The Belt and Road Initiative (BRI), a pet project of Chinese President Xi Jinping, has prompted New Delhi to provide further impetus to its ‘neighbourhood first policy’. With global implications, the BRI aims to put China at the helm of global power, and India seems to have felt the urgency to prevent growing Chinese clout in South Asia.

New Delhi is more concerned about the BRI’s implications on its neighbours, mainly Nepal, Pakistan, Sri Lanka and the Maldives. India boycotted the BRC (Belt and Road Conference) held from May 14 to 16, which was attended by all its neighbours (mainly Saarc members) except Bhutan which does not have formal diplomatic ties with China.

India boycotted the conference on two grounds. First, India said that one component of the BRI, the China-Pakistan Economic Corridor (CPEC), passes through a disputed region which has raised the issue of its sovereignty. Second, India feels that China did not consult it about the project before its implementation and it is a unilateral project, not a multilateral one.

Two schools of thought

There is a view in Delhi that its closest neighbours should stay away from the BRI, as it has more military and strategic purposes than business ones. Some Indian diplomats, policy makers and think tanks are highlighting the economic and environmental drawbacks of the BRI in an attempt to dissuade neighbouring countries from joining it. For example, they are pointing out the huge debt trap Sri Lanka faced by implementing the projects under the BRI. According to recent reports, Sri Lankan debt exceeds $60billion, which has been a huge burden for the government. Some analysts are comparing the BRI with the erstwhile East India Company and a new form of colonialism in South Asia.

But there is another school of thought in Delhi that as China is an emerging global power, Saarc countries cannot snub China’s requests and assistance. India cannot deny this reality.

The second argument seems to have prevailed as the dominant view among the Indian government, experts and policy makers. They see that it is not possible to stop China from expanding its influence in small developing countries that are seeking more investment and aid, so India must invest time and energy to strengthen its neighbourhood first policy. This means New Delhi must focus on enhancing its relations with neighbouring countries by offering new connectivity projects, completing the already initiated projects and promoting trade. There are suggestions to the Indian government to set up independent mechanisms to complete the projects on time and clear various bureaucratic hurdles. 

The diplomats and policy makers concede that there is a lacklustre approach when it comes to completing the connectivity projects. They are suggesting the Indian government deliver on the commitments made with the South Asian countries. Nepal and Myanmar are most frequently cited as examples of countries where India is failing to complete connectivity and development projects.

Though India’s focus is on its neighbourhood, policy makers believe that, in terms of scale and speed, China is overtaking it. Indian Prime Minister Narendra Modi introduced the neighbourhood first policy in 2014. But there are criticisms that it is not yielding positive results. Bilateral connectivity projects and regional and sub-regional connectivity projects are failing to pick up momentum. South Asia remains one of the least integrated regions in the world.

Cordial and vibrant relations

South Asian countries should exercise caution and engage in a wide and intensive consultative approach while implementing projects under the BRI. Nepal has already taken up some issues with China. Nepal has requested China to become flexible on currency-related matter and the Chinese side has responded positively. A free-trade agreement between Nepal and China cannot bode well for a small economy like Nepal, which cannot sustain customs and duty-free access to Chinese goods.

It is obvious that China will implement more connectivity and development projects in South Asian countries under the BRI. At the same time, India will continue to enhance relations with these countries through more investment in connectivity and other development projects. India will work to further consolidate its presence in neighbouring countries to safeguard its core interests.

China’s BRI and India’s plan to refocus on its neighbourhood first policy has appeared as a challenge for South Asian countries. These countries should welcome projects from both both India and China in a way that advances their national interests. They should take up issues of trade imbalance and easing of restrictions on open market operations with India and China. South Asian countries need a robust and dynamic foreign policy to successfully manage the interests of their two big neighbours. An internally fragmented foreign policy won’t be helpful.

Managing the growing interests of the two Asian giants will be a key challenge in the coming days. There already are indications that some South Asian countries are failing to take timely decisions on big projects as both India and China are showing interest on the same project.

The key challenge for South Asian countries is to keep cordial and vibrant relations with both countries by addressing their genuine security and other issues. South Asian countries should refrain from playing one big neighbour against another. It seems both India and China are keen to do something positive in the neighbourhood, which is a great opportunity for South Asian countries to elevate their economic status.

Bhattarai is the Delhi correspondent for The Kathmandu Post