Sunday, August 17, 2014

Why India should take $300 Billion from China for infrastructure and use their expertise

There have been several news articles that China has offered India $300 Billion investment to upgrade its infrastructure. If true, this would really be good news. Because not only does China know infrastructure, the infrastructure sector in India is suffering for lack of the right kind of investments. The debt available to most Indian infrastructure companies is not of long enough gestation to really make the investment projects in infrastructure projects attractive. It has often been said that never change a winning game and always change a losing game. This quote is attributed to Bill Tilden, but is true in all aspects, apart from sports. China is winning the infrastructure game, and India is definitely loosing it. China has high speed rail, and we have really not added a whole lot to our rail network since independence. They have high capacity ports and we have a long way to go there.

The folks who say that this is a bad idea citing security concerns are not completely out in the left field. But security concerns can be taken into considerations and appropriate measures can be taken to protect our security. It is just like FDI in  defense. Having a non thought out agenda, prevents us from getting the state of the art technology and makes us an aspiring superpower who is the largest importer of arms. Infrastructure actually helps in defense. The expressways in the United States were actually built for facilitating quick movement of the military ( Yes, United States did not always have these wonderful expressways). So if China were to help us build the expressways, one can be sure that they will help us defend our borders with them better. Indeed even their investment in India will probably help the cause of a stronger relationship.