THE INDIAN RUPEE DECLINE

RUPEE BREACHES 67: FOUR MYTHS ABOUT INDIA AND THE POLITICS OF PESSIMISM

Rajesh Pandathil

Firstpost, August 28, 2013

Why this panic about the rupee decline, asked Paul Krugman on 20 August, a day when the currency hit 64.13 forcing the RBI to intervene to pull it back to 63.25 levels at the close.

His contention was that a panic was unwarranted now as India's dollar denominated debt situation is not like the Asian crisis countries of 1997-1998 or Argentina in 2001 and the fall in the rupee was in line with the emerging market currencies.

“Now, the depreciation of the rupee will presumably lead to a spike in inflation - but it should be temporary. So at first examination this doesn't look like as big a deal as some headlines are suggesting. What am I missing?,” he said in his blog.

But then the rupee's record low was 64.13, a level which now looks like a strong one. The rupee has fallen 65 and 66 in a matter of 7-8 days and looks set to reach 70 faster than expected.

The Indian rupee breached the 67-mark in early trade Wednesday, hitting a record low of 67.98 against the dollar in a couple of minutes of trade.

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US, CHINA, AND INDIA

THE G-2 DILEMMA

The current dynamic between the US and China poses challenges for Delhi

C. Raja Mohan

The Indian Express, June 11, 2013

The informal California summit over the weekend between the US and Chinese presidents, Barack Obama and Xi Jinping has unveiled a new phase in great power relations and demands a significant recalibration of India’s recent foreign policy assumptions. Although the summit did not produce any major breakthroughs, its very conception is based on the American recognition that a measure of political understanding with China is necessary for the management of the challenges confronting Asia and the world.

Any talk of US-China collaboration makes India rather nervous. Two recent occasions come to mind. In June 1998, barely weeks after the Indian and Pakistani nuclear tests, presidents Bill Clinton and Jiang Zemin declared the intent to build a strategic partnership and promote non-proliferation in the subcontinent. New Delhi went into a paroxysm denouncing the prospects for a Sino-US “condominium” in Asia.

In a Beijing summit in November 2009, Obama and Hu Jintao declared their commitment to seek stability in the subcontinent. Travelling to the US three weeks later, Prime Minister Manmohan Singh sought assurances from the US president that Washington’s partnership with Beijing will not be at the expense of Delhi. Looking back a little further, in the early years of the Cold War, India continually urged America and the Soviet Union to end their confrontation and seek peaceful coexistence. When America and Russia sought to achieve precisely those objectives in the 1970s, Delhi became anxious about superpower hegemony and protested nuclear agreements between them that constrained India’s strategic options.

The current dynamic between America and China will pose even greater challenges to Delhi. In the 1970s, Delhi neutralised the impact of Sino-American rapprochement by a tighter embrace of Soviet Russia. Today, Moscow is much closer to Beijing and is not eager to balance a rising China.

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CAN INDIA DETER CHINA?

STRATEGIC DETERRENCE AGAINST CHINA

Mandeep Singh Bajwa

The Hindustan Times, May 26, 2013

Deft diplomacy working patiently and paying no heed to shrill calls for upping the ante has resolved the tense situation arising out of the Chinese intrusion in Ladakh. To back up the diplomatic initiative, the military subtly flexed its muscles. The army presented the government with a number of options, including a show of strength, if necessary, implemented in a regulated manner to apply pressure.

XIV Corps consisting of an infantry division, a mountain division, certain specialised troops, an artillery brigade and an armoured battle group maintained a high level of operational readiness to meet any possibility. Long-range observation systems and UAVs (unmanned aerial vehicles) were used to keep a track of the People's Liberation Army (PLA) movements and build-up.

The pattern of Chinese behaviour means that we can expect more posturing on our borders. What are our options in strategic terms to deal with intrusions and nibbling away at our territory? While there has been a significant addition to our defence post-62, they need to be further strengthened in the view of increasing Chinese capabilities. However, the greatest truth in warfare is that a purely defensive strategy never works in the long-term.

We, therefore, need to build an offensive wherewithal with the capacity to strike deep into enemy territory while keeping our own base intact. The raising of mountain strike corps for the northern and eastern theatres with lightweight artillery, heavy light helicopters and bold, new concept of aggressive action can no longer be delayed. We also need to build a limited offensive capability for the central sector as well as in all defensive corps.

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INDIA-CHINA EXCHANGES

LI KEQIANG DECLARES 2014 AS YEAR OF EXCHANGES BETWEEN INDIA, CHINA TO BOOST FRIENDSHIP

Business Standard, May 21, 2013

Stressing on the need for increased people-to-people interaction between India and China, Chinese Premier Li Keqiang on Tuesday declared 2014 as the year of exchanges between the two nations to boost understanding and friendship.

Addressing captains of Indian industry at a function organised by FICCI here, Keqiang said: " The year of 2014 will be to boost understanding and friendship between both countries."

Li Keqiang, who is in India on a three-day state visit, further said both India and China have the wisdom to find mutually acceptable solution to the boundary problem.

"India and China have not shied away from addressing boundary question, have wisdom to find a fair and mutually acceptable solution...We have been able to put all issues on the table," he added.

Supporting a favourable trade balance and seeking to decrease trade deficit between India and China, he said Beijing would support Chinese enterprises to increase investments in India and help Indian products have access to Chinese market.

Li Keqiang on Monday said that global prosperity would not be possible without the simultaneous development of China and India.

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LI KEQIANG GOES TO DELHI

IN THE HANDS OF LI KEQIANG AND MANMOHAN SINGH, THE FUTURE OF A CONTINENT

Firstpost, May 19, 2013

In the summer of 1914, Archduke Franz Ferdinand and his wife Duchess Sophie were assassinated on the Latin Bridge in Sarajevo. The shots weren't, as pop history now has it, heard around the world. Europe was riding a great wave of prosperity that had stretched for over a century; its markets better-integrated than ever before and economic institutions better-developed than any in human history. Britain, focused on the Irish conflict, paid little attention to the regicide in the Balkans. The United States had long retreated into isolation, choosing to know little and care less. France had-what else-a sex scandal on its mind.

Less than weeks after the killing in Sarajevo, though, jaunty marching-bands were cheering on soldiers headed into a war that would end in the death of 10 million soldiers and seven million civilians. Europe's great powers had begun an inexorable march towards the abyss.

Chinese premier Li Keqiang will land in New Delhi on Sunday-bearing a message, he says, that his country and India “must shake hands… so that together we can raise the standing of Asia in the world”. It's hard to imagine either he or Prime Minister Manmohan Singh don't know their not-always-steady hands must guide their nations towards something more important than prestige: the survival of a continent.

Europe in 1913 looked a lot like Asia in 2013. China, like Germany back then, fears its rise is being shackled by the established great powers. In the global system, the United States operates much like imperial Britain, an arbiter of the destiny of nations far from its shores. India, like Russia, is struggling to emerge from backwardness-and views its newly powerful neighbour with deep trepidation. There are competing military modernisation programmes; new geo-strategic alliances; tensions from the East China Sea to the Himalaya and the deserts of Persia.

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CHINA AND INDIA AS SOURCES OF CAPITAL

CHINA, INDIA TO BE BIGGEST INVESTORS BY 2030: REPORT

Anna Yukhananov

Reuters, May 17, 2013

WASHINGTON (Reuters) - The percentage of global investment that goes to developing countries should triple in the next two decades as emerging economies catch up to richer nations and become more integrated into financial markets, the World Bank predicted in a report on Thursday.

These nations and their comparatively younger and bigger populations are also set to become the largest sources of capital, with China and India turning into the world's two biggest investors by 2030, the global development lender said.

The shifting landscape of saving and investment has profound implications for everything from which currencies will dominate global markets to the rise of new financial centers, patterns of capital flows and investment priorities.

But policymakers are still woefully unprepared for the changes, fixating instead on what will happen in the next three to six months, Kaushik Basu, the World Bank's chief economist, said.

"The big question that should concern us all is what will happen to the major drivers of growth and development: namely savings and investment," Basu told reporters ahead of the report's release.

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SHARIF AND PAKISTAN-INDIA

COMPETING PRESSURES AND THREATS: A LONG ROAD AHEAD FOR NAWAZ SHARIF

Vivek Katju

The Economic Times, May 15, 2013

In February 1999, the Pakistani defence services chiefs, including Pervez Musharraf, called on then Indian Prime Minister Atal Bihari Vajpayee in Government House, Lahore. As the call concluded, a Pakistani minister emphatically told this writer that the government would not allow the army to disrupt the historic process initiated by the visit. Three months later, the guns boomed in Kargil.

Nawaz Sharif is reaching out to India in a gushing, warm Lahori embrace. But Delhi must not lose sight of the enduring realities of the Pakistani state. Howsoever much Sharif may wish that the Constitution be respected by all Pakistani institutions, the army will not give up its decisive role in the formulation of the country's security policies, nor its traditional reflexes towards India.

Undoubtedly, the elections were credible despite the violence. They are an important milestone in the political evolution of Pakistan. Two points stand out vis-a-vis the elections to the National Assembly.

First, they have diminished the spread of the PML(N) and the PPP. Sharif effectively represents only the Punjab - 118 of his 126 seats come from that province. The PPP with 31 seats is now effectively a Sindhi party, with only one seat in Punjab. And despite the fervour of the metropolitan youth, some subtle support from the intelligence agencies and media attention, the bulk of Imran Khan's 29 seats come from pockets of Khyber-Pakhtunkhwa, FATA and northern Punjab.

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LADAKH REGION

INDIA, CHINA STAND-OFF IN LADAKH ENDS BUT AT WHAT COST TO INDIA?

Venky Vembu

Firstpost, May 6, 2013

At first blush, the news of an end to the 20-day-long border stand-off between Indian and Chinese troops in the Ladakh region will be welcomed to the extent that it has averted the very real possibility of a skirmish in the high Himalayas. When troops of the two countries, with an enormous trust deficit to bridge, stand eyeball-to-eyeball in confrontation, as they have been since the 15 April incursion by Chinese troops into notionally Indian territory, the scope for things getting out of hand gets dramatically heightened. Neither India nor China would have been well-served by a border skirmish - or even just a protracted stand-off - which is perhaps why they cranked the levers of military diplomacy to de-escalate the tension.

The precise details of the terms of agreement under which both Chinese and Indian troops pulled back from the brink aren't known yet. Nor is it immediately clear what caused the Chinese to yield ground when for much of these past 20 days, they had remained unyielding in their claim that they had not ingressed into Indian territory, and therefore saw no compelling reason to retreat.

It's entirely possible that the signals that India sent in the past couple of days - suggesting that External Affairs Minister Salman Khurshid's upcoming visit to China might be deferred because the Chinese response to Indian objections on the incursion had been less than satisfactory - have yielded dividends. As analysts have consistently argued, and as Firstpost too has noted earlier, India was not without diplomatic options in facing up to the Chinese challenge. It didn't need India to ratchet up the military rhetoric, which is the false framework set up by some analysts who favoured a softly-softly approach to China.

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INDIA SEEN BY CHINA

CHINESE FIND INDIA A POTENTIAL PARTNER UNLIKE JAPAN

Leo Wang

The Economic Times, May 5, 2013

The past 12 months have seen China getting directly involved in potentially explosive situations such as Ladakh or the Diaoyu Islands. It almost seems as if, as China rises, it is starting to flex its muscles and shift away from the more non-confrontational approach it has used in the past decade towards more direct military confrontation. However, appearances can be deceiving. These two situations, seen from the point of view of Chinese citizens, are extremely different from each other.

The recent conflict surrounding the Diaoyu Islands is born from the trauma China endured under Japanese occupation during the World War II. To this day, the relationship with Japan remains extremely tense, particularly due to what is perceived as continuing provocation, such as Japanese prime minister Shinzo Abe's yearly visit to the Yasukuni shrine where Class A, B and C war criminals are enshrined. As a consequence, any geopolitical conflict with Japan usually arouses very strong reactions from the population, often demanding immediate retribution and forcing the government into taking a hard stance.

PARTNERS NOT FOES

The Ladakh conflict, however, is seen as very different. Very few Chinese citizens feel there are tensions between India and China, to the extent that awareness of this incident is extremely low. Furthermore, the strategic importance of the Ladakh region or other border areas such as NEFA seems far lower than the Diaoyu Islands. They do not fit into China's plan for Tibet, and the massive, forbidding heights of the Himalayas make the regions difficult to access and develop.

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INDIA’S ECONOMY: ROBUST AND RESILIENT

INDIA GROWTH STORY INTACT, WILL CONTINUE TO GROW FASTER ON DOMESTIC DEMAND: ADB PRESIDENT

The Economic Times, May 3, 2011

NEW DELHI: Growth in emerging Asian economies, including India and China, is likely to remain robust and resilient even after the global crisis due to strong domestic demand, Asian Development Bank's new president Takehiko Nakao said.

Speaking on Thursday, ahead of the ADB's annual meeting, Nakao conceded that the current account surpluses in emerging economies had depleted to 2% from 10% because of the economic crisis.

However, he said, "India, China and other emerging economies would continue to grow faster than other developed economies because of strong domestic demand and strong production capacity in the region." The way forward for these economies is to continue attracting investments, especially in infrastructure development, Nakao said, adding that this can be done by good taxation and mobilising domestic savings.

Admitting that private sector has been a key contributor to Asia's economic boom and a powerful tool in the fight against poverty, he said there still remains considerable untapped potential for drawing on the entrepreneurship, talent and productivity in our region. "India needs to upgrade its services sector to absorb millions of workforce that gets generated each year. Besides, government needs to enhance private sector participation by creating conducive business environment to expand the sources and volume of available infrastructure financing," he said.

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SINO-INDIAN BORDER

HISTORY LESSON: WHY CHINA AND INDIA WILL HAVE TO DO A SWAP

Firstpost, May 1, 2013

China and India both insist they share a border sanctified by centuries of custom-but their troops are facing off on some of the most brutal terrain in the world, unable to agree on it. The problem is simple. The two countries' claims rest on agreements arrived at by local rulers hundreds of years ago, when the only places in the Himalaya that mattered were the passes across the inner Himalayas-used by seasonal trading caravans that provided valuable taxes to local rulers. No one knew, or cared, where the line ran through the high mountains.

Elsewhere in the world, countries are fighting for territories with oil, gas or minerals. In this case, they're geo-strategic: China needs Ladakh's Aksai Chin area to link Tibet to Xinjiang, and India fears losing Arunachal Pradesh would make its entire North-East vulnerable.

Many experts say the two great Asian powers will eventually have to do a swap-in essence, that India will have to sacrifice its claims to Aksai Chin in Ladakh for China acknowledging Indian sovreignity over Arunachal Pradesh. Both sides have been engaged in talks that have skirted around this issue, but neither seems keen on expending political capital on such a deal.

In part, that's because the debate over the border is clouded by political grandstanding, and publics sometimes ill-informed about what the border dispute is actually about.

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INDIA AND CHINA’S MILITARY

CHINA'S MILITARY WHITE PAPER PLAYS DOWN DISPUTE WITH INDIA

Saibal Dasgupta, TNN

The Times of India, April 17, 2013

BEIJING: China's military has issued a white paper blaming the US for causing tension in the Asia-Pacific region and naming Japan as a troublemaker. But the paper plays down the country's troubled relationship with India over boundary claims. It also reveals details of China's enormous military structure, with some of the information being released for the first time.

The report issued by the People's Liberation Army on Tuesday complained about "neighbouring countries" complicating and exacerbating tensions. Especially targeted were China's sea neighbours, including Japan, which the report accused of "making trouble over the Diaoyu islands".

"China still faces multiple and complicated security threats and challenges," said the white paper on 'The Diversified Employment of China's Armed Forces'.

There is little discussion about India in the paper and even joint exercises conducted between the military of the two countries have not been discussed in any detail. Military exchanges with China's neighbours such as Vietnam, South Korea and Pakistan are specifically mentioned.

"Some countries are strengthening their Asia-Pacific military alliances, expanding military presence in the region, and frequently making the situation there tenser," the paper said without taking any names. The obvious reference was to the expansion of US presence in the seas near South Korea, Vietnam and Japan.

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BRICS AND DEVELOPMENT

BRICS NATIONS TO HAVE DEVELOPMENT BANK

UPI, March 27, 2013

DURBAN, South Africa, March 27 (UPI) -- The BRICS nations of Brazil, Russia, India, China and South Africa agreed to set up a bank for infrastructure development, China's finance minister said.

Speaking in Durban, South Africa, site of the fifth summit of the BRICS nations, Chinese Finance Minister Lou Jiwei confirmed the agreement on the bank during a meeting of fellow financial ministers of the five countries.

He said the ministers "have agreed that the set-up of the development bank is feasible and reasonable," the official Chinese Xinhua News Agency reported.

Lou said it was agreed a bank to fund infrastructure projects in the member nations is needed, but that the meeting did not discuss details like initial investment of each country to the bank.

"What we have now is just a general picture," Lou said, adding details may be worked out by next year.

The Chinese minister, apparently allaying any concern a BRICS bank might challenge institutions such as the U.S.-led World Bank or the Asian Development Bank, said the bank would complement such existing institutions.

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CHINA AND INDIA IN AFRICA

IN RACE FOR AFRICA, INDIAN ELEPHANT RIVALS CHINESE DRAGON

Rohit Bansal

New York Daily News, March 24, 2013

Call it a deliberate clash of dates or mere coincidence, the Indian elephant and the Chinese dragon were caught courting Africa on exactly the same dates this month!

New Delhi hosted the CII-Export Import Bank Africa Conclave, an annual converge now in its 9th edition, where more than 500 projects worth some $70 billion were discussed by 900 delegates from 45 countries.

Beijing, on its part, set the stage for President Xi Jinping's visit to Africa beginning Sunday, his second overseas, hosting the Forum on Chinese Businesses in Africa and dangling lines of credit worth $20 billion. A blunt warning that investing businessmen must learn to behave followed!

The charge of the elephant remains a modest mix of development assistance (India's national budget for next fiscal assigns a modest Rs.300 crore or $54 million for Africa), lines of credit via the Export-Import Bank, and hopes that the famed Indian entrepreneurial class will manage to deliver like their predecessors have done over the decades, more often than not without state backing.

The dragon, true to form, hisses loud enough for the world to take notice, with a politico-corporate cabal led by some of the largest contingents of stationed diplomats and state-owned banks loading benign – and often fuzzy – interest regimes to sweeten the deal.

The result? Two-way trade has ballooned from about $10 billion in 2000 to almost $200 billion in 2012. Africa is now Beijing's second largest project contracting market and the fourth largest investment destination. As per data cited until April 2012, its accumulative investment in Africa had reached $15.3 billion, compared to none just over a decade ago.

India's bilateral trade with Africa has no doubt witnessed a five-fold increase in the past seven years. But it still stands at $65 billion. The target has been set now at $100 billion by 2015, against $90 billion earmarked earlier.

Despite the asymmetry between the Asian competitors, Africa isn't eating off Beijing's hand. Evidence lies in the unusual warning from the Chinese vice foreign minister to businessmen Monday.

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INDIA AND THE WOMEN’S DAY

INTERNATIONAL WOMEN'S DAY 2013: INDIA BATTLES RAPE AND SEXUAL ASSAULT; NEW CRIMINAL LAW MAY BE BEST GIFT

International Business Times, March 8, 2013

"There is one universal truth, applicable to all countries, cultures and communities: violence against women is never acceptable, never excusable, never tolerable," UN Secretary-General Ban Ki-moon had once said.The world observes March 8 as International Women's Day, and the United Nations has chosen the theme, "A promise is a promise: Time for action to end violence against women", for this year.

The theme is seen appropriate in the wake of the brutal Delhi gang-rape that triggered mass protests across India.

The 16 December, 2012 incident, in which a 23-year-old physiotherapy student was brutally gang-raped and murdered, shocked not only India but also made headlines around the world. The incensed public took to the streets demanding stringent punishment for rapists, in an effort to put an end to such crimes.

Several rape cases have been reported after the horrifying Delhi gang-rape incident. A three-year-old girl was allegedly kidnapped while she sleeping and was gang-raped in Malappuram district of Kerala a few days ago. Another minor aged seven was raped in a Delhi school on 27 February.

In another shocking incident, three minor girls, sisters, aged six, nine and 11 went missing on 14 February, and their bodies found in a well in Bhandara district of Maharashtra. Post-mortem reports confirmed that they were raped. These are some of the several instances of crimes that have been reported in the past couple of months.

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AUSTRALIA AND INDIA

BALLAST FOR AUSTRALIA-INDIA RELATIONS

Ramesh Thakur

The Japan Times, March 4, 2013

CANBERRA – Based on common colonial links and political systems, Australia’s relations with India should be close and comfortable and those with China contentious. For example, Indian contingents fought alongside the ANZACs at Gallipoli that is so central to the founding myth of Australian (and New Zealand) identity.

In fact, compared to the substantial and mutually beneficial relations with China, Australia has had sparse and troubled relations with India.

With India’s history of opposition to the Non-Proliferation Treaty and its refusal to sign the Comprehensive Test Ban Treaty, the nuclear irritant to the bilateral relationship assumed a symbolic importance out of proportion to the objective dimensions of the problem. Each side was firmly convinced of its own intellectual and moral rectitude and therefore smugly contemptuous of the other. The stark reality that India today matters more than Australia has provided the strategic rationale for Canberra to modify a key and long-standing plank of its anti-nuclear policy.

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BRICS AND MULTILATERALISM

MULTILATERALISM IN A MULTIPOLAR WORLD

Andrew Sheng

The Star, March 2, 2013

Who has that vision of global public responsibility?

After the Chinese New Year holidays, I visited Rio de Janeiro for a conference to discuss the state of the global economy.

I last visited Brazil in 1986, when the whole of Latin America was suffering terribly from the Latin American debt crisis. Today, Brazil is the B in the BRIC economies, with a population of over 190 million population, the fifth largest in the world, with nominal GDP of US$2.5 trillion, 7th largest in the world. There is quiet confidence in air, especially since Brazil's largest neighbour, Argentina, has once again gone back to recession due to mismanagement.

In fact, other than Asia, which has benefited from the rise of China, India and South-East Asia (particularly Indonesia), Latin America is increasingly an important emerging region. Within Latin America, the Pacific countries, such as Chile, Colombia and Peru are emerging as growth leaders, moving to 5% annual growth because of their openness to trade and ability to increase domestic investments.

What is most remarkable is the growth in international trade between the leading Latin American countries with China. In 2000, China moved from 36th place and 35th place in trade with Colombia and Venezuela respectively to 2nd largest trading partner with both countries. Today, China is the largest export market for Brazil, Chile and Peru, so there was no doubt how keen Brazilians are to learn about China.

As one of the members of G20, Brazil has been an important supporter of multilateralism, since free trade has been seen as beneficial. But there are subtle changes in their views on capital flows. Large inflows of short-term capital have driven the Brazilian real upwards, and while commodity exports have benefited from a strong real, manufacturing exports are affected. Brazil is watching closely whether a global currency war will emerge, particularly if there are major moves in the yen and East Asian currencies.

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INDIA: BUDGET AND GROWTH

INDIA’S BUDGET TO PUSH GROWTH, REIN IN INFLATION

Nirmala George (AP)

Time, February 28, 2013

(NEW DELHI) — India‘s finance minister Thursday unveiled a national budget with a promise to put Asia’s third largest economy back on a path of high growth and to trim the fiscal deficit.

Palaniappan Chidambaram told Parliament that attracting foreign investment was crucial to reversing India’s economic slowdown and getting the nation back to fiscal health. Reducing the budget deficit meant the government had no choice but to cut spending.

The minister announced a temporary tax hike for the “super rich.” The 42,800 people with annual income over 10 million rupees ($186,000) would pay the additional tax for one year.

He also hiked taxes on imported luxury cars and yachts, all of which have become symbols of affluence among India’s upper classes.

There was a marginal increase in defense expenditure with the budget for safeguarding the country increased to 2.03 trillion rupees ($37.7 billion). The budget has a provision for 867.4 billion rupees for India, the world’s top arms and defense equipment buyer, to purchase new defense equipment in the next fiscal year.

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GWADAR, CHINA, AND INDIA

GWADAR - A PORT FULL OF POSSIBILITIES

Imran Malik

The Nation, February 24, 2013

As the US/Nato/Isaf combine prepares to egress the AfPak Region (APR), we find Pakistan and China manoeuvring decisively into strategically advantageous positions in the region. Their strategic interests are converging on a grand scale at Gwadar - the centre of gravity and future strategic and economic hub of the South-Central Asian Region (SCAR)-Greater Middle East Region (GMER) complex.

Gwadar sits literally at the mouth of the strategically vital Straits of Hormuz. The leverage it provides is priceless. Its strategic location makes it ideal for any power intending to secure its energy sources in the region or to dominate the SCAR-GMER complex, including all Sea Lines of Communication (SLOCs) to and from the Persian Gulf.

Furthermore, naval forces stationed at Gwadar or other Makran Coast ports could potentially foray deep into the Arabian Sea and the Indian Ocean too, even impacting east-west trade.

A sea-land trade route to and from western or southern Europe to Russia via the Mediterranean, Suez Canal, (North Africa and the Middle East), Red and Arabian seas, Gwadar (Pakistan), Afghanistan and the CARs could integrate regional economies and create mutually-beneficial interdependencies. From Gwadar, another link could be created with the Xinjiang province in western China, thus cutting by thousands the kilometres Chinese ships would have to travel to and from China through the Malacca Straits. India also could be accommodated at some appropriate stage. Gwadar could provide trans-shipment facilities for the entire region. An exhaustive network of roads and railways, therefore, needs to be developed in the Gwadar hinterland connecting it with Xinjiang, Iran, Turkey, Afghanistan, CARs and Russia.

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IS CHINA A THREAT TO INDIA?

HOW INDIA IS PREPARING TO COUNTER THE CHINA THREAT

Rajeev Sharma

FirstPost., Feb 16, 2013

India is bolstering its defences vis-a-vis China in a big way and is set to spend at least $15 billion for China-specific military activities by 2017.

Though the scale of the Indian military preparation is grossly small compared to what China has already done with regard to India, it gives a sense of how much China has been dominating Indian military thinking and strategy over the past few years.

George Fernandes was the first Indian Defence Minister to have gone on record in describing China as India’s “potential enemy one.”

The then Prime Minister Atal Behari Vajpayee had corroborated this articulation immediately in the wake of the May 1998 Pokharan-II nuclear tests by explaining to the world powers that the Indian move was in response to the threats posed by Chinese nuclear weapons.

Since then China has officially replaced Pakistan as India’s number one threat perception.

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