India’s protectionist stance toward China hinders its rail network revamp efforts

By Xiao Xin Source:Global Times Published: 2017/3/27 22:08:39

India's effort to revamp its rail network, the fourth-largest in the world, is apparently suffering from supply-side malaise, as its state-owned railway company purportedly eyes private supplies to make up for production shortfalls.

Indian Railways is considering putting an end to the virtual monopoly of Steel Authority of India Ltd's (SAIL) on steel supplies for standard rail tracks, and giving companies in the private sector access to "annual purchases worth up to $700 million," Reuters said in a report on Saturday, citing people close to the matter. State-owned SAIL's failure to meet production targets has obviously hindered the $130 billion, five-year overhaul to India's aging rail network as part of Prime Minister Narendra Modi's infrastructure push.

Plans to open up rail purchases to the country's private suppliers will decidedly help in overcoming the rail supply shortfalls and will create a level playing field for its private sector. But other than that, it would also be sensible for the Indian government to consider giving up on its protectionist mentality - that is often seen in the use of trade remedies on steel imports from China - for there to be a sufficient and reliable supply of rails for the modernization of the world's second most populous nation.

In a sign of its protectionist stance, the Indian government announced in November 2016 that antidumping duties were being imposed on certain Chinese steel products for six months. The application of trade remedies, as such, certainly builds a shield to protect India's domestic manufacturers, but in the meanwhile the measures also serve to inhibit the nation's rail network from being revamped in an efficient and reliable fashion.

Admittedly, India has stayed vigilant against China and has chosen Japan as a partner for the country's first high-speed railway project which is expected to commence in 2018. However this doesn't mean that it is in India's best interest to bar China from entering into partnerships on other bullet train projects. It needs to be pointed out that India actually needs China more than China needs India in the arena of steel rail manufacturing and train technology.

China has in recent years ramped up efforts to export its high-speed rail technology worldwide, earning the economy a new name card. With the Belt and Road initiative set to reshape global trade, it is anticipated that countries and regions along the route will benefit considerably from China's exports of its train technology which has been well received in terms of both pricing and quality. 

It's thus advised that New Delhi take a sober look at its giant northeastern neighbor when it comes to solutions for either India's rail network revamp or the nation's forthcoming high-speed rails.

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



Posted in: EYE ON THE ECONOMY

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