Ravi Bhoothalingam: India misses a short cut to vikas

The country's 'security' fears in engaging more closely with China's regional economic outreach programmes are overdone

What is remarkable in the joint statement released after the visit of China's President Xi Jinping last month is what it did not contain rather than what it did. There was no mention at all of the Maritime Silk Route (MSR) - an idea floated by President Xi himself during a tour of Southeast Asia in October 2013 and strongly advocated since then (along with a spate of other overland "Silk Routes") by the Chinese government. Presumably, Xi's overtures received a tepid response. So, how should India view the MSR in the light of our own national interest?

There is a sense of dejà vu here. When the "Kunming Initiative" was mooted by China in 1999, India's reaction was unenthusiastic. It was only in 2013 that India agreed to participate in a multilateral "study" of the Bangladesh-China-India-Myanmar Economic Corridor (BCIM-EC). And while the BCIM-EC does find a place in the Modi-Xi joint statement, the phraseology is noticeably lukewarm.

China's policy of economic outreach is very clear. Whether it is the BCIM, the Greater Mekong Sub-regional programme, the Silk Road Economic Belt spanning China's West and Central Asia, the China-Pakistan Economic Corridor, or now the MSR, the name of the game is multi-modal connectivity with its extended neighbourhood. The economic logic is based on the observation that no country in modern times has achieved sustained development without increasing its share in world trade and investment. And connectivity provides the channel to do so.

Spreading its overseas investment also improves China's risk-return equation, compared to the now dismal returns on US Treasury bonds. It also generates orders for China's capital goods companies, many with large surplus capacities after years of over-investment. These are all elements of China's plan to achieve the "Chinese dream" of "a moderate level of prosperity" for her people by 2020.

Since our new government has articulated "vikas" (development) as its goal, India should welcome any connectivity initiatives that could extend our own economic outreach. We see ample evidence of the Association of Southeast Asian Nations (Asean) countries putting this model into practice through their integration into the production, investment and supply chains of China, Japan and East Asia to their lasting benefit.

But there is an underlying fear of a Chinese design to use the MSR to draw India (and others) into a sphere where China's writ will hold. Such realist geo-political reasoning does not fully comprehend the complex and interdependent nature of global business and modern geo-economics.

Whoever wields greater economic power does not always wield the greater clout. In the corporate world, for example, minority partners can wield strong influence over - or even control - a company with a small shareholding, if they add exceptional value by way of management, access to markets or intellectual property. A long-term view of business, where all stakeholders prosper, is a better bet than a tactical "winner-takes-all" game. So, if the MSR is crafted as a tide that lifts all boats and meets India's aspirations towards vikas, should ill-defined "security" concerns blunt the growth impact of the connectivity corridors? The worst security threat, after all, is a restless population that sees its modest aspirations for a better life receding into a distant horizon.

India's aim, therefore, in the MSR, as in the other corridors, must be to actively participate to ensure that the financial, investment, trade, dispute-resolution and governance mechanisms that will frame the rules of the game, are constructed on the basis of fairness, transparency and equity. The recently-announced BRICS Development Bank is an example. Shareholding patterns are equal among the partners. The first President of the bank is to be an Indian. India can, thus, seek to play an active role in how the Bank will work. The proposed Asian Infrastructure Investment Bank is another opportunity to access low-cost funds. Even if shareholding patterns are not equal, as long as the institutional arrangements are generally equitable in terms of powers, benefits and safeguards, a going concern can operate on a shared vision and mutual benefit.

To make the most of this refreshed Sino-Indian engagement, India's own economy needs to be revitalised and strengthened across many dimensions. That, now, is a separate story.

The writer is an Independent Director on corporate boards and an Honorary Fellow of the Institute of Chinese Studies, Delhi