8/8/2019 China and India Strategy
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What emerges is India's need to strategise its commercial
interests and execute projects in terms of
clear objectives.
One aspect is related to internal coordination: getting our act
together, e.g., in domestic
manufacturing. A second aspect has to do with external
orientation, and engaging with China.
The central idea: emulate China's approach in areas where it has
successfully established policiesthat yield scale economies with
appropriate financial and commercial linkages, to result in
high-
quality products delivered at low cost.
Another dimension that also needs to be explored is positive,
constructive engagement with Chinese
enterprises. The potential for engaging in a number of areas
with the scope for mutually beneficial
participation may exist.
This kind of collaboration could mitigate risk by enhancing
access to raw materials as well as to
expanded markets for finished goods, while reducing capital
investment through equity
participation.
Take sectors like energy and metals. Both provide tremendous
opportunities for mutual benefit. One
dimension is joint bidding for projects for exploration and
development in sectors such as oil and
gas, instead of competing bids.
Another is joint participation in projects in both countries,
e.g., for aluminium. China itself is
guarded about FDI in strategic sectors, so such ventures will
require significant efforts andaccommodation from both
countries.
Although more opportune several years ago, it is still possible
that there is scope for analuminium smelting joint venture in India
because of the availability of bauxite, coupled with
back-to-back joint ventures in India and China for finished
products.
The potential benefits to Indian companies such as Nalco are
access to substantial capital for
expansion, as well as increased access to markets.
A Chinese partner like Chinalco would also gain significantly by
access to its share of low-
cost raw materials as well as to a more diversified market, in
return providing access to
Chinese and international markets to its Indian partner.
(China and India have been and are major importers of phosphoric
acid for phosphatic fertilisers.)
While breakthroughs in information and communications technology
(ICT) with India may
be more difficult in the near term, because of mutual wariness
as well as the need forcomplex structuring, mainstream ventures in
sectors like steel, aluminium, copper and energy
(oil and gas, coal) may be more easily structured and executed,
provided there is mutual (a)reciprocity and (b) transparency.
In this, our decision-making and delivery processes must keep up
with the required pace. This
major change in approach between the two countries, open
reciprocity with no game-playing,and in India's own methods, are
necessary conditions for major commercial developments
that lead to optimal economic engagement.
