Saturday 23 October 2021
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India Counters China In Global Trade War

Anindya Nandihttps://www.sirfnews.com/
Anindya Nandi is a Veteran of the Indian Navy. An IT graduate from Mumbai University, Served the Navy for 15 years from 1996 to 2011. Took part in Operation Talwar (Kargil War) and was in a support team during Operation Parakram. Trained in Nuclear Biological and Chemical Defence and Damage Control activities Including Fire Safety. Keen to observe geopolitical developments and analyze them with his own opinion. An ardent follower of Sadhguru JV.

Geopolitics depends on the ability to exploit every available option without the constraint of ideology. India and China have been fighting like cats and dogs over influence in Asia. Both are trying to catch markets, but in the past decade, China has gained the upper hand with its commercial projects along the eastern hemisphere. India is now taking the bull by the horns and launching several ambitious commercial corridors in all directions. If successful, the blueprint could reconfigure trade across the region. India would transform into a pillar of the globalized economy in near future. It is a grand strategy of enormous geopolitical stratagems.

China, through its Belt and Road Initiative (BRI), is trying to reach Eurasia or the Middle East and Europe, as per non-communist countries, since its inclusion in World Trade Organisation in 2001. The BRI contains two components. The overland corridor consists of a cluster of Chinese constructed rail and road infrastructure that extends westward from central Asia to Europe. Some are calling it the “New Silk Road”, the second component is a maritime route that consists of Chinese constructed ports that spread westward across the Indian Ocean. Chinese lawmakers call it the string of pearls.

Connectivity projects are often seen as tools of exercising influence. This is why the BRI bypasses India as a means of marginalising the competition. Some projects such as the Karakorum Highway, Gwadar Port and the China-Pakistan Economic Corridor (CPEC) consider India a pariah outright. The BRI strengthens Beijing’s hand while undermining New Delhi’s sway over its neighbours. The ports, highways and railways could someday service China in the event of a military conflict. With a look at the map, it will not be difficult for anyone to understand that China is encircling India.

India’s answer to this is the International North-South Transport Corridor (INSTC). It was signed in September 2000. The corridor looks to develop India’s reach up to the European markets. Starting in Mumbai, a multi-modular route would link with the Iranian port at Bandarabas. From there, rail infrastructure would link to Baku in Azerbaijan and then to Astrakhan in Russia. The corridor would go further to Moscow and finally reach St Petersburg. With a length of 7,200 km, the INSTC would stop at various hubs, creating value chains in the process. Value chains are commercial corridors where large infrastructure investments are coupled with an industrial base. For example, a route going from point A to point B steadily develops additional hubs between these two points creating a dynamic manufacturing belt. In 2014, a trial was conducted that showed that the North-South Transport Corridor was 40% faster and 30% cheaper than the traditional maritime route going through the Suez Canal and the Mediterranean Sea. The distance between Mumbai and Moscow would be reduced from 16,000 km to 7,000 km.

Everything about the INSTC is revolutionary in terms of international trade but the trouble however is Iran. The Iranians lack rail and road connectivity across the country as it is mountainous terrain. Iran is under international sanctions, making economic collaboration difficult and risky. India has spent two decades tweaking and adjusting the technical aspects of the corridor but it has made no headway till now. The INSTC will remain a questionable venture as long as the Iranians are under international bad book.

In 2014, when the Narendra Modi government came to power, India came up with a humble policy called “neighbourhood first”. The aim was to resolve India’s differences with its smaller neighbours. Thereby curbing China’s influence in the region, New Delhi invited all small neighbours to the swearing-in ceremony of Narendra Modi on 16 May 2014. India opened its chequebook and extended generous lines of credit, commercial contracts and foreign aid. Bhutan, for instance, received a sum of about $ 350 million in foreign aid in 2019. Even today, India is looking after Bhutan’s space and IT departments and setting up space satellites. There was some success in the early phase of the programme, but those advances have reversed over the years. The Maldives, Sri Lanka, Nepal and Bangladesh have grown closer to China in the meantime. Ironically, Afghanistan was the only real success story in the ‘neighbourhood first’ policy. But every ounce of Indian influence dissolved with the Taliban’s takeover of Afghanistan.

The lack of success elsewhere compelled India to take on a new grand strategy in 2017. This time, teaming up with Japan. The project named the Asia-Africa Growth Corridor (AAGC) was the brainchild of prime ministers of the two nations, Narendra Modi and Shinzo Abe. The idea was to link India with Africa through new shipping lanes. India has strong ties with Southeast Africa through trade and diaspora. The plan made sense and served as a strategic motive.

India’s latest commercial belt, named the Arab Mediterranean Route, is aiming for and it seems to be more practical than the previous programs. The project looks to connect India to European markets via the existing road and rail infrastructure in the middle east. In a policy report published by the Institute of South Asian Studies at the University of Singapore, Prof Michael Tanham claims a “paradigm shift” in India’s Eurasian connectivity.

It is a plan that was unthinkable just a few years ago. And the -changer is Israel’s recent normalisation with its Arab neighbours. Rail connection is being established at a rapid pace, going from the ports in the United Arab Emirates to and Jordan to the Israeli port city of Haifa. From the Israeli coast, goods will be shipped across the Mediterranean to Piraeus in Greece and from there further inland into continental Europe. India’s goal is to tap into that emerging corridor and develop an arc of commerce extending from India to the UAE, Saudi Arabia, Jordan, Israel, Greece and all the way to Germany. Interestingly, India would not be alone in reconfiguring the Arab Mediterranean Corridor; it would merrily have to extend the belt from Abu Dhabi to Mumbai. Much of the infrastructure for this corridor is already in place. The UAE has several ports that can serve as connectivity modes and much of the railway network going to Israel is complete. Only about 300 km remains to be built in Jordan and Saudi Arabia. Once the Arab Mediterranean Corridor is operational, Indian goods leaving Mumbai could arrive on the European mainland in as little as 10 days.

It is not just that would be the main destination. By linking into the existing infrastructure, India can help develop value chains along the corridor. India’s giant agricultural sector could emerge as an indispensable force in the regional supply and demand chain. Climate Change is expected to affect the Middle East drastically in the coming decades, the region is warming at twice the global average by 2050. There will be prolonged periods of heatwaves while desertification will accelerate and droughts will last longer. Food and water will become scarce and precious commodities. India, being the fourth largest agricultural producer in the world, could step up as the Food Basket of the Middle East.

A stepping stone towards this has already begun. Food processing plants have already been set up in India by some Middle Eastern countries. India is set to invest roughly $ 7 billion in creating new mega food parks and it is working closely with Israel to enhance agricultural output. India has also signed a comprehensive strategic partnership with the United Arab Emirates promising to boost bilateral trade by 60% and new infrastructure investments worth up to 75 billion dollars. The Emirati based companies are currently constructing and acquiring new ports on the periphery of the Indian Ocean. So, while the Arab Mediterranean Corridor looks primarily at the markets in Europe, the agonising situation in the Middle East opens new avenues for commerce.

The plan is exciting and effective. But there is a catch. It is a geopolitical minefield. Going into business with and Israel would harm relations with Iran and pull India into the intricate power of the Middle East. Second, the Greek port of Piraeus is owned by Costco Shipping, which is a Chinese state-owned corporation. If India plans to counter China by going via Piraeus, it is a bad call. India surely has some plans to construct a port of its own somewhere in the Eastern Mediterranean or acquire an existing port.

This business opportunity from India to the Middle East and is a sensible and practical course of action. India cannot change China’s influence by fighting the existing reality. To break a monopoly, one must design a new configuration that is faster, cheaper, profitable to all. India is on the right path of global leadership.

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