Ongoing Trade Despite Tensions Despite a prolonged standoff between India and China in eastern Ladakh, the two countries continue substantial trading. Imports from China to India crossed over $100 billion in FY24, reflecting the economic sense of procuring electronics, chemicals, machinery, and plastics from China, which have significantly spurred India's economic growth. However, due to the prevailing negative perception of China among most Indians, the countries remain politically distant.
Global Alliances and Anti-China Sentiment India, along with the US, France, Japan, and Australia, has sought to discourage Chinese apps, investments, and startups. This sentiment is further reflected in India's opposition to China’s Belt and Road Initiative and its agreement with Iran to develop the Chabahar port.
Strategic Shifts and Manufacturing Initiatives One of India’s crucial strategic decisions is to join the ‘China Plus One’ initiative, encouraging global companies with significant manufacturing bases in China to relocate to India and Southeast Asia. Apple, for instance, has decided to set up a manufacturing base in India for the iPhone 14, with Foxconn handling the manufacturing.
Balancing Trade and Self-Reliance While continuing business with China through intermediaries, India is also fostering large, self-reliant manufacturing ventures aimed at global competitiveness. Production-linked incentive (PLI) schemes are designed to subsidize large-scale production, but progress has been slow. There is a growing consensus on the need to identify and support industries with potential rather than focusing solely on their promoters. The goal is to allow the best manufacturing units to thrive independently.
Energy Trade and Diplomatic Balancing Aligning with Western diplomatic aims, India continues to heavily import oil from Russia, utilizing alternative payment methods to avoid using dollars. Similarly, some northern European nations continue to import gas from Russia despite sanctions. India's defiance of US preferences by maintaining trade with Russia is notable. In 2023-24, bilateral trade between India and the US was estimated at $118.28 billion, with Washington being New Delhi’s top trading partner in recent years. Indian IT companies continue to earn substantial revenue from the West and send engineers to the US despite high visa costs, indicating ongoing mutual economic benefit.
Economic Interests Prevail In the modern world, economic interests often outweigh political considerations. India freely engages in business with Russia and China while being aligned with Western powers. This pragmatic approach highlights a lack of integrity in politics and geopolitics, with India prioritizing economic gain wherever possible. Recent US warnings to India over its engagement with Iran on the Chabahar port project stopped short of sanctions, reflecting India's growing economic strength and strategic importance
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