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Lucrative Partnership: Digital India has much to Attract China; By Shastri Ramachandaran

C3S Paper No. 0015/2016


Courtesy: DNA India

Although India and China are politically, culturally and economically different, the two countries have much more in common than the border and Buddhism. India’s economy, for one, is very much on a China-like trajectory. That has been so since the economic reforms piloted by Manmohan Singh as finance minister under PV Narasimha Rao from 1991-96.

The “Rao Revolution” was not very different from the policies of China’s Deng Xiaoping in 1978. The Dengist reform — of opening up the economy and creating conditions to attract overseas investors and manufacturers — gave China a 13-year head start over India. Regardless of this lag, it is observed that in pushing for exports, capital expenditure and wooing foreign investment, India and China are similar. Since India began following in 1991 what China started doing in 1978, today India is at the stage where China was at the start of the millennium.

India’s Look East Policy (LEP) was also launched under Prime Minister Narasimha Rao. The two countries have been on the same wavelength on many issues including when the BJP’s Atal Bihari Vajpayee was Prime Minister and thereafter, too, when he was succeeded by Manmohan Singh of the Congress party-led United Progressive Alliance (UPA). There is also that unusual coincidence of Deng Xiaoping’s “To get rich is glorious” resonating, years later, in Vajpayee’s exhortation — “Let’s get rich together” — to SAARC nations.

Beginning with Rao’s economic reform and LEP, India-China relations have only got better in the last 25 years. Through eight changes of government (and six prime ministers) in India and successive leadership changes in China, the striving to strengthen India-China relations and to build trust was constant. The boundary issue has been isolated with a view to improving relations on other tracks, especially economic and trade.

This trend reinforces the perception that India-China dialogue is an ongoing conversation, and is unlikely to be affected when the ruling party changes in India. Manmohan Singh’s 10 years in office saw a phenomenal boom in bilateral trade and economic relations along with more cultural exchanges and higher inflow of Indian students for professional education. Prime Minister Narendra Modi is no less enthusiastic about taking forward the relations and deepening trust. Modi, who had visited China as Gujarat’s Chief Minister, wants to build political trust and steer the relationship to the next stage.

Every Prime Minister has sought to mark India-China relations with his own distinctive contribution. Thus, we have the hi-tech partnership between the two Asian giants which could prove to be a boon for Modi’s Digital India policy. In chasing the “Digital Dream” — as the growth engine for generating more investments, entrepreneurship and jobs — India is again on a path that China had walked more than a decade ago. In fact, India may well remain on a China-like course for years to come.

The Digital India programme comes at a most opportune time, and especially so for India and China. If India is an IT power, China is a digital power. The latter has the world’s largest internet population and big-time digital players such as Alibaba, Tencent and JD.com. China dominates the world’s Top 10 list of internet enterprises. India is way behind in digital development. India-born Sundar Pichai of Google and Satya Nadella of Microsoft, head the biggest internet brands. Yet India itself has no internet magnate comparable to Jack Ma, who founded Alibaba, Taobao and Alipay, or Pony Ma of Tencent, known for the free messaging and calling app, WeChat. It’s used by half a billion people; rivals What’sApp and can also be used for money transfer.

China has achieved digital maturity and, hence, sees Digital India as an opportunity for Chinese internet giants, which are seeking new territories for business — investments, clients and consumers. Therefore, China can confidently partner India’s journey to the digital frontier and, thereby, serve the interests of China and Chinese companies.

Chinese brands with huge visibility in India, such as Xiaomi — one of many success stories — are now moving from selling their products to setting up production units in India. This suits China because Chinese companies are gaining ground and the investment in manufacturing gives a boost to the “Make in India” programme.

Manufacturing apart, when it comes to digital opportunities, it is not only Chinese companies like Baidu, Alibaba and Tencent but also giants like Google, Facebook, Tesla and Adobe that are in quest for new markets with an eye on the next one billion consumers. This makes India the obvious destination and the next big thing — in terms of market and investment for internet players especially in e-commerce.

For the Indian market to come of age and size, people would require to be economically empowered with the kind of purchasing power that China has been able to ensure for a large section of its population. Manufacturing spurred by the Make in India programme may expand the economy and create a market with more buying power, which, in turn, could give rise to innovation hubs that drive the Digital India program and also profit from it. E-commerce in India is growing rapidly. Alibaba is already on the scene, betting on Snapdeal and against Flipkart, and now looking at the payments start-up Paytm as a possible replication of Alipay in India. Tencent, China’s gaming giant, is making a big entry, with an investment in the healthcare start-up, Practo, an app to connect patients and doctors.

Some of those in the race for a piece of Digital India swung into action last month when Chennai was reeling under torrential rains and floods. Start-ups such as Paytm, Practo, Zomato and Ola came to the rescue of people who were marooned without power, food, essential supplies, phones, television and internet. These enterprises assisted a range of relief and rescue operations, and helped with services including medical, mobile connectivity and options for stay and transport. Such intervention shows that internet enterprises are up to speed when it comes to taking the plunge in “Indian conditions”. It also means that Digital India could become a reality sooner than expected and in ways yet to be foreseen. Digital India, like Make in India, Skill India and Start-up India, is a well-conceived plan. The challenge lies in execution.

(Adapted from the author’s comment in the inaugural issue of the monthly, China-India Dialogue, published by China International Publishing Group. The author is an Indian journalist and commentator on international affairs. He has worked in both India and China and can be contacted at shastriji@hotmail.com)

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