Laos calling: Can India raise its game?

Sitting in the high-speed train from Luang Prabang to Vientiane, I could contemplate how China’s actions in Laos reflected its wider neighbourhood policy. The train carried not just passengers but a clear message on how China sees its neighbourhood, using connectivity as a means of control, infrastructure as influence and economic partnership as political leverage. Referred to as the ‘China Train’ in Laos, linking China to the Lao capital Vientiane, the Laos-China Railway (LCR) is a physical expression of Beijing’s neighbourhood policy, binding smaller countries into its economic and strategic orbit through steel and finance.

This was China’s Belt and Road Initiative (BRI) in action, weaving together South, Central, and Southeast Asia through transport, energy and digital corridors that originate in China and radiate outward. Laos, small and landlocked, seemed to be a model laboratory for this policy. The $6-billion LCR is 70% financed by China’s Exim Bank and built largely by Chinese state firms forming the spine of a railway network that will eventually connect China to Bangkok, Kuala Lumpur, and Singapore.

By turning Laos from “land-locked” to “land-linked,” China has effectively redrawn the geopolitics of the Mekong. My journey would take me only two hours as opposed to the 7-10 hours required earlier. Freight movement between China and Vientiane now takes less than 10 hours, cutting costs by up to 40%. Over seven million tonnes of cargo were moved in 2024, and Chinese goods dominate Lao markets. Vientiane’s new skyline is dotted with Chinese banks, hotels, and real-estate projects mirroring the physical and economic imprint of Beijing’s neighbourhood outreach.

Easily discernible in Laos, Chinese financing locks countries into long-term debt and technical reliance, the economic entrenchment ensuring China is the indispensable partner for trade, hydropower, and investment. Laos was becoming not just a corridor for goods, but a corridor for Chinese influence.

Several regional projects follow the Laos pattern, the infrastructure financed and controlled by Beijing, both actions wrapped in a narrative of regional development. In Myanmar, the China-Myanmar Economic Corridor connects Yunnan to the Bay of Bengal at Kyaukphyu. In Cambodia, Chinese firms are building highways, power plants, and a deep-sea port at Sihanoukville. In Pakistan, the China-Pakistan Economic Corridor (CPEC) anchors Chinese access to the Arabian Sea.

Dominance or diversity?

So what is India’s neighbourhood vision? India does have a neighbourhood policy, though of a different nature. New Delhi seeks a region linked by cooperation rather than dependence. While China builds corridors to consolidate its supply chains, Indian corridors open access and trust.

India’s ties with Laos date back to Buddhism’s spread from the Gangetic plains to the Mekong valley. Yet today, the contrast with China is striking. Sino-Lao trade exceeds $3.5 billion annually; India’s trade clocks around $250 million. India has offered over $100 million in lines of credit for power transmission and irrigation, and runs training programmes under the Mekong-Ganga Cooperation (MGC) framework. Small ripples beside China’s flood of capital. India lacks both direct connectivity (I flew to Bangkok to catch a train to Vientiane – no direct flights from India to Vientiane exist) and large-scale investment vehicles comparable to China’s state banks.

India’s regional policy has tools that can extend up to Laos. It can leverage private enterprise, transparency and technology, unlike China’s state-driven approach. The export of India’s Digital Public Infrastructure (UPI, Aadhaar) to partner countries can give Laos a low-cost digital backbone. Educational partnerships and Buddhist circuits, linking Bodh Gaya, Sarnath, and Luang Prabang, can strengthen India’s moral influence in the region. Sub-regional bodies such as BIMSTEC and the MGC could provide diplomatic platforms to deepen trade and cultural engagement with Laos and its ASEAN neighbours.

The India-Myanmar-Thailand Trilateral Highway, once complete, could be extended through northern Thailand into Laos, linking Vientiane by road to India’s Northeast. The Kaladan Multi-Modal Transit Transport Project, connecting Kolkata port to Mizoram via Myanmar’s Sittwe, can serve as India’s eastern gateway to the Mekong.

India can combine physical connectivity, digital integration, and cultural diplomacy into one coherent neighbourhood policy. If China’s neighbourhood policy binds the region through infrastructure, India’s policy can liberate it through inclusivity. Laos should be wary of Chinese overreach and choose between two visions, one based on dominance, the other on diversity. India can offer a different path, a partnership that empowers rather than entraps. If New Delhi can turn its rhetoric into active engagement, the track of influence in Laos need not all lead north to China. It could yet turn towards India.

(The writer is adjunct faculty, St Joseph’s College – Pondicherry University MBA Twinning Programme)