Escalating border tensions with China have not prevented India from becoming the Beijing-based Asian Infrastructure Investment Bank’s biggest borrower.
Data released by the AIIB indicates that its lending to India has reached USD$1.074 billion, equal to nearly 28% of all credit extended.
Out of the 24 infrastructure projects approved by the bank in the week of its second anniversary, five are situated in India.
India also has the largest number of applications for funding from AIIB in the pipeline, including $500 million for a new metro line in Mumbai, which if approved would be the bank’s biggest loan.
The biggest AIIB loan to India that has already secured approved is $335 million in funding for a 22 kilometre metro project in southern city Bangalore,
The AIIB is a multilateral development bank that was established at Beijing’s behest with the goal of funding infrastructure development across the Asia-Pacific.
The bank commenced operation on 16 January 2016 with capital of $100 billion, equal to half that of the World Bank.
India’s copious borrowing from AIIB arrives amidst increasingly tense relations with China.
Sino-Indian border disputes recently flared up again in the Himalayas, while New Delhi was conspicuously absent from the Belt and Road forum in May last year, with one Indian academic referring to the initiative as exemplifying Chinese “creditor imperialism.”
Indian analysts have also expressed concern about China’s construction of ports in other south Asian nations, including Pakistan and Sri Lanka.
Despite these difficulties, Madhav Das Nalapat, director of the department of geopolitics and international relations at Manipal University, expects Sino-Indian relations to rapidly improve on the back of rising trade and financial interactions.
“Once trade between India and China crosses USD$300 billion annually, which it will in about five years, the two countries will be close friends,” said Nalapat to the South China Morning Post.
Nalapat also expects lending by Chinese banks to Indian firms to expand, on the back of the huge demand for funds in India and its “impeccable record” of repayment.