India and World

Indo –Sino Relations emerging trends

New Understanding

Ø  Prime Minister Manmohan Singh met President Hu Jintao on the sidelines of the summits in Washington and Brasilia.

Ø  Cooperation at Copenhegen marks a new beginning in Indo-China relations.

1.      The immediate dividend from Copenhagen was seen when External Affairs Minister S.M. Krishna visited Beijing this month and announced the setting up of a hotline between Mr. Wen and Dr. Singh.

Ø  At a reception hosted by the Indian embassy, Chinese special envoy Dai Bingguo dropped in unannounced and stayed for an unprecedented two hours. He then met with his counterpart Shiv Shankar Menon in Brasilia, agreeing to restart the border talks that have been stalled since last August, along with Prime Minister Singh and Premier Hu Jintao .

Ø  At the same time, the Indian Defence Ministry annual report for 2009-10, released last month, makes no mention of any border tensions during the year, noting that the armed forces of the two countries have, instead, made considerable progress in tieswhile noting China's major military modernisation drive.

Areas of confidence building  (these  points are basically for framing an opinion )

1.      Beyond military matters, the two sides may also be able to build confidence, even a compact on terror —

Ø  China is increasingly worried about the possibility of jihadi terror in the western province of Xinjiang.

Ø  But now, evidence of groups like the Lashkar-e-Taiba and the Hizb-ul Mujahideen training and supporting the separatist Uighur movement poses a threat in China too.

Ø  As India lobbies the world for action against the Mumbai attack planners, China-watchers say it may have Beijing's ear, as China is more willing to listen and worried than ever before.

2.      The largest worry for China, however, remains the threat of an economic collapse — which some economists are already predicting.

Ø   In December 2009, China posted a 2.8 per cent decline in exports and a whopping 21 per cent decline in imports. Despite its massive $39-billion trade surplus,

Ø  With money supply rising (due to stimulus package ) at a dangerous 26 per cent annual rate, the inflation and real estate boom combination does worry Chinese leaders as the recent National People's Congress proceedings reveal.

1.      As a result, India looks a more attractive market for sales and investment for China — deals for infrastructure in particular, like the $1.5-billion bid the Chinese State grid corp. has just won from Vedanta Resources in Orissa.

2.       In return, it is India's expertise in Information Technology that China is recognising more and more and, for the first time, state contracts in IT have considered Indian companies. 

3.      A new  phrase: “Chinese hardware in exchange for Indian software” also holds the key .

3.      The other genuine concern expressed was over the impact of China's strict “one-child” policy on the future.

Ø  Demographic projections show that the Chinese working population ratio (the 18-60 age group as a ratio of the whole) will begin to decline from 2015. China will grow old before it becomes rich, goes a saying there.

Ø  This may open up the possibility of China issuing H1-B-type of visas to Indian skilled professionals soon.

4.      Finally, it is the strategic mindset that needs to be upgraded: fears of Chinese ‘encirclement' must not cause unreasonable alarm and Indian under-confidence, as they did last year. 2010 is not 1962 — in terms of both comparative Chinese capability and Indian incapacity.

Ø  China seems to want to clear the air on border issues including Arunachal Pradesh now,

Ø  Even India remains true to its word on the recognition of TAR (Tibetan Autonomous Region) and Taiwan as part of the PRC.

1.      Interestingly, Union Home Minister P. Chidambaram's visit to Tawang earlier this month was accompanied by none of the angry voices from Beijing that the President and Prime Minister's visits last year attracted.

Ø  The strategic environment in the early 21st century is nearly the exact opposite of what it was at the time of the India-China war of 1962.

Then Mao was able to turn his back on Taiwan and attack India — today China has been working hard to resolve its remaining border disputes with India in order to free up its forces to concentrate on Taiwan

Indo-Nepal  Relation

India-Nepal treaty of Trade and Agreement of Cooperation to Control Unauthorised Trade

India and Nepal signed a “historic” new treaty(revised ,done in 1997)

Ø  to control unauthorised trade across the border and

Ø  redefine their trade and commercial relations,

Ø  The groundwork for singing of the treaty was done during the visit of Prime Minister Madhav Nepal to New Delhi in September.

MAIN OBJECTIVE 

The treaty aims at providing

1.      A stable  framework,

2.      Enhancing access for Nepalese primary and manufactured products to India, promoting investments,

3.      Facilitating trade through simplification of procedures,

4.      Mutual recognition of certificates and development of border infrastructure, and

5.      Assisting Nepal in developing its capacity to trade.

DECISIONS TAKEN

1.      The treaty will lead to opening four additional land customs stations,

Ø  allow trade by the air route, and help to set up an additional trade port for Nepal at Visakhapatnam.

Ø  Talks are already on for opening a trade route by rail.

2.      The significant points include extension of the treaty from five to seven years,

Ø  along with a provision of automatic extension for further periods of seven years at a time.

3.      No discrimination will be made in respect of tax, including central excise, rebate and other benefits against exports merely on the basis of payment modality and currency of trade.(Relevance  of this decision)

Ø  This will bring the bilateral trade conducted in Indian rupee at par with trade in convertible currency and

Ø  End the existing mechanism of Duty Refund Procedure (DRP), which is cumbersome.

Ø  It will provide Nepal direct control over customs duty revenues on import of manufactured goods.

4.      The time limit for temporary import of machinery and equipment for repairs and maintenance has been raised from three to 10 years.

5.      This will provide a stable framework for bilateral trade and promote investments in Nepal based on preferential access for Nepalese products.

ASSESMENT OF TREATY

1.      The 1996 Treaty has been a turning point in the trade relations between the two countries.

Ø  It resulted in a phenomenal growth of bilateral trade from Rs. 28.1 billion in 1995-96 to Rs. 204.8 billion in 2008-09.

1.      During this period, Nepalese exports increased from Rs. 3.7 billion to Rs. 40.9 billion and

2.      Indian exports from Rs. 24.4 billion to Rs. 163.9 billion.

2.      The 2009 treaty allows export of goods imported by Nepal from India to third countries without the necessity for any manufacturing activity in the country.

Ø  This will enhance exports from Nepal to third countries where it has a better market access than India.

Ø   Similarly, it will allow export of goods imported by India to third countries.