Why kicking itself out of OBOR was important for India?

Why kicking itself out of OBOR was important for India?

Salman Rafi,
Image Credit: Satish Acharya/ Oneindia.com

While India stopped short of attending the last week held summit of Belt and Road Initiative (BRI) in China, otherwise known as ‘One Belt One Road’ vision, the decision should not be confused with, despite India’s allusions to the violation of its territory and sovereignty, the possibility of India potentially rejecting the BRI. As a matter of fact, despite being absent at the Summit, India is still very much a part of BRI through the Bangladesh-China-India-Myanmar Economic Corridor (BCIM), a corridor which is not only closely related to BRI, but is very much in line, qualitatively speaking, with the China-Pakistan Economic Corridor.  

The idea of BCIM has been flourishing since at least 2013 and it was only in the last month of April, during a meeting held in Calcutta, India, that China emphasised the need to raise co-operation to intergovernmental level.

While the programme is still on early stage of negotiations, India’s visible presence and willingness to co-operate with China does show that India’s absence from BRI summit is neither rooted in some well thought out regional policy, nor is it a part of long-term strategy vis-à-vis China.

Hence, the question: why was it important for India to kick itself out of the BRI summit?

An answer to this question cannot be simply attributed to the CPEC-factor, which is by far only one of the many projects being completed under BRI.

A more plausible explanation of India’s seemingly errant policy can be found in its bi-lateral relations with China and how its huge trade deficit is driving its policy makers to a direction that may cause, as some Indian papers have suggested in the cover-up to Indian absence at the summit, India to fall a prey to self-inflicted economic isolation.

The trade-deficit concerns were, yet again, a visible part of the report India submitted during the April meeting of BCIM and its officials were not unmindful of the possibility of regional balance of power tilting further to China’s favour in the years to come, particularly once the BRI kicks off with a bang.

While a number of people, both scholars and analysts, have expressed such concerns in Pakistan too, it seems that Pakistan, being a relatively smaller country, sees more benefit than harm in appropriating the billion-dollar project to ease many of its own big problems, particularly its energy crisis.

India, being a much bigger economy than Pakistan and following its ambitious dream of big regional-power status, cannot geo-politically afford to allow the trade deficit to grow unboundedly, or even allow China an easy access to the regional markets at the expense of India’s own trade.

Hence, India’s cautious moves. All India is appearing to achieve is to institutionalize the ways and means of reducing bi-lateral deficits as a mean to secure for itself a bigger role in the region. Perhaps this was precisely what the India official had in mind during the April-meeting of BCIM where he stated:

“…Even as we explore greater connectivity between BCIM countries, we should be mindful of different domestic circumstances and developmental aspirations in our respective countries. While forging ahead on our respective developmental paths our four countries [are] at present at different level of developments and this should be an important consideration while we engage in mutually beneficial areas for cooperation,”

The development disparity, which is fundamentally expressed through trade imbalance, is self-evident here. And again, at the heart of a member of the ruling party’s statement is the fear, real or imagined, of Chinese domination. He was quoted as saying, “the project will only serve China’s economic interests by supporting its steel and cement industries currently bedevilled by overcapacity.”

There is no gain saying that their bi-lateral trade deficit is huge. As of 2016, the trade-deficit stood at US$46.56 billion as the Indian exports continued to decline while the bilateral trade marginally slowed down by 2.1 per cent to nearly $71 billion.  Trade figures prepared by General Administration of Customs show that China exports totalled to $58.33 billion, registering an increase of 0.2 per cent compared to $58.25 billion in 2015.

India exports to China have progressively declined during last few years. In 2014, India exports stood at US$16.4 billion. In 2015, exports dropped to US$13.38 billion, and in 2015, it further dropped to US$12.46 billion, contributing directly to Indian concerns about an overwhelming Chinese ingress in the Indian markets if India decided to partake in BRI without mechanisms put in it to ensure that the deficit wouldn’t get widened in the future.

Although this trade deficit is a function of the commodities India exports to, namely cotton, gems and precious metals, copper and iron ore, and imports from China, namely manufactured capital goods mainly for the power and telecom sectors, Indian officials doubt that an un-restricted participation in BRI and sub-regional groupings such as BICM would only add to the imbalance as they are themselves aspiring to establish an industrial base and seek high growth rates through exports to the neighbouring countries.

As such, what the India officials seem to be preoccupied with is the question of how to manage integration with China and, at the same time, ensure that India’s own exports to neighbouring countries don’t suffer a downgrade.

The only way available to India is to restrict the extent to which China can find place at the regional and sub-regional level. India’s rejection of BRI-summit invitation is a manifestation of this very policy, a policy that nonetheless stands little chance of meaningful success in the wake of an overwhelming majority of the countries willing to jump on the Chinese bandwagon.

This was pretty evident even during the last BCIM meeting where both Bangladesh and Myanmar were seen adopting a different position from that of India.

Salman Rafi Sheikh is an independent journalist based in Pakistan. His areas of interest include politics of terrorism, global war on terror, ethno-national conflicts, foreign policies of major powers, application and consequences.