NEW DELHI: India should adopt a balanced approach to business with China due to the troubled political relationship over the past four years and the need to avoid becoming overly dependent on a single supply chain, external affairs minister S. Jaishankar said on Thursday at an event organised by the Associated Chambers of Commerce & Industry of India (Assocham).
Although the recent understanding with China on resolving the remaining “friction points” along the line of actual control (LAC) has resulted in “some progress,” Jaishankar emphasised that the two sides need further discussions on how to move forward.
“Nobody is saying don’t do business [with China]. But we are equally saying, think about it, weigh it, and look at the bigger-term implications, especially for Ministry of micro, small & medium enterprises (MSMEs). We don’t want to end up as a market for another economy and not be able to compete with their products, which are dumped in our country,” Jaishankar added.
India must also consider that China accounts for nearly a third of global manufacturing, and many supply chains pass through the country. Jaishankar cautioned against becoming excessively dependent on single supply chains or opening markets in a way that could lead to various sectors being “hollowed out.”
The second problem that Jaishankar pointed out is India’s political relationship with China. “For the last four-and-a-half years, our political relationship with China has not been good… because of the situation at the border,” he said, adding, “Things have improved a little bit” following the understanding on patrolling and disengagement at Demchok and Depsang.
“We have managed to make some progress there. We now need to sit down and discuss with the Chinese what we can do further. I think there are no black-and-white answers in very sharp terms. Everything needs to be balanced and weighed, and I would advocate that with China,” Jaishankar said.
The military standoff on the LAC, which began in April-May 2020, brought bilateral relations to their lowest point in six decades. After protracted negotiations through diplomatic and military channels, the two sides reached an understanding on disengagement at Demchok and Depsang on October 21.
Also read: Eye on China, Jaishankar pitches ‘national security filters’ for economic decisions
Prime Minister of India, Narendra Modi, and President of China, Xi Jinping, met two days later and agreed to revive several mechanisms to address the border dispute and normalise ties.
Jaishankar also mentioned that India is in a “much more advantageous position” than many other countries to build deeper ties with the incoming Donald Trump administration in the US.
“We’ll have to work out a political equation with America, and that is one area where we score because we’ve always had a positive political relationship with Trump. I would say Trump has always had a positive political view of India,” he said.
“ Like everybody else, we may also have some issues… there are countries who [are] looking at Trump 2.0 as a political challenge. We are not… We are in a much more advantageous position to translate [Trump] 2.0 into a deeper relationship,” he added.
A new Trump administration is expected to come with “a stronger commitment in America to manufacturing” and “a belief in America that other partners have not been fair,” Jaishankar noted.
While the US will remain the largest power in terms of global presence, the new administration could focus on “more immediate outcomes and results,” and India can address this by sending out a message “that our interests are aligned and anything we do, both will benefit,” he said.
Regarding the burgeoning but skewed India-Russia trade relationship, Jaishankar said New Delhi has been pressing Moscow to address non-tariff barriers that are impeding Indian exports. At the same time, he pointed out that Russia is expected to remain a long-term supplier of commodities such as oil, coking coal, and fertilizers.
“We also need access, on a long-term and sustainable basis, to natural resources. For me, the countries which are basically natural resources economies – Russia, Australia, Indonesia, and Brazil – are our natural partners,” he said.
Jaishankar stated that a “good customer” like India also has the right to have better access to the Russian economy.
“So, we are pressing them in the pharma industry, marine products, and some agro-products. There are SPS (sanitary and phytosanitary) restrictions, non-tariff barriers, and standards [that] make you do things even if you have certification somewhere else,” he said, referring to the problems faced by Indian exporters.
“These are standard tactics which everybody employs to keep the other guy out. Now we have to find ways of going through it and persuading them, cajoling them. I think we will make progress,” he added.
Jaishankar mentioned that he had told Russian first deputy prime minister Denis Manturov during a meeting last month that the “Russian economy should open up much more to exports from India.”
India-Russia trade surged dramatically to $66 billion during 2023-24, largely driven by New Delhi’s purchase of discounted Russian crude. The two sides have set a bilateral trade target of $100 billion by 2030, but India has concerns over its exports being worth less than $5 billion in the overall two-way trade.
