By P.K.Balachandran/Daily News
Colombo, October 29: Indian Prime Minister Narendra Modi and Chinese President Xi Jinping had a very significant bilateral meeting on October 23 on the side lines of the Shanghai Cooperation Organization’s summit in Kazan, Russia. Both leaders signalled a breakthrough in the long-drawn out and tortuous negotiations on ensuring peace on the troubled 3,000 km border between the two countries.
Speaking at a think tank in New Delhi, after the Kazan summit, India’s Defence Minister, Rajnath Singh, said that the two countries have reached a broad consensus to restore the ground situation “based on principles of equal and mutual security.”
The new agreement allows Indian forces to resume patrolling in key areas such as Depsang and Demchok that had been flashpoints in the India-China standoff on the border.
The resumption of patrolling opens areas for Indian herdsmen to take their flock for grazing. That has been a major demand of people on the Indian side of the border.
Although the deal does not amount to “disengagement” as such, it is an arrangement which will lessen friction on the ground, allow the two countries to discuss de-escalation and disengagement, and hopefully go for demarcation of the border in course of time.
Experts said that the resumption of these activities is a confidence-building measure and a signal that both countries are willing to reduce military tensions. “Continuous dialogue has paid dividends,” said Defence Minister Rajnath Singh.
Surprise for Most
To most observers in India and abroad, the deal, however small, came as a surprise because the prevailing wisdom was that India and China are such incorrigible rivals that even the smallest detente is inconceivable. But economic compulsions and geopolitical developments combined to shape events in favour of a détente.
In 2020, in Galwan Valley, 20 Indian and four Chinese soldiers were killed as the two sides fought ferociously with clubs and stones. This mediaeval clash in rugged Ladakh led to a marked deterioration in Sino-Indian relations. India banned more than 50 Chinese apps, including TikTok.
But the bitterness appears to have disappeared into thin air and euphoria is the order of the day. A combination of diverse factors such as India’s growing disillusionment with the West, its need for Chinese investments and China’s opening its doors to Gautam Adani, an Indian tycoon close to Prime Minister Modi, account for the change.
Geopolitical Dimension
To take the geopolitical dimension first: India’s relations with the Western bloc, particularly US and Canada, had hit the rocks. India did not back the West’s case against Russia on Ukraine. On the contrary, to America’s chagrin, it bought crude oil from sanctioned Russia at a concessional rate, refined it, and made money by selling it to energy-starved Western Europe.
An angry US Ambassador to India, Eric Garcetti, told an audience in Kolkata that he does not think that India and the US are friends. Friends, he said, come to each other’s help when one of them is in need. But India’s hadn’t come to the aid of the US on the Ukraine issue.
Before Garcetti’s admonition, US foreign policy expert Dr. Ashley Tellis, had written a paper urging Washington not to count on India, because India takes a lot from the US, like sophisticated defence equipment, but does not reciprocate in political terms. In American eyes, India’s bid to exercise “strategic autonomy” in international affairs while being a “strategic partner” of the US, is not on.
More recently, the US, Canada and India have been at odds over an alleged Indian governmental involvement in the killing of a Sikh Canadian, Hardeep Singh Nijjar, on Canadian soil in June 2023, and an attempt to kill an American Sikh, Gurpatwant Singh Pannun, in New York. The latter case is in court in the US.
Nijjar and Pannun have been campaigning for the secession of a part of India to form an independent Sikh state of “Khalistan” and both are wanted in India as terrorists. But for the US and Canada, any Indian official involvement in the assassination of Nijjar or the attempt on the life of Pannun, is unacceptable, an invasion of their sovereignty.
India denied any official involvement in the two cases and accused Canada and the US of disregarding India’s sovereignty and territorial integrity and brazenly mollycoddling wanted terrorists and separatists. Though talks are on about the Pannun matter at least, an understanding is not on the cards, as of now.
India and US are at odds over China also. The US wants India to be more active and cooperative on containing China in all possible ways. But India is not willing to go to war with China, even on the border issue, preferring to negotiate with China, while enhancing its defence capabilities.
China is shedding its total antagonism towards India. It has always been interested in economic cooperation, putting the intractable border issue on the backburner. And India is shedding its stance that there can be no normalization of ties so long as the border is tense. As for India-Russian ties, these have been continuously strong for 75 years and is expected remain so.
Economic Factor
India’s need to develop its industry is pushing it to have closer ties with China, the world’s factory. It is shedding some of its fears about Chinese infiltration and sabotage through investments.
The reason for the change in the Indian attitude is that key Indian industries are heavily dependent on Chinese intermediaries. Writing in the India Forum, economists Biswajit Dhar and K.S Chalapati Rao, says that India depends on China for the supply of a wide range of products, from the simplest ones like nails/tacks and umbrellas to sophisticated telecom and electronics products, and pharmaceutical intermediates called Active Pharmaceutical Ingredients (API).
Chinese domination in India’s import of telecom and electronic products has increased manifold over the past few years after the Indian government initiated the Digital India programme in 2015, Dhar and Rao say.
Chinese APIs have helped Indian generic pharma manufacturers who provide cheap medicines not only to Indians but to people abroad. Due to its deep penetration in the global markets, India has acquired the name “Pharmacy of the World”. India would like to maintain that status.
Large volumes of mobile phones are sourced from China. In 2019–20, more than 83% of imports of mobile phones were of Chinese origin. Nearly 90% of colour TV sets imported into the country were from China. India continues to depend substantially on imports of Chinese telecom transmission equipment.
The motorcycle industry sourced 85% of its imports of parts and components from China in 2018-19. India imports critical parts like wheel rims from China. India is heavily dependent on China for solar photovoltaic cells. More than 90% of imports of silicon wafers and solar lanterns in 2019–20 were from China.
To support the production of Indian textiles and garments, another important export industry, India has been ramping up imports of yarn and fabric from China. Even the automobile industry — considered a success story for both domestic and export sales — has been increasing its imports of vehicle parts and accessories from China. No wonder then that China is India’s largest trading partner.
Bid for Chinese FDI
In July, India’s Chief Economic Adviser Dr. V. Anantha Nageswaran said that to boost global exports, India should either integrate into China’s supply chain or promote FDI from China. And for some time now, India has been allowing Chinese companies to invest, albeit on a case-by-case basis. It has also been allowing minority share-holding in some companies and relaxing visa rules for Chinese personnel. Dr. Nagewaran is keen on reducing the adverse trade balance with China which was US$ 83.36 in 2023 and is increasing.
Enter Adani
China did something very significant to clinch issues with India. In September, it allowed the Adani Global Pte, a Singapore-based subsidiary of Adani Enterprises owned by Gautam Adani, to establish a wholly-owned subsidiary, Adani Energy Resources (Shanghai), in Shanghai, with a registered share capital of U$ 2.1 million.
AERCL was incorporated and registered under the Company Law of China on September 2, 2024. This was a month before Prime Minister Modi was to meet Xi Jinping in Kazan. The two smiled and shook hands for the first time in many years.
With Prime Minister Modi’s favourite Indian tycoon having a stake in China’s economy, it could be an “all clear” signal for Chinese investments in India. This may even lead to some kind of détente over the border and a smoother political relationship in course of time.
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