Modi sweet coats the Silk Road, beginning of new ties



By Shivaji Sarkar

The Silk Road is mysterious, dazzling, posing hopes, some fears but ultimately unavoidable. India has trudged it for millennia, traded heavily, earned gold but also lost to some marauders as well. Has that changed? Is prime minister Narendra Modi changing that with business deals, gift of Bodhi tree – eternal source of knowledge or is it still besotted with the age-old border issues?

It is indeed a difficult and charming route. The coming century is being viewed as the era of the Chinese. The earlier two centuries were marked by the prowess of UK, Europe and the US. The US still remains in reckoning. Russia under the sanctions of the West also has started looking towards China and acknowledges the rise of China as an economic and military power.

The southern neighbor India howsoever it likes or not cannot ignore the growing might of China. It has two options either to ignore it completely and get into a Utopia or live with all caution and gains through a healthy participation and subtle moves.

India is also said to be growing. Its projected growth at 8 per cent would be faster than China’s falling growth now veering around 7 per cent. It sounds good to see India trudging ahead. There is difference in the volume of economy of the two countries. India despite lots of progress is yet to match China. India’s manufacturing growth remains low while China is on high trajectory. Yes, critics can say China also has slowed a bit. That is no consolation.

The economic dynamics is still favourable for China and is much ahead of what India is planning. India has to learn a lot from China. Its business strategies are in perspective. It has a bureaucracy, not merely the political leadership that is pro-active. It has a business that knows how to penetrate deep into the psyche of its competitors.

That is what India needs to be apprehensive. Chinese businesses during the last year have almost bagged 60 per cent of the total standardization certificates issued by Indian Standards Institution (ISI). It demonstrates that Chinese business is serious about giving the tough competition.

So far Chinese goods were merely a ‘cheap” buy. Now the price advantage is being offered with quality. Indian business has to look for strategies to unseat them. The Chinese businesses have done that long back in Europe and the US. Manufacturing of utilities there were cornered long back with this strategy – lower price and tolerable quality. It suits the use and throw culture.

Indian business has been a bit too dependent on the government. They are too protective be it at the licence-permit raj, the era of liebralisation or any other period. They gobble up public money for their ventures and never return the money leading to a whopping Rs 3 lakh crore bank NPAs (losses) apart from another few lakh crore government subsidies and tax relief. They have high appetite for their pockets. The nation’s loss is always their individual gains.

China sees it in a different light. Indians often believe that China wants to capture Indian market. They have virtually done it. But China also has taken care to do so in many other markets – entire south-east Asia, Pakistan, Sri Lanka, Malkduves, Myanmar, west Asia and now even penetrating Africa.

China is coping up with the high pace of home production through its foreign contracts. It is eyeing on $ 10.6 billion rail projects in Thailand, $ 20 billion energy projects in Pakistan, building 3000 km road to strategic Gwadar port at the Makran coast in Pakistan. The projects also have political connotations. The Gwadar road is also tool to check discontent in troubled Xinjiang. China has penetrated Sri Lanka with soft loans and virtually made a key base at Hambantota port.

China is eyeing on mineral and petroleum resources in the Indian Ocean region. But it is pro-actively preventing India from a tie-up with Vietnam in South China Sea, frowns at economic and military tie up with Japan and Taiwan. It pinpricks India on Tibet and even on Indian territories of Arunachal and Aksai Chin. It does not mind marauding through Pakistan-occupied-Kashmir.

For increasing business China goes to any extent mixing, diplomacy, gunboats and aggressive postures at international and UN bodies. India has to match it and not be just satisfied with the gains of some contracts or deals for building hi-speed train tracks and asking it to contain the balance of trade that is highly in favour of China.

The 10th Annual Business Confidence survey of European companies in China prepared by the European Chamber of Commerce shows business discontent.

More than half of the 552 the companies surveyed have been in China for over a decade. The companies largely have apprehensions as China is becoming stricter with its norms on finances, competition to pollution. They feel China is becoming “less businesslike”. India may see an opportunity. It also has to learn from China that a liberal attitude is often taken advantage and it harms the host. On the HR front, rising labour costs are on top of the mind for executives at 31 per cent compared to 28 per cent for talent shortage.

India is also mulling changes in labour laws to help such companies. Can we learn from the Chinese experience? The worst labour law violators are the western companies. How would India gain by extending facilities to such violators? Is it not possible to have a joint international approach on labour issues to protect the workers? China, of late, also has to think of worker protection.

“India is just not about IT and beauty. As Modi presses for greater market access for Indian companies, Indian companies also have to localize their services  for the China market”, says Rangarajan Vellamore,CEO, Infosys China.

“New energy is evident in relationship as Modi and Chinese president Xi Jinping have close rapport”, says BJP general secretary Ram Madhav. He, however, is concerned about China re-hyphenating vis-à-vis Pakistan.

That is the problem. It does not matter how many business deals India has with China. What matters is how strategically it matches every Chinese move. China has eyes on the West Asia and Europe. It won’t overlook Pakistan and also not give up efforts at encircling India.

It is a difficult relationship. Modi wanting to sweet coat is a good diplomatic move. Former prime minister Atal Behari Vajpayee in the context of China had said, “You cannot change your neighbour”. The present NDA government is following that to have the best. The gains cannot be measured in terms of dollars. It would be much more than that. Despite that, the ticklish points would remain. The love-hate will continue.


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