Swamy said Prime Minister Narendra Modi should convene a conference of "insiders" to draw up a new policy specially after the recent Lakhvi episode.
"We are working on Congress party's outdated China policy. The Prime Minister needs to convene a conference of insiders to draw up a new China policy which should review our strength, weaknesses and opportunities," Swamy, senior member of BJP's National Executive, told Indian media here.
The present China policy lacks clarity, he said, adding: "We have a China policy but it is carry over."
Swamy, here to attend 2015 World Peace Forum conference organised by China's Tsinghua University, said China's backing to Pakistan on Lakhvi should be a "wake up call".
"I have been informed that they (China) had hinted to our people that a vote in the UN against Pakistan is premature and we did not read the signal," he said.
For China "abandoning Pakistan means empowering India. You have to empower yourself. Why should they make the road clear?" he said.
On the impact of Chinese President Xi Jinping's visit to India and Modi's visit here last month, Swamy said not much progress has been added except commitment of about USD 20 billion, mostly from Chinese private sector.
"We should not be carried away by atmospherics. Every visit (of Modi) is described as historic. We have not seen anything from Japan. My advice to Modi: convene a conference with people who know China, whomsoever you are comfortable with and devise a new China policy," he said.
He also said Indian navy's strength both in fleet and weapons should be vastly increased to the point that it can be deployed to police on busy shipping routes like Malacca Strait in cooperation with Indonesia which could be an "effective answer" to China's plans of 'String of Pearls' to contain India.
Swamy said India's new China policy should have a clear statement on what will be our stance on issues like in the event of China-US conflict.
"Chinese will find it acceptable to have neutrality. If it becomes public, Americans tolerate that. The China policy should have clarity. We have a China policy but it is carry over," he said.
"At the moment, there are issues between India and China that require urgent resolution. Border will be a by-product solution. Border cannot be one of the solutions," he said.
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