Economic Advantages of CPEC for India

Dr. Tughral Yamin[1], Waseem Iftikhar[2]


From the current level of poor relationship existing between India and Pakistan, it is highly unlikely that India will make a formal bid to join the economic corridor linking China and Pakistan within the framework of the Chinese concept of One Belt One Road (OBOR) policy. Political problems notwithstanding, there are obvious economic advantages that India stands to gain should it become part of this enterprise that has the potential of providing huge financial benefits to all the stakeholders.

Linking India with the CPEC will require immense political capital and a great diplomatic effort on part of India as well as Pakistan. India will have to put aside its objections to CPEC and Pakistan will have to find ways to open up Transit Trade with India in a manner that its goods can access the CPEC highways without undue hindrance.

The most obvious advantage that India will have in linking up with CPEC would be an upgraded communication infrastructure and easy access to markets in Central Asia and beyond. Hopefully such collaboration would lessen tensions in the region and bring more prosperity to its people.

The purpose of the paper is to highlight the economic advantages that India will reap by investing in CPEC.   

Keywords: CPEC, India, China, Pakistan, Economic Opportunities, OBOR


CPEC is part of the larger Chinese economic strategy based on inter- and intra-regional connectivity. The vision of building a Silk Road economic belt and Maritime Silk Road was developed by the Chinese National Development and Reform Commission, Ministry of Foreign Affairs and Ministry of Commerce.[3]  With five layers of connectivity including policy, physical, economic, financial and human, the concept aspires to revive the once vibrant Silk Route connecting ancient civilizations of the Asia, Africa and Europe. Marked by the theme of peace, development, cooperation and mutual benefit, the idea of building the Silk Road Economic Belt and 21st Century Maritime Silk Road (also known as One Belt One Road or OBOR) was proposed by President Xi Jinping in 2013 during his visit to Central and South Asia.[4]

            The concept of Belt in OBOR has mostly a northern dimension as shown in Map 1.[5] Originating from Xian in central China, it goes through Central Asia, with one branch going through Kazakhstan, and the other one through Mongolia, linking up with Trans-Siberian Railway, only to branch off again with one artery going to Moscow, another one to Rotterdam in Netherlands and yet a third  one to Venice in Italy. The geo-strategic nature of this road encompasses system of highways, rail links, oil and gas pipelines along with other infrastructural projects. There is a maritime dimension to it consisting of a series of ports and allied maritime infrastructure. Originating from Eastern China, meandering through South China, South East Asia, South Asia, the Gulf, East Africa the maritime silk route passes through the Mediterranean, terminating at ports in Mombasa (Kenya), Piraeus (Greece), Venice (Italy) and northern European port of Rotterdam in The Netherlands.  Besides these major economic corridors, number of linking loops have been planned to connect Belt and Road. In this complex maze of OBOR Gwadar port plays the role of a lynchpin.  Within this maze of über-connectivity there exists a gaping hole and that an absence of any or very little links between Pakistan and India. CPEC promises to bridge this gap and create a net of dependencies that can auger well for the two countries.

Map 1: One Belt, One Road: The Silk Road

Theories of Dependencies    

Within the existing corpus of international relations and economics, two theories make a case for linking economies to improve foreign relations. The first one is the theory of Complex Inter-dependence that suggests that the fortunes of states and are inextricably tied together through the instrument of economy and trade. Robert Koehne and Joseph Nye were the foremost advocates of this theory in the realm of international relations.[6]

The second theory was propounded by Thomas Friedman in his book Lexus and the Olive Tree. In his theory of the Golden Arches, Friedman suggested that rapid globalization has decreased the chances of war. He gave the example of the Mcdonald franchise. Characterzied by its iconic golden arches, Friedman suggested that no two countries with Mcdonalds international chain have gone to war.[7] As an economist Friedman’s panacea for preventing conflict was to become part of the globalized world.

Unfortunately these theories of dependencies have eluded India and Pakistan because, as they continue to examine their mutual relations with suspicion and mistrust.

One Belt One Road (OBOR)

OBOR involves almost 60 per cent of the world population (4.4 billion people), with one third of the global collective wealth and a GDP of $ 21 Trillion.[8] This grand initiative involves 60 countries and links three continents. Extending from Pacific to the heart of Europe, it is predicted to generate $4 Trillion in investment over the next three decades and draw in countries that account for 70 per cent of world’s energy reserves.[9] According to Zhang Gaoli, the first Vice Premier of China and head of the group piloting this project. The main objectives of the OBOR are[10]:-

  • Enhancing policy coordination across Asian continent
  • Trade liberalization
  • Financial integration
  • Connectivity including people to people links

China’s grand economic strategy for 21st Century involves creation of six economic corridors[11] :-

  • New Eurasian Land Bridge
  • China – Mongolia – Russia corridor
  • China – Central Asia – West Asia corridor
  • China – Indochina Peninsula Corridor
  • China – Pakistan Economic corridor
  • Bangladesh – China – India – Myanmar corridor

India is also investing in transnational infrastructure plans such as BCIM (Bangladesh, China, India, and Myanmar). The path of this corridor is shown in Map 2.[12] It is worth noting that that this route passes through troubled Eastern India.

Map 2: BCIM

Indian Dilemma

            Geopolitical scholars tend to make their analysis through the lens of economy and strategy.[13] In this context, it is pertinent to note that traditionally in the Western Hemisphere, America dominates the North Atlantic and North Pacific Ocean – a maritime realm around European Union. A land based Eurasian region is dominated by Russia. OBOR initiative by China has altered this notion significantly. Economic space will now have to be shared between the traditional contestants with China. While China has clearly stated this to be integrative and inclusive initiative, some nations will certainly view it with a degree of suspicion. India is no exception. With such large capital and political investment, China has little option for India to exert itself as a regional competitor.

            Indian policymakers have expressed their concerns about this project. In a conference organized by Indian Ministry of External Affairs and think tank Observer Research Foundation, held in New Delhi in March 2016, Indian officials openly expressed their suspicions and worries about the Chinese initiative of such large proportions.  In her speech stating the challenges and opportunities for India, at this forum, Indian External Affairs Minister Sushma Swaraj without mentioning China stated that such projects involving inter-connectivity should not be undertaken  unilaterally. Instead it should be based on a spirit of cooperation, after creating an environment of trust and confidence.[14]  India continues to see OBOR primarily as a Chinese initiative and has complained about not being engaged in an extensive dialogues on the issue (Jaishankar). Speaking at another public forum in Singapore, Indian Foreign Secretary Subrahmanyam expressed his concerns by stating that one could not ignore that initiatives with regional and international scope have national interests embedded in them. Therefore he would like greater consultation with India on this subject, which hadn’t happened thus far.  

            Besides many other issues hindering Indian acceptance of this inevitable reality, a major issue is that by enthusiastic involvement in the OBOR project India would implicitly accept Pakistan’s claim with on portions of Kashmir that CPEC passes namely the Gilgit Baltistan region. India is also wary of the Chinese presence and influence in the Indian Ocean, thereby shrinking space for larger Indian designs to remain a key player partnering USA to counter China. For the same reason India has shown its skepticism to allow Chinese led Asian Infrastructure Investment Bank to smoothly finance OBOR projects.[15]

            To top it, confusion persists in Indian policy quarters, whether to view OBOR as an opportunity or as a challenge? There have been suggestions to tick both boxes and move on because there has been no worthwhile decision in this regard by Indian policy makers.[16] Foreign statesmen friendly to India insist that their country stands to benefit by linking up with the neighbors through the Chinese connectivity regime. Prominent among those suggesting such a course of action are former Presidents of Sri Lanka and Afghanistan Chandrika Kumaratunga and Hamid Karzai.[17] It is a difficult decision for India to make. India is suspicious of the growing Chinese influence on smaller countries in its neighborhood. Its current position is prevent the Chinese from doing so.

China on the other hand wants India to join various regional ventures e.g. it has welcomed both India and Pakistan into Shanghai Cooperation Organization (SCO). Chinese official have held talks with their Indian counterparts at different forums in order to engage with them and to dispel their worries and explain the Chinese good intentions encompassing their entire economic progress strategy for the region. Nonetheless India eyes all this activity with suspicion. Simultaneously USA is investing in India in order to balance out the expanding Chinese economic initiative.

For China, involving more than 60 countries in a mega project involves a great deal of diplomacy and capital investments to outbid any potential competition by a single nation or a combination of countries. In January 2016 Iran was the first port of call as President Xi Jinping of China embarked on a tour of the Middle East. The timings of the visit were significant because Iran had just come out of the debilitating sanctions regime.[18] In a clear display of impartiality and peace for all, he proceeded to Saudi Arabia and Egypt.

There has been abundant criticism of the Chinese project from USA and that could be one possible reason for Indian indifference to this initiative. Some China watchers in USA have made light of the Chinese move as a publicity stunt to depict itself as a benevolent power, and to add gloss to the legacy of Xi’s legacy, as he struggles to control his unwieldy country (sic).[19]  

India has a lot to level up with China, as shown in Table 1 i.e. It has the largest trade deficit with China amounting to over $48 Billion in financial year 2014 – 15.[20]

Table 1 – Top 5 Indian Trade Partners 2013-2014

India is already using Sri Lankan ports developed by China.[21] However, in order to redraw its lines of economic benefit and influence India needs to think in long term and act short term. 

Indian Economic Aspirations

India has been working hard on increasing its domestic economic outlook as well as inviting foreign investments. To this end it has developed multiple bilateral and multilateral economic alliances within the immediate region and beyond. Besides affording India a reasonable degree of economic advantage it has accrued multiple political and commercial advantages. The general trend of Indian economic activity gives the drift of its aspirations and ambitions. Some of these tendencies have been identified as excluding Pakistan and concluding bilateral and multilateral treaties with other countries of the region:-

Indian Ocean Rim Association (IORA). India is very possessive about the Indian Ocean. It considers it as a preserve of India. Pakistan has been kept out of this association. The Indian Ocean Rim Initiative was launched in March 1995, and the creation of the Indian Ocean Rim Association (then known as the Indian Ocean Rim Association for Regional Co-operation) two years later, in March 1997. IORA has currently 21 Member States and 7 Dialogue Partners, including countries as far away as South Africa and Australia.[22] This organization has been created with a view of undermine the potential influence of South Asian Association Regional Cooperation (SAARC). More of which will be discussed subsequently.

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). BIMSTEC is the second initiative that excludes Pakistan. It joins countries of South and South East Asia. These are: Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal.[23]

The Chahbahar Port Project. Modi government has promised to invest a sum of US $ 500 million in the Iranian port of Chahbahar. The India – Afghanistan – Iran agreement of trade through this port, can actually benefit both India and Pakistan through the Chahbahar – Gwadar connection.[24]

Many in Pakistan interpret this as a bid to belittle the Pakistani port of Gwadar. At the highest official levels the feeling is different. Pakistan would like Chahbahar – Gwadar to develop as sister ports.[25] This concept was proposed by Baluchistan Chief Minister Nawab Sanaullah Zehri in a meeting with Iranian delegation.[26] At the recent UN summit the Iranian President hasan Rouhani had assured the Pakistani prime minister that the Chahbahar port is not meant to rival Gwadar but to complement it. There is already a proposal to link the Iranian port with the Pakistani port through a railway line.

International North – South Transport Corridor (INSTC). INSTC was proposed in 2012 to enhance the trade and transportation between the Central Asian States, Russia, Iran and India. As shown in Figure 1, the hub of activities will be the port of Bandar Abbas.[27] While the timings were not good from Iranian point of view at that time because it was heavily sanctioned by USA and EU etc., the proposed agreement took place despite US pressure.

Figure 1: INSTC

Mekong – Ganga Project. India’s Look East policy is symbolised by a number of ventures. Michael Arndt has stated in his book India’s Foreign Policy and Regional Multilateralism that India seeks cooperation for economic development beyond South Asia and its immediate neighbors.[28] Mekong – Ganga project is one such example which involves the nations of Ganga and Mekong Rivers. This project has been ongoing since November 2000. For the development of tourism, culture, transportation and education, India has partnered with Thailand, Myanmar, Cambodia, Laos and Vietnam. Multiple meetings are held on regular basis to promote and continue the cooperation.

Project Mausam. Indian maritime project Mausam (literal meanings season or weather) derives its name from age old traditional maritime trade practices. In pre-modern times sailors moving west from Indonesia etc. heading to Africa, Middle East etc. and others moving towards eastern edge of Ocean, made use of the so-called trade winds blowing steadily towards the equator from the north-east in the northern hemisphere or the south-east in the southern hemisphere. In an effort to reach destination they used to stop at Indian ports to wait for next monsoon with a new crew to sail to other side.[29] This allowed sailors to reside in India, conduct business and exchange culture. Project Mausam is an effort to revive that old cultural and trade practice. China’s new proposed maritime route envisions Gwadar as a trade hub, allowing other nations to utilize existing and newly developed infrastructure. India project seems to fit into this option and increase Indian economic activity on the ocean front.

Regional Comprehensive Economic Partnership (RCEP). It is a free trade agreement (FTA) between ten member states of ASEAN (Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, Philippines, Singapore, Thailand and Vietnam) and the six states with which ASEAN has existing FTA relationship (Australia, China, India, Japan, South Korea and New Zealand). As the trade intensifies under this agreement, India fears that China, being better placed economically and in a position to use this integration to its advantage, might start arms twisting other nations. In any FTA ventures countries need to pay attention to tariff barriers reduction, impact of FTA non-trade issues such as labor and environmental etc. need to be considered. Finally FTA can only flourish and benefit a nation if special attention is paid to medium, small and micro enterprises and the regulations are updated accordingly. China is best placed in this regard with abundance of production (at times production over flow and reduced consumption) and desirably lesser markets – a major driving factor behind OBOR. India has a long way to go in its domestic industrial capacity building to be able to compete with China. This forum is also viewed as an alternative to Trans-Pacific Partnership (TPP) which includes USA in the equation but India and China are not part of that. Multiple rounds of negotiations have been held so far making improvements on issues of contention.[30]

Asia Pacific Economic Cooperation (APEC). For years India has been struggling to be part of the forum comprising rim of 21 Pacific nations.[31] This forum has clearly refused to allow India in for multiple reasons, the major one; India not being part of Pacific Rim. Due to immense economic activity involving few major economies of the world, India has (unsuccessfully thus far) been aspiring and pushing for the membership as late as June of 2016.[32] The forum on the whole has been the target of criticism as well.[33] The forum for promotion of free trade infringes on national and local laws which regulate and promote labor rights (usually absent and appalling in India), environmental protection and safe and affordable access to medicine (debatable issues in case of India).

Eurasian Economic Union (EAEU). Russia, Kazakhstan and Belarus formed this economic union in 2014. Some view this as a Russian effort to counter balance economic impact of EU and USA in the region.[34] Russia has joined the Chinese OBOR initiative and will capitalize on already existing trade pacts such as this one. In face of US sanctions against Russia, this has been a robust initiative on Putin’s behalf. India opened negotiations aspiring to join EEU in July of 2015.[35] Indian aspirations to make EAEU – India a free trade zone can get a major economic boost by India joining in on Chinese OBOR/CPEC projects.

Shanghai Cooperation Organization (SCO).  SCO is the joint initiative of China and Russia to basically address counter terrorism issues but it has the venture into the fields of economics as well.  China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan are the members of this organization, while Pakistan and India have been principally added to the forum.[36] This forum provides an excellent opportunity for India to link up with Pakistan and Central Asia. Perhaps it can become a platform for India to eventually join OBOR.

South Asian Association for Regional Cooperation (SAARC).Unlike other regional organization, SAARC has failed to realize its full potential. It has been marred by very high political and very low economic activity due to traditional rivalry between India and Pakistan. The organization involving eight South Asian nations of Pakistan, Afghanistan, India, Bangladesh, Bhutan, Sri Lanka, Maldives and Nepal, has failed on one of the major goals to achieve economic integration. Bilateral politics has fostered creation of smaller groups within the larger SAARC region such as South-Asian Sub Regional Economic Cooperation (SASEC) including Bhutan, Bangladesh, Nepal and India. Another such group is BIMSTEC that has been mentioned earlier in this article.[37] These platforms aspire to achieve a free trade zone by 2017. SAARC capacity to boost any trade or economic relationship has been visible by failure and non-implementation of terms adapted by South Asia Free Trade Agreement (SAFTA) in 2006. A major goal of SAFTA has been to make the region a Free Economic Trade Zone by 2020, a rather long shot in existing relationships. Indian involvement in CPEC as a trading partner will certainly be an immense lift to all these and many other existing treaties and organizations.

India – Pakistan Trade. Historically, trade between both neighbors has been low or insignificant because of poor relations. Immediately after partition the trade almost stopped. 1965 war brought another low in bilateral relationship. Another dip in the activity was observed after Indian Parliament attack of 2001 and yet another low was seen in 2013 due to cross border exchange of fire. Currently India and Pakistan are again experiencing a deep freeze in their economic relations.

Overall trade relations between two countries have remained far from substantial. In 2012–13 total trade amounted to $ 2.4 Billion which is a fraction of total business they conduct around the globe.[38] Transit trade has limited Pakistan’s usage of Indian land for trading with Nepal, Sri Lanka, Bangladesh etc. while India’s ability to access Afghanistan through Pakistan has been limited by reciprocal hindrance. While India granted Most Favored Nation (MFN) status to Pakistan in 1996, the favors Pakistan could receive have been seriously limited because of excessive tariffs, un-necessary delays at check points and other political reasons. Pakistan is yet to reciprocate the status of MFN for India. Immense potential in trade of textile, automobiles, IT, health and entertainment has been identified if the trade is allowed to be liberalized. CPEC is a golden opportunity for India to tap a 180 million consumer market in Pakistan, while Pakistan can access almost 1.2 billion buyers. Such trade and bilateral dependence will certainly benefit both nations. Indian envoy Gautam Bambawale has expressed eagerness to conduct business with Pakistan.[39] While the timings of such gestures match perfectly with India on defensive due to its brutalities in Kashmir being internationalized and pressure being intensified globally by Pakistan, desire for genuine economic cooperation cannot be completely ruled out.

Advantages for India

As mentioned above India is eager to join RCEP and APEC for the reasons of robust economic activity, simultaneously it refuses to give space to Chinese initiative as a whole and more specifically to CPEC. While India is willing to give up some of its domestic laws and economic liberties aspiring to join other fora, it refuses to do same in case of CPEC. It needs to consider advantages that it can accrue by joining the larger Chinese initiative, more specifically CPEC.

India’s geographical location and territorial expanse is ideally suited for enhanced connectivity through modern communication infrastructure in which India may not have to invest much. Using the newly conceptualized CPEC project India can have faster, cheaper and increased access to Afghanistan, Central Asia, China and Middle East.

Iran – Pakistan – India Pipeline will be completed on Chinese expense and will benefit India both economically as well as politically in regional affairs. China – Iran railway project further extended to link with CPEC would allow India to connect to Iran increasing bilateral trade and geo-political cooperation. China – Iran railways expanse will be borne by China so India would hardly need to make huge investments on this link. Moreover India has been aspiring to extend its rail link with Iran but has been unable to do so due to resistance from Islamabad.

India can use Chinese influence over Pakistan effectively expand its trade activity westwards. Due to heavy Chinese investment in Pakistan through CPEC and the existing political goodwill between China and Pakistan, China is in an influential position to alter Pakistan – India economic equation. This will certainly benefit both India and Pakistan economically as well as politically.

The existing economic reckoning involving Asia – EU activity is likely to be intensified due to Chinese OBOR initiative. CPEC is one of the most vital links joining the belt and the road. By joining the CPEC enterprise, India in collaboration with China can significantly alter the existing Asia – EU trade activity and secure a greater portion of the EU economic pie. This is also likely to modify dependence and power shift from existing US – EU relations more in favor of EU – Asia economic alliance.

Russia, a traditional Indian partner is integrating into OBOR. The realization that the Chinese project will benefit the larger Asian continent, they have allowed the linkages with Trans-Siberian railway, Moscow and passage deep inside EU. Existing Russian – Indian partnership can further strengthen through active Indian involvement in the project, economically benefitting them and the neighborhood. Moreover closer Russia – China – Pakistan ties are not a beneficial scenario from Indian point of view and would only drive India further away from Russia while Pakistan seizes the opportunity to strengthen its new-found binding with Russia.

Increase in Indian – Afghan trade relationships by using the CPEC instead of bypassing Pakistan is obviously a better option. By safeguarding their vital national interests, both India and Pakistan would be very well placed economically if such a venture materializes. Economic dependence and involvement of other nations could certainly bar both nations from frequent military stand-offs or other such misadventures.

India should not sit silent as China invests in Pakistan, Sri Lanka, Myanmar, Bangladesh and many other Indian neighbors. Resistance to this call (and Chinese invitation) would only harm and to some extent isolate India economically. The sole reason that since CPEC passes through what the Indians claim to be Pakistani occupied Kashmir is insufficient reason for India to miss such robust economic option. Moreover India cannot allow unchecked Chinese influence to increase with traditional South and South East Asian Indian partners.

USA has been investing in India on nuclear, political, economic and military fronts for over a decade now in order to harness the Chinese influence. There has been an increase in this indirect economic advantage to India since Chinese announcement of the project. However, OBOR involves more than $200 billion to be invested by AIIB.[40] USA has no plans to match such investments in India alone. While USA continues to support Indian influence in the region to keep a check on China, they would certainly not want India to become too big for its boots. India needs to realize this aspect and joining in Chines venture would be an economically viable option.

Indian Prime Minister Modi’s flag ship Project Mausam, can seamlessly be integrated into Chinese maritime dimension of the OBOR. Building on the ports being developed by China, India can significantly add on to the maritime trade through its proposed enhancement and improvement of Andaman and Nicobar Island ports. This will allow the South East Asian maritime economic flow to benefit India and others participating in OBOR. Pakistani deep sea port of Gwadar can further enhance Arabian Sea linkages.

Using Gwadar port, India can transport its goods to Iran, Afghanistan, China and Central Asian markets which are a much more economically viable option than the existing means of transportation. The only reason that India doesn’t desire to benefit Pakistan in economic field is a short-sighted approach and will only harm Indian economic interests.

Indian aspired Digital India program[41] can benefit significantly from fiber optics linkages being developed through CPEC and within the larger gambit of OBOR.  These linkages are going to significantly add on to the existing undersea cables with enhanced speed and connectivity between Asia and Europe. It reduces the dependence on limited means of digital communication and provides alternative means of faster broadband connections, something India should not afford to miss.

“Fragile Five” is a term coined by a researcher from Morgan Stanley for economies that have been too dependent on skittish foreign investment to finance their growth ambitions. These countries include Turkey, India, Indonesia, South Africa and Brazil.[42] India has been desperate to shed this impression and wants large scale direct foreign investment and sale of its goods and services. In yet another step to promote manufacturing within India and allowing enhanced foreign investment, Prime Minister Modi announced the “Make in India” project. The project was designed to transform India into a global design and manufacturing hub, Make in India has been a response to the lowest levels of growth rate in Indian economy when Modi took office.[43] By linking up with OBOR infrastructure, India will be better placed to link with developed economies of Europe transporting goods and services much faster and cheaper. Delinking border tensions with Pakistan and China, India can capitalize on this opportunity to add on to economic growth.

India cannot compete with China in developing its offshore assets as well as infrastructure in countries doing business with India. However, its aspirations of being dominant factor in Indian Ocean are being curtailed to a great extent by Chinese investment in BCIM, and smaller nations such as Maldives.  By being an active part of OBOR, India can safeguard its interest better rather than remaining out of it. It will also have better prospects to negotiate its existing maritime influence in Indian Ocean with China. Instead of placing all its eggs in the American basket, India should consider China  as a reliable trading partner instead of a hostile competitor. Development of Andaman and Nicobar Islands within the framework of Project Mausam can certainly be a positive step towards alternate entry point ports into Indian sphere of influence.

Indian involvement into affairs of immediate Chinese neighborhood dates back years, as is clearly visible in the Mekong–Ganga Project. By becoming part of the OBOR initiative, India will gain even more economically by utilizing the existing institutional and cooperation infrastructure. Chinese BCIM and China – Indochina Peninsula Corridor, both amply cover the region and are open for Indian engagement. Economic benefits accrued would only enhance if they decide to give up the ego-centric approach and shake hands with China on OBOR project.

Chahbahar – Gwadar connection will definitely enhance the trade activity between Iran and Pakistan. While, some analysts have viewed India–Iran–Afghanistan trade deal through Chahbahar as a counter measure to CEPC,[44] the fact remains that both cannot be compared due to amount of investment disparity. However there has been a realization in Indian quarters that geo-economics of CPEC project and linking it with Chahbahar will only improve the economic activity and India should not miss this opportunity. To be economically and strategically viable Chahbahar and Gwadar will have to be eventually linked. Even if India refuses to utilize CPEC, China remains the largest trading partner in the region.

Yet another reason for India to gain economically would be linking INSTC to CPEC through Iran. India over the years has developed multiple trade and economic ventures and some of them are still under discussion. Prime Minister Modi in his speech at SCO meeting in Ufa, Russia had expressed his interest in lending support to improving transportation and communication networks in the region. He envisioned the creation of a vast network of physical and digital connectivity extending from Eurasia’s northern corner to Asia’s southern shores. He suggested that the INSTC was the right step in that direction.[45] Modi’s interest in improving the INSTC connectivity should convince Indians to tap into a more supportive CPEC. If Afghanistan – Pakistan Transit Trade Agreement (APTTA) is opened to India it will be an economic boon for regional countries. In any case there is a proposal to extend APTTA upto Tajikistan.[46] Pakistan obviously needs to guard its own national interests before opening APTTA to India. It also needs to demand reciprocity for doing transit trade with Nepal and other countries.

China has roaring bilateral relations with India upto a tune of nearly US $ 80 billion but it the balance of trade is heavily tilted in favor of China. It has border disputes with India which it tends to downplay. In fact China will be more than happy to let India connect with CPEC. In the words of Chinese scholar Hu Weijia, “The CPEC is not a zero-sum game where Pakistan gains and India loses. If economic cooperation between China and Pakistan can improve infrastructure in the region, including in the Kashmir area, India will have an opportunity to expand trade routes to Central Asia”. [47]


            Interdependence has eluded Pakistan and India so far, however, this is not to say that it is not possible. Mega projects in the nature of OBOR and CPEC, by virtue of their size can bring together odd bed fellows. Indian inclusion in the project will accrue economic benefits for India that have otherwise been stalled due to weak political will, absence of requisite funding, sluggish progress on building and improving infrastructure etc. In this case China is serious in building six economic corridors and multiple maritime structures through OBOR project. India seemingly has little options but to join in. Development of infrastructure in all directions bypassing India will only limit economic space for India and a wise option for Indian policy makers would be to think strategically and act immediately. 


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[1] Dr. Tughral Yamin, PhD, is the founding member and Associate Dean of the Centre for International Peace & Stability (CIPS), Institute of Peace and Conflict Studies, National University of Sciences and Technology, Islamabad, Pakistan

[2] Waseem Iftikhar is a PhD Scholar at Centre for International Peace & Stability (CIPS), Institute of Peace and Conflict Studies, National University of Sciences and Technology, Islamabad, Pakistan.

[3] NDRC, “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road,” NDRC,

[4] FMPRC, “President Xi Jinping Delivers Important Speech and Proposes to Build a Silk Road Economic Belt with Central Asian Countries,” Foreign Ministry People’s Republic of China,

[5] Moritz Rudolf, “One Belt, One Road: The Silk Road,” Mercator Institute of China Studies,

[6] Joseph S. Nye Robert O. Kohane, Power and Interdependence, 4th ed. (USA: Longman, 2012).

[7] Thomas L. Friedman, The Lexus and the Olive Tree  (New York: Random House, Inc, 2000).

[8] Nadège Rolland, “China’s New Silk Road,” National Bureau of Asian Research,

[9] Gal Luft, “China’s Infrastructure Play; Why Washington Should Accept the New Silk Road,” Foreign Affairs 95, no. 5 (2016).

[10] Shayam Saran, “What China’s One Belt and One Road Strategy Means for India, Asia and the World,” The Wire,

[11] Andrew Christie Ingrid Ge, Jeff Astle, “A role for UK companies in developing China’s new initiative,” (China British Business Council).

[12] Noorul Islam Hasib, “China unveils plans on building Silk Road Economic Belt, 21st-Century Maritime Silk Road,”,

[13] Saul Bernard Cohen, Geopolitics: The Geography of International Relations  (USA: Rowman & Littlefield, 2015).

[14] Sushma Swaraj, “Speech by External Affairs Minister at the inauguration of Raisina Dialogue in New Delhi,” Ministry of External Affairs,

[15] Ananth Krishnan, “The dragon raises a lair: India backs the China-led superbank,” India Today, Jan 20, 2016.

[16] Ritika Passi Samir Saran, “Seizing the ‘One Belt, One Road’ opportunity,” The Hindu, Feb 2, 2016 2016.

[17] Tanvi Madan, “What India thinks about China’s One Belt, One Road initiative (but doesn’t explicitly say),” (USA: Brookings Institution).

[18] News, “President Xi Jinping Visits Saudi Arabia, Eqypt, Iran,”

[19] Luft, “China’s Infrastructure Play; Why Washington Should Accept the New Silk Road.”

[20] Government of India, “Export Import Data Bank,” Ministry of Commerce and Industry, Department of Commerce,

[21] Nilanthi Samaranayake, “India’s Key to Sri Lanka: Maritime Infrastructure Development,” The Diplomat, March 31, 2015.

[22] IORA, “Indian Ocean Rim Association,”

[23] BIMSTEC, “The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation “.

[24] Gulshan Sachdeva, “India and Pakistan can both benefit from Chahbahar,” Hindustan Times, Jun 1, 2016.

[25] ANI, “Pakistan may link Gwadar with Chabahar: Sartaj Aziz,” The Financial Express, May 27, 2016.

[26] Muhammad Zafar, “Gwadar, Chabahar to be made ‘sister port cities’,” The Express Tribune, Jan 12, 2016.

[27] Sandeep Dikshit, “Despite U.S. opposition, Iran to be transport hub for North-South Corridor,” The Hindu, May 31, 2012.

[28] Arndt Michael, India’s Foreign Policy and Regional Multilateralism  (UK: Palgrave Macmilan, 2013).

[29] Akhilesh Pillalamarri, “Project Mausam: India’s Answer to China’s ‘Maritime Silk Road’,” The Diplomat, September 18, 2014.

[30] PTI, “RCEP Talks: Chief negotiaters to meet on July 18-19 in Jakarta, tariff talks on agenda,” The Economic Times, July 3, 2016.

[31] APEC, “Member Economies,”

[32] IANS, “APEC membership for India, important in PM’s talks with Obama: Arvind Panagariya,” Business Standard, Jun 2, 2016.

[33] Tina Gerhardt, “America’s Pacific Century?: APEC Summit in Hawaii Seeks to Implement Free Trade Agreement of the Asia Pacific Region,”,

[34] Abigail Hauslohner, “Russia, Kazakhstan, Belarus form Eurasian Economic Union,” The Washington Post, May 29, 2014.

[35] News Briefing, “India Opens Talks With Eurasian Economic Union Over Free Trade Agreement,”

[36] AFP, “India, Pakistan edge closer to joining SCO security bloc,” The Express Tribune, Jun 24, 2016.

[37] Saira Yamin, “Regional Peace in South Asia through Economic and Security Alliances,” (National University of Sciences and Technology, Islamabad: Center for International Peace and Stability, NUST, 2013).

[38] Rohit Kumar, “India-Pakistan trade relations: Current and Potential,” Jinnah Institute,

[39] Basma Siddiqui, “Forget Kashmir, let’s talk trade: Indian envoy,” The Express Tribune, Sep 6, 2016.

[40] Luft, “China’s Infrastructure Play; Why Washington Should Accept the New Silk Road.”

[41] Tech Desk, “Digital India Week: Digital Locker,, and other projects that were unveiled,” Indian Express, July 5, 2015.

[42] Jr. Landon Thomas, “‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil,” The New York Times, Jan 28, 2014.

[43] “Program,”

[44] Sachdeva, “India and Pakistan can both benefit from Chahbahar.”

[45] Meena Singh Roy, “International North-South Transport Corridor: Re-energising India’s Gateway to Eurasia,” (India: Institute for Defence Studies and Analyses).

[46] Sachdeva, “India and Pakistan can both benefit from Chahbahar.”

[47] Hu Weijia, “India should adopt an open attitude toward the China-Pakistan Economic Corridor,” Global Times, Aug 16 2016.

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