A risky sell-off by India

In deciding to amend the Enemy Property Act India may be creating difficulties for itself downstream. There are 9,400 so called ‘enemy’ properties that were left behind by people that got citizenship in Pakistan or China. In this instance ‘enemy’ is defined by any property belonging to, held or managed by a state considered an enemy or any other entity that has ‘enemy’ associations. The amendment to the 49-year-old Enemy Property (Amendment and Validation) Act has raised anxiety in some quarters about the effect that such a move may make, given that relations with China — a substantial investor in India — are of immediate and vital importance. In the event of any conflict between India and China and let it be remembered that there is a history of limited warfare between the two stretching back decades, then Chinese properties in India may be sequestered and their assets seized.

India is in the midst of high-profile economic reforms and is hoping to attract inwards investment. The Chinese have an interest because India is one of the peripherals of the One Belt, One Road project that is going to define geopolitical relationships regionally as well as internationally for at least the next 30 years. The Sino-Indian relationship has improved in the last year since the low point in mid-2017 of the incidents along the Siliguri Corridor, the so-called Chicken’s Neck that saw the two countries come close to a local war.

India thus has to tread carefully and the snap auctioning of potentially ‘sensitive’ Chinese (and Pakistani) assets has the potential to drip volatiles on an already ‘hot area’. In 2016, the Chinese direct investment created jobs for Indians in a country that has a significant unemployment problem. The risk is that the confiscation of ‘left behind’ assets — which in monetary terms are a drop in the ocean — will create an undercurrent of uncertainty and is illustrative of just how vulnerable and fragile the security environment is and how easily affected by what is reality is a minor tweak in Indian legislation. Tread lightly.

Published in The Express Tribune, January 20th, 2018.

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