BRI taxation framework worsens threat for India

Panama's recent withdrawal from China's Belt and Road Initiative (BRI) amid United States (US) pressure over Chinese proxy control of the Panama Canal underscores the geopolitical tensions surrounding Beijing's flagship infrastructure programme.

- Poonam Sidhu Khaira

Panama's recent withdrawal from China's Belt and Road Initiative (BRI) amid United States (US) pressure over Chinese proxy control of the Panama Canal underscores the geopolitical tensions surrounding Beijing's flagship infrastructure programme. China's lending practices have pushed several of India's neighbours, including Pakistan, Bangladesh, Nepal, and Sri Lanka, towards economic distress. With the Maldives now on the verge of sovereign default, China's funding of infrastructure in these nations is clearly not purely economic and carries strategic implications that directly impact India's regional security.

The 2017 BRI agreement, set to auto-renew in 2026, had enabled China to invest in Panamanian infrastructure, including ports operated by Hong Kong-based Hutchison. However, Panama has officially exited the BRI on February 7, 2025. Launched in 2013, the BRI aimed to revive ancient Silk Road trade routes through over $1 trillion in global infrastructure projects, including roads, ports, railways, and digital networks. The initiative spans more than 151 countries, including 21 in Latin America, 53 in Africa, and 10 in Southeast Asia. Notable absentees include India, Japan, and most European Union (EU) nations. The BRI Tax Administration Cooperation Mechanism (Britacom) further solidifies China's influence, embedding debt-laden economies into Beijing's fiscal and digital governance frameworks. These countries risk becoming arenas for external coercion in strategically sensitive regions.