India has key first-mover edge on China in Iran

India doubling down on Iran’s Chabahar port project as strategic counter to China’s Belt and Road gains trade traction

By FM SHAKIL

When China clinched a massive $400 billion bilateral investment pact with Iran, few noted that India was already well-engaged.

By the end of May, India will begin full-scale operations in its first foreign port venture at Iran’s Chabahar. That is facility that opens on the Gulf of Oman that will aim to facilitate more South Asia, Central Asia and Middle East trade while bypassing Pakistan.

India’s US$500 million investment represents a clear and potent commercial challenge to China’s massive port investment in neighboring Pakistan’s Gwadar. Gwadar is a key component of Beijing’s Belt and Road Initiative (BRI).

The 10-year lease agreement, a deal first clinched by Prime Minister Narendra Modi in Tehran in 2016, has until now been hobbled by US sanctions imposed under the Donald Trump administration.  

Indian suppliers and engineers, some with interests in the US, were reluctant to deliver essential machinery and services to Iran on fears they could somehow be sanctioned, despite clear exemptions on Chabahar in Trump’s sanction order. That led to certain speculation that China may take over the project from India.

New Delhi has doubled down and accelerated the project with the shift from Trump to Biden. It is banking like others on a new breakthrough on the Joint Comprehensive Plan of Action (JCPOA) nuclear agreement and a broader US-Iran warming trend.

Aerial view of Iran’s Chabahar port. Image: Twitter

India has supplied two large cargo-moving cranes. It will deliver two more in the coming weeks before the facility’s expected ceremonial opening.

New Delhi is already promoting the port’s potential humanitarian role, noting it was used to send emergency shipments of wheat to Afghanistan during the Covid-19 crisis and pesticide to Iran to deal with a recent locust infestation.

Pakistan is getting worried about losing regional trade

India’s renewed commitment to Iran via Chabahar is already setting alarm bells ringing in neighboring Pakistan, which is already losing regional trade mainly from Afghanistan to Iran despite US sanctions.

India and Pakistan recently announced a renewed commitment to an existing 2003 ceasefire over contested Kashmir. That move that should allow both to focus more on economic linkages than strategic rivalry.

Chabahar has seen limited operations since 2019, a result of US restrictions imposed on Iran’s energy exports. The port handled a mere 123 vessels with 1.8 million tons of bulk and general cargo from February 2019 to January 2021. It is well below its operating capacity, according to reports.

That’s set to change. New Delhi ultimately aims to link Chabahar to its International North-South Transport Corridor (INSTC). It is a project initially proposed by India, Russia and Iran in 2000 and later joined by 10 other Central Asian nations.

Some see the INSTC as a less-monied rival to China’s BRI. Belt-Road-Initiative has invested heavily in Pakistan’s road, power and trade infrastructure. And including huge multi-billion dollar investments at Gwadar port some critics have likened to a debt trap.

Security concerns sparked by armed groups in Pakistan’s Balochistan province, where Gwadar is situated, have hindered progress on various BRI projects and pushed Pakistan to recently ramp up security at the Beijing-invested port.

From India to Europe – cheaper and faster

INSTC envisions a 7,200 kilometer-long, multimode network comprised of shipping, rail and road links. It is connecting India’s Mumbai with Europe via Moscow and Central Asia. Initial estimates suggest INSTC could cut current carriage costs by about 30% and travel times by half.

That means more trade and port activity for Iran and less for Pakistan. Last year Iran has already usurped 70% of Pakistan’s recent transport business at Karachi port.

Landlocked Afghanistan has traditionally relied on Pakistan as its gateway to international shipping routes. However, recent trends indicate that as much as 70% of Afghan transit trade is now handled by Iran.

If India presses ahead as planned with INSTC, Pakistan would be the ultimate loser as Afghan and Central Asian transport business diverts increasingly to Chabahar and away from Karachi and Gwadar.

“Iran had already started working on a 600-kilometer-long railway line connecting Chabahar port to Zahedan, the provincial capital of Sistan-Baluchestan province close to the Afghan border,” he said.

India has already lined up $1.6 billion for the project to facilitate the movement of goods to and from Afghanistan via Iran. India also plans to invest $2 billion to develop supporting infrastructure including the Chabahar-Hajigak railway line in Afghanistan.

Many Afghan traders are plugging into Chabahar

Many Afghan traders still rely on traditional transit routes through Pakistan. However, many are plugging into Chabahar’s comparative cost-effectiveness and speed in handling transit cargo, analysts say. The same is true for Uzbekistan, Tajikistan and other landlocked Central Asian countries looking for alternatives to Pakistani ports.      

Pakistan-Afghanistan trade has recently fallen from around $2.5 billion to $1 billion annually due to wide-ranging differences over the now expired transit agreement.

“Afghans want Pakistan to allow Afghan wheelers to enter into Indian border areas through Wagah for transportation of Afghan export goods and on return upload import consignments from India,”

“Pakistan on the other hand argues that the APTTA is a bilateral arrangement between Pakistan and Afghanistan and not a trilateral agreement to facilitate mutual trade between India and Afghanistan,”.

Chabahar is Iran’s only oceanic port and so far consists of Shahid Kalantari and Shahid Beheshti terminals. Each of which has five berth facilities. The port is located in Iran’s Sistan and Baluchestan Province. It is about 120 kilometers southwest of Pakistan’s Balochistan province, where the China-funded Gwadar port is situated.

In May 2016, India, Iran and Afghanistan signed a trilateral agreement for the strategically-located Chabahar to give New Delhi access to Kabul and Central Asia without having to travel through Pakistan.

Chabahar is regional project unlike Gwadar which is China oriented

The original plan committed at least $21 billion to the so-called Chabahar–Hajigak corridor, which then included $85 million for Chabahar port development, a $150 million credit line to Iran, an $8 billion India-Iran MoU for Indian industrial investment in a Chabahar special economic zone, and $11 billion for the Hajigak iron and steel mining project awarded to seven Indian companies in central Afghanistan.

Unlike Chabahar, which is designed more to serve the economic and trade interests of the wider region, Gwadar is more tilted toward Beijing’s ambitions, analysts and traders say.

Gwadar port’s planned capacity will accommodate a massive 300 to 400 million tons of cargo annually, comparable to the combined annual capacity of all Indian ports. It also dwarfs the 10-12 million tons of cargo handling capacity now planned for Chabahar.

In another comparison, the largest US port at Long Beach, California, handles 80 million tons of cargo, about a quarter of what Gwadar could handle upon completion of a project that is designed largely to receive and move China’s, not the region’s, trade.

India-Russia friendship too pragmatic to be ruined

Sreeram Chaulia

Sreeram Chaulia is a professor and dean at the Jindal School of International Affairs in Sonipat, India. His forthcoming book is ‘Crunch Time: Narendra Modi’s National Security Crises’

Upon his return from India last week, Russian Foreign Minister Sergey Lavrov has said he feels no wavering on New Delhi’s end of its defense cooperation with Moscow. Despite American pressure on anyone doing business with Russia.

The 19th century British statesman Lord Palmerston famously said “we have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual.” This maxim has been used to justify flexibility for a country to choose and discard partners. Depending on the changing times and circumstances.

Whether in defiance, or in support of this very pragmatic logic, one major relationship has persisted. India and Russia have sustained a robust partnership through the Cold War, the post-Cold War era, and now in the emerging multipolar order. The international system as a whole has changed beyond comprehension in the last fifty years, but what New Delhi and Moscow call ‘Druzhba-Dosti’ (friendship in Russian and Hindi) has remained intact.

India’s External Affairs Minister Subrahmanyam Jaishankar referred to this while hosting his Russian counterpart Sergey Lavrov on April 7 by remarking that India and Russia have shown a “consistent ability to identify and update our shared interests.”

In spite of the US

While there is a perception of divergence between the two sides due to their respective global strategic compulsions, India needs Russia and vice-versa. The ‘special and privileged strategic partnership’ is not fading away. Defense cooperation is an obvious illustration of that. Lavrov’s comment in New Delhi that ‘prospects for additional production of Russian military equipment on India’s territory are under discussion’ caught attention in India because of the threat of American sanctions on any country that does ‘significant transactions’ with Russia.

New Delhi insists that the Russian-made S-400 anti-missile system is essential for India’s national security and that imposing sanctions on India for pursuing its core national interests would be a strategic blunder by the US. Russia is a touchstone for India to prove its ‘strategic autonomy’ in foreign policy. Moreover, Russia has been the most generous among the world’s military powers in offering co-production and technology transfer to India for defence manufacturing. Lavrov’s emphasis that ‘we are the only partner that indeed transfers to India cutting-edge military technology’ and that this is in ‘the national interests of both countries,’ conveys that the two sides are determined to plough ahead.

President Vladimir Putin’s commitment to enhancing India’s indigenous defence production capacities matches with Prime Minister Narendra Modi’s vision of making India an exporter of ‘low-cost, high-quality’ weapons. Russia is keen to retain its share of the Indian defence market, which has historically been massive but lately has fallen to 49% of total Indian military imports. If Russia’s competition for a share of the Indian defence pie with France (18%), Israel (13%) and the US spurs more advanced co-development of weapons with India, it serves both New Delhi and Moscow.

Between China and India

Skeptics who contend that India and Russia are strategically drifting apart because of the former’s closeness to the US, the latter’s alignment with China, and intensifying tensions between India and China, should look at how Russia promptly supplied much-needed defence equipment to India in 2020 as New Delhi was engaged in a major national security crisis along its northern border. Jaishankar acknowledged in Lavrov’s presence that “our defence requirement in the past year was expeditiously addressed” by Russia.

Lavrov’s statement that “we are closely watching the process of normalisation at the Line of Actual Control (LAC)” between China and India was not unwelcome from an Indian point of view. Moscow’s good offices have been creatively used both in the 2017 Doklam standoff and during the LAC dispute that began in 2020. India and Russia serve as each other’s balancing factors that bring stability in relations with China.

Unlike the crude offers to ‘mediate’ or ‘arbitrate’ between China and India that the US made under President Donald Trump, Putin’s Russia has a proven record as a pragmatic interlocutor. Lavrov has assured New Delhi that “Russia has no plans to sign a military alliance with China”. Russia has been willing to hear out India’s geopolitical perspectives and dilemmas despite having a joint front with China in standing up to the West. The same open-mindedness has led to exploration of new avenues such as Japan-India-Russia trilateral economic cooperation in Russia’s Far East and India manufacturing Russia’s Sputnik V vaccines for combating the Covid-19 pandemic.

Sticking points

One issue where differences have crept in between India and Russia is Afghanistan. Some in India have expressed worries of a ‘Russia-China-Pakistan axis’ emerging in South-Central Asia whose practical effect could be to sideline India from the settlement of Afghanistan’s future. Lavrov’s recent discussions with Jaishankar on Afghanistan, the former’s reiteration that India was very much a part of the ‘Moscow format’ for stabilising Afghanistan and an ‘important player in the settlement in Afghanistan’, should calm nerves in New Delhi.

Russia’s defence sales to Pakistan are much smaller in volume and scope than the India-Russia security cooperation. And in themselves are not major irritants. What is required in order to reduce disagreements on this front is for Russia and India to coordinate better on their commonly stated goal of an ‘Afghan-led, Afghan-owned peace process.’

Iran is another regional issue where India and Russia are looking more aligned now. The restart of talks involving the Europeans, Russia, China, the US and Iran to revive the 2015 nuclear agreement has India’s wholehearted backing. New Delhi’s investments and plans to integrate with Iran, Afghanistan and Central Asia via Iran’s Chabahar port were stuck in limbo as long as Washington applied ‘maximum pressure’ sanctions on Tehran. India’s push to get Chabahar included in the agenda of the 13-nation International North South Transport Corridor (INSTC) could connect Russia, Iran, India and Central Asia closer and help usher in balance in the Eurasian region.

In this context, it can be a good sign that Lavrov personally met the Joe Biden administration’s climate envoy and former US Secretary of State John Kerry. He had played a crucial role in the US-Iran thaw of 2015, while both happened to be in New Delhi.

With a lot still in common between India and Russia, the global dichotomies of Sino-US confrontation and Russia-US frostiness need not be insurmountable hurdles. In the current fluid multipolar world, there are no watertight or exclusive alliances. Countries have to forge one set of friends on one issue and another set on a second issue. India and Russia are mature enough to understand this dynamic.

US warship stirs the waters ‘without Indian consent’

Reacting to the development, the Ministry of External Affairs adhered to the government’s stand on not allowing military exercises in its exclusive economic zone without consent and said it has conveyed its concerns to the US government through diplomatic channels

Written by Krishn Kaushik | New Delhi |

Days after the first summit of the Quadrilateral grouping and US Secretary of Defence Lloyd J Austin’s visit to New Delhi, the US Seventh Fleet announced that one of its warships, USS John Paul Jones (DDG 53), had carried out a Freedom of Navigation operation west of Lakshadweep Islands. “Inside India’s exclusive economic zone! And without requesting India’s prior consent, consistent with international law”.

Responding to this public announcement by the US Navy which raised eyebrows given the growing ties between the armed forces of the two countries, especially their navies, New Delhi said: “We have conveyed our concerns regarding this passage through our EEZ to the Government of USA through diplomatic channels.”

“The USS John Paul Jones was continuously monitored transiting from the Persian Gulf towards the Malacca Straits.”

“The Government of India’s stated position on the United Nations Convention on the Law of the Sea is that the Convention does not authorise other States to carry out in the Exclusive Economic Zone and on the continental shelf, military exercises or manoeuvres, in particular those involving the use of weapons or explosives, without the consent of the coastal state,” it said.

In a statement dated April 7, Arabian Sea, the US Seventh Fleet said: “USS John Paul Jones (DDG 53) asserted navigational rights and freedoms approximately 130 nautical miles west of the Lakshadweep Islands, inside India’s exclusive economic zone, without requesting India’s prior consent, consistent with international law.”

“India requires prior consent for military exercises or maneuvers in its exclusive economic zone or continental shelf, a claim inconsistent with international law. This freedom of navigation operation (“FONOP”) upheld the rights, freedoms, and lawful uses of the sea recognized in international law by challenging India’s excessive maritime claims,” it said.

Freedom of Navigation Operations

“US Forces operate in the Indo-Pacific region on a daily basis. All operations are designed in accordance with international law and demonstrate that the United States will fly, sail and operate wherever international law allows. We conduct routine and regular Freedom of Navigation Operations (FONOPs), as we have done in the past and will continue to in the future. FONOPs are not about one country, nor are they about making political statements,” it said.

Under Indian law — The Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 — “all foreign ships (other than warships including submarines and other underwater vehicles) shall enjoy the right of innocent passage through the territorial waters” and a passage is innocent “so long as it is not prejudicial to the peace, good order or security of India”.

“Foreign warships including submarines and other underwater vehicles may enter or pass through the territorial waters after giving prior notice to the Central Government,” the law states.

The US Navy’s Freedom of Navigation operation near Lakshadweep is not unprecedented. The US Department of Defence publishes an annual Freedom of Navigation report and India found mention in the 2019 report along with 21 other countries that included China, Russia, Pakistan, Sri Lanka, Bangladesh, Maldives and Saudi Arabia. India was mentioned in the 2017, 2016 and 2015 reports as well.

But the public announcement of the operation has raised eyebrows. It comes at a time when military cooperation between India and the US is on the rise. Their navies were involved in a joint exercise, along with navies of Japan, France and Australia in the eastern Indian Ocean region, in the La Pérouse exercise between April 5 and April 7, and led by the French Navy.

“Shared vision for the free and open Indo-Pacific”

Last month, Secretary of Defence Austin conveyed to New Delhi the Biden administration’s “commitment towards strengthening the bilateral defence relations between the two countries”.


India and the US, along with Australia and Japan, make the Quadrilateral grouping. At its first summit on March 13, Quad leaders affirmed their commitment to a “shared vision for the free and open Indo-Pacific” and a region that is “inclusive, healthy, anchored by democratic values, and unconstrained by coercion”.

The Quad members, for the first time since 2007, had together participated in the Malabar multilateral wargaming exercise last November.

Reacting to the Seventh Fleet statement, former Navy chief Admiral Arun Prakash, in a Twitter post, said: “There is irony here. While India ratified UN Law of the Seas in 1995, the US has failed to do it so far. For the 7th Fleet to carry out FoN missions in Indian EEZ in violation of our domestic law is bad enough. But publicising it? USN please switch on IFF!” — IFF stands for Identification, Friend or Foe.

He also questioned the intent behind the move. “FoN ops by USN ships (ineffective as they may be) in South China Sea, are meant to convey a message to China that the putative EEZ around the artificial SCS islands is an “excessive maritime claim.” But what is the 7th Fleet message for India?” he said.

Source:

India’s China fears put to rest in Sri Lanka

Sri Lanka hands India major port development deal that will tie the two neighbors together for decades to come

By MK BHADRAKUMAR

In a stunning coincidence, a mere two weeks ahead of Indian Prime Minister Narendra Modi’s planned visit to neighboring Bangladesh, the Sri Lankan government on Monday issued a Letter of Intent to India’s Adani Ports and Special Economic Zones Ltd (APSEZ) to develop and operate the West Container Terminal (WCT) in Colombo. 

Sri Lanka’s Rajapaksa clan-led government took a calculated risk. If New Delhi were in Colombo’s shoes, it probably would have waited for another week. To make up its mind before formalizing the audacious decision to invite a big Indian presence. Right at the epicenter of the Sri Lankan dream to be “another Singapore.” 

For, in another week, Colombo would know which way the Indians actually voted in Geneva when the crunch time came on the US-sponsored resolution at the UN Human Rights Council regarding the alleged war crimes committed during the last brutally violent phase of the struggle to vanquish the rebel Liberation Tigers of Tamil Eelam (LTTE). 

Colombo has drawn New Delhi into a ring of long-term engagement that will be difficult to shake off easily. Indian high commissioner to Colombo has reportedly been touring the eastern and northern provinces of Sri Lanka to explain to the Tamil parties what is on the anvil in Geneva. 

What brilliant geopolitical “outsourcing!” Colombo expects that New Delhi will discourage Washington from undermining the stability of the island nation’s government. And to stop threatening to dispatch President Gotabaya Rajapaksa to The Hague. To meet the same tragic fate as Slobodan Milošević, the last president of the former Yugoslavia. Before it was carved up by the North Atlantic Treaty Organization (NATO) like a turkey on Thanksgiving Day.

Public Private Partnership

The WCT project envisages that APSEZ will partner with John Keells Holdings PLC. It is Sri Lanka’s largest diversified conglomerate, and the Sri Lanka Ports Authority as a part of the consortium with a 51% majority shareholding. It will be developed on a build, operate and transfer (BOT) basis for a period of 35 years as a public-private partnership. 

India’s biggest investment

The WCT will have a quay length of 1,400 meters and alongside depth of 20 meters. Thereby making it a prime transshipment cargo destination to handle ultra-large container ships. The project cost is estimated at US$750 million as of now, which may rise.

The WCT will become the single biggest economic project ever executed by an Indian company in the country’s immediate neighborhood. 

The huge significance of the WCT for the region’s economy cannot be minimized. An APSEZ statement highlighted that the project is expected to boost the WCT’s container handling capacity. And to further consolidate Sri Lanka’s locational advantage as one of the world’s top strategic nodes along the busiest global transshipment route.

The Port of Colombo is already the most preferred regional hub for transshipment of Indian containers and mainline ship operators. 45% of Colombo’s transshipment volumes is either originating from or destined to an Adani-run port terminal in India. 

Simply put, the Sri Lankan government is intertwining its economic prosperity with India’s massive market in an inseparable way. This takes the breath away. Particularly considering that it was only five years ago that New Delhi allegedly became messed up with an Anglo-American project to overthrow the established government in Colombo. It was, ironically, headed by the same leadership as today. 

India had teamed up with its Quad partner Japan originally to bid (unsuccessfully) for the East Container Terminal project at Colombo Port. There was much-suppressed fury when the Sri Lankan government spurned the offer. Indian strategic analysts thereupon went overboard with the stupid hypothesis that Colombo had buckled under “Chinese pressure.” 

Political stability

But now, the WCT, a much bigger BOT project, has been offered to India on a platter with no strings attached. Colombo seems to prefer that the Indians shake off their Quad ally and undertake the WCT on its own steam.

India is de facto becoming a stakeholder in the political stability of Sri Lanka. The bittersweet lesson of 2015 is that securing an easier, cost-effective, risk-free, predictable and durable outcome is possible with a pragmatic outlook and strategic patience.

No one in Delhi talks any more about the “China factor.” The paradox is that the WCT project will be adjacent to the massive Colombo Port project that Chinese companies are funding and executing.

Yet, apparently, there is no heartburn in Beijing either that the Adani Group is moving in as next-door neighbor.

Arguably, Beijing knew about the WCT project, which has been under discussion for a while. But in its ingenuity and wisdom, Beijing assessed that it is just as well if India’s paranoia about China’s presence in Sri Lanka is set at rest.

The WCT saga is unfolding just before Prime Minister Modi’s visit to Bangladesh planned for March 26-27. Bangladesh is another example where it emerges that India doesn’t need to carry a Quad visiting card to build a partnership. The Sri Lankan experience nonetheless has great relevance to Bangladesh.

World Bank Report

According to a new World Bank report titled “Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia,” seamless transport connectivity between India and Bangladesh has the potential to increase national income by as much as 17% in Bangladesh and 8% in India.

The report says a 297% increase in Bangladesh’s exports to India and a 172% increase in India’s exports to Bangladesh. It could be within reach if only transport connectivity improves between the two countries and they were to sign a free-trade agreement.

Nobody’s puppets

From the perspective of diplomacy and foreign policy, the bottom line is that the Indian strategic community should remain self-assured that the political elites in the SAARC (South Asian Association for Regional Cooperation) capitals surrounding India are not only nobody’s puppets but have always regarded New Delhi as their most important partner.

That, in turn, puts the onus on India to act with maturity and a sense of responsibility and decorum. 

Only with such a comfort level can India eschew its paranoia about the Chinese presence. It can instead focus single-mindedly on the pursuit of its business interests optimally in regional capitals. Ideally, leave it to the Adani Group to reset the India-Sri Lanka relationship and put it on a realistic, pragmatic footing.

As for the strategists and think-tankers in Delhi, do not suspend rational thinking after reading the garbage disseminated by US propaganda outfits from time to time expanding on the Central Intelligence Agency’s decade-old hypothesis about a Chinese “string of pearls” around India’s delicate neck. 

This article was produced in partnership by Indian Punchline and Globetrotter.

M K Bhadrakumar is a former Indian diplomat.

India’s green hydrogen cost parity could be less than a decade away

By Tim Daiss

Fusion Fuel Green has signed an MoU with India’s BGR Energy to build a demonstration plant in Cuddalore in Tamil Nadu in southern India; it could be the start of something big

India’s latest clean hydrogen move came late last week when Dublin-based Fusion Fuel Green Plc. A green hydrogen tech company, signed a memorandum of understanding with Indian engineering, procurement and construction heavyweight BGR Energy Systems to develop projects in India.

The two companies’ first project will include a demonstrator plant for BGR Energy in Cuddalore in the Indian state of Tamil Nadu. Fusion Fuel will use a technology that includes a miniature PEM-based electrolyser with solar power. 

After its initial project slated to be completed by the end of the year, the two companies plan to develop larger-scale projects to produce hydrogen needed for green ammonia production and bio-ethanol, as well as feedstock for other heavy industrial uses.

Fusion Fuel says its electrolyser can produce green hydrogen at highly competitive costs. 

Green hydrogen is produced by splitting water into hydrogen and oxygen. It is using an electrolyser that may be fed by wind power, solar power, or hydro power and as such produces no emissions. Brown hydrogen uses fossil fuels in its production and has a high carbon footprint. Blue hydrogen also uses fossil fuels but also utilises carbon, capture and storage (CCS) technology for emissions.

Argument over cost, but Europe optimistic 

Green hydrogen development, however, has been slow to gain momentum in most Asia-Pacific. Because of its current high cost compared to production from fossil fuels. The region’s current liquified natural gas (LNG) pivot, in its first stages in most of Southeast and South Asia, away from dirtier burning coal needed for thermal power production could also create headwinds for hydrogen investment, at least in the mid-term.

Moreover, there are varying forecasts over when green hydrogen can reach cost parity with fossil fuels. Some claim that parity could be reached within the next year. Some others see a longer and bumpier road to achieve that objective. Other factors including geographical location and government incentive have to also be factored in.

Commodities data provider S&P Global Platts said recently that green hydrogen production costs need to drop at least another 50% to compete with fossil fuel production costs. The International Renewable Energy Agency (IREA), for its part, said in December that it could take another 10 years for green hydrogen to compete with the cost of fossil fuel alternatives. 

Much of Europe however appears more optimistic. In February, a consortium was formalised between 30 French, Spanish, Italian and German companies to produce green hydrogen from solar energy. At a cost they claim is similar to that of fossil fuels. However, the claim is not without nay-sayers since technical details haven’t materialized yet.

Hydrogen-fossil fuel cost parity for India

Hydrogen-fossil fuel cost parity for India has been placed less than a decade away. In lock-step with production costs dropping around 50% over that time period.

With the price reduction and the imperative to decarbonise the economy, Indian hydrogen demand could actually increase five-fold by mid-century. With about 80% green hydrogen, the report added.

Currently, India’s hydrogen demand is around 6Mt per annum for ammonia and methanol for industry sectors such as fertilizers and refineries. By 2050, TERI sees this increasing to around 28Mt. Primarily with the growing demand from industry but also with expansion into the transport and power-generation sectors.

Two companies are off to an early lead in India’s hydrogen push in the transport sector. Indian Oil is establishing hydrogen compressed natural gas (HCNG) stations. It is announcing a hydrogen fuel cell bus pilot. Mumbai-based Tata Motors is also developing hydrogen buses and spearheading other programs.

International Energy Agency sees India making strides

The International Energy Agency (IEA) also sees India making strides in its clean hydrogen build-out strategy.

The country has the potential to close the cost gap between hydrogen made from electrolysis and natural gas. And more quickly than many other countries because of its relatively high gas prices and low-cost solar PV potential.

However to achieve that “flexible electrolysis and cost-effective hydrogen storage will be essential to integrate hydrogen with variable renewables.”

Indian Finance Minister Nirmala Sitharaman announced in her budget in February that the country will launch a National Hydrogen Energy Mission (NHEM) in 2021-22.

End users in the plan reportedly include the steel, chemical and transportation industries. These sectors contribute to one third of India’s GHG emissions. Since these key sectors burn fossil fuels, they can be replaced by clean hydrogen. 

There are also ongoing talks to mandate the usage of 10% domestic hydrogen in fertilizer, steel and oil refineries. 

Is India shifting the goalposts in Indo-Pacific debate?

India’s participation in the ongoing Indo-Pacific debate and its decision to join the revived Quadrilateral Security Dialogue (the US, Japan, India and Australia) have raised concerns in the corridors of power in Moscow, Beijing and other capitals.

Even Association of South East Asian Nations (Asean) member states view the two back-to-back “Quad” meetings last month in Singapore with concern, as they fear the informal body could eclipse the bloc’s leading role in regional affairs. Then there are several other extra-regional stakeholders who also remain wary of the role of the Quad in this tectonic shift from the continental “Asia-Pacific” to the maritime “Indo-Pacific” geopolitical paradigm.

Understandably, India has been trying to address some of these misperceptions of its policies. In this regard, Indian Prime Minister Narendra Modi’s  Shangri-La Dialogue speech in Singapore last month has since emerged as the best elucidation of India’s Indo-Pacific vision as Act East policy as well.

To say the least, the Modi government seeks to expand the Indo-Pacific dialogue beyond the Quad. It seeks to build a larger consensus for making the Indo-Pacific a truly “free, open and inclusive” region that extends from the eastern shores of Africa to the western Pacific. This consensus-building process will be an uphill battle that is pregnant with possibilities, and the goalposts may change. The Indo-Pacific paradigm’s mainly western proponents see it as a bulwark against Chinese regional hegemony.

As part of India’s efforts to engage various Indo-Pacific stakeholders, the month of March saw French-Indian maritime dialogue result in a naval cooperation deal in the southern Indian Ocean. This was followed in May by India signing another defense pact with Indonesia and gaining access for the strategic development of Sumatra’s Sabang port. The last week of June saw Seychelles President Danny Faure visiting India to reaffirm the country’s access to its strategic Assumption Island. Against this backdrop, last week India formally announced that it wants to open Indo-Pacific dialogue with both Moscow and Beijing. To say the least, this has come as a surprise to many, even in these three countries!

To begin with, India has proposed that the Indo-Pacific be discussed at the soon-to-be-convened second China-India maritime dialogue. The first one was held in March 2016, but the Doklam crisis in 2017 derailed this initiative. It is now being revived following the success of April’s “informal” summit between Modi and Chinese President Xi Jinping in Wuhan, which is believed to have reset China-India relations.

India sees China as the most important trigger for this shift from Asia-Pacific to Indo-Pacific. The most visible element that joins these to oceans today is the high volume of ships carrying Chinese exports from China’s eastern coastline and bringing home imports of large amounts of gas and oil. China is today the largest trading partner with most littoral nations of the Indo-Pacific and therefore the strongest stakeholder in the formulation of this vision. But with regard to Indo-Pacific geopolitics, China remains skeptical about India’s credentials for engaging in, let alone initiating, Indo-Pacific discourses with China.

Chinese media outlets view the Indo-Pacific paradigm as a counter to rising China and think India is just jumping on the American anti-China bandwagon. China was clearly upset with India obtaining access to Sumatra’s Sabang port. Its Communist Party mouthpiece, Global Times, for instance, advised New Delhi in a June editorial not to “wrongfully entrap itself into a strategic competition with China and eventually burn its own fingers.”

Last week, Global Times warned New Delhi that the benefits from its Indo-Pacific strategy may be “greatly outweighed by the costs to India,” adding that Beijing can offer more support and knowledge than the US. All this may have also put India on the defensive, but India’s response can also be read as New Delhi calling China’s bluff about India gaining more by engaging Beijing. Doubts also continue to be cast on whether this visible shift in India’s China policy is also Indo-Pacific policy, marking a decisive change, or is only a tactical move to avoid a second Doklam crisis before India’s coming general elections.

Speaking at the Shangri-La Dialogue on June 1, Modi said, “India does not see Indo-Pacific region as a strategy or as a club of limited members.” He even alluded to his strategy of building a consensus across the Indo-Pacific community using “partnerships in format of three or more” countries. Policy initiatives so far seem to follow that remit and, therefore, after achieving a Russia-China-India triangular dialogue on the Indo-Pacific, India may engage other members of Asean as well as East African countries.

However, the first stop on this new journey, Beijing, is not going to be easy. India’s talk of ensuring a “free, open and inclusive” scenario and ‘”rule-based” navigation and connectivity in the Indo-Pacific is often interpreted by Beijing as a swipe against China’s assertive policies in the South China Sea, though India has never been directly critical of Beijing’s maritime policies. If anything, the last 18 months of whimsical policies from US President Donald Trump have witnessed India’s silent drift toward China and Russia. This was clearly showcased by Modi’s recent “informal” summits with Xi and Russian President Vladimir Putin before he outlined his Indo-Pacific vision in his Shangri-La speech. This speech did not even mention the South China Sea, which can be seen as a marked change from the January 2015 US-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region, which emphasized “safeguarding maritime security and ensuring freedom of navigation and overflight throughout the region, especially in the South China Sea.”

Modi’s Shangri-La speech focused on the need for China and India to be “sensitive to each other’s interests” and policy initiatives since have alluded to this being a genuine undertaking. Today, India surely does not wish to provoke China or Russia, especially when the US commitment to the regional security architecture remains uncertain, though India has so far managed its relations with the US with minimum disruptions.

Important questions remain as to how Beijing will respond to New Delhi’s efforts to make the Indo-Pacific paradigm a reality? It is important to note that Global Times has also published some less hostile articles about China-India relations.

The intensifying trade war with the United States has seen Beijing making some unforeseen diplomatic overtures toward both Tokyo and New Delhi. While there remain questions about when and how Russia, China and India will engage on the Indo-Pacific, their recent interactions indicate that there will be significant cooperation, which is bound to have deeper systemic implications for not just the US and its allies but also for all the littoral nations of the Indo-Pacific rim.

 

Assessing the need for deeper China-India cooperation

The equation between countries in international relations does not remain static forever but keeps on changing as per the demands of time and situation. The relationship between China and India has seen many ups and downs in history, which even led to a war in 1962.

In recent decades, both these countries have been experiencing high rates of economic growth. Their bilateral economic cooperation is also on the rise. It has often been said that the 21st century could very well be the “Asian Century.” If it is to be realized, then China and India will have to cooperate with each other rather than act as rivals.

Regional geopolitical scenario

India is undoubtedly the biggest power in South Asia. However, many of the other South Asian nations do not view it as a benevolent neighbor but rather as a hegemonic one.

India has never been comfortable with the idea of China spreading its footprints in South Asia, which has been increasing over the years. India has decided not to join the Chinese global venture the Belt and Road Initiative (BRI), citing that the strategic China-Pakistan Economic Corridor (CPEC), which passes through the Pakistan side of the disputed Kashmir region, infringes on its sovereignty.

India has also not been able to contain China’s increased investments and partnerships in almost all of the South Asian nations barring Bhutan. India’s “string of pearls” theory is a realist perception that might be considered outdated as China has already marked its presence in South Asia, which appears to be quite irreversible.

A liberalist approach that emphasizes mutual cooperation and interdependence would benefit both nations as well as the entire South Asian region.

A new beginning in Sino-Indian ties?

China and India have traditionally shared a relationship that lacks mutual trust. Any sort of military skirmish between these two nuclear powers would not only threaten each other’s national security but the security of the region and the world in general.

Chinese President Xi Jinping and Indian Prime Minister Narendra Modi seem to have begun efforts in earnest to enhance cooperation between the two countries, taking lessons from last year’s border standoff in the Doklam region. Their informal meeting in the Chinese city of Wuhan in April allowed them to reflect on how their ties can move forward for mutual benefit.

Further warming of relations was observed after their recent meeting on the sidelines of the Shanghai Cooperation Organization (SCO) summit in Qingdao, which led to the signing of an agreement to settle the Brahmaputra River dispute.

One of the major foreign-policy concerns of China is related to Tibet and it expects its friends to stick with the “one China” policy. China has repeatedly accused the Dalai Lama of orchestrating the free-Tibet movement from Dharmashala in India. As India has given asylum to the Dalai Lama and his government-in-exile, the bilateral relationship will continue to be shrouded with suspicion if India continues to support the anti-China activities of the Tibetans in India.

Similarly, the frequent border disputes prevailing between the two countries should also be tackled in a logical manner to avoid a Doklam-like situation in the future.

China and India are members of several multilateral forums including BRICS and the SCO. Therefore, they both stand to benefit if they can build trust and start cooperating with each other, not only in economic matters but encompassing toward fulfilling their desired goals.

Although it is too early to predict the sustainability of a continued camaraderie between China and India, it can certainly be deduced from the recent events that the leaders of both countries have felt the need to have sincere mutual cooperation in the future for shared prosperity.

Geopolitics beyond the neighborhood

On one hand, India is considered to be an intimidating neighbor in South Asia, whereas China seems to be viewed more favorably. On the other hand, because China’s assertive posturing in the South China Sea, it is viewed by Southeast Asian nations as a hegemonic power threatening their sovereignty.

China’s ultimate competition for global supremacy is with the US, and therefore it is cozying up with India’s traditional ally Russia in its quest to establish a new world order. Its historically troubled relationship with Russia is a thing of the past, and their bilateral relationship is getting stronger by the day.

Considering its strategic location for maritime navigation and availability of a huge amount of natural resources, control over the South China Sea region has become a major foreign-policy objective for China. Similarly, India’s “Act East” policy of engaging with Southeast Asian countries has economic as well as strategic maritime objectives. Modi’s recent visit to a couple of countries in the region highlighted their growing cooperation in this regard as well as implicitly exploring means to counter China’s maneuvers in the South China Sea.

The often aggressive moves of Chinese naval vessels in the South China Sea have prompted the United States and India to cash in on the opportunity and become sympathetic to the plight of Southeast Asian countries toward countering China. The US and India have advocated for the right of free navigation in the South China Sea, much to the displeasure of China.

The recent move by Washington to change the name of US Pacific Command to US Indo-Pacific Command signals its desire to expand maritime cooperation with its allies encompassing the whole of the Pacific and Indian oceans.

Despite pressure from the US, India has shown reluctance toward the Quadrilateral Alliance also comprising Japan and Australia, bearing in mind the probable diplomatic fallout from China.

Creating a win-win situation

India appears to have adopted the strategy of maintaining a fine balance in its relations in such myriad scenarios in its international relations. Despite Russia being an old and trusted ally, the relationship is not as strong as it was during the Cold War era. While India wants to increase economic cooperation with China, it also desires to engage with the US and Southeast Asian countries to assert its role in the Indo-Pacific region.

The Chinese leadership is aware that although India is not its competitor at this point in time, it definitely possesses the capacity to act as a deterrent in China’s ambitions to challenge the US dominance in the international arena. Realizing this possibility, Xi has been trying to convince Modi of deeper collaboration during their meetings in Wuhan and Qingdao even if China has to give certain concessions in favor of India.

As the next step, he would be courting Modi so as to ensure India joins the BRI. China seems to be clear in its ultimate objective and the onus is now on India whether it wants to remain engaged in geopolitical games in conjunction with the US or forge a conducive partnership with its neighbor for creating a win-win situation not only for both of those countries but the region and the world in general.

The dream of an “Asian Century” will remain a distant one if China and India fail to cooperate with each other for the long term and have a divergent worldview.

Source: http://www.atimes.com/assessing-the-need-for-deeper-china-india-cooperation/?utm_source=The+Daily+Report&utm_campaign=e8daec37be-EMAIL_CAMPAIGN_2018_06_11_12_09&utm_medium=email&utm_term=0_1f8bca137f-e8daec37be-21552319&cn-reloaded=1