SSB GD Series: ECONOMIC WAR - CPEC v/s INSTC

As the title suggests it may be mistaken as a military war between the worlds two biggest giants in terms of population. Instead, it’s an “ECONOMIC WAR”. China is pulling its socks with already made corridor “the string of pearls” (as the American call it) and the latest CPEC project (China-Pakistan economic corridor) whereas  India is aiming at its multi-modal transportation project the INSTC (International North south corridor) with Russia.  So, now the battleground opponents are crystal clear CPEC Vs INSTC. Let’s know about these economic corridors.

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The CPEC runs through the entire length of Pakistan – through Pakistan-occupied Kashmir (PoK) and the southern state of Balochistan. It reduces the distance for Chinese goods bound for the US, Europe, Africa and the entire western world. With a whopping USD 11 billion investment in rail and road infrastructure and USD 33 billion in energy and power generation projects – largely financed by Chinese state-owned institutions – this project is being seen as one of the biggest investments made by China. It’s a project that could usher in a new era of economic development in Pakistan. Chinese strategy is aimed at connecting some 60 countries across Asia, Africa and Europe to boost trade and economic ties along its traditional maritime route.

The INSTC is a 7,200 km long multi-mode network of ship, rail, and road route for moving freight between India, Russia, Iran, Europe and Central Asia. The objective is to connect the Indian Ocean and Persian Gulf to the Caspian Sea through Iran and then onward to St. Petersburg in Russia and northern Europe. INSTC can reduce the time and cost of deliveries by 30-40%. Goods transported through the Suez take 45-60 days to reach Europe, compared to INSTC’s 25-30 days.

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INSTC details on the map

This is enough of their introduction. These routes are definitely beneficial for the world, but are affecting the parent countries economies. India has continuously opposed the project due to the following reasons:

·         The CPEC passes through the Pakistan-occupied Kashmiri (POK) territory of Gilgit-Baltistan – a claim opposed by Pakistan. The 1,300-km corridor is also perceived to be an alternative economic road link for the Kashmir Valley lying on the Indian side of the border. The CM Mehbooba Mufti is convinced with the route as Kashmir on both sides of LoC can be called “Special Economic Zone” due upcoming local business. This will also attract industrial development and foreign investment. India might lose its claim.

·         When the CPEC becomes fully functional, China will be in a position to offer a ‘shorter and more economical’ trade route. Located a mere 600 km from the Strait of Hormuz, Gwadar places China in close proximity to the Iran-controlled water channel, which supplies 35% of the world’s oil requirements. India, with over 60% of its oil supplies passing through the Strait (mainly from Saudi Arabia, Iran and Iraq) will be choked and will have to join the CPEC.

·         China has been increasing its presence in the Indian Ocean with the ‘String of Pearls’. They have encircled India through the mentioned network.

·         Pakistan will be having a continuous supply of raw material, technology and with cheaper manpower it will be becoming a manufacturing outsourcing. With the ease in connection with the western countries supply will be fast.

·         China’s one-belt-one-road (OBOR) project that focuses on the trade connectivity between China and the rest of Eurasia through a network of ports, roads and railways has been often seen as China’s plan to dominate the region politically.  It has offered India to join the corridor.

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After giving points to China, India comes back with its second dry run of INSTC against the backdrop of OBOR. India will have following advantages through this corridor:

• INSTC will connect the Indian Ocean and Persian Gulf with the Caspian Sea through Iran and then onwards to St. Petersburg in Russia and northern Europe which is a shorter route against the aim of 60 countries OBOR initiative of China.
• The corridor will reduce time and cost of deliveries by 30-40%.
• This will even boost the trade between Europe and Southeast Asia as well. If the corridor links with southeast asian countries.
• The corridor will help India bypass Pakistan to reach central Asia and Russia and potentially get a competitive advantage due to lower cost and shorter delivery time.
• India plans to develop Chabahar port in Iran, which will allow access to landlocked Afghanistan and energy-rich Central Asia.

Details on map of CPEC

Thus, the tussle for domination of central Asia has begun. Both have equaled one point each. For the time being the match is drawn.

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Further, Russia has accepted the invitation to attend the OBOR summit by China in May. India with the second dry run have given indication that they are not with OBOR. It is finding its own way to connect with the countries. Projects like Chabar port will boost India’s economic as well.

This is the time when our PM Narendra Modi’s friendly and business visits in other countries will play an important role for INSTC to be fully operational. India is already boycotting China’s good.

Let’s see if “Make in India tiger ready for the Chinese dragon”

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About the Author: Tanmoy is from West Bengal currently doing private job in Manesar, Haryana. He did his Graduation in B.E. Production Engineering from PEC University of Technology, Chandigarh. His aim is to become an officer in Indian Army. His hobbies are gym and teaching and he wants to help the aspirants across the nation through this.