Examples of the new developments based on strategic interests—
China is catching up in its trade and investment, and in some cases, its economic diplomacy has been accompanied by expanded strategic cooperation with India’s neighbours
- The $ 46 billion China-Pakistan economic corridor—a vision to link western China by road and rail down to the Gwadar deep water port
- Status of a “dialogue partner”— Accorded to Colombo and Kathmandu in the Shanghai Cooperation Organisation by Beijing
- Through Silk Road “belt and road” vision, it can splurge extensive resources on initiatives such as the Asian Infrastructure Investment Bank
- Has emerged as a top exporter of goods to the region, breaking into South Asian markets with its export-led growth strategy
- Major donor to the AIIB (capital pool of $100 billion), and to the reserve fund of the New Development Bank (the “BRICS bank”),
- Has created its own Silk Road Fund of $40 billion in capital
India & the unfolding globalisation of the Subcontinent—Diminishing role of India
South Asian Region: The South Asian region is one of the least economically integrated regions in the world—
- Below potential intraregional trade due to high transport costs, protectionist policies, and political tensions
- Broader regional trade expansion also has been affected due to deep enmity between India & Pakistan
- Bangladesh: Eighth largest in the world (more than 160 million)
- Afghanistan (33mn), Nepal (29mn) and Sri Lanka (21mn) are at 40th, 46th and 57th positions respectively
- Mini States: Only Bhutan and Maldives, with their populations below 1 mn
Current Dynamics with India—
Much weight given to Pakistan:
India needs to reinvent its discourse w.r.t. Pakistan as other regions are getting pushed aside with the maximum space being occupied by one country owing to an increased focus on tackling—
- Islamic identity,
- Ever-emerging issues related to the critical geopolitical location,
- Close association with the Western military alliances
- Their possession of nuclear weapons
Rebuilding Afghanistan— has exhausted India off considerable amount of energy and focus. In fact, the underlying issues are mostly in continuance with issues related to Pakistan— India’s strategy towards Pakistan and the battle against violent religious extremism.
- This eighth largest country is also one of the fastest growing economies of the world and is open to massive investments in the infrastructure sector. Its position can be utilized strategically as a bridge between South Asia, China and South East Asia.
- China in Bangladesh: Around 2005, China overtook India as Bangladesh’s top trading partner—displaced many Indian goods in Bangladesh, offering cheaper Chinese products (especially cotton and other fabrics central to the garment industry) without the visa, transport, and customs challenges that had limited trade between India and Bangladesh
- India has been a major economic partner to Bangladesh since its independence in 1971, and Bangladesh enjoys duty-free access to Indian market for almost 98 per cent of its products since the end of 2011. India should thus, encash the current peaceful situation (the 2015 Land Boundary Agreement), to address border issues affecting trade in the near future as well as widening and deepening the traction for creative and sustainable initiatives.
Bhutan and Nepal:
Nepal has been blessed with an important strategic position (important for both India & China) and likewise, India and Bhutan share “mutually beneficial economic inter-linkages” too.
- A 1996 trade agreement between India and Nepal increased bilateral trade volume, which now accounts for more than half of Nepal’s total trade
- But in 2005, at the peak of Nepal’s Maoist insurgency, a low point in its relations with India, Sino-Nepali relations shifted both economically and politically. Chinese goods flooded Nepali markets as Nepal diversified its imports and lessened its dependence on India.
- However, India’s recent announcement of an additional $1 billion to Nepal for post-earthquake reconstruction can add a sweet spot in the age-old friendship
- China & Bhutan— Increased influence of China in Bhutan can lead to China moving further South to occupy the Doklam plateau and attain strategic leverage and an advantage over the Chumbi Valley. This, in the long term, could make the Siliguri corridor—the point that connects mainland India to its North East—vulnerable.
India signed its first free trade agreement with Sri Lanka and the impact of Indian investments in projects like housing and railways have continuously benefitted the local population over the past decade.
China in SL: Since 2005, Chinese exports to Sri Lanka have quadrupled to close to $4 billion, coming closer to Indian levels (dramatic gap between Indian and Chinese contributions)
- Chinese development assistance to Sri Lanka—mostly in the form of concessional loans—began in 2009 after the Sri Lankan civil war and then spiked dramatically in 2011.
- Chinese support for a port, airport, and cricket stadium in Hambantota also speaks of an increasingly close relationship between the two countries— The Colombo port of call of two Chinese submarines in late 2014 and reports that Sri Lanka granted Chinese state-owned enterprises operating rights at the Hambantota port (matter of concern for India)
- Features prominently in China’s Maritime Silk Road project
Note: Sri Lanka’s new president, Maithripala Siresena, has however suspended several Chinese projects, including the $1.4 billion Colombo port city due to the opacity of financing terms.
Maldives: is a highly coveted piece of maritime real estate and thus, there exists no doubts that China is trying to make inroads into the Maldives to fulfil its strategic objectives. Indian government has rightfully been worried of possible Chinese reclamation in the Maldives keeping events in the South China Sea in mind. India should take efforts to urgently revitalise and expand the ‘Trilateral Maritime Security Cooperation’ as well, given the growing maritime security challenges in the area and to safe-guard and further consolidate strategic influence in the extended neighbourhood.
A future of cooperation and competition is definitely possible with an overlap in the efforts of both India and China—
- The development of the Bangladesh-China-India-Myanmar economic corridor (new opportunities for constructive cooperation)
- India’s “Act East” policy converging with China’s focus—aiming to facilitate commerce, culture, and connectivity throughout Southeast Asia
- The pressing infrastructure needs can demand greater convergence in their resources and efforts to generate greater connectivity enabling both China and India to tap further into Asian markets through trade and investment
India should sail over the challenges posed by the new geopolitical dynamism by—
- Reducing the gap between its own perception of being superior and addressing the huge gap that is being filled by China – economically, politically and militarily
- The past mistakes and losses owing to the Partition, the inward economic orientation of socialist India, and the neglect of connectivity and commerce at and across the frontiers must be left behind and should be taken up with a fresh perspective (to not only perform damage control but also rein in various other hidden possibilities)
- The nature of intervention in other countries internal affairs need to be double-checked before coming down to conclusions. Moreover, India should in its ‘neighbourhood strategy’ also adopt a balanced outlook towards these disturbances and only after a proper calculation should take a step ahead with the consent of the major stakeholders.
Connecting the Dots:
- Has the ‘right to unilateral means’ been an overarching policy of India’s neighbourhood relations with its neighbours? Discuss.
- Comment on India’s “neighbourhood first” strategy.