown in Europe, but later in the 1500s, the Portuguese carried the banana to the New World, where it has been grown since the 1500s. Biruni a very famous historian and geographer contributed a lot with the efforts and help of Caliph al Ma’mun to measure the meridian in the 9th century.  Al Biruni advanced the technology to determine the positioning and coordination of earth and different places. An advanced form of this is known as Global Positioning System (GPS) today.  He also writes a book “The Determination of the Coordinates of Positions for the Correction of Distances between Cities in 1025 CE by using the mathematical geography.  Al Biruni work was very accurate at that time and modern measurements confirm it.

Global Era 1500 to 1770 CE

Among the famous explorer of this era a famous name is Ferdinand Magellan from Portugal born in 1480.  When he was younger he worked as a helper in the Queen’s palace where he heard the fantastic adventures of great sailors like Vasco da Gama, Christopher Columbus and Bartholomew Dias, and their discoveries.  Magellan sailed under the Portuguese flag form years until he got a dispute with the Portuguese King.   After it Magellan approached the Spanish King join his fleet with an idea to find a western passage to Spice Islands and to compete with the Portuguese trading system in Indian Ocean.  At the time explorers believed that the Strait of Magellan only opened up into a bay rather than the Pacific Ocean but Magellan believed otherwise.  He sent a small crew to explore the western parts of the strait.  Magellan named the strait as Estrecho de Todos los Santos (the Strait of all Saints) but the Spanish King renamed it in the honor of Magellan as a Strait of Magellan.  Magellan set sail from South American coastline into Pacific Ocean; he named it Pacific as he found it very calm as compared to the Atlantic where he spent the most of time. 

The crew continued the journey for three months without fresh food and many died but ultimately reach to eastern Asia.  This era cannot be concluded without mentioning the Captain Cook.  James Cook is probably the most accomplished European mariner of the 18th century.  He went on three official voyages and spent over a decade at sea from 1766 to 1778. His first voyage was scientific in nature to Pacific Ocean in 1766 to observe and record the transit of Venus across the sun. After his return from first voyage Cook was commissioned to lead another scientific expedition on behalf of Royal Society to search the Terra Australia.  His last voyage was to locate a Northwest Passage around the continent of America.  The purpose of the voyage was to find a Northwest route that many believed led back to Europe.  In 1778 captain James Cook became the first European that has formal contact with the Hawaiian Islands. Cooked named this archipelago the “Sandwich Islands”.  Captain Cook was also murdered in 1779 on a Hawaiian island by local villagers on his final voyage when Tensions rose, and a number of quarrels broke out between the Europeans and Hawaiians.  His voyages are best known for their contributions to geographic discovery, science, and the arts.(Rumely. d, 2007) He brought back plants, animals, and collections of art along with maps he made of his South Pacific voyages.

Captain Cook is credited for mapping New Zealand, some Polynesian islands, the eastern coast of Australia and was the first to circumnavigate Antarctica while searching for a southern continent. Captain Cooke was among the first to use the newly perfected chronometer on his Antarctic voyage, a device which allowed him to measure his longitude with precision. The Dutch East India Company also known as The United East Indian Company was founded in 1602 as a charter company by Dutch Government granting it monopoly over Dutch spice trade business. This company came Indian Ocean later than the Portuguese but it dominated the spice trade of Indian Ocean by taking complete control of cloves, nutmeg and mace. On the other hand, although pepper was most important good of trade for this company yet company failed to control the pepper its sale and shipment as it grew in many places and Dutch East Indian Company could not control ever source of pepper.  According to a rough estimate Europeans, in the seventeenth century, carried out almost seven million pounds of pepper shipment from Indian Ocean to Europe every year. In addition to spices, printed fabrics with fantastic flowers of many colors were very important goods of trade. These were originally printed in France. But during the 17th and 18th centuries, Indian style chintz fashion was very popular. 

These were hand painted on smooth cotton fabric with fast color dyes and imported from the India from Gujarat province and were sold in France by British East Indian Company.  Their demand was so high that French lawmakers were afraid that it would hurt French weaver industry so they banned it by law to import and forbidden to wear it. But amazingly, they continued to be popular, even though the French law included the death penalty. The reason was that the Mediterranean port of Marseilles was exempted from all such laws and it became the heaven for smugglers of Indian cottons and from here it was imitated into other parts of France and people wear these cloths secretly in their homes instead of public places.  Ultimately on the pressure of public these fabrics were made legal by lifting up all laws. During this era when the Ottomans conquered Constantinople (Istanbul) in 1453, they established a center point for navigation for their territories around the Mediterranean and the Black Sea, the Red Sea, the Persian Gulf, and the Indian Ocean.

The Ottomans were well aware of the growing competition from Italy and other European powers. The King, Sultan Mehmet, built a naval ship building arsenal on the Golden Horn, known as Halic in modern Turkey a waterway of Istanbul, and appointed a Commander of the Navy. At the arsenal, galleys, or ships with oars, were built, repaired and equipped with supplies. This arsenal was consisting of more than 200 buildings for preparation and repair of ships, ammunition depot, a mosque, a prison, kitchens for preparing food for working labor and to store on ships, water reserves for fresh water supply for voyage and administration buildings including studios for artisans related to shipping and outfitting.  There was no match Istanbul maritime Arsenal but only one in Arsenal of Venice.  A large Ottoman fleet which expanded in sixteenth century was built in the arsenal. Sultan announced that he would build 500 warships in addition to already existing hundreds of war ships to threaten other powers. They were already controlling the ports in Syria and Egypt, and wanted to hold major Eastern Mediterranean islands. Thousands of men from all over the Ottoman Empire were employed in Ottoman navy.  They were organized into Officers and crews.  The commanders and seamen who sailed and other were the workers and managers of the Arsenal, and both braches were headed by the Grand Admiral of the Fleet who directly reported to the Sultan.  The whole operation was highly organized and well financed. 

The Ottoman Navy kept it organized for centuries and ensure its presence it three major seas. The people living on the Malabar Coast of Kerala province of India are known as Mappilas. This community was grown by intermarriages of Arab traders and local Hindus on the coast of Malabar.  This community maintained peaceful trade relations for centuries with other communities of India and Indian Ocean.  These links with traders of Arab and Persia dated back to centuries.  According to a legend, the King Chera Manperumal Malabar had a vision during the time when Prophet Muhammad (PBUH) lived and the king departed to visit Makkah. King Chera Manperumal embraced Islam and supported its spread on the Coast of Malabar. The Malabar mosque, built in 629 CE, is the oldest on the continent of India. It still exists today.   The community of Mappilas developed their own culture in dress, food music and in dance also.  They lived in a peaceful and beneficial way with other groups and communities and Hindu king of Malabar Coast treated them as a merchant caste, who gained wealth and status from their activities as traders.  Famous explorer like Ibn Battuta and Marco Polo mention this community as a peaceful trader.  When Vasco da Gama entered the Indian Ocean he was amazed to know that Muslims were prominent merchants in Africa and Asia and Portuguese had fought against Muslims traders to gain control of trader routes.  They anchored on Malabar Coast with cannons and demanded the Hindu rulers to expel the Muslim traders from the coast. 

The Hindu rulers were stunned and refused to do so. Portuguese bombarded the towns and demanded the control of seas also authority to allow the passage by special permission.  This situation was very awful for Mappilas so they retreated inland and became farmers or involved into fishing business.  Others used their maritime skills and fought against Portuguese ships, captured them and continue trading.  To the Portuguese the Mappilas were pirates and smugglers. The Europeans used the Carracks to take the control of all trade in Indian Ocean.  They also armed these ships and attacked major ports of Indian Ocean for example Mombasa and Kilwa in Africa, and Calicut and Malabar Coast in India.  They also attacked on Arab merchant’s ships and other ships that have not trading permits form Portuguese government.  This was to take all the trade control of Indian Ocean trade and to control the ports. However, they only had limited success and they met a great resistance from Ottoman Empire Navy and from other Europeans.  Besides, the Indian Ocean was too large to control by this way.

The Opium became also an important product for trade. Opium poppies are natively grown in Mediterranean region from thousands of years. From this it traveled to Greek, China and also to India by sea routes before 12th century.  Opium poppies were grown also in India and the Mughal Empire controlled the trader of Opium.  The Narcotic property of opium was used as a medicinal plant and its use can be found in Greek and Arabic manuscripts.  When Muslim medical work was translated in European languages it also became known to Europeans.  The trade of opium increased extensively after the entry of Europeans into Indian Ocean region in 16th century. It was imported to Europe as a popular medicine.  Portuguese also trader the it from India to China and the Dutch brought into China and Japan the practice of smoking opium through tobacco pipes.  After the weakened the Mughal Empire the British gained power in India and British East India Company gained complete control of trade also of opium and started taxing the sale of Indian Opium. European also gave very importance to opium by using it as an exchange commodity for trading of tea, silk and porcelain instead of gold and silver.  They expectant Chinese merchants to buy opium they bought in India as an exchange for trade. Soon the Chinese became addicted of it and by seeing all this situation Chinese government banned its import and use. But on the other hand British started its smuggling and increased opium production as it was most profitable crop. This all situation leaded to Opium Wars between China and British East India Company.

Industrial and Imperial Era         

During 19th century the Royal Geographic Society of Britain announced a prize competition to find and chart the Nile’s source.  Two explorers Captain John H. Speke and Captain Sir Richard F. Burton found this in 1858. Captain Speke named the lake after the Queen Victoria. James Bruce a Scottish explorer also claimed to be the first from Europe to reach to Nile source.The people working on ships of British were known as Lascars. The word Lascar is drawn from the Persian language that means army.  This term was used by the East India Company for the persons who were working on their ships.  These persons were skillful seamen, rope makers, ship carpenter and other crew needed on the board belonging from different regions of coastal areas of Asia.  These were free men who sold their services for wages mostly came from Indian Ocean region. These people were later settled.  There life was not easy and they had to do all the chores of the shipping life.  The Lascars worked long shifts in the dark, hot, dangerous engine rooms and coal furnaces that powered the ships. By 1928, there were more Lascars employed on British ships. Slave trade was common in regions associated to Indian Ocean. Slavery in the Indian Ocean was consisting of a wide variety of peoples of scattered cultural and backgrounds. 

Peoples were involved in different capacities as slaves, slave traders and owners of slave’s form regions of Africa, Arab, Asia and Europe. Male slaves were indulging in the business of pearl divers, ship crew, employed into trade, working in agricultural fields and as soldiers of wars while female slaves often worked in homes as maids, nannies and nurses.   In the eighteenth and nineteenth centuries African slaves demand was rapidly increased because of less price and hard working.  British worked hard to end slavery. British Empire declared protect zone for slavery. But unfortunately, till to date, slavery is persisting is some sorts of forced labor, especially involving women, children and poor population of third world countries and refugees. Suez Canal was also built during this era. This is the artificial waterway is 163 km long, running north to south across the Isthmus of Suez in northeastern Egypt and shorted the distance between the Red Sea and Mediterranean Sea. This canal is one of most important water ways of the world.  This is also known as crossroads of Europe, Africa and Asia because it is interlinking these three continents. It was built in 1856 by a French company after ten years’ hard work.  This made trade easy as traders had not to sail around the Africa or carry goods overland and gained its importance to European Imperial powers. in combination with the expansion of the American transcontinental railroad, the canal permitted the world to be circled in record time. The Suez Canal was not initially a financial success for Egypt, nor for France. Due to the growing debt required to finance it, Egypt was forced to sell the canal to Great Britain in 1875.

The English controlled the Suez Canal until shortly after Egypt regained its independence from Britain and nationalized the canal. Steamships changed the Indian Ocean trade by opening new routes that were not dependent on the winds.  By the mid to end of the 19th century, the British Empire had the largest and most successful naval force in the world powered by steam. Steam power allowed for expanded exploration of the continents, the mass movement of people around the world, and caused great changes in the trade system. During the period of the steam engine ships grew larger and faster, but they had to refuel often. The ships were first used for short and regular service, like mail and wealthy passengers. These first ships had a huge advantage over sailing ships, in that they were much easier to navigate upstream and this made rivers and canals more accessible. Steam-driven railways also transformed the British Empire, and the Indian Ocean region, increasing business activity, and giving consumers access to cheaper goods. In 19th century the most important and the busiest port of Arabian Peninsula was the city of Muscat in Oman. Being an international port, the city was heavily populated, having different religious, and multi-ethnic. Muscat was the crossroads of trade between East Africa, the eastern shores of the Gulf, and western India. In the 19th century every kind of merchandise could be found, silk and linen, spices, dates, coffee brought across the desert by caravans, pearls, grapes, bananas, figs, butter, fowl, and many more. Muscat was known for being supreme in trade and military power, and the city produced a lot of wealth for the Omani nation. Omani rulers carried out careful associations with customary Indian Ocean trading partners and with the European powers. They even concluded a trade treaty with the Americans.

*Ali Nagri, PhD Candidate, School of Politics and International Studies

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