India has long been the dominant power in South Asia but as Beijing invests millions in the region, New Delhi is looking to defend its sphere of influence.
India must play to its strengths instead of attempting to match Chinese capital, a panel of experts at the World Economic Forum’s India summit said in response to CNBC’s question on the topic.
“China has surplus capital to invest — we don’t but we can do our own thing in areas of different value…That’s still highly appreciated and sought after,” said Shashi Tharoor, a member of India’s parliament.
As part of its ambitious Belt and Road Initiative, Beijing has funded various infrastructure projects right in India’s backyard, such as Sri Lanka’s southern port of Hambantota and the China-Pakistan-Economic-Corridor. That’s triggered criticism from New Delhi, which refused Beijing’s invitation to join Belt and Road. It’s also added to growing rivalry between the Asian giants — relations between the two fast-growing economies remain marred by territorial disputes like the Doklam standoff in the Himalayas that ended last month.
To ensure China doesn’t eclipse India on its home turf, Prime Minister Narendra Modi should continue exporting low-cost technology and offering favorable development loans, panelists at WEF said.
India has emerged as a leader of low-cost tech in South and Southeast Asia. Its affordable generic pharmaceuticals are highly sought-after while the country is championing solar energy, reflected by the April launch of the International Solar Alliance — New Delhi’s brainchild aimed at boosting solar cooperation among member nations.
India is at an advantage in this arena because it shares similar challenges as other markets in the region, such as poverty and weather, said Suhasini Haidar, diplomatic editor of The Hindu newspaper. If New Delhi attempts to compete against China’s sizable war chest on the investment front, “we’re setting ourselves up for disappointment,” she said. “We need to play to our strengths.”
India also supports the economic development of South Asian peers through rupee-structured loans, which helps avoid problems of exchange rate and devaluation, pointed out Leela Ponappa, India’s former deputy national security advisor.
“There’s no question of competing with China, why should we?” she said. Modi should simply focus on his country’s long track record of building human capacities in South Asia, she continued.