Connecting With Neighbours: Cross-border infra development to open new avenues for India

Around 60 countries have agreed to participate in the initiative under which nearly 900 infrastructure related projects are expected to be taken up. India also figures in the plan as one of the proposed maritime routes of the silk road has Calcutta in it.

Written by Sandeep Singh | Published: January 6, 2016 1:55:28 am
CORRIDOR OF DEVELOPMENT: ‘India will be a big beneficiary of Bangladesh-China-India-Myanmar Economic Corridor’. CORRIDOR OF DEVELOPMENT: ‘India will be a big beneficiary of Bangladesh-China-India-Myanmar Economic Corridor’.

Japanese Prime Minister Shinzo Abe’s visit last month and his resolve to partner with India on “Quality Infrastructure” only boosts the prospect of the sector’s further development in the country. While Japan signed several agreements with India, including the marquee $15 billion high-speed rail project between Mumbai and Ahmedabad which has the potential to lift the economic activity here, India’s possible move to participate in China’s ‘One Belt, One Road’ (OBOR) initiative in Eurasia and the Indo-Pacific may provide another fillip to its endeavour of building infrastructure. These will only provide additional avenues for development.

Moreover, the government’s key initiatives to build infrastructure such as the setting up of National Investment and Infrastructure Fund, its Smart City mission, Atal Mission for Rejuvenation and Urban Transformation initiative, infrastructure development through partnerships and participatiion in development of economic corridors may only provide an additional boost to the goal of having better connectivity and other basic infrastructure needs.

OBOR initiative and India

Over the last two years China has been rallying various nations across Asia and Europe to join its OBOR initiative that aims to enhance international economic and technological cooperation. It also aspires to improve trade and investment potential across the belt and road area by creation of infrastructure facilities, trade facilitation and financial integration.

Around 60 countries have agreed to participate in the initiative under which nearly 900 infrastructure related projects are expected to be taken up. India also figures in the plan as one of the proposed maritime routes of the silk road has Calcutta in it.

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Although India has not finalised its position and has not given a clear commitment to participate, it has expressed its concerns over the China–Pakistan Economic Corridor (CP-EC), which is a part of the project, as it runs through Pakistan occupied Kashmir (PoK). However, India has expressed willingness to participate in the Bangladesh-China-India-Myanmar Economic Corridor (BCIM-EC). The idea of BCIM-EC emerges from the concept of growth zones and their development depends on cooperation between three or more countries for the development of geographically contiguous region.

Transport infrastructure, ports, civil aviation, cross-border communication infrastructure, trunk line networks are some of the key infrastructure priorities that has been chalked out by the Chinese government across the route. A report by Knight Frank titled ‘The Silk Road Economic Belt and 21st Century Maritime Silk Road — Implications for India’ points that while the core of the initiative lies in creating infrastructure facilities and enhancing the existing ones, infrastructure and real estate sectors will emerge as the biggest Beneficiaries. And since it lays emphasis on urbanisation and industrialisation, cities that fall in the Belt and are located on the planned Road corridor will witness a rise in construction activity.

While BCIM-EC is one of the key infrastructure projects identified on the maritime Road within the OBOR plan, the report states that it can be beneficial for India as it proposes to construct a route that can help bypass the Strait of Malacca, which poses a major impediment in trade in the Indian Ocean and the Pacific.

The report states that India will be a big potential beneficiary of BCIM-EC and the1.65 million square km stretch to be built at an estimated cost of $22 billion, will connect Yunnan in south-western China to Bangladesh, Myanmar and India.

“The major beneficiaries of the BCIM-EC in India are the north-eastern states, including Manipur, the Barak Valley of Assam, and Kolkata, as the proposed economic corridor will pass through them. The benefits will be more pronounced once India commits to the initiative in clear terms. With a firm and clear commitment from India, more areas will come under the BCIMEC, and India and China would be better placed to identify more projects,” said the report.

As far as the funding goes, the Asian Infrastructure Investment Bank, China-Mexico Investment Fund and Silk Road Infrastructure Fund have been established and they have an aggregate corpus of over $140 billion to support the infrastructure development.

Other outbound investment mechanisms that are under consideration by the Chinese government are Green Ecological Silk Road Investment Fund, Gold Fund and BRICS Development Bank. The BRICS bank has an initial capital of $50 billion which would be increased to $100 billion. The bank is expected to help mobilise funds for the Belt and Road Initiative.

Other projects

In the meantime, India has also entered into an agreement with Myanmar and Thailand to develop India-Myanmar-Thailand trilateral highway. While it is a strategic project that Prime Minister Narendra Modi has taken up on priority, the progress on the proposed infra link came up for discussion at the PM’s meeting with his Thai counterpart on the sidelines of the Asean summit last year.

The 3,200-km trilateral highway, if developed will enhance the connectivity between the Mekong sub-region and India and prove to be a game-changer for India’s northeast region. The link is expected to be ready by 2018, about two years behind schedule.

The highway project, to run from Moreh in Manipur to Mae Sot in Thailand via Mandalay in Myanmar, will ensure India’s eastern border is opened to a new bus route from Imphal to Mandalay, which would enable travellers to board a bus from Manipur’s capital to reach Mandalay in just over 14 hours. The trilateral highway project, along with the Kaladan multi-modal transit transport model, is one of the cornerstones of the new government’s “Act East” plan.

In another boost to infrastructure in border areas, the government has announced Rs 80,000 crore Bharat Mala project, aimed at improving connectivity in border areas, including the coastal boundary. While the project may not take off in the current fiscal, the 7,000-km project, will cover Gujarat, Rajasthan, Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, part of Uttar Pradesh, Bihar and West Bengal in the first phase and then move to Sikkim, Assam, Arunachal Pradesh, Manipur and Mizoram.

So, while India continues to build its domestic infrastructure which is critical to its ‘Make in India’ initiative, its participation in infrastructure development in geographically contiguous regions, connecting various countries is likely to help improve trade with neighbouring countries

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