At the heart of India’s China problem is an Indian inability to size up the Middle Kingdom and the meaning of its spectacular rise and to devise realistic responses to meet the attendant challenges. To be fair, this is not an affliction of New Delhi alone. Successive American administrations have also remained equally puzzled about China’s long-term strategic intent. There are three views on China that dominate much of Indian public discourse: of China as a (historically) unique power; of China as an economic partner; and of China as fellow ‘norm-entrepreneur’.
China as a sui-generis power
Many in India have implicitly assumed China to be a sui generis power – grounded in a supposedly-Asian ethos – whose behaviour is to be understood outside the matrix that is usually employed to study traditional (Western) powers. When Xi Jinping calls for a new kind of great-power relationship, he has many takers here.
This group of China aficionados believes that Beijing’s mandarins privilege the impetus of a deep-historical identity over raison d’etat – the assumption being that China is a civilizational state that would eschew the use of force and coercion in its rise to great-power status. Such idealists are comforted whenever Chinese dignitaries visiting India invoke the ‘Five Principles of Peaceful Coexistence’ – a set of quasi-philosophical principles that were in vogue up and until Mao saw to it that India was abjectly defeated in a short and sharp confrontation in 1962.
China as an economic partner
The second view of India-China relationship can be termed econo-centric. China, in this view, emerges as a key partner in India’s economic transformation, especially when it comes to becoming a large market for Indian goods and services as well as an important source of foreign direct investment. ‘Chindia’ – a Chimerica-like portmanteau coined by a minister of the previous government – will be predicated, in equal parts, by the logic of economic interdependence and the history of civilizational ties, so goes the argument.
But idealism is not always a necessary condition in the econo-centric view. One prevalent pragmatic opinion in India is that of leveraging China for India’s infrastructure growth and connectivity needs to reduce the gap in material strength between the two countries. Once that gap is sufficiently bridged India will be in a position to deter Chinese designs, proponents of this view hold.
It is not uncommon to see this view being expressed pithily both on- and offline as “an 8 per cent GDP growth rate for the next two decades is India’s China policy.” For India to sustain this growth rate, Chinese surplus capital, directed at infrastructure development, can come handy. India’s connectivity aspirations can also be met by aligning them with Chinese mega-plans like the Belt-and-Road-Initiative.
There is indeed historical precedence to buttress this line of thinking. After all, China’s spectacular growth was supported through free-riding the economic and security architectures that the US put in place, not to mention through leveraging Western investment. Why can’t India out-China China in a similar way?
There are two problems with this argument. First, there is no common enemy that India can invoke to seek concessions, economic or otherwise, from China. The US-China rapprochement was in the shadow of the Soviet Union and is a classic example of how the two countries leveraged a strategic triangle to their own benefits.
With China-Russia animosity now buried (at least publicly) and India-Russia relationship increasingly under strain, triangular geopolitics is unlikely to work in New Delhi’s favour. Second, even assuming that Chinese economic growth slows down in the near future, the gap in material strength between the two countries is unlikely to be closed anytime soon.

Putin, Modi and XI Jingping
China as fellow norm-entrepreneur
The third view of China in India is as a potential partner in promoting global governance norms that will promote the unique needs of emerging economies led by the two countries. The coterie that hold this view have argued that existing multilateral institutions, whether it is the International Monetary Fund or the World Bank, have been insufficiently effective in meeting the needs of emerging economies.
They also hold the view that these economies are under-represented in multilateral institutions (as measured by voting shares, for example). Seen from the prism of multilateral bargaining it makes sense for India and China to deploy their collective heft to seek reforms of these institutions – when possible – and to create new institutions that compliments the existing ones.
BRICS was the product of this line of thinking. Pragmatic Indian scholars and policy-makers, even when suspicious of China’s strategic intent towards India, have argued that BRICS is a valuable platform in that it allows the two countries to cooperate on “low-politics” issues (the über-realist John Mearsheimer’s terminology) – trade, sustainable development, and finance, for example – without hard-security irritants that would normally stalemate bilateral discussions being in the picture. This was also the line of thinking that led India to seek membership as the second-largest shareholder in the China-led multilateral Asian Infrastructure Investment Bank.

An unstated hope was that as both countries find convergence on low-politics issues, the road towards greater understanding on hard-security concerns and sensitivities would be paved. That has not come to a pass. While India has enthusiastically supported the BRICS agenda – last year’s summit in New Delhi had a record number of events around it – China has shown no discernible softening around India’s core security concerns regarding Pakistan or India’s membership in the NSG.
The view that the 21st century will be that of Asia’s has become commonplace to the point of being trite. The fructification of this long bet will be predicated in large measures by whether India and China can simultaneously and peacefully rise to great-power status. This will be invariably determined by whether India reads China – and absorbs the consequences of China’s rise into its strategic calculus – correctly and realistically.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.