A protest against new citizenship law in New Delhi, India, December 18, 2019. /Xinhua
Editor's note: Iram Khan is a Pakistan-based commentator on international affairs. The article reflects the author's opinions, and not necessarily the views of CGTN.
India and China agreed last week to ease the border situation that arose from a clash on the night of June 15 in the Galwan Valley. The economic route that India took as a form of retaliation, however, still has to be rescinded to consolidate the disengagement.
India banned a set of mobile phone apps of Chinese origin, citing less than convincing grounds of data privacy, in what appeared to be an imitation of the politically motivated U.S. tendency of casting doubts on Chinese technology.
No loopholes or data breaches have ever been proven in these apps even by U.S. and European top security experts. What India, with its relatively mediocre tech prowess, is basing its allegations on remains unclear.
The banning decision by the Indian government was abrupt. Neither the regulatory mechanism was utilized nor was the relevant procedure. Instead of a legal order, a simple press release with vague language was released that talked about the sovereignty and integrity of India becoming prejudicial – also raising questions on their frailty if actually affected by mobile phone apps.
The abruptness of the move has left foreign investors in India scrambling for legal cover for their own ventures, in case its effects spiral out of control. Because it is they who bear the consequences when the economy is entangled with geopolitics to assuage public sentiment.
Investors in India are supposed to be protected by their right to Fair and Equitable Treatment (FET). Now, that the government has disregarded a lawful path in banning the apps, the measure fits the classical definition of an arbitrary act – something that is disallowed under the FET. Apart from the Chinese, other foreign players in the Indian market are questioning themselves if they, too, are prone to the whims of Indian policymakers.
They are seeing how the website blocking rules of 2009 were flouted and no issuance of a notice or a reasoned order was undertaken before the ban. They are seeing that if India develops political differences with their countries, how apathetic can be its legal system in redressing their concerns. They are also seeing that India's propensity for leveraging its market to harm investors can one day put even them in the line of fire.
India recently lost two cases when it was found guilty of violating the provisions of FET. Devas Telecom of Mauritius and Deutsche Telekom of Germany proved that their contracts were canceled arbitrarily without following the due process. Meanwhile, the UK's Vodafone and Cairn Energy are fighting their cases under the Investor-State Dispute Settlement (ISDS) for a retrospective imposition of taxes.
As can be seen, it is not the best of times when India engaged in another possible violation of the FET and sent a wrong signal to the restive foreign investors.
The other attempt at harming Chinese interests was the extended scrutiny of Chinese shipments at Indian ports. Without offering any reason – which is another violation of a law-based system – custom authorities started putting hurdles for consignments. This action was fundamentally incompatible with the multilateral trade country that is dependent on geographically distributed supply chains.
Containers at the port of Yangpu in south China's Hainan Province, April 8, 2020. /Xinhua
Such is the significance of global connectivity that a group representing American companies in India had to raise its concern over holding up of Chinese goods by Indian customs. The head of the group expressed strong reservations and asked for "predictable tax and investment policies."
A similar approach adopted by U.S. President Donald Trump in his tariff war against China had miserably backfired and imperiled American farmers and manufacturers. In India's case, it will be a lesson learned from its own mistakes, instead of others.
Indian pharmaceutical industry incurred the heaviest repercussions from delays at the ports in the midst of a raging pandemic. It acquires raw medicinal materials from China and, with the discontinuation, raked in nothing but losses. Automobile and electronics manufactures were in a similar spot, sending alarms that the congestion at ports will be extremely hurtful.
India is now the third worst-hit country by COVID-19. Its economy has taken a severe beating and ill-advised trade moves are in no way helping mitigate the damages. Even its Minister for Micro, Small and Medium Enterprises admitted that the clearance delays will lead to losses.
The attempt to denigrate China through unfair trade tactics has sent a message to India's smaller neighbors as well. Nepal, Bangladesh, Sri Lanka and Bhutan have a high dependence on India for their exports. At the same time, each has its own contentious issues with India that range from border disputes to accusations of internal interference. When they see India engaging in such ploys, they will naturally look for alternative and more reliable partners.
Indian Prime Minister Narendra Modi won the election in 2014 over promises of pro-business and investor-friendly policies. But, as The Economist notes in its latest edition, foreign competition is not something that is welcomed in India.
The recent steps have seriously damaged India's investment repute, and it can only be hoped that New Delhi disengages from this posture just as it has agreed to de-escalate the tension at the border.
(If you want to contribute and have specific expertise, please contact us at opinions@cgtn.com.)