September 18, 2023
Good morning. In today’s either/view, we discuss whether the India–Middle East–Europe Economic Corridor (IMEC) can take on China’s BRI. We also look at the story of a unique temple in Tamil Nadu, among other news.
📰 FEATURE STORY
Can the India–Middle East–Europe Economic Corridor (IMEC) take on China’s BRI?
As the dust settles from the recently concluded G20 meeting in New Delhi, there’s a lot of information to parse through. India’s goal going into the meeting and the G20 presidency in general was to be something of a leader, a voice, for the Global South. Economically and geopolitically, the region is emerging as an important player in the larger scheme of things.
One of the outcomes, the India–Middle East–Europe Economic Corridor (IMEC), has been labelled a landmark moment for India and the G20. Such a broad economic corridor seems like an obvious retort to China’s ambitious Belt and Road Initiative (BRI). Is the multi-continental IMEC up to the task?
One of the fallouts of the pandemic, from an economic and trade perspective, was how vulnerable the global supply chain was. With the Russian invasion of Ukraine and the resulting economic uncertainties, countries are jostling to ensure they’re not on the wrong end of any supply chain issues. This meant countries were looking for more region-based solutions. When Prime Minister Narendra Modi visited Washington in June, he spoke about supply chains being the centre of the latest chapter of Indo-US relations.
A World Economic Forum (WEF) report from earlier this year stated the regions likely to benefit from changes in the global supply chain were South and East Asia, the Caribbean, Latin America, and the US. More specifically, the report noted countries like India, Vietnam, Thailand, and Mexico, among others. These countries have recorded substantial Foreign Direct Investment (FDI) inflows over the past few years. Take India, for example. In FY2021-22, FDI into India was $83.6 billion.
Where’s China in all of this? Not in a good place as far as supply chains and commerce go. When the WEF surveyed economists, most said China would be the biggest loser in shifting supply chain dynamics. For instance, Apple’s plans to diversify its supply chains meant it headed to Vietnam and India. It’s what some people have termed the “China plus one” strategy.
That ‘plus one’ is mostly South East Asia. There’s potential, thanks to fiscal incentives, cheap wages, and improved logistics. Coming to India specifically, the government has implemented several schemes over the past few years to lure foreign companies to set up shop here. India is also a large importer of goods. According to the World Trade Organisation (WTO), India ranked fifth in importing intermediate goods in 2022.
As far as the IMEC is concerned, perhaps the foundation was laid when the UAE-India Comprehensive Economic Partnership Agreement came into force last May. Speculation increased when the national security advisors (NSAs) of the US, India, Saudi Arabia, and the UAE met in Riyadh a few months back.
The ambitious trade route includes India, the UAE, Saudi Arabia, the European Union, France, Italy, Germany, and the US. Joe Biden said it’s a big deal. Israeli Prime Minister Benjamin Netanyahu called it the “largest cooperation project in our history”.
The countries involved in the massive rail and shipping corridor want to increase the capacity of routes for transporting cargo. The IMEC is also a part of the Partnership for Global Infrastructure Investment (PGII). This is an initiative by the G7 to fund infrastructure projects in developing countries to counter China’s BRI.
That last part, countering China’s BRI, is what the IMEC is all about. The question is, can it?
VIEW: Look out BRI
India’s relationship with China has deteriorated since both sides clashed at the Gulwan Valley in 2020. While imposing restrictions on Chinese firms and goods, India is on an ambitious path to woo several companies to its shores, and they’ve been quite successful in that effort. It’s a shrewd move on India’s part. If companies are wary of China due to geopolitical tensions with the US, why not present India as a destination?
India wants to be a leading exporter, and the IMEC will help. Due to economic headwinds, India’s exports decreased by 16% to $32 billion. The money aspects of the IMEC are obvious, with significant savings in time and costs for shipping and transportation. Take engineering exports, for example. Their primary destinations are the Middle East and Europe. With the IMEC, these will get a fillip.
The timing is crucial for another reason. It comes a month ahead of the next BRI conference in Beijing. While China has announced that 90 countries will be attending, one country that won’t be is Italy. They’ve decided to pull out of the BRI and join the IMEC instead. They were the first G7 nation to join the BRI. China’s BRI isn’t on solid footing of late. They’re looking at BRI 2.0 to rein in costs and scrutinise new project announcements. All this is happening as China’s economy faces some uncertainty.
COUNTERVIEW: Still got a lot to prove
While the BRI and the IMEC have similar objectives, the BRI is arguably larger in scale. China has signed BRI agreements with over 150 countries and 30 international organisations. It has galvanised nearly $1 trillion and created over 3,000 projects. All this was possible because the BRI had a 10-year head start. We still don’t know the finer details of the IMEC, like financing, for example.
From China’s perspective, the BRI forged in 2013 gives it a one-up on the IMEC. The world is more divided now than it was a decade ago. If the IMEC needs to pass through Iran, how will some EU countries respond? How will the US, in particular, respond? There’s no doubt that the BRI has seen its fair share of challenges, especially since the pandemic hit. However, China has been proactive on this front. President Xi Jinping stated that the BRI will focus more on healthcare, poverty alleviation, and green development.
The IMEC, on the face of it, looks more like a geopolitical tool for the US rather than an economic one. While the BRI might not have gone exactly as China planned, it still addresses a real urgent issue – the unmet need for infrastructure development. According to the World Bank, there’s an $18 trillion global infrastructure gap. When traditional lenders moved away from infrastructure, China and the BRI stepped in.
- India-Europe Economic Corridor: What is the Partnership for Global Infrastructure Investment that is behind the project? – The Indian Express
- Global supply chain relocation: China’s loss is India, Vietnam’s gain – The Economic Times
- How does India Middle East Europe Economic Corridor compare with Belt & Road Initiative – BusinessLine
- IMEC versus BRI: Corridor conflicts in emerging bi-multipolar world order – Daily Mirror
- G20 Summit: Will India Successfully Counter China’s BRI Project With Middle East-Europe Economic Corridor? – Outlook
- Being all-embracing gives BRI a major advantage over IMEC – China Daily
- Will the U.S. Plan to Counter China’s Belt and Road Initiative Work? – Council on Foreign Relations
- Grand US rail plan might be another road going to nowhere – Global Times
What is your opinion on this?
(Only subscribers can participate in polls)
a) The IMEC will be able to counter China’s BRI.
b) The IMEC won’t be able to counter China’s BRI.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
Does Modi really want Bharat, Sanatan Dharma?
For the Left:
Nine-year-old Ashoka University is asking the most important question. Who am I?
🇮🇳 STATE OF THE STATES
Internet clampdown (Haryana) – Haryana’s Home Ministry has suspended internet services in the Nuh district from September 17 to 19. The suspension encompasses all SMS services, including 2G, 3G, 4G, 5G, CDMA, and GPRS. Apart from banking and mobile recharges, all dongle services will be halted from 6 pm on September 17 to midnight on September 19.
Why it matters: The decision has been taken in response to potential disruptions of public utilities and threats to public law and order. It aims to prevent the spread of inflammatory materials and false rumors via the internet, SMS, and social media.
Marathwada water grid project (Maharashtra) – Maharashtra’s Chief Minister, Eknath Shinde, seeks Central aid for the Marathwada water grid project, having already allocated ₹15,000 crore from the state. This request was emphasized during the Marathwada Liberation Day event, where Shinde also announced a ₹45,000 crore development package for Marathwada.
Why it matters: The Marathwada water grid project is crucial for addressing the region’s water scarcity issues, especially given its history of insufficient rainfall. The Chief Minister’s appeal for Central assistance underscores the project’s significance for the state’s agricultural and overall development.
Basic needs crisis (Jharkhand) – Buddha Pahad area, once a stronghold for Maoists, is grappling with a severe lack of basic amenities, according to a recent survey. Over 55% of residents from 27 villages lack access to safe drinking water, and nearly 60% don’t have toilets. Despite Jharkhand being declared open defecation-free in 2019, the ground reality in Buddha Pahad suggests otherwise.
Why it matters: The survey also revealed that 14 villages are without electricity, and a significant number of families still rely on firewood for cooking and live in kutcha houses. The stark contrast between the state’s declaration and the actual situation in Buddha Pahad underscores the challenges in delivering basic amenities to remote areas.
Kurathiarai temple’s unique worship (Tamil Nadu) – The Tamil Nadu government plans to declare an early Pandya period rock-cut temple in Kurathiarai, Kanniyakumari district, as a protected monument. Historically, the temple’s deity was identified as Lord Vishnu. However, locals now worship the deity as Avvayar Amman.
Why it matters: The temple, which measures 5 feet in length and 4 feet in width, showcases an image of the four-handed Vishnu with a conch and Sudarsana Chakra. Notably, Sangam age poet and epigraphist, Kavimani Desikavinayagam Pillai, had previously written about the temple’s deity being Lord Vishnu.
Trade support (Arunachal Pradesh) – Arunachal Pradesh Chief Minister, Pema Khandu, announced a state government flagship program to support trades not covered by the central government’s PM Vishwakarma scheme. This decision was shared during the virtual launch of the PM Vishwakarma scheme by Prime Minister Narendra Modi.
Why it matters: The state’s program aims to ensure that local artisans, craftsmen, and tradesmen left out of the central scheme receive equal benefits and government support. Arunachal Pradesh is home to skilled artisans specializing in carpentry, weaving, sculpting, handloom, and textiles.
🔢 KEY NUMBER
₹13,000 crore – PM Vishwakarma scheme, pegged at ₹13,000 crore, was launched by Prime Minister Narendra Modi in New Delhi on Sunday.