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Opinion

In China, put India first | HT Editorial – Editorials

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India should react to China’s act of aggression in eastern Ladakh through all means at its disposal: economic, military and diplomatic. That is a fact and there can be no discussion about it. None. That said, India must also ensure that everything it does is driven by self-interest above all else, particularly in the economic arena. There is a clamor to cancel contracts awarded to some Chinese companies in areas such as engineering and construction. So how should New Delhi do this?

It is easy to see why Chinese companies should be excluded from all strategic areas, not only defense, but also from domains such as information and communication technology. There is a very opaque relationship between the private sector and the government in China, and most Chinese private companies and entrepreneurs ensure that their objectives are in line with the broader vision of Beijing. In return, the Chinese government has supported these private companies, helping them grow and spread their network around the world. In these areas, India’s answer, when it comes to the participation of Chinese companies, should be a direct and unequivocal No.

But the line can’t be that difficult when it comes to other areas. As this newspaper has reported, India depends on China for various raw materials and intermediate products (or components). Chinese companies are good at heavy engineering. India would do well to build on this experience and continue to maintain these supply chains in its own interest. Sure, it’s always good to make locally, but it won’t be possible to do it overnight. Even when possible, it may not make economic sense for some products. Nor does it make sense to say no to Chinese capital, as long as investments in strategic areas are not allowed and there continues to be a clear line between ownership (or beneficiary ownership) and management. In recent days, some state governments have canceled contracts issued to Chinese companies for largely non-strategic work. This is not a good idea for two reasons. One, doing so can result in lengthy and costly arbitration. Two, most importantly, most of these contracts were awarded to the highest bidder. Re-bidding on those contracts can cause delays that India cannot afford in trying to rebuild its economy. We must go back to the Chinese, but always driven by the principle of self-interest.

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