China derails India’s wagon diplomacy

China derails India’s wagon diplomacy
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First Published: Fri, Feb 09 2007. 03 31 AM IST
Updated: Fri, Feb 09 2007. 03 31 AM IST
New Delhi: The Chinese want to build rail networks in South Asia and Africa, and India isn’t amused. Constructing railway lines and supplying wagons has been one aspect of India’s diplomatic efforts in these regions. Now China is making inroads into the business with a strategy that has worked for it in most others: low cost.
India has built the railway infrastructure, or part of it, in countries such as Nepal, Myanmar, Mozambique, Tanzania and Sri Lanka. In recent years, it has begun talking trains and tracks to oil-rich Nigeria which could help sate India’s thirst for the precious commodity.
The template for deals has been for India to sell countries equipment and expertise, and give them a loan (called line of credit) to pay for these. China, it emerges, can do better on both counts that matter: its equipment costs about 30% less than India’s, and it gives bigger loans. “Many of these countries are turning to China because its costs (of railway equipment) are so low,” says V.K. Aggarwal, the managing director of Rites, the arm of Indian Railways that executes such deals. “In Angola, India offered $40 million as a line of credit, and China countered with $280 million,” he adds.
China’s growing influence in South Asia and Africa could undermine India’s position, that of a friendly and generous superior power. It is constructing Hambantota port in Sri Lanka, a clutch of ports in Pakistan and Bangladesh, and has also been wooing Sri Lanka with several offers in the rail business.
India and China are currently engaged in a silent diplomatic battle in Sri Lanka over a proposal to rebuild a 137-km railway line that was damaged in the 2004 tsunami.
India, which offered a loan of $100 million, looked set to bag the order for both the line and wagons. “Now, Sri Lanka says it has a better offer for the supply of rolling stock (rail lingo for wagons) and that it only needs assistance to reconstruct the damaged line,” says an Indian Railways official.
Other officials are worried that China may have made overtures to the leaders of 52 African nations that visited it last year. China, they claim, can offer its wagons at a lower cost than India because of a state subsidy. “They have linked railway exports to their larger strategic goals; we still treat it as a business,” says one.
Aggarwal, though, sees an opportunity in several of the countries that originally bought Chinese wagons now coming to India because these were of poor quality.
“That is how we have to market ourselves,” he says.
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First Published: Fri, Feb 09 2007. 03 31 AM IST
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