Explained: Role of India’s Market in addressing Chinese Challenge


Recently, India has bravely been confronting a face-off in the Himalayas for the past several months against the Chinese transgressions in Galwan Valley.

China’s Expansionistic Tendency

  • Extreme Focus on Emerging Markets for Investments: The Chinese growth model needed to find subservient emerging markets where it can park huge debts and make investments to keep feeding the Dragon’s high growth rates.
    • The friendly foreign debt-investment markets were needed to compensate for over-investment at home.
  • Expansion of Belt and Road Initiative beyond Pakistan: The Belt and Road Initiative (BRI) was rolled out as a meeting point for China’s geo-strategic and geo-economic interests.
    • After the border stand-off at Doklam, China has expanded its global footprint by signing on about 100 countries to the BRI.
  • China’s aggressiveness towards its neighbours: China has made aggressive moves on most of its non-submissive neighbours i.e. from Vietnam, Malaysia, Brunei, Indonesia and the Philippines in the South China Sea to India in the Himalayas; from its traditional rivals like Japan and Taiwan to independent-minded nations like South Korea and Australia.

Role of Indian Market to force China solve Border dispute

  • Potential of Emerging Indian Market: The size of the Indian market and its potential in the coming years provides India considerable leverage which it should be willing to use fully.
    • In order to leverage the potential of Indian markets, the individual consumers as well as firms have to accept that there would be a period of adjustment in which they would have to pay higher prices.
  • Use of selective imposition of China-specific safeguard duties: The selective imposition of China-specific safeguard duties and use of non-tariff trade barriers should be enough in segments like electrical appliances to let Indian producers expand production and increase market share.
  • Increasing the role of government in Indian Market: The government should also facilitate the flow of finances for expansion and provide technical support for testing, improving quality and lowering costs of production.
  • Scrutiny of Chinese FDI for Security Concerns: India should take similar decisions such as the United Kingdom has just decided that new Chinese participation in 5G would not be permitted and that by 2027 existing Chinese equipment should be phased out.
  • Increasing Private Investments in Critical Products: There are critical products like solar panels and grid storage batteries in which private investment for manufacturing in India would be triggered by assured government procurement at a commercially viable price.

Focus on Diplomatic Adjustments in seeking Equilibrium with China

  • Resolution on border dispute: India’s first priority could be the resolution of the border dispute as past formulae from different package deals mutually offered and discussed may be invoked with innovative redefinitions wherever necessary and practical.
  • China as mediator in India-Pakistan dispute: As China has offered to mediate between India and Pakistan, it should be asked to prevail over Pakistan to resolve the Kashmir issue.
  • Access to Chinese commercial cargos to sea: India could offer access to Chinese commercial cargos to sea, through the Nathula pass and join China’s BRI on mutually acceptable terms.
  • India’s entry into Gilgit-Bauchistan: India may also show its willingness to join CPEC as both Pakistan and China have asked for, provided that India is allowed to undertake projects in PoK and Baluchistan.

Measures beyond Trade Barrier to contain China

  • Standing up against China’s Aggressive Policy: It is time for India to stand-up to Chinese expansionism and the path will require conviction and exercising a range of military, diplomatic and economic options based not just on emotions but on the cold calculus of relative strengths.
  • India to take leadership role in QUAD Grouping: India needs to build on and provide leadership to the Quadrilateral Security Dialogue, which was started with India, Japan, Australia and the US as members in 2007.
    • India should now propose the expansion of the Quad’s scope with a possible exploration of a collective defence architecture clause like Clause 5 of NATO, where an attack on one of the members is considered an attack on all.
  • India should welcome the expansion of G7 Grouping: On the economic front, India must welcome the US proposal to expand G7 to include India, Russia, Australia and South Korea without China as a member.
  • India to strengthen ties with Neighbour and Beyond: Apart from strengthening ties in our neighbourhood, there is a need to make an effort to regain the relationship with Russia, Arab Countries and Central Asia.

Way Forward

  • India could afford to be largely non-aligned during the 20th century Cold War, but India’s size and its economic momentum necessitate that it should play a clearer role in the Cold War’s 21st-century sequel.
  • India of today is strong enough to stand for her interest and yet must be adroit enough to find common ground with those with whom her interests align, whether to its West or East.
  • The Chinese profitable investment in India would highlight the importance of the size of the Indian market in the years to come and the advantages of good relations based on a final settlement of the border.
  • India should made a bold diplomatic initiative and a huge tactical move towards thinking through out-of-the-box solutions and displaying that it can undertake risks to pursue its long-term national interests.

Source: The Indian Express

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