India's 'Act East' and China's 'Go West' Policies

Prime Minister Narendra Modi has been emphasizing on the need for foreign investment in the North Eastern regions of the country

His influence over the neighboring South East Asian countries to invest in India's impoverished the North Eastern States has been part of India's Act East policy for regional development. When India asks for investments from developing countries, it might seem a little strange. But considering India's wide range of regional disparities, such foreign investments from the ASEAN economies can bring benefits to some Indian states.

Looking at the state of Assam, it has a GDP per capita income of about ₹ 75000. Which is almost the half of entire nation's GDP per capita income. Assam's per capita income is closer to that of Sub Saharan African countries. When we look at the neighboring states of Assam, they have a better economic prosperity, but Assam itself consists of nearly half of the entire population in North Eastern region. 

Here, the problem is that the countries from which India has been asking for foreign investment in these regions are those, which have very little economic advantages more than India.

Let's take a closer look. If India wants foreign investment in building a road connecting Manipur and Myanmar's Sagaing region, it is less likely to earn the interest of foreign investors of the neighboring nations. Since, ASEAN nations such as Thailand, Myanmar, Indonesia already have their own backward regions, if they want to invest in poor and backward regions, then why should they take an interest in investing in rural districts of India's impoverished North Eastern states.

China

Now, what about China? The only country capable of investing and developing the backward parts of Inda's North East is China. China does have the outbound investment capacity and technology but it is the last country from which India will demand foreign investment. We all know how long China and India got engaged in the Doklam issue which was only resolved after China withdrew from its Road building project in the disputed region. Still, the geographical and political relations between both countries remain frosty.

When looking at the Geographical relations, Manipur state is far away from Bangkok while it is closer to the Chinese metropolis of Chengdu. The Chinese investors in these regions have a greater interest in investing abroad. They do have the technological and financial capacity in order to invest in a meaningful manner. But India and China have created a lot of economic barriers which stays on the road connecting the investment ties between both nations. It still not clear when such barriers and issues will be resolved, but the rationale behind the need for a much closer economic relationship between both countries is true.

The geographical and political barriers between China and India is more difficult. From the time of independence, which was almost 70 years ago, India and China have engaged in a lot of border disputes and sometimes even armed clashes. A better and practical geographical connectivity between the two countries is possible through Myanmar. But both India and China have hard relations with Myanmar.

China is always in the pursuit of finding better export markets. China has outbound growth in its infrastructure and other industries. There's no doubt in the fact that India will definitely benefit from Chinese investment. China's One Belth One Road (OBOR) initiative is seen as China's strategic step to expand its markets. But most of China's OBOR countries are poor or have a fragile economy to absorb anything significant from China's commercial capacity. That's where India's significance in OBOR comes to light. India has a $2.5 trillion economy which is almost larger than that of all the ASEAN economies combined.

We know that as Narendra Modi is working on this Act East policy, the president of China has the Go West policy which combines his strategies for development in western China. Go West aims at increasing exports and development in Western China with help of OBOR. China is a country with overgrown capacity in exports and infrastructure. What it needs are markets. India is one of the largest markets in Asia, after China and Japan. What India needs is Infrastructural development. For all the time being, geographical and political reasons have prevented Asia's two giants from engaging in a mutual development course and to benefit each other. Geographical factors can be solved but Political factors are much harder to overcome.