India should join China in promoting regional economic development in Nepal

By Song Shengxia Source:Global Times Published: 2017/1/18 23:43:40

China and Nepal have moved one major step forward in kickstarting a joint venture to build a long-delayed hydropower project in Nepal that has the potential to enhance regional energy supply security and unlock economic growth. The latest progress in the project may put some pressure on other Asian countries, particularly India, to rebalance their strategic and economic calculations and decide whether they want to join China in improving regional infrastructure and reap gains from engaging in pragmatic economic cooperation.

The Nepal Electricity Authority recently signed an initial agreement with China Three Gorges Corporation (CTGC) to develop the $1.6 billion West Seti hydropower project in midwest Nepal, which could generate 750 megawatts of power when completed. The project is expected to address chronic power shortages in the country and boost the energy-starved economy. If it is connected to grids in other South Asian countries after it goes into operation, it could increase the stability and security of the power supply in the region and unleash regional economic potential.

According to a report last year from India's think tank Gateway House, Chinese investments in Nepal overtook India for the first time in 2014 and contributed to 42 percent of total foreign direct investment to Nepal in 2015-16.

It is understandable that India may be wary of China's increasing economic engagement with Nepal as India sees Nepal as its conventional sphere of influence and has a particular interest in maintaining dominance in Nepal's hydropower industry.

But for a project as large as the West Seti hydropower station, Chinese investors are more competitive than their Indian counterparts in terms of technical capability, equipment and costs. The go-ahead for the project shows the trust and confidence of the Nepalese government in the Chinese investors and demonstrates Katmandu's willingness to join China's One Belt One Road initiative to improve its infrastructure and boost its economy. The West Seti project can not only benefit Nepal but also other South Asian countries, including India, who has always been eager to import electricity from Nepal to drive its fast growing economy but has failed to do so due to technical hurdles and poor infrastructure. 

Instead of being nervous of China's expanding role in Nepal, India should know that there are opportunities for both China and India to tap into Nepal's hydropower industry and help the country improve its infrastructure. Further, China is more than willing to welcome other nations to join in its effort to contribute to regional growth. 

India should change the mentality that China is trying to undercut its influence in South Asia and instead put serious action into helping promote regional economic development. This is also a practical choice for Asian countries amid a slow recovery of the world economy.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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