Indian media analysts have applauded New Delhi’s apparent success in consolidating international support against Pakistan-sponsored terrorism during the recent BRICS summit in Goa. However, going forward from Goa and taking note of other developments in its immediate neighbourhood, short-term prospects for India remain somewhat mixed and more complex than before.
Announcing a massive US $24 billion aid package for Bangladesh before joining the BRICS proceedings, Chinese premier Xi Jinping served notice that India may no longer enjoy its eminence as the lead player within the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) grouping. In Myanmar and Bangladesh, China is poised to set the pace for economic development. It is bound to encourage China’s all weather ally Pakistan, which is entirely blindsided on its East.
Within the BIMSTEC, current Chinese moves strengthen the bargaining position of Bangladesh and Myanmar. Both countries will now be able to play India off against China or vice versa while promoting their national interests. Pakistan, having a support base within a section of the political establishment in Bangladesh, may also try to exploit this.
Apparently, Beijing would lay more stress on specifically developing and strengthening those areas of the road and railway infrastructure in Bangladesh which are integral to its massive “One Belt One Road” (OBOR) initiative. The emphasis here would be on building strong linkages between certain areas of Bangladesh and its ports, with Chinese border regions.
The stage has been set for an interesting tussle between India and China for infrastructure building and economic development of the BIMSTEC region. China will go all out to implement its proposed economic corridor concept BCIM (comprising Bangladesh, China, India and Myanmar), seeking to complete the work before the Delhi-sponsored BBIN agreement takes full effect.
In the BBIN vs. BCIM race, India got off the starting blocks earlier, as preliminary work on the India sponsored Bangladesh Bhutan India and Nepal Transport Agreement (BBIN) has been completed. The proposed arrangement ensuring a seamless travel and movement of peoples and goods in the four countries is partially operative already.
Bangladesh has sent its products to Delhi and Kathmandu through Indian territory. And the distance by road from Tripura to Kolkata through Bangladesh has been reduced by 600 kilometres, cutting travel time and generating fuel savings. Prime Minister Narendra Modi had taken a personal interest in launching the project quickly.
The fact is that India is less than enthusiastic about the BCIM corridor project than Bangladesh, Myanmar or China. It was going slow in improving and widening its roads and highways, especially in the North Bengal, despite repeated prodding from Beijing and Dhaka.
Economic concerns prompted India’s reluctance. India fears that Chinese goods will flood the markets of its populous East and Northeast regions. It feels the major gainer of the BCIM corridor would be China. However, Bangladesh has responded enthusiastically to the idea.
Naturally, in the context of the highly negative balance of trade between India and China, Indian Industry and Business circles are apprehensive about the BCIM Corridor. It is no different with smaller countries like Bangladesh and Myanmar which have even greater trade deficits vis-à-vis China than India.
Indian experts tracking the shifting currents of India-China bilateral economic trends say that Delhi’s apparent reluctance in going ahead full steam on the BCIM project had resulted in a corresponding unofficial go-slow on the part of China, which had promised investments of around $22 million in individual projects about a year ago, mainly in Gujarat.
Some East India-based economists and exporters feel India’s worries about Chinese goods swamping local products, from electric bulbs to computer parts, in the NE states or elsewhere are exaggerated. A leading leather exporter says, "By now Indian buyers of Chinese goods understand very well the comparatively poorer quality of the cheaper Chinese products. Our homegrown goods are costlier, but they last longer." He feels the challenge from China should make Indian goods even better quality -wise in the long run.
"China has invested nearly $50 billion in energy, mining and other sectors in Myanmar in the past decades. Yet, the Chinese find it difficult to compete with other major powers in post-democracy Myanmar, because of their rough and ready ways. They destroyed the environment in many parts of Myanmar, did not share any technology with locals, trained nobody, and appointed mostly workers brought over from China. They helped only the army junta to survive. No wonder they are not popular among ordinary people, who recall and resent their exploitation by Beijing. Unless they change their ways drastically, they will face the same problems in Bangladesh or elsewhere, where they are contemplating investments," says one economist.
In other words, China can count on short-term gains and success in South Asia if it relies on muscling into the smaller economies through the sheer weight of massive capital investments. India should not feel unduly alarmed over being left out in the race; it must stay the course. It can be done best by going in for specific time-bound projects in Bangladesh or Myanmar, according to an Indian foreign ministry official.
Unfortunately for India, its record in implementing projects in Myanmar has not been encouraging. All its major road building and other projects are running years behind schedule. At one point during a project, the timeline became meaningless as local people objected to the work on environmental grounds. In comparison to China’s recent investments in Myanmar to the tune of over $3 billion, Indian projects involved a mere $230 million or so. With such a significant gap regarding financial investments, timely implementation of projects and efficient delivery of benefits was of the utmost importance. India did not exactly shine in this department.
What is more, the Chinese President came armed with a fully prepared agenda before he visited Bangladesh, before the BRICS summit. Anticipating the common fears of most smaller countries of running huge trade deficits vis-à-vis bilateral trade with China, he offered them the sop of accepting massive Chinese investments in priority sectors of infrastructural development, where recipient countries were unable to meet the total cost.
In Bangladesh, Chinese companies would partner local industrialists and entrepreneurs in at least 13 schemes. Discussions were held to build power plants, seaports and upgrade the Railways. As developing countries, it would be difficult for either Bangladesh or Myanmar to reject such offers. Any real fallout from such moves would certainly be favourable for China. India’s eminence within the BIMSTEC or in South Asia as a whole would be reduced. The smaller countries would now have two big brothers to address their needs instead of one and here China, with more financial clout than India, will dominate.
(The views expressed are strictly personal.)