India and China have reached a landmark agreement on the construction of two billion dollar infrastructure projects in the country, as both countries seek to diversify their economies.
The agreement, known as the Strategic and Commercial Partnership Agreement, aims to provide a global backbone to the construction industry and help boost the economy, the country’s commerce minister Ananth Kumar said on Friday.
“This agreement will strengthen the capacity of India to become a hub for global commerce and promote the development of the manufacturing sector in China,” Kumar said.
The agreement also envisages investments of $10 billion, including $6 billion in infrastructure projects and $5 billion in manufacturing.
“This will be the biggest trade agreement in history,” Kumar told reporters at the opening ceremony of the Indian-Chinese Economic Corridor, an economic corridor that connects Beijing with Hyderabad.
The economic corridor is a network of highways, ports, power stations, railways, railways stations, ports and other infrastructure linking China to the rest of India.
India has sought to establish its own business model in the region and has invested $2 billion to $3 billion in the corridor so far, while China has invested at least $1.3 billion.
China is India’s biggest trading partner and has been building infrastructure projects at a rapid pace in the South Asian nation since the early 1990s, and is set to spend $20 billion to build the first phase of the South China Sea infrastructure project.
India is building a major new highway linking Telangana, the poorest state in the nation, with Odisha, a state that has a large Hindu population, in a move that could have a lasting impact on its economy.
India, a small and poor country, has been under pressure from its neighbours for a long time to boost the manufacturing economy in the Indian Ocean region.
In 2016, India announced a $20-billion investment package to build new ports, a project that was halted amid the country having the largest population of migrants in the world.
India’s move to build a $10-billion rail line linking Mumbai to Pune, Maharashtra, in 2017 triggered protests by Indian exporters, who said the project would only worsen the countrys economic crisis.