Sino-Indian Relationship under Modi- Reflection of a New India

Probably no other month in the history of modern India has been as important as the month of September 2014 is going to be. If this month started with the conclusion of one of the most successful foreign visits by any Indian premiere to Japan, with an investment commitment from Japan to the tune of $35 billion, the middle of this month is now witnessing a historic visit by the Chinese President with an investment commitment of a whopping $100 billion. Both investments, be it by Japan and China are expected to be spread over the next five years.

Later on this month, the Indian Prime Minister would be visiting US for another historic event where among others he would be addressing some 20,000 NRIs in New York. No prize for guessing that the Americans would not like to be kept behind and much on the lines of the Chinese and the Japanese, they too would be more than willing to put money into the Indian market which has started showing new signs of optimism with the emergence of the Narendra Modi at the helm of affairs.

The Indian Story - Bouncing Back with Modi

One cannot deny that none of this would be charity work and most of the investment commitments are primarily because India in spite of being one of the largest economies in the world ( 10th in terms of nominal GDP and 3rd in terms of PPP) has incredible potential.

India's rising population of middle class and the unique demography consisting of a huge proportion of young people with high level of aspirations provide the perfect opportunity for foreign investors to park their money for the long haul game. It is a win-win situation as India too requires investments running into hundreds of billions of dollars to shore up its infrastructure and to boost manufacturing.

The Chinese Challenge

However, among the three key meets, it is the Chinese President's visit which is the most challenging. Candy of investment commitments and the success earlier in initializing the BRICS Bank cannot simply do away the issues related to the unsettled border disputes, relentless Chinese intrusions as well as the prickly issue of Chinese military assistance to Pakistan.
No doubt the Chinese investments are highly welcome especially in the realms of infrastructure development but this alone would not be good enough to camouflage the thorny issues which are contentious but not unsolvable.

In other words, the Sino-Indian relationship is entering an era of cooptition, a combination of cooperation, competition and stalemates and all the three are here to stay and which are needed to be finely managed as well as balanced. And this is perhaps the norm of the day. The era of flawless friendships or complete diplomatic cut-offs are over.

The Shift in the Indian Approach

Interestingly, the marked change in approach of the Indian Government is that it is willing to play the hard ball of geopolitics even while continuing with the bonhomie of handshake diplomacy. If the warmth of a close and enduring relationship with Japan was evident during Modi's visit to Japan and his clear barb at the expansionist tendency of China, it is becoming even more evident during the visit of the Chinese President Xi Jinping, wherein the visit and visible show of warmth of between the premiers did not deter India from going ahead with signing of pact with Vietnam for exploration of more oil blocks by ONGC, many of which fall in those regions of South China Sea which are claimed by China as well.

The Exceptional Midas Touch of Modi....

Many had doubted the diplomatic capability of Narendra Modi and observed that Modi as CM of Gujarat might have been successful as a capable administrator but may be a rookie when it comes to international affairs and matters of geopolitics.

Yet all the mandarins of South Block and the shenanigans of the diplomatic corridors as well as the think tanks have been humbled by the manner in which Modi has hogged the international limelight and made the Indian story come alive. The success is all his.

In many a respect his electrifying charisma and personal touch that he brings in any diplomatic rendezvous has catapulted both him and the India story to a new height from the nadir that it reached during 10 years of UPA regime.

If the investment commitments from Japan and China alone fructify, $135 billion of combined investments would be good enough to materialize some of the major proposals that his government mentioned in the maiden budget and which included 100 smart cities, bullet trains as well as major industrial clusters among others.

Already $135 billion of combined investment commitment-Is $500 billion too far?

It is for sure that the investment proposals from many of the other countries would also be coming forth in the near future and the combined foreign investment commitments for the next five years might even reach the magical $500 billion. And it is here that it would be extremely important to see if we can use the investment bait to make others appreciate the Indian perspective and take into account the Indian concerns more effectively.

Time to play the hard ball of diplomacy- Choose between India and Pakistan

The Chinese or the American investments in India are not any favor to India. If India needs those investments then those nations too need to park their money for long term business gains in one of the most promising economies of the world.
However India would need to make it clear now to both US and China and business cannot go as usual if they don't change their policies towards Pakistan and cross border terror that bleeds India. Or else there are many others waiting in the queue

While US continues to dilly dally on its policy on Pakistan , China's continued military assistance to Pakistan is a cause of concern. And thus India, given its massive market that few can afford to ignore, should make it clear to the world that it is time they choose between India and Pakistan.

It cannot happen that some would reap the benefits of investing in Indian market while continuing with their opaque policy and stoic silence on the nuisance that Pakistan does. It is either they choose a rogue and a failed Pakistan or they choose the $ 2 trillion Indian economy. The business as usual approach has not helped India and it is time for her to bargain hard.

Sino-Indian relationship is delicate but critical

There is no doubt that Indo-China relationship is extremely critical. Apart from being civilizational nations that both are, the countries are abode of nearly two-fifth of human population and both are supposed to be among the top two economies of the world in the next few decades.

This relationship has to go beyond just investments and have to also be in the realms of cultural exchanges, more of people to people contact and trashing the suspicions which have been allowed to thrive for long.

Modi has made a grand start and his success lies in making nations who don't see eye to eye getting eager to engage with India as a focal point. But the best thing is the fact that India has not lowered its guard or completely bowled over by Chinese commitments huge investments.

Even as Chinese President enjoy the Indian hospitality and both sides pledge to take the relationship forward, the Indian Army and US Army have started their annual joint military exercise in addition to India mulling the sale of weapon systems like Brahmos to Vietnam, proof enough that it is not willing to put all eggs in one basket anymore. Interesting times ahead for sure.