Guilt Pangs

There was considerable surprise when news emerged that Foreign Secretary Vikram Misri was in Beijing on India’s 76th Republic Day rather than joining in the celebrations at New Delhi. Subsequent news on January 27 said that India and China agreed to resume the Kailash Mansarovar Yatra and “agreed in principle” to restore direct flights; an announcement made after Misri held talks with Chinese Vice Foreign Minister Sun Weidong. Mistri also met Foreign Minister Wang Yi and Minister of the International Department of the Communist Party of China Liu Jianchao. Both sides agreed to hold an early meeting of the India-China expert level mechanism to discuss resumption of provision of hydrological data and cooperation pertaining to trans-border rivers, plus measures to further promote and facilitate people-to-people exchanges, including media and think-tank interactions.

According to some analysts, India was in a hurry to get the Kailash Mansarovar Yatra through, which would have a double impact together with the ongoing Maha Kumbh having an extraordinary alignment this time that happens once in 144 years, during which a dip in the holy Ganga River assures Moksha (salvation). In a different context altogether, a post on social media, referring to politicians switching political parties, reads: “Why travel all the way to Prayagraj, get pushed by crowds and risk stampedes, when joining the ruling political party provides instant moksha; all sins washed off and all charges dropped automatically”.

But there is a more important reason why Misri was dispatched post haste to Beijing. News had emerged that in Washington, External Affairs Minister S Jaishankar was pressing US Secretary of State Marco Rubio to operationalize the America-India Defence Pact at the earliest, which India was ready to sign; the act having been sponsored by Rubio last year.

India avoided signing such a pact all these years in the interest of retaining strategic autonomy but has apparently decided otherwise now. Perhaps this is also because the proposed defence pact promises transfer of high-end technology. But, are we ignoring the fact how America has sabotaged India’s Tejas project by delaying supplies of the F404 engine? Misri’s mission in Beijing obviously included gauging China’s reaction, forgetting how astute the Chinese are in not revealing their actual intentions behind the mask of bonhomie.

The Ministry of External Affairs (MEA) brief, covering the January 18 meeting between the Special Representatives of India and China, used the usual diplomatic language indicating ‘consensus’. But two days later (December 20) India rejected China's claims regarding a so-called "six-point consensus" on the boundary issue. Indian officials emphasized that any consensus must respect India's territorial integrity and sovereignty (https://www.thestrategicperspective.org/articles/india-china-special-representatives-met/).

Earlier on January 17, MEA spokesperson Randhir Jaiswal said in a media briefing that there is no contradiction in the positions taken by the MEA and the Army regarding the situation on the Line of Actual Control (LAC), in context of the Army Chief’s remarks that a “degree” of standoff continues between the Indian and Chinese militaries. Jaiswal also referred to the India-China understanding reached on October 21, 2024 that facilitated the withdrawal of frontline forces at the two remaining “friction points” of Demchok and Depsang.

The catch here is the degree of standoff continuing. The official line is that patrolling has been resumed at both these points. But the question is up to which points? Some analysts, including Brahma Chellaney, mention the separate Indian and Chinese interpretation of the LAC. It would be downright stupid to believe that China, which has been salami-slicing territories across the Himalayas over the past several decades (https://www.usiofindia.org/strategic-perspective/beyond-shaksgam-china-scorching-himalayas-blatantly.html) and has developed 22 villages inside Bhutan                                           (https://www.spslandforces.com/experts-speak/?id=1225&h=China-Swallowing-Bhutan), would give up a 20-km deep intrusion in Depsang, which the PLA occupied for  three weeks in 2013 and for more than four years since 2020 without firing a shot, that too with India having no leverage to force a PLA withdrawal. The military has no alternative but to tow the government line but take it for granted that the 20-km deep PLA intrusion in Depsang is now permanent and the area part of the recently announced Chinese Counties in the Hotan Prefecture of Aksai Chin.   

By opening the narrative in 2020 that nothing happened in eastern Ladakh, and failing to brand China the aggressor, the Jaishankar-led MEA has tied itself in knots – playing a series of cover ups to whitewash the first lie. Jaishankar, of his own volition, even has tried to cover up the construction of a Chinese village in Arunachal Pradesh during the standoff in 2020, which is hardly convincing. 

On January 27, seven days after US President Donald Trump’s swearing-in, Prime Minister Narendra Modi dialed Trump and congratulated him. There is speculation he was waiting for a message from Misri in Beijing about China’s reaction to the proposed America-India Defence Pact. Modi says he and Trump were committed to a trusted partnership and posted on X: “Delighted to speak with my dear friend President Donald Trump. Congratulated him on his historic second term.” Modi further said, “We are committed to a mutually beneficial and trusted partnership. We will work together for the welfare of our people and towards global peace, prosperity, and security.”

Modi perhaps requested Trump for a meeting, which is why according to a Reuters report, Indian and US diplomats are trying to arrange a February meeting between Modi and Trump in Washington. According to the White House, "The President (Donald Trump) emphasized the importance of India increasing its procurement of American-made security equipment and moving toward a fair bilateral trading relationship.”

Trump mentioned to Modi “fair bilateral trade relationship”, as per the White House but separately Trump said on January 27 that India, China and Brazil, the high-tariff countries, are harmful to America. Earlier also he had mentioned high tariffs by India, which he will demand to be lowered, in addition to imposing tariffs on India. With job cuts in the US, remittances from America are also likely to reduce, which stood at USD 129 billion (3.40% of GDP) in 2023-2024. How Trump's global trade policies will affect India, with the INR already in free-fall vis-a-is the Dollar was covered in these columns before, also pointing out that  India’s rising external debt was already USD 711.8 billion in September 2024  (https://www.thestrategicperspective.org/op-eds/the-economic-haze/).  

India is now looking at ways to keep projecting robust GDP growth; like changing the base year for calculating GDP from 2011-2012 to 2022-2023 because the latter recorded negative growth rate due to the pandemic, and forecasts for coming years were all subpar. Delinking food completely from the Consumer Price Index (CPI) is also being examined since food and beverages are a major cause of inflation, currently accounting for 45.9% of CPI. But India’s economy could be disrupted quite heavily by Trump. That is why the exodus of Foreign Portfolio Investors (FPIs) from the Indian equity market continues unabated and they already withdrew USD 7.4 billion as of January 27.

Many of India’s big companies have huge USD debt – external commercial borrowing (ECB) and the stock market will be adversely affected with the unchecked fall of the INR. ECBs of Indian companies have doubled from USD 26.6 billion in FY2023 to USD 49.2 billion in FY2014. According to the ‘Economist’, this situation arose because in 2022, the RBI started making interventions and “managing” the rupee exchange rate; resulting in loss of India’s export competitiveness plus depletion of India’s foreign currency reserves to keep the rupee strong. India got into this by betting on high GDP, which Trump’s trade policies will target. Finance Minister Nirmal Sitharaman is party to all this and it will be interesting to hear her spin doctoring while presenting the next Union Budget on February 1.

During the BRICS summit at Kazan, Russia last year, Modi was a proponent for using local currencies in trade, but now reportedly is reconciled to using dollars instead. Modi’s mission in meeting “dear friend” Trump next month is, therefore, cut out; minimize the damage to the Indian economy as much as he can. He can be expected to agree to anything and everything that Trump demands. Will he show enthusiasm for signing the America-India Defence Pact, which Jaishankar is pushing hard with Rubio? Will India become an American proxy by signing this pact? According to a source in the ‘inner circle’ of decision makers, India would be doing all the fighting in an India-China war, with America in “support role”, whether we sign a defence pact with the US or not, so what is the harm in signing the defence pact?

This sure is some weird logic, but how will this affect our relations with Russia and China, especially when China is technologically far more advanced? China’s DeepSeek shocker preceding the US setting up the USD 100-500 billion ‘Stargate’ is only a small example. Are we looking at open confrontation with China, starting with China’s ‘Year of the Snake’ this year, just because our economy is threatened by Trump’s policies irrespective of the grave consequences? Wouldn’t it be wiser to reach a non-confrontational equilibrium with China, given the influence Beijing wields globally, especially in India’s immediate neighborhood (https://www.southasiamonitor.org/spotlight/india-challenging-neighbourhood-need-reach-non-confrontational-equilibrium-china)?

The author is an Indian Army veteran. Views expressed are personal.