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~ Tufel NooraniWhat implications does China’s Belt and Road Initiative (BRI) have for India’s foreign and security policy?
In the year 2013, half a decade post Financial crisis, China declared that it is going to launch the Belt and Road Initiative (B;RI) with six economic corridors1, that will stand as a guardian to secure the capitalist world order against growing protectionism2. This project will embrace Africa and South America via the maritime route that passes through the Indian Ocean region and will encompass over 60% of the world population with over one third of the global economic output3.
With more than eighty countries as signatories4, the world sees this initiative as the quest for Beijing to spread its strategic influence over the globe and realize its dream for a Sino-centric unipolar Asia through the establishment of an empire of exclusive economic enclaves5. The only country that is openly vocal to this initiative led by China is India. India is the only South Asian country and one among the eight-member countries of SCO that have not signed this multilateral initiative6.
India and China will celebrate their 100th year of independence at a close gap of two years viz. 2047 and 2049. By that time, both the economies are expected to have overtaken USA in terms of GDP size and economy7. In terms of seeking markets outside their own boundaries, both the countries see each other as competitors as they try to increase their share in the global supply chain. Both want to escape the middle-income trap that requires developing niche in high value manufacturing and have launched their respective programs viz. Make in India and Made in China 2035. While India recognizes that B;RI is here to stay, it also has important stakes in the survival of the Silk route project. This essay will try to analyze the likely implications of B;RI on India’ policies and probable response of India. I will divide them into four compartments Economical, Military, Geopolitical, and Regional.
India’ influence in the world during the 20th Century was particularly due to the expansionist policies that were followed by Lord Curzon8, when India was considered to be a pearl in the crown of British Raj9. During this time, Indian Navy ruled from Aden to Malacca10 and helped the colonial empire expand its boundaries to as far as the Africa where Ottoman empire once ruled11. When India gained independence, it was expected that India will take the place of imperial Japan12 and control the Indian Ocean region. India went against the norm and followed socialist policies that made it more inward looking while the other countries went for capitalist model13. These led to a disconnect with Central Asian countries and South East Asian countries with whom India enjoyed strong cultural ties till the 18th century when the East India company finally established its empire in India14.
Things changed drastically after India opened up its economy in the year 1991. As per the words of Prime Minister Manmohan Singh, the then finance minister, ended his budget speech of 1991–1992 with a quote from French novelist Victor Hugo: “No power on earth can stop an idea whose time has come.”15 As per the words of IMF Chief Christine Lagarde, India is now at a bright spot in the global economy at a time16, when USA is more and more turning towards protectionism. As Sanjaya Baru has reported, India’ increasing influence in the world can be attributed to its rising economic strength and its purchasing power parity that makes it a big market for other peripheral economies. Thus, continuing with this reason, if India wants to became a global power by the time, when it celebrates its 100th year of independence, India will undergo further structural reforms to maintain its GDP growth rates. For that, India needs critical technologies to fuel its Make in India program and escape middle income trap. Considering the current scenario wherein, it is in the interests of both USA and India to contain the rise of China, India will may use its relationship with China as a bargaining chip to get more technology transfers and waivers from USA in WTO and trade agreements17.
China may also try to fill that void by sharing such critical technologies, that are crucial for India in return for India, agreeing to soften its stand on CPEC. If India joins the B&RI, it will become easy for China to engage with the neighbors of India via the land route of India. These include Bangladesh, Nepal, Bhutan and Sri-Lanka.18 Secondly, since the US power is declining in 21st Century and both China and India are likely to overtake US economy by 2040, the world order is likely to led by these two nations. It is for these reason that China wants India to climb this boat because that will give a tacit recognition to China as a regional power in South Asia. Currently India opposes the project as it claims that CPEC passes through Gilgit-Baltistan that is a disputed area between India and Pakistan19. As per India, China is therefore supposed to stay neutral and take the permission from both the parties before constructing the all-weather highway that connects Kashgar to Gwadar20. India therefore alleges China of violating its sovereignty21. However, in a long run, things may take a U turn. First of all, it is in the interests of both China and Pakistan that India joins CPEC to make it more profitable, in light of the massive investments that China has done and escalating debts on Pakistan. While not neglecting the geostrategic imperatives of the B&RI, it shouldn’t be discounted that one of the major economic objectives of China under BRI, is to export surplus capacity and inventories of its domestic industries to other countries. China wants to reduce the enormous NPA, that has accumulated since it went for expansionary fiscal policies during the 2008-2012 Global Financial Crisis22. If China finds that its objectives are failing, it may soften its stand with India and may return to neutrality on PoK. At the same time, India too doesn’t want to be stay dependent on Chabahar port singularly and therefore, wants to keep its options open to engage with Central Asia through land route passing through Pakistani soil. Thus, if China returns to neutral position on PoK and treats Gilgit-Baltistan as a bilateral issue between India and Pakistan, India may open up to CPEC or certain parts of CPEC that are not funded by China. For e.g. the Hazara Motorway project is funded by ADB and existed even before CPEC project was announced in the year 2013. The success of TAPI gas pipeline, the supply of Uranium from Kazakhstan and Uzbekistan to India, the precious rare earth elements and other raw materials that are vital for India’ electronic industries and e-vehicle program, all these hang on the confidence in the relationship between India and Pakistan.
India has already accepted that B;RI is here to stay. One of the salient aspects of the Make in India program and the Zero-Defect Program launched by India is to improve its share in the global supply chain by increasing exports on finished products and expertise in engineering23. The countries of South Asia and South East Asia are few of the major emerging economies that can serve as potential market for India. To establish further linkages, it is also possible that India, while maintaining its reservation on violations of its sovereignty on CPEC corridor, may still embrace B;RI corridors in South East Asia (BCIM corridor) and Indochina region. China has used this strategy earlier to facilitate its membership for WTO in 2003, by influencing the US government to soften its stand through the multi-national corporations and companies24. It may show these benefits and opportunities to Indian companies and lobby them to pressurize the Indian government to open itself for investments under the B;RI. B;RI also known as railway diplomacy25 is actually a conglomeration of various infrastructure projects like high speed railways, digital highways and electricity grids etc. that offer immense opportunities for employment creation and fetching investments. Since India needs critical technologies that are vital for the success of its Make in India program, China can offer some of them to Indian companies that are engaged in these infrastructure projects (high speed railways and bullet train will be the biggest beneficiaries in this case).
An unstated goal of the B;RI is internationalization of the renminbi (Chinese yuan) as an international reserve currency26. In a long run, with increasing share of India in the world economy, India may try to balance renminbi by pushing for internationalization of Indian rupee.
“To be secure on the land, we must be supreme at sea”
– Jawaharlal Nehru27.
More than 55% of India’s trade passes through South China Sea28. Peace and stability in that region is, therefore of great significance to India. Although, in geographical terms, India is located outside the South China Sea, but in geo-political and geo-economic terms India now increasingly operates inside the South China Sea29. With China subsuming its string of pearls under the B&RI and establishing its permanent military presence in the Indian Ocean region through a naval base at Djibouti, India is trying to establish a forward posturing to the East of Malacca. By doing this, India aims to achieve the following three objectives.
China, with its increasing forays in the Indian Ocean region in the name of anti-piracy, wants to prove that Indian Ocean doesn’t belong to India. On the other hand, based on historical records, China claims its hegemony on the South China Sea (SCS) and East China Sea. While India finds China becoming more and more belligerent by violating the verdict of Permanent court of arbitration in 2016, India may try to deter China by establishing its permanent presence to the East of Malacca. By doing so, India aims to achieve the following objectives.
1 China’ recent activities in Indian Ocean aim to challenge the very notion that Indian Ocean belongs to India and the identity that India is the largest maritime power in the Indian Ocean region. Since Vietnam lies close to the Gulf of Tonkin, it has the advantage to keep a watch on China’ activities in Yulin Naval Base, Vanuatu and Paracel islands. Hence by maintaining its presence through commercial military projects in Vietnam that overlaps with SCS30, India wants to create a psychological pressure on China by challenging its very identity that South China sea belongs to China.
2 By doing so, India also has a strategic dimension behind it. India wants to prove that it can balance the hegemony of China, especially at the time when China is trying to undermine the rules-based order in the Pacific. This will help India, build a strong constituency in ASEAN that legitimizes its naval presence near Haiyang Shiyou 981 platform to counter China’ aggressive character in the Pacific.31
3 Additionally, this help to restrict China in its own sphere of influence in the Pacific before it arrives in the theatre that India claims its own backyard. For this reason, India will strengthen its Eastern Naval command and the build stronger naval capacities under the joint forces command in the Andaman and Nicobar Islands. Since, India lacks in certain technologies like efficient radar systems, this common interest may bring Japan, USA and Australia closer to India to balance the aggressive nature of China. However, since maximization of security is the major goal for India rather than maximization of military assets as India has limits to its defense spending, India may at the same time engage with China in maritime dialogue on bilateral levels to diffuse the tensions and the arms race while exerting its strategic autonomy. This appears more probable, as India needs to buy time till it develops its own capacity to match the strength of PLA-N.
While China has made the string of pearls, India is joining the pearls of democracy, to make a garland that encircles China. This is evident from India’ initiative on reviving the QUAD that consists of USA, Japan, Australia and India32. Since Australia has deeper relations with China in terms on trade and economy, and doesn’t have any conflicts with China, it is likely that it would want to stay away from being drawn inside the conflict held in this theatre of Indo-Pacific case of regional conflict. India will therefore not trust Australia to that extent as it does trust, its relationship with USA and Japan to balance the rise of China. This is evident from the fact that Australia was not invited in joint naval exercise Malabar 2018 held in Bay of Bengal. One of the reasons for these joint exercises is to improve interoperability of naval platforms between the three nations.33
It is believed that China is making a string of pearls in the space and a great underwater wall of sensors to snoop on movements of ships and submarines in the Indian Ocean region34. This is evident from the fact that China has already launched satellites for Maldives, Bangladesh and Pakistan in the last one decade35. India considers South Asia as its own backyard and legitimate sphere, where it can exercise its own influence. India will therefore try to balance this by expanding its own space program and the range of Indian Regional Navigation Satellite System (IRNSS). The recent decision to establish a satellite tracking and monitoring system in Vietnam by India is a case in this aspect. India has already operationalized its IRNSS, also known as its domestically developed GPS-lite version that is regional, consisting of seven satellites and is willing to expand its coverage with eleven operational satellites. One likely reason behind this is to improve the communication capabilities of its Navy that was dependent on services provided by UK based company Inmarsat36. With successful launch of South Asian Satellite in the year 2017, India has gained the confidence that it can use its space diplomacy to benefit its neighbors. With this improved capacity for communications and remote sensing through its space program, India is now steadily sharing its facilities for the benefit of neighboring countries. To match the influence that China is achieving through B&RI, India is pressed to use its soft power Humanitarian Assistance and Disaster Relief (HADR) exercises and taking the leadership to assist countries for disaster relief in South Asia and the Indian Ocean region.
India will also expand its naval fleet under Project 15, Project 75 and project Skylark, esp. in the light of latest acquisition of an aircraft carrier by China. This will allow India, identify itself as a blue water Navy and maintain a strategic presence deeper inside the Indian Ocean region. With increasing events of China docking on the ports of Sri-Lanka and Pakistan, India will try to gain access to advanced Airborne warning and Control System (AWACS) from USA and Israel to quickly detect Chinese presence in its backyard. Although, the chances of the currently evolving USA-Israel-India relationship to emerge as a full-fledged military alliance against China is very little, but India’ defense market is too lucrative for these countries, to be neglected. Technology transfer to strengthen India’ naval arm esp. Ballistic Missile defense will bring these countries closer in a triangular relationship to counter the emerging threat of Russian-China-Pakistan-Iran axis. It is in the interests of both USA and Israel, that India possess a strong navy to maintain the freedom of navigation in the warm waters of the Gulf to diminish the chances of Iran blocking the strait, so that USA can mobilize its naval fleet from Indian Ocean to West Pacific to maintain the freedom of navigation in that region. While India is moving closer towards USA through agreements like Logistics Exchange Memorandum of Agreement (LEMOA), Basic exchange of Communication Agreement (BECA) and Communication Interoperability and Security Memorandum Agreement (CISMOA), to facilitate interoperability of platforms that Israel too uses for its defense forces, Russia is moving in opposite direction by supporting China’ claim in SCS37. Since Russia finds CPEC as lucrative to connect itself and the nations of Eurasian Economic Union (EAEU) to the warm waters of the Gulf, it has avoided being pulled into the Sino-Indian rivalry by maintaining silence on CPEC project and whether or not, it violates India’ sovereignty.
While China is improving its influence in Central Asia through the three corridors of B&RI, it is also enlarging its clout in Central Asia through SCO that contains a military arm. Recent military exercises, led by China under the umbrella of SCO and the ones that China has proposed under BRICS-plus, show that China is trying to develop a security architecture of its own. India may try to balance this by increasing its grip on BIMSTEC and involving them in joint exercises38.
Till date, India always saw Chinese diplomacy in its neighborhood as a trojan horse (cheque book diplomacy)39. With the B&RI, the fears of encirclement are now taking deep roots in Indian foreign policy establishment that sees B&RI as a covert initiative of China to cover its hard investments on the string of pearls under the soft blanket of an economic project. While from the eyes of India, China is always seen as a threat, however post stand-off at Doklam, it is clear that the other way is also true. While China to a certain extent, is successful in enforcing its diktat on the smaller countries, it clearly failed to impose its verdict on India during the Sino-India standoff at Doklam trijunction. This has alerted both the cis-Himalayan countries viz. Bhutan and Nepal India about the growing chances of conflict and therefore balancing their relationship equally with India and China.
For three of the six corridors under the B&RI, that are passing through South Asia, Tibet will act as bridge head. China has already proposed to extend the railway line from Lhasa to Kathmandu.40 As a signatory of B&RI, China has also offered Nepal to use its sea ports for trade, thereby ending the dependency of this land locked country on Kolkata port. At the same time, to balance the threats from USA and the impact of sanctions on its economy, Iran is also showing signs of warming up towards China. Iran has already also shown its interest to connect Chabahar with Gwadar and connect its railway lines with CPEC41. If this happens, this will surely embolden Afghanistan, where India has a considerable influence to shed its fears of inviting the ire of India to join the CPEC project.
Hence, under the fear of getting isolated in its own neighborhood, it may happen that India extends an olive branch to its neighbors with more bilateral support. This may particularly be the case with Afghanistan and to a larger extent Nepal and Sri Lanka, who openly criticize India of being belligerent in its attitude. India will try to regain their trust by facilitating more connectivity and integrating their economy with India through its ports and power-trading. In the light of these, India will become more aggressive for the early completion of Bangladesh-Bhutan-India-Nepal (BBIN) motor vehicles agreement and the Coastal Shipping agreement in BIMSTEC.
However, this posturing may completely turn upside down in case of Indo-Pacific region. In order to exert its identity as the net security provider in the Indian ocean region, India will continue to do joint naval exercises including those countries, with whom China has conflicts and territorial disputes. While China claims that the construction of the ports that it has funded in the Indian Ocean region like Gwadar in Pakistan, Chittagong in Bangladesh and Hambantota in Sri-Lanka are strictly for commercial purposes, India has taken notice of the fact that they are also deep enough to accommodate submarines and aircraft carriers. To maintain its leverage on China’ trade routes in the Indian Ocean region, India may intensify its relationship with countries in the Bay of Bengal region as it serves as a funnel to squeeze the SLOCs into strategic maritime choke up point at the strait of Malacca (also known as China’ neck). This explains India’ recent white shipping agreement with countries in South East Asia and numerous port calls by its navy in those countries. India will engage further with Indonesia to get Sabang port on lease or sign a logistics exchange agreement with Indonesia. At the same time, in order to reduce the overwhelming dependency of these economies on China, India will open up its economy for them through various regional integration projects. Here, India may leverage its relationship with Japan and revive its two-decade old proposal to establish an Asian Monetary Fund to rival China’ AIIB and BRICS bank. Japan is already funding Bay of Bengal Industrial Growth Belt (BIG-B) initiative in Bangladesh and coastal states of India are willing to benefit from it. By subsuming BIG-B in Sagarmala project, India will push forward Sagarmala as a regional economic integration initiative that will connect countries from North to the South of the Bay of Bengal to rival China’ BRI that spreads itself from East to West. Cooperation between India and Japan will also be visible in Asia Africa Growth Corridor project. If India is successful in making its space in Africa, it can use the same strategy used by China in Pakistan, Sri-Lanka and Myanmar to develop ports that have a dual purpose, particularly in countries that are close to maritime choke up points in Africa and West Asia.
India wants to build a strong constituency in ASEAN that gives supports and gives legitimacy to its leadership in the Indian Ocean Region. Currently India engages with ASEAN through economic tools like FTA and regional initiatives like RCEP and EAS. For India, ASEAN acts as a gateway to Indian Ocean on the West and Pacific on the East. With growing influence of China in ASEAN, India will atleast allow Preferential Trade access to countries in RCEP against China’ push for blanket FTA in RCEP.
India’s dialogue with RCEP will be based on the following objectives
1 Build a strong constituency in ASEAN. With the support of ASEAN, India wants to buttress the notion that Indo-Pacific is a continuous body and the preservation of the same as a global common is in the interests of everyone.
2 While USA is trying to push for stringent rules and procedures in areas like intellectual property rights (IPR), competition policy, the environment, labour standards, human rights and so on (WTO+ standards), India has more interests to side with China through RCEP. This is because the Indian economy and manufacturing is not that competitive compared to USA and Japan.
3 In addition to China, India will be connected more closely with Japan, South Korea, Australia and New Zealand. India’ diplomacy in RCEP will act as a window to increase its influence beyond East Asia through APEC (also known as mini-WTO). This will also shape India’s broader regional and international image, which is essential for its ‘soft power’ projection. In a long run, this will improve the credibility of its application for NSG and UNSC membership.
On the West of India, India may engage more and with Indian ocean littorals like Maldives, Seychelles, Mauritius and Madagascar while intensifying its cooperation with France to use its naval facilities in the Reunion islands. For Africa and GCC, India will try to buttress their common identity as the countries that share their boundaries with Indian Ocean through forums like Indian Ocean Region Association for Regional Cooperation (IOR-ARC) and emphasize inclusive growth to project Indian Ocean as a zone of peace. By doing so, India will achieve the following benefits that it can use as a leverage against China.
1 If India manages to project Indian Ocean as the one, whose governance is based on rules-based order, under its leadership, it can use this model to improve its clout on other countries that are threatened by Chinese hegemony in the West Pacific.
2 By reinforcing the geographical identities of countries that share their borders with Indian ocean, it can send a very strong signal to China that it is an extra regional player in the Indian ocean region. There is a very strong possibility that India will do this, particularly after China has established its presence on the ports that are very close to maritime choke up points viz. Djibouti close to Suez Canal and Gwadar close to the Hormuz.
Additionally, since the corridors of B;RI pass through West Asia, China has important stakes in maintaining stability in that region. Under the pretext of resolving conflict between the government and non-state actors, it appears that China is gaining an upper hand by sharing table with these players. Rising influence of China in these regions may lead to crowding out effect of the influence, that is currently enjoyed by both USA and India. India currently doesn’t have any strategy to match this phenomenon unless it promises investments in these nations. While Saudi Arabia, as a de-facto member of Gulf Cooperation Council has opened up its economy (under Saudi Vision 2030), India is far behind to make its presence significantly visible in the private sector of Saudi Arabia.
India always aspired to be a global power from the time it got independence, and it was indeed one during the time of Mughal empire. When India gained independence, India tried to punch above its weight using moral power compared to the material power that other nations tried to use. In the 21st Century, India has both, the material power and the moral power that it has projected through its actions under Responsibility to Protect (R2P). And let’s not forget, this material power is bound to increase if India manages to sustain its GDP growth rates.
Since, India wants to be seen as a global power, it is becoming more and more aggressive to settle for a veto wielding ‘P’ membership in UNSC. India till date has counted on its moral role, that it always played as a leader of the developing countries and crusader for their rights to win the support of African nations. However, it failed to consider the influence of China in Africa when it lobbied successfully, to motivate the African nations into proposing several permanent seats for African nations with veto power. This complicated the joint campaign of India, Brazil, Germany and Japan (known as the G-4).
With the B;RI, China’ influence in Africa in the future will rise exponentially and India will have to balance that with its own influence by engaging with African nations. Through an existing presence under UNPKF, India will intensify its engagement with African nations through donations for other soft (human, health, skills etc.) and hard infrastructure. It is likely that India will use these contributions in Africa to gain recognition of its activities under R2P to facilitate its rise for permanent membership in UNSC. However, its current failures to prove its significant presence on the grassroots level in Africa is increasingly proving that it lags behind China in words and in actions.
In this era, when climate change is the buzzword, the world is increasingly getting alert to the risks posed by Climate Change on food security and development of Africa. Currently, the African nations view India as a middle power. Since India wants to improve its image in Africa, it will try to deliver its experiences for the purpose of development in Africa. India has one of the best banking systems in the world that has broken records after records in financial inclusion. India has one of the largest e-governance programs in the world known as Jan-Dhan-Aadhar mobile (JAM trinity) that can be implemented in Africa and let’s not forget the food security that India has achieved through Agricultural revolution.
While India will surely use these tools to engage with nations in African Union (AU), India will also use technologies that address the larger goals of Climate Change. India has developed an efficient nuclear program to cater its needs of energy security that comprises Uranium-Plutonium-Thorium cycle. India has largest reserves of Thorium that can provide bulk power with minimum chances of radiation fallout. Combining the advantage that India has now with the vast amounts of Thorium and the Generation IV reactors that India has developed to cater its Energy requirements, it can trade this technology with African nations in return for their support to India’ application for P membership in UNSC.
While India is already member of major export control regimes, India is still left out of NSG. This thorium-based technology that India has indigenously developed will create a demand to integrate India into NSG club as the current NSG waiver allows only imports of nuclear technology and raw materials and not the exports.
Till date, India was always left behind China because it tried to emulate the models of development that were proposed by the West. India will therefore show its aggressiveness to establish its own norms and standards, in almost every emerging field that requires an ethical code of conduct to prevent proliferation of weapons and restricting their diversion into the hands of Non-State Actors. This proactive approach will not be seen immediately, but probably in a long run including the International Financial Institutions led by USA, considering the fact that India’ own project of nation building is still incomplete.
Since India wants to lead the world from Oriental East, it may use BRICS-plus mechanism to bypass European led order. This includes developing the code of conduct for dual use technologies like autonomous bots, Artificial intelligence and Internet itself. India may also mature its approach to provide Democracy assistance to countries that neighbor China, to maintain a strategic pressure on it and increase the funding to those countries, through bilateral and multilateral mechanisms. This may involve the development of Spice route or the existing proposal for the revival of Lapis-Lazuli route in Central Asia.
Thus, the B;RI, has the potential to alter the entire geo-political and geo-economic landscape. However, it is feared that Chinese funding is ad-hoc since it doesn’t consider the macro-economic and political stabilities in those countries. While it is in the interests of both the countries to nourish the Silk route project, to keep the world order open for global trade, it may also act as a double-edged sword to bring the Sino-Indian rivalry on the surface. This can also be a win-win if India and China join hands to invest their expertise in service sector and manufacturing sector respectively. India’ response to B;RI will thus be more clearly defined by the pattern of coopetition.