India’s influence in South Asia is largely due to its geography, comparative economic might and historical and cultural relevance to the region. That influence is currently under strain, largely due to China’s Belt and Road Initiative (BRI), led by President Xi Jinping. The BRI is meant to strengthen Chinese position in six continental and maritime areas, including in South Asia and the Indian Ocean with a view to assert China’s leadership in the longer term through capturing strategic communications, creating dependencies and marginalising India.

While China’s history of involvement in South Asia is of fairly recent origin, it has had long-standing ties with Pakistan, which go back over five decades. The China-Pakistan nexus reflects a unique strategic logic, with the relationship being touted as ‘higher then the mountains, deeper than the oceans’, to which has recently been added the epithet ‘sweeter than honey’. Since the turn of the century, China has strengthened its relations with other South Asian countries as well, forging strong economic ties through trade, diplomacy, aid and investment with many of the projects being pursued under sovereign agreements. Its economic diplomacy has also been accompanied by an expanded strategic cooperation with India’s neighbours which is a cause of concern to India as are China’s double standards on issues of terrorism and extremism.

China’s economic growth over the last three decades has been phenomenal, with its GDP Annual Growth Rate from 1989 until 2018 averaging 9.63 percent. Its dependancy on energy and resource supplies from the Middle East and Africa, which in turn are transported through the Indian Ocean was the logic for China to increase its presence in the Indian Ocean littoral. China’s development of maritime facilities in Gwadar in Pakistan, as also in Sri Lanka, Bangladesh and Myanmar, has been viewed by India as an attempt to encircle India by what is known as China’s ‘string of pearls’ strategy. Beijing has developed Hambantota port in Sri Lanka, built a container port facility in Chittagong in Bangladesh and is building roads, dams and pipelines in Myanmar.

China’s economic growth being dependant on its freedom of navigation through the Indian Ocean leaves it little option but to build capability to secure its corridors of prosperity and progress. South Asia also provides the pivot to China that can guarantee it to continue to fuel its industries. With the US decision in 2011 to expand and intensify its role in the Asia Pacific, the strategic rivalry between Washington and Beijing in the Indian Ocean Region (IOR) will further intensify. The Indian Ocean is thus an area where China could potentially be on a collision course with India and the US.This explains the Chinese focus on expanding its reach in the IOR.

In matters of trade, the South Asian Region remains one of the least economically integrated. The SAARC initiative has floundered, largely because of hostility between India and Pakistan. Most SAARC countries rely heavily on developed nations as export destinations, and increasingly import from China. Chinese engagement in the region, largely through the BRI, is thus set to promote Asian connectivity on Chinese terms. China has emerged as a top exporter of goods to the region, including to India, breaking into South Asian markets with its export-led growth strategy. As early as 2005, China overtook India as Bangladesh’s top trading partner. Chinese exports to Sri Lanka are close to Indian export levels and Chinese goods have flooded Nepalese markets, displacing Indian goods.

Indian response to China’s BRI has been on expected lines. The China- Pakistan Economic Corridor (CPEC), which is an essential part of the BRI, passes through Indian Territory (presently under Pakistan’s occupation) which India, obviously, will not countenance. Some analysts are of the view that it is in India’s economic interest to support this Chinese initiative, but they fail to state how India will benefit from the same. It is not clear what support the Chinese seek from India as all the infrastructure projects are being developed by Chinese companies. Are the Chinese then only seeking India’s approval and moral and political support?

Much of the recent attention to China’s growing footprint in South Asia focuses on its development assistance and government investment programs, particularly for large infrastructure projects. Between 2012 and 2015, China disbursed almost USD 2.5 billion of loans to Sri Lanka, of which more than 75 percent came from the Export-Import Bank of China. Sri Lanka’s inability to service the loans has led to it being forced to give the port of Hambantota to China on a 99 year lease. This ability of China to marshal its resources to achieve strategic ends is thus a cause of concern. While the Sri Lankan President Mr Srisena has sought to allay Indian fears by stressing that the port is for civilian use only and will never be used for military purposes, the potential for such use in future cannot be ruled out. India is therefore concerned that the smaller nations which were traditionally India’s allies, could drift towards China largely due to Chinese money power and may become victims of political manipulation by China despite the fact that India has cultural, religious and economic ties with them that are difficult to break.

In Afghanistan, both India and China share a common interest in Afghanistan’s stability. Interests also overlap, such as in the development of the Bangladesh- China-India-Myanmar economic corridor, opening up new opportunities for constructive cooperation.   Prime Minister   Narendra Modi has also doubled down on his outreach across South  Asia,  stressing on infrastructure development, people-to-people connectivity, and a “lift all boats” approach to help India’s neighbours gain from its own rise.  However, with an unresolved border and  a  contentious history, India will view China’s activities in the South Asia neighborhood warily. In Southeast Asia, India’s “Act East” policy aims to facilitate commerce, culture, and connectivity. This area is also in China’s focus, but the interests of the two countries will likely be complementary since the region’s infrastructure needs are pressing and require trillions of dollars in capital. Greater connectivity will enable both China and India to tap further into Asian markets through trade and investment, although India will be hard-pressed to provide products as inexpensive and plentiful as China can in the near term.

In the region’s west, China’s connectivity plans have the potential to help stabilise and strengthen Afghanistan by opening up trade routes and creating new economic opportunities and linkages. Should the China-Pakistan Economic Corridor, a vision to link western China by road and rail down to the Gwadar deep water port, come to fruition in the near term, India may find itself on the outside of a new transformational supply chain in the middle of the region. The CPEC however is hostage to the internal security situation in Pakistan, and the prognosis for its success in the near term as of now is debatable. Beijing’s infusion of resources to create its Silk Road Economic Belt will however position China as a benefactor without parallel. It is the major donor to the AIIB (capital pool of $100 billion), and to the reserve fund of the New Development Bank (the “BRICS bank”), and on top of those multinational institutions, has created its own Silk Road Fund of $40 billion in capital.

For India, it is important to continue with renewed vigour on its Act East Policy and on upgrading BIMSTEC. SAARC is unlikely to yield any positive outcome, but as the countries which comprise BIMSTEC are by and large the same as SAARC (BIMSTEC includes Myanmar and Thailand and excludes Pakistan and Maldives), renewing focus on BIMSTEC makes great sense. The Chahbahar port project and the Asia-Africa Growth Corridor with Japan and Indonesia must also be given a push. There is also a need for India to take the lead role in integrating South Asia and Southeast Asia and become the magnet for these regions. The concept of SAGAR (Security And Growth for All in the Region) as enunciated by Prime Minister Modi, would also need to be given a fillip.

In terms of hard power, India must continue with its effort in building its maritime capabilities, strengthening the Andaman and Nicobar Command and on military to military contact with the US, Japan and Australia. Raising of the proposed strike corps must be completed at the earliest, to signal India’s intentions. Ultimately, India must increase its economic and military capability if it wishes to be a player in the region and in world affairs.

Note: This article was written with inputs from Prof Srinath Kondapalli and Brig Narender Kumar, SM, VSM

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