It could be said of the government that if wishes were horses, then beggars would ride. One of those many wishes, which include retail reform that’s come under a cloud, is developing the skill and financial muscle to accumulate the assets that India will need to fuel economic growth in the global scramble for resources, where the key challenge emanates from China. The Chinese take no prisoners when it comes to these contests—even so-called pariah regimes are not untouchable if they have minerals of value. How to win friends and influence regimes include offers to develop infrastructure—something India also admittedly does. Then again, the Chinese aren’t squeamish about extracting their pound of political flesh by, say, keeping the Dalai Lama from attending events in those countries.
This tendency to arm-twist is something that India can use to its advantage. Seeking to benefit from the world’s suspicion of China and its intentions could be seen as a sneaky thing to do, but why spurn the opportunity to fill a gap in the market? This strategy could perhaps be at work in Myanmar, where the military junta is paving the way for a democratically elected government. It’s still too early to predict whether the exercise will end happily, but by appearing to be the good guy, India stands to gain from any opening up of the economy there.
But acquiring global assets also depends on putting together the capabilities to take advantage of openings. Talks about a sovereign wealth fund have remained just that. Meanwhile, as Mint reports today, the government still doesn’t have a blueprint for a mechanism to acquire fertilizer and mineral resources overseas almost four months after a committee of secretaries was set up to look into the issue. International Coal Ventures Pvt. Ltd, which was set up two years ago to acquire coal mines overseas, hasn’t been able to make much headway on that count. It’s been in the news recently because one of the consortium members, NTPC, has been allowed to exit from the grouping; not really something that boosts confidence in the government’s push for resources.
One of the ideas being floated is to encourage non-state companies to acquire overseas assets by providing sovereign guarantees and giving them an interest subsidy, as Mint reports. Several Indian companies have a proven track record in this area, so this could be one way to go. But given the seemingly widespread resistance to policy reform, this is perhaps not an opportune time to solve this particular conundrum.
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