Illustration by Soham Sen | ThePrint
Illustration by Soham Sen | ThePrint
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Less than two years ago, Saudi Arabia lent $6.2 billion (roughly half of it comprising oil on credit) to Pakistan as it teetered on the edge of international default. Now it has recalled the loan and ended the oil credit facility. China has stepped in to help Islamabad with emergency cash, but in the meantime a $6-billion loan agreement with the International Monetary Fund is on ice. Islamabad’s ties with the United Arab Emirates (UAE) too have soured. The provocation is Kashmir, on which both the UAE and Saudi Arabia have ignored Pakistan’s wishes because Gulf politics is no longer what it was.

There can be little doubt about one reason why: India is the world’s third-largest consumer of oil. In a surplus market such consumers are to be humoured, not offended as Malaysia discovered in January, when India stopped buying its palm oil as a response to its comments on Kashmir.

India’s market size is a weapon waiting to be used. As is well known, the country happens to the world’s second-largest market for mobile phones, the third-largest currently for solar power equipment, the second-largest importer of arms, and the largest consumer base for such companies as Facebook and (until recently) TikTok. This power of the purchaser has rarely been used in the past by New Delhi. That is in part because its middle-class market wasn’t quite so big earlier; it is only the other day that India became the world’s fifth-largest economy. And in part because it is relatively recently that the world began to move away from rule-based multilateralism, thereby opening up space for tactical bilateral moves.

China has long exploited access to its market as a lever to bring other countries to heel. It did so recently against Australia and in the past with the Philippines, Bolivia, and others. It has also systematically discouraged imports from India, making it difficult for India’s tech services companies to function in that country. Beijing has had its way with even the bigger powers because Japanese, American, and German companies have been hugely dependent on sales in China, while others like Apple, Nike, and various clothing brands have depended heavily on Chinese suppliers.


Also read: Modi govt set to keep China’s Huawei, ZTE out of 5G trials in more pushback after Ladakh


Now India, pushed on the back foot by Chinese encroachments in Ladakh, is responding in a language Beijing understands. Narendra Modi’s new plan for self-reliance in manufacturing in key sectors may or may not work as intended (the risk is of creating a hothouse market all over again, and thereby a high-cost economy). But it is hitting China where it hurts at a time when US pressure and rising costs within China are already gnawing away at its export-oriented manufacturing base.

Meanwhile, the oil-exporting countries have been busy conferring their highest national honours on India’s prime minister in order to make sure that he is kept happy. Likewise, if the US under deal-maker Donald Trump has mostly held its hand despite trade irritants with India, it is because New Delhi has supplied Boeing and others with a steady stream of orders for defence equipment.

China could hit back in sensitive areas like pharmaceutical ingredients and strategic materials, on which markets it has a lock as the dominant global supplier. While that is a point of vulnerability, India has to play its hand carefully on other fronts too. Russia, even now India’s largest arms supplier, lifted in 2014 its longstanding ban on defence supplies to Pakistan. It recently shipped attack helicopters to that country. Tanks and missiles might follow. While Pakistan cannot match India’s defence purchases, and is in any case short of foreign exchange, the fact is that the more India succeeds in manufacturing at home, the less it will need from Russia. With Indo-Russian trade mostly confined to the defence sector, broader ties with Moscow need careful nurturing.

Ditto with the countries in the neighbourhood, all of which (other than Bhutan) have bigger trade and closer defence ties with China. Opening up India’s market to neighbouring countries can be as strategic as access denial to others. The game should be played both ways, even if it upsets domestic business lobbies that today are thrilled with the government’s market-denial measures and yesterday were upset by the free trade agreement with Sri Lanka.


Also read: Close combat is so last century. China will use drones, PGMs, high-end tech against India


 

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37 Comments Share Your Views

37 COMMENTS

  1. Success of India will ultimately boil down to the unity within India. Division will significantly prevent progress. No doubt more is needed to be done, and it will be.

  2. If a country of the size of India does not know to leverage its strength and work around its weakness then it does not have the right to exist as one country. Modi government is the first government in India that got this right. Congress was breaking and selling India and will not hesitate to make a deal with Pakistan for the lust of power. China took Aksai Chin and we were talking Hindi-China Bhai Bhai when China was not even half powerful under congress rule. We were living in fools paradise when self-centered Nehru did not hesitate to sell India out. It is good we are becoming and taking strong policy positions now. Better late than never. At least we can make sure Chinese do not walk all the way in to the TN border and make a historical claim on TN due to the fact some one from China having visited TN 5000 Years ago.

  3. What India can make and cannot make should study , what happened in the WW II days . Various war supplies of difficult nature were compelled to be made in India. Knowledgeable people without any bias can inquire. Even Howrah industries produced wonder. The Great Howrah Bridge was made by Indial Steel made by TATAs at Jamshedpur. Quality was as high as E300. Even some Luddites will shell out harrowing pictures of economy with slightest or no provocations.

  4. 74 years of independence with ahimsa as weapon ,the last two decade due to outdated teaching practices,India is way behind in technology and science. Here the writer says India is the second or 3rd in size of consumption. Inspite of 74 yrs of independence we are still depending on foreign weapons and our external affairs ministry has never taken a sincere action to finalise our map. We dont have good diplomacy with any of our neighbours. Sad to say this writer is speaking about purchasing weapons when the country is fighting poverty and diseases.

    • World respects powerful people and countries,if u have weak economy, military they will twaek u however the want, don’t be hypocrite even I came from lower middile class but if we need to increase defence budget 10% every year I wouldn’t mind
      India is big country it is still socialist mind country
      Be capitalist if u want to free from shackles of povert
      All people here are lazy still want to just be govt babu but they don’t want to start their own that’s why it taking time to uplift them because govt works in socialist way if u want to rich like China in 30 years stop thinking from socialist mindset or rely on govt subsidiaries

  5. Absolutely speculative article. China has been smart enough to ensure that imports into India are routed through Vietnam, Thsiland etc. This article is part of series intended to bolster the Government’s fragile and non-performing image

  6. Hey, the print..what happened?? Suddenly turning nationalist?? Still i wish the print closes down soon! You have done more harm than good. Get lost

  7. I don’t mind if greatest Chamcha of the Congress party Shekhar Gupta’s”The Print” media portal goes shut ❗👏🙏. There are many genuine journalists are there who can do more better job than Shekhar Gupta.

  8. God didn’t bless me with a complex mind so I find the content of the article very positive and nationalistic. Anyone who has followed your views in the decades gone by will know how objective and unbiased you are Mr. T.N.Ninan. The piece above is spot-on about India’s strengths and weaknesses. More power to India and Indians. Cheers.

  9. It’s worthless. As an industrialist we have felt that next 5 years, everything will finish and we shall sack our employees because the market is now at the verge of collapse.

    • Are you sure about the quality and standard of the product from the industry that you own? I mean the saleability of the products?

  10. If despite its many challenges, Indian economy rises to $5 Trillion before 2030, it will help lead to a greater social cohesion, which is at risk when people are poor. Ideological and religious zealots will be in abundance in India but they are slowly being marginalized. It should be noted, however, that as zealots become marginalized, they become more desperate, daring and therefore dangerous.

  11. Indians make these false comparisons with China while lying in the gutter.

    Being a large market on its own is not sufficient. The author is trying to tell India has strength because people want to sell oil, arms, and solar panels, and India can afford to tell sellers to ignore its human rights abuses against minorities. This is what Ninan’s article boils down to.

    Oil, arms, and solar panels, are things we need that we do not produce. The question is what do we produce that others want and that brings income and allows us to import things we do not make. To import, there must be some native production capacity. That has shrunk since demonetisation. We have some production but it is scarcely export quality. Indian’s production has been largely for the domestic market where quality does not matter. Unlike China, India is not leading in robots, artificial intelligence, 3D printing etc.

    China on the other hand may import oil, but like Japan, it started producing manufactured goods, which are increasingly state of the art. They use more robots than the US and the US fear is that they have got ahead in Artificial Intelligence. China now controls the Rare Earth metals needed in electronics, mobiles and defence – even the US has to import them from China. China turns of supply of these metals to the US if it opposes. India’s lever is to use the market, not its production – because it does not have any. Is there anything that India can block to the world ?

    China is gearing up for the situation when cheap labour will not be its advantage. Contrast with India. Hindus are mired in gomutra and gobar, and imagine they are vishwa guru.

    China has not really opened upits production to cater to its own domestic market. If exports hits a road block due to the US, China can change gear and cater to their own domestic market.

    Self reliance is not a new concept, it was started by Nehru.

    Ninan should stop misleading and acting like a Hindutva Hindu.

      • I explained today ‘Hindus are mired in gomutra and gobar, and imagine they are vishwa guru.’

        That is what is wrong with you. You need to get real and fit with the mainstream.

      • Xyz, this fellow rasgolla has a thing against ‘Hindu’, he’s most probably a Bangladeshi or a Muslim condemned to live and die in India, a Muslim whose grandfather or father opted to stay on in India at Partition-time, and now finds himself isolated and thwarted. He’s living miserably and will die miserable.

    • I think you raised valid points. But your paki/Muslim brain don’t understand what India holds big assets .1 India have man power and self trainable one. 2 there were never ever before most determined govt like today one. 3 country growth is dependent on the policy. Current govt has right road map and polices. 4 we are 15 yrs behind with china in growth or other human metrics. But with tech actually we only behind 3 to 4 years. Cuz with tech you can easily self train most of the tasks. So India may not become like china will sure become no 3. The no 1 USA and no 3 India can team up against china

      • You are making vain claims.

        ‘1 India have man power and self trainable one.’

        India’s manpower and so called demographic dividend is no use if half of them are illiterate. Half of the Hindus are only good for being cow vigilante or shakha attendant.

        ‘2 there were never ever before most determined govt like today one.’

        We did not see any determination against China, we saw only Hindu cowardice at the LAC. Which world do you live in ?

        ‘3 country growth is dependent on the policy. Current govt has right road map and polices’

        Then why was the economy in the doldrums even before Covid ? After Covid it is shattered. Record unemployment, GDP growth is forecast to be negative.

        ‘4 we are 15 yrs behind with china in growth or other human metrics. But with tech actually we only behind 3 to 4 years.’

        What technology does India have ? China is ahead in robotics and the US fears it is getting ahead in Artificial Intelligence. After the beating, India had to run to import arms.

        ‘So India may not become like china will sure become no 3’.

        No 3 by GDP. But that is a misleading metric. By GDP, India got ahead of France – except India has 1.3 billion and France produces the same with 60 million people. The per capita income of India is amongst the lowest.

        India leads in the number of malnourished also. It will lead in Covid. So will you be boasting about that ?

        Hindus have an inferiority complex because you want to be like China but can’t. You cannot govern the country even.

    • So basically your conclusion in the end is…
      Being Hindu is the main problem in India. And we can solve the all problems if there will be no Hindu in India. Right?

      • Well, Hindus claim they own the country, only Hindus are running the country. But the country has gone to the dogs with shattered economy, and violence.

        Thus, Hindus are the main problem. You cannot blame the minorities.

        There will be no problem if Hindus became educated, civilised and learnt the norms of modern governance. All you produce today is a chai wallah with forged degree, a fake encounter specialist, a Yogi with a criminal record and cow fetish, and a Brahmin with khakhi shorts making Hitler salutes. True or not ? Name me a Hindu achiever today.

  12. What I fear about this man is that he is akin to ” all sound and fury signifying nothing” beyond the realm of winning elections. On the ground he has very little to prove and therefore talk about. Such a blank slate is bound to its talking, hopefully someday soon as otherwise recovery becomes uncertain.

  13. “India’s market is a huge weapon waiting to be used”. This is a delusion from which we Indians suffer. The purchasing power of Indians is still low. This is especialy so after the Corona Pandemic. So, the size of the Indian market alone does not impress other countries and investors, nor impact decisions of other countries concerning India.

    • Not a delusion. The author has listed the areas in which India is either the largest, 2nd and 3rd largest purchaser in the world. The Indians who have purchasing power are larger in size then the population of most countries.

    • It is a delusion. Being a market without being a producer does not work. You need wealth creation to purchase. Production has shrunk. When people cannot afford domestic produce, how can they afford imported goods ? Also, being a big purchaser of arms is not something to be proud of, it is still money going out of the country.

      China and Japan import oil and raw materials and make state of the arts goods that the world want. India imports oil for domestic consumption only.

  14. Modi has done a lot for India. He is relentlessly working for the good of India and people are recognizing and responding to Modi’s calls but librandus are doing just opposite of what people of India wants them to do. While Modi pride in MAKE IN INDIA, librandus pride in denigrating India on flimsy grounds. Librandus’image of India is of a poor, helpless and with begging bowl country. Librandus enjoy taking high moral ground while indulging in anti national acts. If India wants to be a power house of manufacturing, it must stop librandus to sabotage MAKE IN INDIA programme.

    • Can our Private Players, now that Public Sector is sold out,rise to the occasion or they will think of their ever dominant goal of profit margin only.

      • We have seen what high IQ people have done to the country in past 70 years, largest importer and free giver of land was the image of india before 2014, hope you get some wisdom in your life.

      • We have seen precisely the growth rate delivered by high IQ people from 1947 to 1991. Let’s give low IQ a chance.

        • We had a high IQ Sikh PM from 2004 to 2014 when the economy grew by leaps and bounds. The most notable President was Kalam. Perhaps we should give minorities a chance, they seem to have better IQ. Hindus spend their time stoking caste and communal fights, the minorities think as Indians.

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