China–Pakistan Economic Corridor (CPEC): India’s Conundrum and Policy Options

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AbstractHaving realized that India’s growth and prosperity is connected with the development of the South Asian region, successive Indian prime ministers have attempted to give due importance to India’s neighbours and continue to engage with them, despite the ups and downs they have experienced in such bilateral ties. But in this endeavour, Pakistan remains a difficult nut to crack and the challenges are further deepened with the commencement of the China–Pakistan Economic Corridor (CPEC), which is one of the six core economic corridors under the China’s Belt and Road Initiative (BRI) and is regarded as a fate-changer/game-changer for Pakistan. The CPEC was launched in April 2015, with China pledging to invest around US$46 billion in Pakistan (enhanced to US$62 billion in 2017) and providing preferential loans in key sectors. However, this corridor has been outrightly opposed by India on the grounds that it threatens its sovereignty and security, although, there are several studies by policymakers, academics, and business groups that analyse India's position and response to CPEC. However, there are fewer studies (from an Indian perspective) on the prospects of CEPC for both China and Pakistan, as well as the impact of CEPC on India's strategy. At the same time, scholars and policymakers have yet to undertake studies on identifying areas for India's (at least restricted) engagement in BRI/CPEC. Nonetheless, this study contends that India must reconsider its CPEC responses and plans, and China must address India's concerns in order for both countries to participate in the BRI. Subsequently, Pakistan's economic expansion will benefit both India and China, as well as the region.In this context, the twin objective of the chapter is to: first, examine the socio-economic/geostrategic prospects of CPEC for both China and Pakistan and its implications for India. Second, analyse India’s responses so far and to identify the viable policy options for India to overcome the CPEC dilemma. In order to understand the dynamics of CPEC and its implications for India, the study attempts to argue from a realistic and liberal international relations perspective. The methodology consisted of interpretive view focusing on the political, economic, and strategic aspects of CPEC from 2015 to till now. The study is deductive in nature as the economic, political, and security-related aspects are reviewed, analysing the perspectives of Pakistan and China as well as India. Subsequently, it examines the qualitative and narrative characteristics of the data, and uses exploratory research methodology to enhance the understanding of the strategic importance of CPEC for both China and Pakistan. Finally, it concludes: (a) Although China and Pakistan portray CPEC as a key to deepening bilateral relations and not undermining India's regional interests, it is clear that the corridor endangers India's sovereignty, strategic interests in South Asia and beyond Afghanistan, and weakens India's regional role, with China gaining an advantage through the BRI. (b) India's counter-CPEC initiatives have limited impact, as India is unable to give an alternative to BRI because of limited resources, and South Asian countries are more inclined towards China than India. In this sense, India and China might look at the possibility of taking a selective approach to projects linking Iran, Afghanistan, and other Central Asian countries to the CPEC, which would be a win–win situation for both countries.KeywordsBRIChinaPakistanIndiaCPEC