After over a decade of negotiations, India and the U.S. finally signed the Basic Exchange and Cooperation Agreement on Geospatial Cooperation (BECA) on geospatial intelligence sharing to boost the accuracy of Indian weapons. In signing the BECA, both countries are hoping for more cooperation, particularly in the fields of economics and military.

India was perhaps betting that by siding with America, it could help it win the border war with China and make the country a global power, militarily and economically

The speculation was prompted by Indian Foreign Minister Subrahmanyam Jaishankar’s thinking that siding with the U.S. would better serve India’s national interests by taking advantage of the deteriorating U.S.-China relationship or playing the “my enemy’s enemy is my friend” card.

There were probably two reasons why Prime Minister Narendra Modi went along with that. One, rising anti-China sentiments due to deadly border disputes with his northern neighbour, culminating in killing 20 Indian troops and an unspecified number of Chinese soldiers demanding him to “take revenge” on the northern neighbour.

Two, to deflect attention away from his mishandling of the COVID-19 pandemic and the damages it caused. According to Johns Hopkins University, COVID-19 cases in India surpassed 8 million and might soon overtake the U.S. number of more than 9 million.

This turn prompted the Reserve Bank of India to predict an economic contraction of 11 percent in 2020.

Against this backdrop, the signing of the defence pact might make economic and political sense on the part of India. Picking a fight with China might improve the prime minister’s sinking popularity.

Forging closer relations with the U.S. might spill over to the economic realm, increasing trade with the U.S. might justify walking away from the Regional Comprehensive Economic Partnership and refusing to join China’s Belt & Road Initiative.

However, global economic and geopolitical realities are in the way. The U.S. economy is sinking into a recession worse than that of the 2008 financial crisis and not expected to recover anytime soon. One reason is the COVID-19 pandemic is worsening which, in turn, could lead to further lockdowns in the U.S.

Another reason is the Democrats and Republicans could not agree on the size of another stimulus package, preventing the economy from spending its way out of recession, like the trillions of dollars bailout money did in the third quarter.

Moreover, South China Morning Post reported on October 30 that the U.S. and China held a military-to-military meeting on avoiding war, suggesting the two countries would not fight one under any circumstances and for good reason: falling into the “Thucydides Trap” would be mutually assured destruction.

In this sense, recruiting India as an ally was probably meant to be a weapons sales bonanza for the U.S. military-industrial complex, not putting U.S. “boots on the ground”, in the event of border skirmishes between India and China.

It is also noteworthy that India’s chances of winning a war against its northern neighbour could be zero because its weapons and ammunition inventories would last only 10 days, according to a 2015 India Times report.

While the government was talking about increasing the inventories from 10 to 40 days, nothing significantly happened since then, according to the Jan. 27, 2020 Times of India report, suggesting that the decision of increasing weapons inventories only emerged this year. In this regard, India can only hope that any war with China will not drag on beyond that time period.

On the economic front, India should not expect any help from the U.S., because America is struggling to get its house in order because of the surging pandemic and the rising national debt to combat the virus.

And investors are well aware of India shortcomings as a destination of investment: poor infrastructure; unattractive investment climate because of archaic laws; just to name two. U.S. firms such as Ford, General Motors and even Wal-Mart are either downsizing in or leaving the country, in part, because of poor transportation facilities, unreliable power shortages and insufficient skilled labour.

In any event, .U.S President Donald Trump’s “America First” policy was meant for “reshoring” rather than “offshoring.” He imposed tariffs on foreign imports for the purposes of reducing America’s trade deficits and pressuring U.S. investors to relocate back to U.S. soil.

Against this backdrop, it could even be argued that the reasons why the U.S. signed the BECA was hoping India could help it recover from the pandemic- and bad policy-induced recession and boost Trump’s re-election bid.

Selling large quantities of arms to India would bring massive economic and employment opportunities to many states in the U.S. because of the military-industrial complex’s weapons development and production facilities are spread across the country. Growing employment could improve the President’s popularity, winning him a second term.

Ironically, however, signing the U.S.-India defence pact hurts India’s economic prospects because China might be the only country that could invest in and relocate labour-intensive manufacturing factories to the country.

China has already begun to move away from low-end manufacturing to value-added production.

India would be the logical destination because of its large size and strategic location, ideally situated to expand China’s Belt & Road Initiative

Through the BRI, China has the financial measures and expertise to help India build its woefully poor infrastructure system and train a pool of skilled both of which are crucial in attaining Modi’s “Make in India” policy goals of employing millions of young Indians and making the country a manufacturing power a reality.

Yes, India is betting on the wrong horse.

Author: Ken Moak
Editor’s note: The article reflects the author’s opinion only, and not necessarily the views of editorial opinion of Belt & Road News.