By Melissa Cyrill
The ninth annual summit of the BRICS countries – referring to the institutional coalition of major emerging powers Brazil, Russia, India, China, and South Africa – took place in Xiamen this Sunday through Tuesday.
Coming on the heels of a prolonged military stand-off between India and China over border tensions, the summit presented the best opportunity to showcase business as usual.
Naturally, optics played its part: a much awaited handshake between Prime Minister Narendra Modi and President Xi Jinping followed by bilateral talks underlined the summit’s optimistic undertone.
Even more interesting though – the Xiamen Declaration by the BRICS nations explicitly condemned Pakistan-based terrorist groups – a major concession to the Indian side by the Chinese.
All of this points to both countries opting for a constructive and “forward looking” approach.
Economics trumps geopolitics – India, China move beyond Doklam stand-off
A 73 day stand-off at Doklam ended on August 28 – with India and China agreeing to a mutual disengagement.
The Doklam plateau is a disputed territory north of the tri-junction of Sikkim, Bhutan, and Tibet. Tensions began on June 16 when the Indian army intercepted Chinese road-building activity in the Doka La area of the plateau. Subsequently, the Bhutanese protested Chinese intervention into their territory – internationalizing the stand-off.
Yet, even as all sides indulged in media propaganda and political high-talk, India and China maintained diplomatic communications throughout.
Furthermore, the timing of the border dispute’s sudden resolution – just before the BRICS Summit at Xiamen – indicated that India’s participation was accepted as vital.
A primary reason is because at the top of China’s current foreign policy agenda is its One Belt, One Road (OBOR) vision. The OBOR seeks to establish infrastructure networks across Eurasia, including a China-Myanmar-Bangladesh-India Corridor and a China-Pakistan Corridor, the latter of which has India uneasy.
Just as important, however, are China’s expanding and deepening economic and business ties with India – both in terms of trade relations and private sector investments.
This is why economic considerations trumped geopolitical kinks in the latest face-off between the Asian giants.
What is at stake
Besides concerns over OBOR, China knows the importance of its access to the Indian markets, while India continues to remain dependent on Chinese imports. In 2016-17, China’s goods exports to India valued at a whopping US$61.3 billion as against India’s shipments worth US$10.2 billion.
Chinese business linkages with India are also increasing. The country’s foreign investments into India has accelerated in recent years; between June and August 2016 alone, Chinese firms invested US$2.3 billion into India. Chinese firms are especially invested in India’s technology startups – across a variety of sectors.
Finally, India’s economic programs like Make in India and Digital India have also courted Chinese interest in investing in manufacturing, infrastructure, and the strengthening of India’s digital ecosystem.
Ultimately, it makes the most business sense to make peace and carry on.
India Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, Indonesia, Russia, the Silk Road, & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout India and the Asian region. We maintain offices in Delhi and Mumbai and throughout China, South-East Asia, India, and Russia. For assistance with India investment issues or into Asia overall, please contact us at email@example.com or visit us at www.dezshira.com.
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
The third edition of Tax, Accounting and Audit in India is updated for 2017, and provides an overview of the fundamentals of India’s tax, accounting, and audit regime. The guide also includes a detailed introduction of the Goods and Services Tax (GST) that was launched on July 1, 2017, representing the complete transformation of India’s indirect taxation structure.
In this issue of India Briefing Magazine, we discuss payroll processing and reporting in India, and the various regulations and tax norms that impact salary and wage computation. Further, we explain India’s complex social security system and gratuity law, and how it applies to companies. Finally, we describe the importance of IT infrastructure, compliance, and confidentiality when processing payroll in India.