Digital India Has Much To Attract China

By Shastri Ramachandaran* | IDN-InDepthNews Analysis

BEIJING (IDN) – Although India and China are politically, culturally and economically different, the two countries have much more in common than the border and Buddhism. India’s economy, for one, is very much on a China-like trajectory. That has been so since the economic reforms piloted by Manmohan Singh as Finance Minister after P V Narasimha Rao became India’s Prime Minister in 1991.

The “Rao Revolution”, as the economic reform of 1991-96 was dubbed by those favouring it, was not very different from the policies initiated by China’s ‘Paramount Leader’ Deng Xiaoping in 1978. The Dengist reform – of opening up the economy and creating conditions to attract overseas investors and manufacturers – gave China a 13-year head start over India.

Regardless of this lag, it is often observed, and correctly so, that in pushing for exports, capital expenditure and wooing foreign investment, India and China are similar. Since India began following in 1991 what China started doing in 1978, today India is said to be at the stage where China was at the start of the millennium.

India’s Look East Policy (LEP) – with an eye on China and the East Asian countries gaining from cooperation with China – was also formulated and launched under Prime Minister Narasimha Rao in the early 1990s.

The two countries have been on the same wavelength on many issues including when the Bharatiya Janata Party’s Atal Bihari Vajpayee was Prime Minister and thereafter, too, when Manmohan Singh of the Congress party-led United Progressive Alliance (UPA) succeeded him.

There is also that unusual coincidence of Deng Xiaoping’s “To get rich is glorious” resonating, years later, in Vajpayee’s exhortation – “Let’s get rich together” – to the South Asian Association for Regional Cooperation (SAARC) nations. These include Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.

Beginning with the Rao Revolution’s reform of the economy and change of emphasis in external affairs, India-China relations have remained steady and only got better in the last 25 years.

Through eight political changes of government (and six prime ministers) in India and successive leadership changes in China, what remains constant is the striving to strengthen India-China relations and build political trust. The vexed boundary issue has been isolated – one might say, quarantined – with a view to improving relations on other tracks, especially economic and trade.

Such a trend reinforces the perception that India-China dialogue is an ongoing conversation, and unlikely to be affected by the political colours of the party ruling in India. Prime Minister Manmohan Singh’s 10 years in office saw a phenomenal boom in bilateral trade and economic relations along with more cultural exchanges and higher inflow of Indian students for professional education.

Enter Narendra Modi as Prime Minister in 2014. He is no less enthusiastic about taking forward India-China relations and deepening trust. In fact, Modi, who had visited China as Chief Minister of Gujarat, wants to build political trust and steer India-China relations to the next stage.

Modi’s Digital India policy

Every Prime Minister has sought to mark India-China relations with his own distinctive contribution that would endure. Thus, we have the hi-tech partnership between the two Asian giants, which could prove to be a boon for Modi’s Digital India policy.

In chasing the “Digital Dream” – as an engine of economic growth that would bring forth massive investments, unleash entrepreneurship and create millions of jobs – India is again on a path that China had walked more than a decade ago. It may not be too far-fetched to suggest that India may well remain on a China-like course for years to come.

The Digital India program aims to transform India into a digitally empowered society and knowledge economy. As the official website states, a lot more thrust is required to: ensure e-governance for promoting inclusive growth that covers electronic services, products, devices and job opportunities; and, transform the ecosystem of public services through use of information technology (IT).

The Digital India program comes at a most opportune time, and especially so for India and China. Both countries have compelling reasons as well as complementary conditions for joining hands to realize the program’s objectives.

If India is an IT power, China is a digital power. It has the world’s largest internet population and China’s digital players such as Alibaba, Tencent and are in the big league. China dominates the world’s Top 10 list of internet enterprises.

India is way behind China when it comes to digital development. India-born tech wizards Sundar Pichai, CEO of Google Inc, and Satya Nadella, CEO of Microsoft, head the biggest and bluest of blue chip internet brands.

Yet India itself has no internet tycoon who can hold a candle to Jack Ma, who founded Alibaba, Taobao and Alipay, or Pony Ma, the founder of Tencent, which offers the free messaging and calling app, WeChat. It’s used by half a billion people, rivals What’sApp and can also be used for money transfer.

It may be a blessing that India trails China in digital development. China has achieved a high level of digital maturity and, hence, it is not in competition with India. On the contrary, Digital India is an opportunity for companies in China, which need to find new territories for business – investments, clients and consumers. Therefore, China can confidently partner India’s journey to the digital frontier and do so to help Chinese companies and serve China’s own interest.

Benefiting from ‘Make India’

Chinese companies with huge brand visibility in India, such as Xiaomi – one of many success stories – are now moving from selling their products to setting up production units in India. This suits China because Chinese companies are gaining ground and the investment in manufacturing gives a boost to the Indian government’s “Make in India” program.

Manufacturing apart, when it comes to digital opportunities, it is not only Chinese companies like Baidu, Alibaba and Tencent but also giants like Google, Facebook, Tesla and Adobe that are in quest of new markets with an eye on the next one billion consumers. This makes India the obvious destination and the next big thing – in terms of market and investment for internet enterprises especially e-commerce companies.

For the Indian market to come of age and size, people would require to be economically empowered with the kind of purchasing power that China has been able to ensure for a large section of its population. Manufacturing spurred by the Make in India program may expand the economy and create a market with more buying power, which, in turn, could give rise to innovation hubs that drive the Digital India program and also profit from it.

E-commerce is growing in India and at a breath-taking pace. Alibaba is already on the scene, betting on Snapdeal and against Flipkart, and now looking at the payments start-up Paytm as a possible replication of Alipay in India. Tencent, China’s gaming giant, is making a big push in India with an investment in the healthcare start-up, Practo, an app to connect patients and doctors.

Some of those in the race for a piece of Digital India swung into action in December when the southern city of Chennai was reeling under unprecedented torrential rains and floods. Start-ups such as Paytm, Practo, Zomato and Ola came to the rescue of people who were marooned without power, food, essential supplies, phones, television and internet. These enterprises assisted a range of relief and rescue operations, and helped with services including medical, mobile connectivity and options for stay and transport.

Such intervention shows that internet enterprises are up to speed when it comes taking the plunge in “Indian conditions”. It also means that Digital India could become a reality sooner than expected and in ways yet to be foreseen.

Digital India, like Make in India, Skill India and Star-up India, is a well-conceived plan. The challenge lies in execution.

*This article first appeared as Comment in C-I Dialogue of CIPG where the author is Senior Consultant and Editor. It is being reproduced by arrangement with the writer. [IDN-InDepthNews – 19 January 2016]

Shastri Ramachandran’s previous IDN articles: ramachndran&ordering=newest&searchphrase=any

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2016 IDN-InDepthNews | Analysis That Matters

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