Last week’s historic accord with Bangladesh erased a dispute as old as Kashmir while nudging the subcontinent towards a common market.Trade and investment have been the refreshing focus of Prime Minister Narendra Modi’s diplomacy. He understands instinctively that power emanates from a bowl of rice, not from the barrel of a gun. In this respect, he is following an ancient tradition that once made India a great trading nation that carried its amazing soft power on merchant ships.

Although the land boundary agreement was the most visible victory during Modi’s visit, other accords were equally significant. Indian goods travel via Singapore to reach Bangladesh in three weeks; now they will go directly to Bangladeshi ports in a week. Indian companies will sell electricity and make goods in special economic zones across the border, creating masses of jobs while helping reduce Bangladesh’s trade deficit. The accord signals to Nepal, Sri Lanka and Pakistan the benefits of moving from the politics of suspicion to the economics of prosperity.

If you had stood at the famous port of Muziris in Kerala 2,000 years ago, you would see a ship arriving laden with gold. Every day a ship from the Roman Empire landed in a South Indian port where it picked up fine Indian cottons, spices, and luxuries. But Indians did not care for what the Romans brought, and since accounts had to be settled, they were settled with gold and silver. Back home, Roman senators grumbled that their women used too many Indian luxuries, spices and fine cottons and two-thirds of Rome’s bullion was being lost to India. One South Indian king even sent an embassy to Rome to discuss the empire’s balance of payments problems.

Fifteen hundred years later, the Portuguese had the same complaint: their gold and silver from South America was being drained in the trade with India. The British parliament echoed this refrain in the 17th century. Indian textiles and spices changed culinary tastes and clothing habits around the world. Europeans began to wear underwear only in the 17th century when they discovered soft and affordable Indian cloth brought by the East India Company. In antiquity, the flowing togas of upper class Romans were made from Indian cloth. Punjabi Khatris in Multan led caravans across the Himalayas from 16th to 19th centuries, changing the lifestyle of the people all the way to Russia.

With a 5,000-mile coastline, India has historically been a great trading nation and in some periods, commanded as much as 20% share of world trade (compared to 2% today). It always had a positive balance of trade with the world until the Industrial Revolution in 19th-century England when the mills of Lancashire made our handloom textiles technologically obsolete. After Independence we forgot our trading past, closed our borders in the name of a bogus idea called ‘import substitution’, denying ourselves the prosperity of international trade. We only opened up in 1991. Today, Modi is trying to recover that past while quietly burying the foolish protectionism of RSS’s Swadeshi Jagran Manch, even as he promotes ‘Make in India’.

India’s power has always been ‘soft’, not expressed through military conquest but in the export of goods and ideas.The great Sanskrit scholar, Sheldon Pollock, reminds us that between the fourth and 12th centuries the influence of India spread across Southeast and Central Asia. Across the vast area, Sanskrit became the language of the courts, government and literature. much like Latin in medieval Europe.The elite spoke different languages but used Sanskrit to communicate across the border. We are not sure exactly how Indian culture travelled but most likely it was through trade. Tamil literature describes seafaring merchants sailing to distant places like Java in search of gold. The historian, Michael Wood, summed it up well: “History is full of Empires of the Sword, but India alone created an Empire of the Spirit.”

In recent times our neighbours have grown suspicious of us and declare that they are ‘too close to India and too far from God.’ However, Modi’s economic diplomacy is creating new possibilities. If he is successful, India may become once again become worthy of the seventh-century Chinese traveller, Xuanzang’s description: “People of distant places with diverse customs generally designate the land they admire as India.”