India must sell a different vision to counter BRI

India is in talks with the United States to join hands, together with Japan and Australia, to form an ‘economic Quad’ alongside the four nations’ evolving ‘security Quad’ (quadrilateral security dialogue) to take on an increasingly aggressive China.

While the security Quad is an attempt to manage China and constrain its increasingly powerful navy in the South China Sea and the Indian Ocean, the ‘economic Quad’, so to speak since it has no name to call it by, is a bid to take on China’s Belt and Road Initiative (BRI).

The BRI is Chinese President Xi Jinping’s strategy to keep the country’s growth engine humming and spread China’s economic and geopolitical influence all the way to Europe through South and Central Asia and West Asia and Africa through a humongous infrastructure-building effort in countries and seas all along China’s expansively reimagined version of the ancient Silk Route.

Not that even the world’s largest, third largest and sixth largest economies, along with Australia, can together match the scale of funding that Beijing is pouring into the projects, but the fear among countries that signed up for BRI – some 60 countries, from Sri Lanka to Greece -- that China may be driving them into a debt trap has opened up an opportunity for the Quad countries to offer Asian and African countries an alternative model of infrastructure development.

India has been in discussion with the US at least since early this year. The US Overseas Private Investment Corporation (OPIC) said in September that it was talking to the Indian side. It is learnt that it is being handled at the ambassadorial level from the Indian side.

It was only in July that the Trump administration itself firmed up its determination to take on the BRI. The US Congress has since passed the BUILD Act, providing potentially $60 billion and bringing OPIC and a part of the USAID into a newly created development agency – the US International Development Finance Corporation – for the purpose. Japan and Australia have signed up, and it’s all neatly packaged under the three countries’ ‘Indo-Pacific’ strategy. India hasn’t signed up yet.

India has its own connectivity projects going, albeit too slowly, such as the International North-South Corridor, connecting Chabahar port, developed by India, through Central Asia to Russia, where it will join trans-European transport networks, and the recently proposed India-Japan Asia-Africa Growth Corridor (AAGC).

The US-Japan-Australia trio, the European Union as well as even China want India to be part of their respective projects. And India will do well to be a part of all or most of them. Still Delhi must think through whether it wants to bet big on being part of efforts to provide multiple infrastructure projects or whether it can offer something uniquely suited to its strengths while diminishing the appeal of China to others.

For one, China’s biggest BRI investment is the $62 billion it is pouring into the China-Pakistan Economic Corridor (CPEC); its biggest adverse effect has been felt in Sri Lanka over its Hambantota port project; and it is working hard on turning every other neighbour of India — from Maldives to Afghanistan and Nepal and Bhutan -- into its pawns. China’s influence in Central Asia is natural, but its ambition in South Asia is clearly aimed at India. How should Delhi deal with China encroaching its turf?

Second, China has the export volumes to justify building roads, railways and ports to transport them. In other words, there’s demand for what China is supplying under BRI. That’s not the case with India. India’s merchandise and manufactured exports are minuscule compared to China’s. Is there a justification for India to build transport infrastructure across a vast region or is it feeling compelled to do so merely to counter Chinese influence?

Third, China has a problem of industrial overcapacity at home and therefore needs to move out and spread its capital and labour across half the world. India hasn’t yet achieved substantial capacity in many sectors in the domestic market itself as our industrialisation has gone slow. Should it spread its resources thin in competing with China on BRI?

Fourth, the US strategy is a private sector-led one. Can India match it? India’s

failure to resolve the twin balance-sheet problem — of distressed banks and highly leveraged companies and conglomerates — has left the private sector incapable of making substantial investments, whether in the domestic market or overseas. Delhi should therefore be realistic about what it can contribute and achieve by going down the same route as BRI.

Instead, India will do well to sell a different vision – where China focuses on building conventional power plants, for instance, Delhi could dangle solar power through its International Solar Alliance; where China focuses on brick-and-mortar, India must step up capacity-building and training initiatives for government, NGOs and other personnel across the regions. India must thus contribute to strengthening democracies. That would help take care of Chinese influence.