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A next step in the tango

It's a sign of change in Sino-Indian relations that the trade deficit, rather than the trust deficit, is the immediate cause of concern for New Delhi ahead of PM's visit, writes Amit Baruah.

india Updated: Jan 12, 2008 22:52 IST
Amit Baruah
Amit Baruah
Hindustan Times

It's a sign of change in Sino-Indian relations that the trade deficit, rather than the trust deficit, is the immediate cause of concern for New Delhi ahead of Prime Minister Manmohan Singh's visit to China from Sunday.

Since June 2003, when the then Prime Minister Atal Bihari Vajpayee headed for Beijing, a solid mechanism to address the border issue, which has the blessings of the highest in both establishments, has been put in place. Five years ago, the fears were of Chinese goods ruining Indian industry. Nothing of the sort happened. Sections of the Indian industry, which at the time were concerned about Chinese goods affecting them, have learned to live with the Chinese products.

Today, the Indian industry is expressing fears about the implications of pushing ahead with negotiations on a possible regional trading arrangement between the two countries. But, even without a free trade arrangement, bilateral trade between the two countries has come close to $38 billion, up from a paltry $7.6 billion in 2003.

At a time, when an Indian company is threatening to change the global economics of car manufacturing, fears of foreign competition seem misplaced. Not that the government should not safeguard the interests of the Indian industry — but freer trade has a logic of its own — acting in favour of the consumer.

As a breakthrough in deepening trade relations appears imminent, the two sides are noticeably cool about settling their decades-old border dispute. It's been 45 years since the border war between India and China ended, and both countries, where one-third of humanity lives, realise that the time to move on has arrived.

While Foreign Secretary Shivshankar Menon said on Friday that India is comfortable in its relationship with China, External Affairs Minister Pranab Mukherjee conceded in an interview to CNN-IBN that sometimes border incursions do take place. "Every incursion is taken care of. It's being addressed through the established mechanism," Mukherjee said. "... Their (Chinese) infrastructure in terms of roads, electricity and availability of other facilities is much superior to that on our side. It is a known fact. That is why we have decided that we should also build up the roads and other types of infrastructural facilities," he added.

Given that there's not much India can do about China building roads, airports and world-class infrastructure in Tibet, New Delhi can only improve facilities on its own territory. That's the only mature response if this infrastructure development is seen as build-up.

(In the days of the Cold War, the Americans "taking control" of the deep-water harbour in Trincomalee was seen as against Indian national interest. But, with vast improvement in Indo-US relations, such fears have long been forgotten. With China, the situation is different: fears and suspicion do persist, despite massive increase in both trade and bilateral contacts.)

Singh told the Xinhua news agency that an early settlement of the border dispute would advance the basic interests of the two countries. India, he promised, was committed to resolving the boundary dispute through "peaceful means and in a fair, reasonable, mutually acceptable and proactive manner, while ensuring that such differences are not allowed to affect the positive development of bilateral relations".

In an editorial, the State-run People's Daily wrote, "Western media are quoted as describing the meeting of Chinese and Indian leaders at the start of the New Year as 'intriguing' or worth a closer look. In fact, the background reason for an in-depth growth of bilateral relationships is not complex, since the cause is attributed to the strategic height and far-sightedness with which the leaders…cope with the (other) nation's concerns." Both countries are trying to set the right tone for what promises to be a big visit by Singh.