Posts tagged ‘BRICS’

02/11/2016

India to launch clean energy equity fund of up to $2 billion – sources | Reuters

The Indian government and three state-run firms will jointly set up an equity fund of up to $2 billion for renewable energy companies to tap into to help New Delhi meet its clean energy goals, two government sources told Reuters on Wednesday.

Private and public companies will be able to dip into an initial amount of more than $1 billion starting next fiscal year, said the sources with direct knowledge of the decision taken after a meeting of government officials more than a month ago. India’s government hopes the Clean Energy Equity Fund (CEEF) will attract pension and insurance funds from Canada and Europe.

Around $600 million of the initial pool will come from the National Investment and Infrastructure Fund, under the finance ministry, and the rest from state entities NTPC Ltd, Rural Electrification Corp and the Indian Renewable Energy Development Agency, according to one of the sources.

The sources declined to be named as they are not authorised to talk to the media. Officials at the finance ministry, new and renewable energy ministry, NTPC, Rural Electrification, and Indian Renewable Energy Development Agency did not immediately respond to requests for comment.

Prime Minister Narendra Modi has set a target of raising India’s renewable energy target to 175 gigawatts by 2022, more than five times current usage, as part of the fight against climate change by the world’s third-biggest greenhouse gas emitter and to supply power to all of the country’s 1.3 billion people.

The program will depend on getting as much as $175 billion in funding with 70 percent of that likely in bank loans and the rest as equity, the sources said.

The government reckons loans are not a problem but providing equity to investors may be difficult due to uncertainties over returns, one of the sources said.

“As we expand our clean energy capacity, there may be a shortage of equity next year,” said the source. “Private equity is seen as risky in India but if the government itself creates a fund, that gives a lot of confidence.”

India’s clean energy push was set back earlier this year when U.S. solar company SunEdison filed for bankruptcy. The company is now looking to secure partners to see through its planned India projects.

Nevertheless, companies are still keen to invest in clean energy.

Japan’s Softbank Corp, Taiwan’s Foxconn and India’s Bharti Enterprises have pledged to invest about $20 billion in India’s renewable sector. Global solar giants like First Solar Inc, Trina Solar Ltd and Fortum are also expanding their presence.

Source: India to launch clean energy equity fund of up to $2 billion – sources | Reuters

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31/10/2016

The Economist explains: Why some Indians want to boycott Chinese goods | The Economist

ON OCTOBER 30th India celebrates Diwali, the most important festival in the Hindu calendar. Over five days, millions of lamps and candles will be placed on doorsteps and rooftops; prayers will be offered to Lakshmi, the goddess of prosperity; and fireworks will go off in the skies over the streets of nearly every town and village. A festival that celebrates the victory of light over darkness, Diwali has in recent years brightened the mood of Chinese exporters as well: many Indian households favour cheaper, electric decorations made in China over the traditional earthen diyas (pictured).

But this year’s edition could take a dark turn. The country’s noisy social media are cluttered with posts calling for Indians to shun Chinese goods. A fake letter championing the boycott, ostensibly signed Narendra Modi, the prime minister, has gone viral. Politicians from India’s ruling Hindu-nationalist Bharatiya Janata Party (BJP) have endorsed the cause. What is going on?

The economic roots of the boycott are not new. China is India’s largest trading partner, with $71bn worth of goods exchanged between them in the past financial year. But China is also the nation with which India has its largest trade deficit, an imbalance that rose 9% to $53bn in 2015-2016. In contrast, China’s trade surplus with America reached $367bn in 2015. What the deficit is made of matters most. China’s light-industry goods compete directly and with overwhelming success against India’s small industries, the lifeline of its manufacturing sector and a reservoir of jobs. So India exports mostly raw materials to its neighbour. That has the government worried: of the 572 anti-dumping measures India took between 1995 and 2015, 146 were aimed at Chinese-made goods. The “Make in India” campaign, which has been championed by Mr Modi and sees foreign investment as crucial to boosting his country’s manufacturing power, has been careful not to advocate protectionism. Yet in a country where economic boycotts were first popularised as a non-violent strategy to combat British rule, such appeals carry emotional and historical heft. Geopolitics provided the spark for the current call. India has long been trying to get Masood Azhar, the boss of Jaish-e-Mohammad (JeM), a Pakistan-based jihadist group, listed as a terrorist by the United Nations. India suspects JeM of carrying out the January attack on an air-force base in Punjab, which killed eight Indians, including one civilian. JeM is also the alleged perpetrator of last month’s massacre at the Kashmiri garrison of Uri, in which 19 soldiers were killed (though another group claimed responsiblity). Yet twice this year, China used its Security Council veto to block Mr Azhar’s addition to the UN sanctions list. The move underscored Beijing’s all-weather support for the Pakistani establishment, elements of which India suspects of harbouring Mr Azhar. Some Indians don’t understand why they should have to trade with a nation working against their interests. This perception of China was compounded by its decision in June to oppose India’s accession to the Nuclear Suppliers Group, a 48-nation body that governs the global nuclear trade.

Yet calls for a boycott of Chinese-made goods are unlikely to have much effect. Both India and China are members of the World Trade Organisation, which forbids arbitrary bans on foreign goods. India’s commerce minister, Nirmala Sitharaman, recognised as much earlier this month when she said blocking imports was not a feasible option. A BJP leader deleted his tweets, blaming staff for the text; the opposition is silent on the issue. Nor is the wider business community likely to embrace the cause. Traders and industrialists, who have come to rely heavily on Chinese-made merchandise and machinery, form powerful lobbies. Yet with Mr Modi’s government promoting an increasingly assertive brand of nationalism, anger over China’s snubs will not easily go away. Expect further diplomatic fireworks.

Source: The Economist explains: Why some Indians want to boycott Chinese goods | The Economist

14/10/2016

India and Russia to sign air defence deal – BBC News

Russia and India are expected to sign a deal on Saturday for the delivery of an advanced air defence system to Delhi, a Kremlin official has said.

The S-400 missiles are Moscow’s most sophisticated aircraft defence system.Yuri Ushakov said the agreement would be signed at a summit in Goa where President Vladimir Putin will hold talks with Indian PM Narendra Modi.

India is also hosting a Brics summit in Goa this weekend involving Brazil, Russia, India, China and South Africa.

“An agreement on the delivery of S-400 ‘Triumph’ anti-missile defence systems and other deals will be signed as a result of the talks,” Russian news agencies quoted Mr Ushakov as saying.

Russia’s missiles send robust signal

The Kremlin earlier this week said the talks with Mr Modi would focus on “a wide range of matters of bilateral relations, especially trade and economic ties”.

The S-400 surface-to-air missiles have been deployed to Syria, where Russian forces have been operating in support of the government of President Bashar al-Assad.Russia and India were close allies during the Cold War, but recently the relationship has become more complex.Talks have been held annually since 2000 and hosted alternately by Moscow and Delhi.

Source: India and Russia to sign air defence deal – BBC News

22/08/2016

Capturing China’s $5 trillion productivity opportunity | McKinsey & Company

It won’t be easy, but shifting to a productivity-led economy from one focused on investment could add trillions of dollars to the country’s growth by 2030.

After three decades of sizzling growth, China is now regarded by the World Bank as an upper-middle-income nation, and it’s on its way to being one of the world’s advanced economies. The investment-led growth model that underpinned this extraordinary progress has served China well. Yet some strains associated with that approach have become evident.In 2015, the country’s GDP growth dipped to a 25-year low, corporate debt soared, foreign reserves fell by $500 billion, and the stock market dropped by nearly 50 percent. A long tail of poorly performing companies pulls down the average, although top-performing Chinese companies often have returns comparable with those of top US companies in their industries. More than 80 percent of economic profit comes from financial services—a distorted economy. Speculation that China could be on track for a financial crisis has been on the rise.

The nation faces an important choice: whether to continue with its old model and raise the risk of a hard landing for the economy, or to shift gears. A new McKinsey Global Institute report, China’s choice: Capturing the $5 trillion productivity opportunity, finds that a new approach centered on productivity could generate 36 trillion renminbi ($5.6 trillion) of additional GDP by 2030, compared with continuing the investment-led path. Household income could rise by 33 trillion renminbi ($5.1 trillion), as the exhibit shows.

Pursuing a new economic model

China has the capacity to manage the decisive shift to a productivity-led model. Its government can pull fiscal and monetary levers, such as raising sovereign debt and securing additional financing on the basis of 123 trillion renminbi in state-owned assets. China has a vibrant private sector, earning three times the returns on assets of state-owned enterprises. There are now 116 million middle-class and affluent households (with annual disposable income of at least $21,000 per year), compared with just 2 million such households in 2000. And the country is ripe for a productivity revolution. Labor productivity is 15 to 30 percent of the average in countries that are part of the Organisation for Economic Co-operation and Development (OECD).

A new productivity-led model would enable China to create more sustainable jobs, reinforcing the rise of the consuming middle class and accelerating progress toward being a full-fledged advanced economy. Such a shift will require China to steer investment away from overbuilt industries to businesses that have the potential to raise productivity and create new jobs. Weak competitors would need to be allowed to fail rather than drag down profitability in major sectors. Consumers would have more access to services and opportunities to participate in the economy.

Making this transition is an urgent imperative. The longer China continues to accumulate debt to support near-term goals for GDP growth, the greater the risks of a hard landing. We estimate that the nonperforming-loan ratio in 2015 was already at about 7 percent, well above the reported 1.7 percent. If no visible progress is made to curb lending to poorly performing companies, and if the performance of Chinese companies overall continues to deteriorate, we estimate that the nonperforming-loan ratio could rise to 15 percent. This would trigger a substantial impairment of banks’ capital and require replenishing equity by as much as 8.2 trillion renminbi ($1.3 trillion) in 2019. In other words, every year of delay could raise the potential cost by more than 2 trillion renminbi ($310 billion). Although such an escalation would not lead to a systemic banking crisis, a liquidity crunch among corporate borrowers and waning confidence of investors and consumers during the recovery phase would have a significant negative impact on growth.

Our report identifies five major opportunities to raise productivity by 2030:

  • unleashing more than 39 trillion renminbi ($6 trillion) in consumption by serving middle-class consumers better
  • enabling new business processes through digitization
  • moving up the value chain through innovation, especially in R&D-intensive sectors, where profits are only about one-third of those of global leaders
  • improving business operations through lean techniques and higher energy efficiency, for instance, which could deliver a 15 to 30 percent productivity boost
  • strengthening competitiveness by deepening global connections, potentially raising productivity by 10 to 15 percent

Capturing these opportunities requires sweeping change to institutions. China needs to open up more sectors to competition, enable

corporate restructuring, and further develop its capital markets. It needs to raise the skills of the labor force to fill its talent gap and to sustain labor mobility. The government will need to manage conflicts among many stakeholders, as well as shift governance and incentives that rewarded a single-minded focus on rising GDP, even as it modernizes its own processes.

Exactly how can China’s economy become more productive? Go to Tableau Public to examine how six industry archetypes contribute to the country’s growth by province.

Source: Capturing China’s $5 trillion productivity opportunity | McKinsey & Company

05/10/2015

India’s Competitive Ranking Surges on the Back of Modi Momentum – India Real Time – WSJ

India leapt 16 places to 55th position in the latest ranking of economies’ competitiveness released by the World Economic Forum Wednesday.

The Geneva-based think tank says India is a “bright spot” among larger emerging markets, which have shown a broader trend of either a decline or stagnation. It attributes the country’s big rise–which comes after five years of decline–to the election of Prime Minister Narendra Modi last year, which ignited optimism about the country’s limping policy changes.

“This dramatic reversal is largely attributable to the momentum initiated by the election of Narendra Modi, whose pro-business, pro-growth, and anti-corruption stance has improved the business community’s sentiment toward the government,” the WEF says in the report, which includes the Global Competitiveness Index 2015–2016 Rankings.

The ranking is based on the assessment of 140 countries on 12 parameters such as infrastructure, macroeconomic environment, institutions, health and education, among others.

The report says the quality of India’s institutions was judged more favorably in the latest ranking while its macro-economic stability has improved, with easing inflation and a gradual drop in the government’s budget deficit since its 2008 peak. Infrastructure has also improved, the report said.

“The fact that the most notable improvements are in the basic drivers of competitiveness bodes well for the future, especially the development of the manufacturing sector,” the report said.

However, India needs to improve its technological readiness: it is one of the least digitally connected countries in the world.Fewer than one in five Indians use the Internet regularly, and fewer than two in five own even a basic cell phone, according to the report.

The ranking of regional rival China has barely budged in the past six years as it has been dealing with rising production costs, an aging population and diminishing returns on the massive capital investments of the past three decades.

However, its 28th position–unchanged  from the previous year–is still much higher than India’s.

China remains by far the most competitive among larger emerging economies. “However, its lack of progress moving up the ranking shows the challenges it faces in transitioning its economy,” the report said.

Switzerland, Singapore and the U.S. were the top three ranked, unchanged from the previous year.

In Asia, Malaysia ranked 18th, up two places, Indonesia ranked 37th, down three notches while Thailand ranked 32nd, down one position.

Among the remaining BRICS group of countries, Brazil was at number 75, plummeting from 57 last year. The Russian Federation was at number 45, up from 53 and South Africa was at 49, better than 56 last year.

Source: India’s Competitive Ranking Surges on the Back of Modi Momentum – India Real Time – WSJ

12/07/2015

Beijing invites Japanese prime minister to ceremony marking end of second world war | South China Morning Post

President Xi Jinping has officially invited Japanese Prime Minister Shinzo Abe to a ceremony in September commemorating the 70th anniversary of the end of the second world war.

Shinzo Abe speaks at the Japan Summit 2015 on Thursday. Photo: Reuters

Beijing had been waiting for a reply since the invitation was made three weeks ago, Vice-Minister of Foreign Affairs Cheng Guoping said on Friday following a BRICS summit.

Cheng said all leaders from the Shanghai Cooperation Organisation members – Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan – had agreed to attend the September 3 ceremony, which includes a military parade in Tiananmen Square.

Abe had told aides he was willing to visit China, the Asahi newspaper reported.

However, fearing a domestic backlash, he was considering a visit either before or after the ceremony, it said.

A Japanese government source said Abe hoped to talk with Xi on repairing the damage caused by territorial disputes and differing perceptions of history.

Jiang Yuechun , a professor at the China Institute of International Studies, said Abe’s hesitation was understandable.

“If Abe decides to attend the ceremony, it would be a good opportunity to help his country get rid of its historical burden [as an invader]. It would also be a chance to [turn back] Sino-Japanese bilateral ties,” he said.

“Of course, it’s impossible for the two countries to remedy the breach even if Abe does meet Xi, because there are so many problems left by history that have hindered the relationship, such as maritime disputes over the Diaoyu Islands and fishing rights. It will take time to solve these by rational communication.”

Whether Abe’s trip goes ahead could depend on the content of a statement he is expected to make regarding the war anniversary and China’s activities to press sovereignty claims in the East and South China seas. China has urged Abe to include a full apology and note that Japan was engaged in a war of aggression.

Recent speeches by Abe had reflected on Japan’s “wrongdoing” but “offered no apology”, said Sun Cheng, director of the East Asia International Studies Centre at the China University of Political Science and Law.

Sun said the attitude of the US would be key to pushing Japan into an open apology “because Tokyo cares more for Washington’s [approval] than for China’s or South Korea’s”.

To lay the groundwork for Abe’s visit, Shotaro Yachi, the head of Japan’s National Security Council, was planning to travel to China this month to hold talks with Yang Jiechi , the mainland’s top diplomat, a Japanese government source said.

Abe and Xi held talks last November in Beijing and this April in Jakarta on the sidelines of international conferences.

Observers say Beijing hopes to improve its relations with Tokyo before Xi’s visit to the United States in September, while Abe is eager to bolster his domestic support by repairing ties with Beijing amid deliberations on controversial security bills.

Meanwhile, Japan has proposed sending its foreign minister, Fumio Kishida, to Russia from August 31 to September 1. Russian President Vladimir Putin is scheduled to visit Japan within the year.

via Beijing invites Japanese prime minister to ceremony marking end of second world war | South China Morning Post.

09/07/2015

The Troubled Path to Modi and Sharif’s Meet – India Real Time – WSJ

A little more than a year after they met amid high expectations in New Delhi, the prime ministers of India and Pakistan will hold talks on the sidelines of a summit in Russia on Friday. The mood this time around is decidedly less upbeat.

Narendra Modi and Nawaz Sharif are scheduled to sit down for a one-on-one in the city of Ufa, where they have both traveled to attend a meeting of the Shanghai Cooperation Organization, a China- and Russia-dominated group that India and Pakistan are a part of as observers. The two South Asian nations aspire to full membership of the organization, which also includes Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Relations between India and Pakistan over the past year have been strained, with a long catalog of disagreements. New Delhi called off planned talks in August after Pakistan’s ambassador to India met with separatists from the northern state of Jammu and Kashmir.

 

Tit-for-tat cross-border firing in the fall resulted in civilian casualties and provocative rhetoric from both sides.

The flare-up cast a shadow over a meeting in November of South Asian nations in Nepal, during which Mr. Modi held bilateral talks with some of his counterparts from the region but skipped a one-to-one with Mr. Sharif.

Frosty ties turned openly belligerent again in April when the alleged mastermind of a devastating 2008 terrorist attack in Mumbai was freed from prison in Pakistan. India accused Islamabad of not pursuing his prosecution properly, an allegation Pakistan denied.

Inflammatory remarks haven’t made matters easier. India’s cross-border raid on insurgent camps in Myanmar after its soldiers were killed in an ambush near the country’s northeastern frontier–and comments by Mr. Modi’s ministers afterward that the military operation should serve as a warning “to all those who harbor intentions of terror on our country”–irked the government in Islamabad. India has long accused Pakistan of supporting terrorism in India.

India has another growing strategic misgiving: a strengthening China-Pakistan nexus. The two countries, which are longtime allies and each have territorial disputes with India, recently took their relations a step further by inking a $46 billion deal for Chinese investments in building an economic corridor through Pakistan. The pact raised hackles in India, largely because it includes building Chinese-funded infrastructure on disputed territory that is governed by Pakistan but also claimed by India.

All that said, Mr. Modi and Mr. Sharif have tried to ease tensions with occasional telephone calls. In February, the two exchanged messages over the then-upcoming Cricket World Cup. In June, Mr. Modi called Mr. Sharif to wish him well ahead of the Muslim holy month of Ramadan and gave him the news that, as a gesture of goodwill, India would be releasing some Pakistani fishermen detained by Indian authorities.

The planned meeting Friday is unlikely to result in a major breakthrough in ties. Still, when the leaders of two nuclear-armed rival nations meet, the world watches.

via The Troubled Path to Modi and Sharif’s Meet – India Real Time – WSJ.

08/07/2015

The Brics Are Harming Each Other’s Trade, and India Is Largely to Blame – India Real Time – WSJ

Like most families, the Brics bloc isn’t as happy as it looks from the outside.

Brazil, Russia, India, China and South Africa, whose leaders begin a two-day summit today in Russia, are responsible for a growing share of the world’s trade-distorting policies but an even larger portion of trade-liberalizing ones, a new report finds.

However, the temporary nature of some of the market-opening measures means that overall these countries are still discriminating significantly against their trade partners—many of which are fellow emerging markets.

The finding, documented by the Global Trade Alert project of the London-based Centre for Economic Policy Research, highlights some of the awkward contradictions in the effort to unite the Brics.

“On the one hand, the Brics have sought to bolster trade between themselves with more generous credit lines for exporters and the like,” writes the report’s author, Simon Evenett, a professor of economics at the University of St. Gallen, Switzerland. “On the other hand, the Brics are responsible for a third of the instances of the harm to each other’s commercial interests. This cannot make sense.”

Global Trade Alert monitors trade-distorting moves such as tariffs, investment restrictions, “buy local” requirements for public procurement and export-promotion tools such as tax incentives and trade finance. GTA says its dataset includes more than 4,500 trade-related policies enacted globally since the financial crisis, more than double the number tracked by the World Trade Organization.

The GTA database documents three major spikes in protectionism since 2008. Over that period, the Brics governments have implemented a total of 1,451 policies that favor domestic commercial interests over foreign ones, or 32% of such measures world-wide. The Brics countries have since unwound just a fifth of these, suggesting that protectionist walls weren’t raised merely as temporary crisis-fighting measures. The Brics account for 17% of world trade.

Within the bloc, India stands out as an offender. According to GTA, the country is second only to the European Union both in the number of discriminatory measures imposed since November 2008—452 against the EU’s 604—and in the number of product categories affected by such measures—1,174 against the EU’s 1,220, both out of a possible 1,229.

Rich-country protectionism is still alive and kicking, the report shows. Of the 2,733 economic policies that harmed at least one Brics member, a fifth came from a member of the G-7 group of nations—the U.S., Canada, Japan, Germany, France, U.K. and Italy—or Australia. Nearly a third, however, came from fellow Brics nations.

All told, a greater share of G-7 policies were discriminatory, but the Brics’ protectionism affected a broader range of products. China was the most-common victim, with 2,153 foreign measures hitting its commercial interests.

The Brics also account for an increasing share of reforms world-wide to lower obstacles to foreign firms and investors, the report finds. But 28% of these liberalizations have already lapsed, compared to the global average of 15%.

Some economists say developing countries, in order to kick-start industrialization, need to shield and nurture local firms until they’re ready to compete on world markets. But Mr. Evenett argues that condoning “special and differential treatment” for poor countries doesn’t straightforwardly protect them against rich countries’ discrimination—it also provides cover for developing countries to step on other developing countries’ toes. China is the only one of the Brics whose exports haven’t stagnated over the past four years.

Hence, “a less selective approach to tackling crisis-era protectionism would seem to be in order,” Mr. Evenett writes. “The frequency with which Brics commercial interests are harmed by beggar-thy-neighbor interests ought to make the Brics champions of the monitoring of protectionism by international organizations.”

via The Brics Are Harming Each Other’s Trade, and India Is Largely to Blame – India Real Time – WSJ.

06/07/2015

Narendra Modi’s Visit to Central Asia: What to Know – India Real Time – WSJ

India is starting to latch onto the need to forge diplomatic relationships with other countries beyond simple exchange of embassies. However, in the two months of rest between PM Modi’s globe trotting, China formed or reinforced relationship with 28 countries:

  • May:  E U; Japan; Belarus; India; Ireland; Vietnam; Brazil; Colombia, Peru, Chile.
  • June:  Pakistan, Senegal; French Polynesia;  Angola; Sri Lanka; Georgia; Myanmar, Maldives; Uzbekistan; Australia; Czech Republic; Poland; Belgium; USA; Brazil; France.

Some of these were when senior foreign politicians visited China, others when senior Chinese politicians visits abroad.

In 2014, China wooed 167 nations – https://chindia-alert.org/2014/12/31/chinese-diplomacy-2014/ and over 100 in 2013 – https://chindia-alert.org/2013/12/31/who-did-china-woo-in-2013/.  So far 62 in 2015.  Someone in the higher eschelons of Chnese government must have read and espouse Dale Carnegie’s book!

“Less than two months after returning from a journey that took him to China, South Korea and Mongolia, Indian Prime Minister Narendra Modi begins another whirlwind overseas tour on Monday in which he is slated to visit five Central Asian countries, attend two multilateral summits in Russia and talk about issues ranging from trade to yoga to terrorism.

In a series of short trips, Mr. Modi will touch down in Uzbekistan, Kazakhstan, Turkmenistan, Kyrgyzstan and Tajikistan, covering a cluster of strategically-positioned, resource-rich nations not far from India’s borders where China has established robust trade and investment ties. In between, he’ll visit Russia for the annual Brics summit.

Mr. Modi’s main focus is going to be energy: Turkmenistan’s natural gas reserves, for instance, and Kazakhstan’s oil and uranium. In recent years, India’s plans to invest in Kazakhstan’s oil projects have been waylaid by proposals from China, which has a major presence in the country’s oil and gas production.

Efforts to ramp-up the flow of these resources to India have also been complicated by the region’s security risks and geopolitics. A long-pending project with Turkmenistan, for instance, involves constructing a gas pipeline from that country over Taliban-hit Afghanistan and across India’s rival neighbor Pakistan, to India.

The Indian government is looking to kickstart work on the pipeline. In April, during a visit by India’s foreign minister, Sushma Swaraj, Turkmenistan pledged to begin construction of it this year, India said. Ahead of Mr. Modi’s departure, Navtej Sarna, an Indian official, said on Friday that the government “will have to explore how we can move this project forward very quickly,” though he didn’t elaborate on how much progress Mr. Modi and his team were expected to make.

It’s not just the pipeline. Mr. Modi is hoping to push other infrastructure projects too that would connect Central Asia to India – regions that are not far apart on the map but have remained inadequately linked by roads, railways and ports, diminishing opportunities for trade and investment.

A North-South transport corridor that would help move cargo through a more straightforward and cheaper route between Russia and Central Asia on the one hand and India on the other has been in the offing for years. While some infrastructure has been built, big gaps remain. Mr. Modi is hoping to recruit more partners to help fill them.

One crucial link country in this plan is Iran, which has been off limits because of Western sanctions aimed at driving Tehran to end its nuclear program. As Iran and its U.S.-led opponents moved toward a deal this year that would end the deadlock, India in May sought to reinvigorate a port project in Iran’s eastern Chabahar region. Once completed, the port would become a central part of the planned corridor.

These questions of connectivity are important for India’s trade prospects, but they also have a geopolitical  significance. China has in recent months stepped up its diplomatic outreach for its new “Silk Road” belt connecting it to Central Asia and Europe. On a visit to Islamabad in April, Chinese President Xi Jinping unveiled a $46 billion economic corridor that would cut across Pakistan and a disputed territory governed by Pakistan that India also claims. Indian officials have objected to the initiative, both publicly and in meetings with Chinese officials.

At the same time, Mr. Modi is looking to forge closer economic ties with China. This week, he will meet Chinese leaders during the Brics summit in the Russian city of Ufa, where the leaders will discuss, among other regional and global issues, their recently-formed bank. The New Development Bank as it is called is headquartered in Shanghai and will have an Indian banker as its first head. Mr. Modi will also participate in a meeting of the Shanghai Cooperation Organization, a security grouping led by China and Russia, which India is likely to join shortly as a full member.”

via Narendra Modi’s Visit to Central Asia: What to Know – India Real Time – WSJ.

06/07/2015

Rivals Pakistan, India to start process of joining China security bloc | Reuters

Nuclear-armed rivals Pakistan and India will start the process of joining a security bloc led by China and Russia at a summit in Russia later this week, a senior Chinese diplomat said on Monday, the first time the grouping has expanded since it was set up in 2001.

Photo

The Shanghai Cooperation Organisation (SCO) groups China, Russia and the former Soviet republics of Tajikistan, Uzbekistan, Kazakhstan and Kyrgyzstan, while India, Pakistan, Iran, Afghanistan and Mongolia are observers.

“As the influence of the SCO’s development has expanded, more and more countries in the region have brought up joining the SCO,” Chinese Vice Foreign Minister Cheng Guoping told a news briefing.”India and Pakistan’s admission to the SCO will play an important role in the SCO’s development. It will play a constructive role in pushing for the improvement of their bilateral relations.”

India and Pakistan have fought three wars since 1947, two of them over the divided Muslim-majority region of Kashmir which they both claim in full but rule in part. Pakistan also believes India is supporting separatists in resource-rich Baluchistan province, as well as militants fighting the state.

India applied to join the regional security grouping last year and SCO foreign ministers gave a positive recommendation when they met in June. “We await further developments,” said Sujata Mehta, a senior foreign ministry official.

Prime Minister Narendra Modi will be in Moscow for a summit of the BRICS group of emerging markets and both he and his Pakistani counterpart, Nawaz Sharif, will attend a special SCO “outreach” session as part of the gathering.

Pakistan’s application is being considered, said foreign ministry spokesman Qazi Khalilullah. “We hope they will support us for full membership,” he added.

The grouping was originally formed to fight threats posed by radical Islam and drug trafficking from neighboring Afghanistan.

Cheng said the summit, to be attended by Chinese President Xi Jinping, would also discuss security in Afghanistan.

Beijing says separatist groups in the far western region of Xinjiang, home to the Muslim Uighur minority, seek to form their own state, called East Turkestan, and have links with militants in Central Asia, as well as Pakistan and Afghanistan.

China says Uighur militants, operating as the East Turkestan Islamic Movement (ETIM), have also been working with Islamic State.

“It can be said that ETIM certainly has links with the Islamic State, and has participated in relevant terrorist activities. China is paying close attention to this, and will have security cooperation with relevant countries,” Cheng said.

via Rivals Pakistan, India to start process of joining China security bloc | Reuters.

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