Arvind Subramanian's Business Standard piece on countering China's economic dominance.
From the Article
Bismarck famously said of the United States that it had managed to “surround itself on two sides with weak neighbours and on the other two sides with fish”. India, unfortunately, does not enjoy this luxury of splendid isolation: instead of fish it has Pakistan on one side and China on the other, a China that is on the verge of becoming economically dominant, sharing that status with the United States for now and enjoying it exclusively in the near future. The India-China relationship is fraught, having to contend with a number of things: the mutual resentment created by history (India’s stemming from its humiliation in the 1962 war and China’s from having to endure the Dalai Lama’s flight to, and long-term exile in, India); tensions of contiguity; anxieties of a hierarchical geography with upstream China controlling downstream India’s access to possibly the most precious of all future resources — water; and the unavoidable rivalries of large growing economies competing for markets, commodities and seats at the high table of global decision making.
Goldman Sachs, in creating the grouping BRIC (Brazil, Russia, India and China), thought that the common denominators of size and promising growth prospects could somehow wish away or at least dilute these complications and create common purpose and interest. Alas, that will not be the case. So, a strategic question for India is: how should it respond in the economic arena to a dominant China?
On the one hand, trade and economic relations between China and India are intensifying, creating opportunities for both countries and mutually reinforcing stakes, and imparting a positive-sum dynamic to the relationship. On the other hand, the economic relationship is seen, politically, as increasingly imbalanced. India runs a large and growing trade deficit with China, and the pattern of trade is reminiscent of trade during the days of empire. India exports predominantly raw materials to China and imports high-value-added and sophisticated goods.