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#1906, 17 December 2005
India-China Relations
Report of an interaction with the delegation from CICIR, at the IPCS Conference room on 13 December 2005
Seema Sridhar, Research Officer

Chair: Maj Gen Dipankar Banerjee ((Director, IPCS)

Opening Remarks

Maj Gen Banerjee:

India-China relations have been growing in a substantive manner in recent years. India and China are two growing economies and emerging powers. China has had a 15-year lead in this context and its economic development has been remarkable. Over the last 27 years, China GDP grew at a rate of 9.4 per cent, which is unique in world history for a major nation. India too is undergoing a good growth rate, particularly since 1991. India and China have no outstanding problems except the border dispute. Trade and economic relations have seen a rapid growth and regional cooperation is expanding. China is India's third largest bilateral trading partner. In the last SAARC Summit, China was given Observer status. India has an Observer status in the Shanghai Cooperation Organisation. Military-to-military relations are also deepening in recent years.

Relations with Neighbours

India has very good relations with Afghanistan. With Pakistan, our relations are improving and the talks are moving ahead. However, some contentious issues remain unresolved with Pakistan, particularly cross-border terrorism, which has not subsided. Growing Islamic fundamentalism and terrorism in Bangladesh is a matter of concern to India.

Strategic Interests

The task ahead for India is to address its economic development and ensure satisfactory living conditions for all its citizens. Among strategic concerns, the important challenge before India is not the possibility of inter-state conflicts. Instead, terrorism has emerged as a major threat to India and the world, particularly cross-border terrorism. Demographic shift from neighbours is another important concern, for India is the largest recipient of migrants in the world. The probability of failing states surrounding India is a matter of concern. There are also countries where democratic values have not taken roots and there is internal strife. Drug trafficking and international crimes are other serious threats. Restrictions on trade are a roadblock to enhanced international trade and commerce. Energy requirements threaten to hamper our economic growth rate as India has a severe shortage of domestic energy supplies as compared to its domestic consumption.

Indian Strategic Posture

Today, India has cooperative relations with all major powers such as Russia, Japan, European Union and the US. Relations with the US have been growing in the recent past and close ties with the US remains very important to India. Relations with China are improving and India is looking forward to enhanced ties with China. Good relations between China and India can be a powerful force for peace and development in Asia and the world.

Military CBMs: India & China

Rukmani Gupta
Research Officer, IPCS

Need for CBMs

The current geopolitical scenario and threat perceptions underline the need for CBMs between India and China; these include - regional concerns over China's military modernization and India's concerns over Sino-Pak relations, especially military cooperation. CBMs are integral to long lasting solutions to problems left over from the past, most importantly, the border question. The border dispute is at the core of all CBMs undertaken by India and China, the key ones being the1993 Agreement on the Maintenance of Peace & Tranquillity along the LAC along the India-China Border areas and the military CBMs of 1996.

The 1993 agreement for the maintenance of peace and tranquillity was path breaking as it spoke of de-escalation along the LAC. The salient features of the agreement were as follows. As per Article I of the agreement, both sides agreed to de-escalate tension across the LAC and solve the issue through 'peaceful and friendly consultation'. According to Article II, both countries are to reduce military forces based on the 'principle of mutual and equal security to ceilings to be mutually agreed'. Article VIII provides for verification and supervision of such force reduction measures. Article III calls for prior notification of military exercises near the LAC. Article IV, provides for 'friendly consultations' between border personnel along the LAC. In addition, it calls for adequate safeguards against violations of LAC. The 1996 agreement was developed on the 1993 agreements. It reiterated several provisions of the 1993 agreement, but went a step further in specifying dos and do nots on the LAC.

Developments in 2005

India-China talks began in April this year and an Agreement was reached on setting the Political Parameters and Guiding principles for the Settlement of the India-China Boundary question. Article III is of actual and operational significance where it is clear that what is aimed at is a 'package deal' which will be final and covering all sections of the boundary. This is a change from India's earlier sector-by-sector approach. The protocol on modalities for the implementation of CBMs in the military field along the LAC reiterates commitments made in the 1996 agreement that remains the basis of all military CBMs between the two countries. A three-tier structure to handle the boundary question has emerged. Moreover, the leaders have provided the will and impetus. Next, the special representatives who work in keeping with the guidelines oversee the negotiations and finally the JWGs and experts will work out the technical details.

Military CBMs in 2005

There were several high-level meetings this year and the Chinese Chief of General Staff of the PLA Liang Guanglie met with Indian Defence Minister Pranab Mukerjee in May in Delhi on the cooperation between the two armies. There was planning for joint training of troops where unprecedented joint counter-terrorism and peace keeping training programmes were planned in the aftermath of visits. Soldiers participated in joint mountaineering expeditions. There were increased border contacts like those that the special border personnel meeting held on 15 July in the Choshul Sector to celebrate the 55th anniversary of establishment of diplomatic relations. The meeting of Indian and Chinese troops in Eastern Ladakh sector to celebrate Indian Independence Day on 15 August, meeting of Indian military delegation and Chinese team at Choshul on 20 October were other such meetings.

Stronger defence ties were agreed upon. Representatives from the Indian armed forces participated as observers in Sino-Russian military exercises, and Chinese observers attended the recent military exercises by the Indian armed forces. Trilateral military exercises involving Russia, India and China have been proposed. Chinese naval ships - a Luhai-class destroyer and a Weishanhu auxiliary tanker - berthed at the Kochi port on 28 November and participated in naval search and rescue exercises with the Indian Navy. This was the first time that the two navies held joint exercises in Indian jurisdiction. In 2003, the very first naval exercises were held in Shanghai.


It is clear that military CBMs between the two countries are bearing fruit and greater cooperation between the armed forces is evident. CBMs have gone a long way in reducing suspicions about military aims and intentions. However, the fact remains that military CBMs stay in place only so long as the political will and initiative are forthcoming. There is a need to evolve CBMs that move beyond the parameters of the boundary question. Though there is no doubting the political will of the two parties to resolve outstanding issues, it would make sense to encourage economic and trade CBMs that are able to maintain momentum without excessive sponsorship by the state.

US-India Nuclear Energy Cooperation

Reshmi Kazi
Research Officer, IPCS

The Indo-US Nuclear Agreement was signed between US President Bush and Prime Minister Manmohan Singh on 18 July 2005. It was a continuation of the Next Steps in Strategic Partnership concluded in January 2004. The 10 year US-India Defence Framework Agreement signed in June 2005 is a give and take arrangement where India and US "reciprocally agree" to accept certain responsibilities in exchange for civilian nuclear technology. The objectives of the deal are to advance India's energy security through full civilian nuclear energy cooperation, to strengthen Indo-US bilateral ties and to emerge as a "responsible nuclear power" with advanced nuclear technology.

There are several benefits from the deal. First, it confers new respectability on India as a responsible nuclear state. The US will provide smooth and uninterrupted uranium supply to fuel nuclear plants in Tarapur and other reactors. Nuclear energy can provide fuel at affordable rates especially in the face of depleting hydrocarbon reserves and the spiralling costs of oil can be harmonized with cheap nuclear energy. It enhances prospects of achieving higher percentage of electricity generation as against the present output of 2.5 per cent. There are prospects of reducing our energy production deficit through commissioning more nuclear power reactors in a short period. It helps in bringing increased foreign investments and trade.

As far as the deal is concerned, India seeks to maintain "strategic equipoise" in the region. India does not intend to be a junior partner to Washington. China views the nuclear energy cooperation agreement between India and China as a mere political move on the part of US to contain China by strengthening India politically and economically. It is interpreted as Washington's efforts to offset the regional balance in the Indian sub-continent. Their stand is that it encourages other powers to provide nuclear energy supplies to states of their interests. It thwarts the emergence of a pan-Asian security arrangement excluding the US. It is seen as a hard blow to the non-proliferation regime.

India has made it clear that it does not wish to engage in any US-sponsored containment policy of China. It has assured that there is no intention to engage in nuclear technology (weapons) competition with China. India looks forward to enhancing mutual confidence with China to dispel its doubts over the deal.

The policy of nuclear restraint is the Indian vantage point. India has not violated the non-proliferation regime, as it is not a member of NPT and has not accepted its obligations. Non-proliferation regime would thus gain from this deal. As Homi J Bhabha quipped, "No energy is more costly that no energy."

Sino-Indian Relations

Professor LI Shaoxlan:

The Chinese foreign policy is based on economic development for achieving the final target of peaceful rising. The three guiding principles that are pivotal to China's foreign policy are

  • Friendship between China and major powers, international and regional,

  • Relations with surrounding countries, and

  • Relations with developing countries.

Sino-Indian ties are based on the aforementioned priorities. India is a major power, is China's neighbour, as well as developing country. Around the world, a much talked about topic is China's rise. India rising is also much discussed. In fact, many Chinese scholars focus their study on comparing the rise of China and India. Most of the Chinese scholars conclude that China and India's simultaneous rising is beneficial to each other. It is generalisation as whole of Asia Rising. The perception is that improvement in our relations will be not only benefit both our 'rising', but also to the 'rising' of the region. The contention is: Will there be no difference in our relations? While rising and re-emerging are influences. China's national interest and influences will increasingly overlap with Indian interests. There is an important need to strengthen and co-opt disputes.

Indians have concerns. India and China have competitive influences and interest in at least three of the five big regions. Of course, China has its concerns. China has concerns whether US can use India to confront China. It is imperative for our scholars to come together to understand each other's concerns and sensitivities.


Observations by Indian participants

India is responsible for initial delays in resolving the border dispute with China. Had India accepted the package proposal there might have been a settlement of disputes by now. In the third round of talks, this could have happened, but India did not go ahead as the political situation in India did not permit this. Now, India is well placed politically. A timely resolution of the border dispute augurs well for the region.

India has good relations with South Asian countries with whom China has relations as well. India is looking at the rest of the world to improve relations between India and Pakistan. Often we look at outside elements to move forward our relation with Pakistan. There are also suspicions on both sides about what we are doing in Myanmar and in the Indian Ocean. There is a need for more communication among the naval forces and cooperation in maritime trade. Facilities being set-up between Sikkim and Tibet has great promise. There will be a measure of competition because we are growing economically. However, that competition is healthy as it benefits both our citizens. Increased exchanges at the political, military and economic level will be beneficial.

1962 War

The 1962 war was a very sad chapter in history. It is surprising that two countries that were so friendly were unable to avert a misunderstanding. There could have been a political solution had the Chinese strategic requirement of a route from Xingjian to Lhasa been accepted. Since 1993, it is heartening to note that we are moving in an amicable direction. The road ahead lies through economic exchange, development, border trade and exchange of students.

Questions from Chinese Delegates & Responses

Question: India and China are now located in a similar developing stage. Both are developing countries who are 'rising' and are facing a number of non-traditional security threats. In China, three areas are of concern: terrorism, separatism and extremism. There is a strong linkage among them just as there are differences. India has been a victim of terrorism for a long time, especially international terrorism in the name of Islam. India has suffered a lot in Kashmir. Can you share your experiences in dealing with terrorism under the banner of Islam?
Response: Terrorism - Islamic terrorism is predominant in Central Asia and Pakistan. In Pakistan, it got a boost under President Zia-ul-Haq, who emphasized Islamic education and madrasas. President Musharraf is a moderate and advocates a tolerant Islam. The answer to extremism lies in modern education and tolerance, which would take a long time.


  • It is first dissidence that later turns into terrorism. India has experienced it not only with Islam, but also with Sikhs and Tamils. It could be religious or ethnic. The leadership of the terrorist groups does not come from ordinary madrasas, but from the middle class and upper middle class. They aye often educated, frustrated nationalists. This is supported by the availability of weapons and money.

  • The world is facing Islamic terrorism and its leadership primarily comes from West Asia. Islamic terrorists, whether they are in India, Indonesia or the Middle East are primarily opposed to the western way of life.

Chair's Remarks: In the next few years, fighting terrorism under the banner of Islam will be the most important security challenge facing the world. India is aware of the enormous seriousness that China has given to this problem. Islamic fundamentalism developed in South Asia as a response to Soviet aggression in Afghanistan. Whatever may have been the background of this development, its repercussions resonates across the Muslim world. There are indigenous Muslims in China, but they are not of Islamic orientation.

Question: Relating to the market size of India and China, our bilateral trade is disproportionate. Bilateral volume during 2005 is less than $20 million. How could we upgrade bilateral trade?
Response: India remains at least 15 years behind China in trading infrastructure - ports, highways and others. India needs time, not only to build better trade ties with China, but with everybody. The current growth rates are very encouraging and at this rate of growth, it will be very substantial in the near future. However, there are problems like political suspicion for opening up dealership/ownership to companies from China. If this suspicion is removed, Chinese companies would not only be able to sell, but also manufacture in India. The other problem is that most of the exports of China are manufactured by multinationals and this trade is probably reflected under multinational company trade figures. More joint ventures between Indian and Chinese entities are needed.
Chair's Remarks: Growth in bilateral trade between India and China is dramatic. It has been growing at a rate of 60 per cent a year. This is not sufficient. At the East Asian Summit in Kaula Lumpur, many such issues are under discussion. Border trade between our countries is also not enough as there are major constraints. For instance, the Nathula Pass had to wait for settlement of the Sikkim issue. Currently, the buoyancy in trade is due to China's import of steel and cement because of the huge construction activity in China. Significant breakthroughs need to be made in other sectors as well.

Question: Being big countries border issues should not be obstacles to our bilateral relations. What kind of model of settlements of border issue is acceptable to India? What is India's bottom line on this issue?
Response: Present realities need to be taken into consideration while resolving the border issue. This has also been agreed by our governments. No specific model can be laid down for a final settlement.
Chair's Remarks: The border issue is a complex issue. We have an excellent framework to resolve this. The basis of this is 'mutual accommodation and mutual interest'. The specific arrangements for a resolution are under discussion. We expect to see an early breakthrough in this regard.

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