CAA’s Articulate – India may not alter rules of engagement with AIIB


  • New Delhi is unlikely to alter its engagement with the Chinese-led Asian Infrastructure Investment Bank (AIIB) despite a host of offensive measures announced recently to reduce its trade and investment links with China.

More on the news:

  • Speaking at the AIIB virtual annual meeting recently, the Indian finance minister said India expects AIIB to
    • Introduce new financing instruments,
    • Provide financing for social infrastructure and
    • To integrate the development of climate-resilient and sustainable energy access infrastructure into AIIB’s recovery response to the coronavirus crisis
  • India is not taking money from China but from the multilateral development bank. Therefore, any structural change in India’s engagement with AIIB has not been done.

Background of India’s engagement with AIIB

  • Founding member:
    • In January 2016, India became a founding member of AIIB along with 57 countries.
    • AIIB’s membership has now grown to 102 countries.
  • Shareholding: India owns 83,673 shares (second-largest shareholder) with a capital subscription of $8.4 billion in AIIB,
    • China is the largest shareholder and owns 297,804 shares with a $29.8 billion capital subscription.
  • Projects approved:
    • So far, AIIB has approved up to $19.6 billion for 87 projects in 24 economies with India the largest beneficiary.
    • AIIB has approved financing projects in India in a host of sectors like energy, transport, and water.
    • These projects include the Bangalore Metro Rail project ($335 million), Gujarat rural roads project ($329 million), and Phase 3 of the Mumbai urban transport project ($500 million).
  • Response to COVID-19 crisis
    • AIIB has approved $500 million for the COVID-19 Emergency Response Fund and Health Systems Preparedness Project.
    • It has also approved another $750 million for COVID-19 active response and expenditure support, in a co-financing arrangement with ADB.

Asian Infrastructure and Investment Bank:

  • It is a multilateral development bank with a mission to improve social and economic outcomes in Asia.
  • HQ: Beijing, China.
  • It began operations in January 2016 and has now grown to 102 approved members worldwide.
  • By investing in sustainable infrastructure and other productive sectors in Asia and beyond, it will better connect people, services and markets that over time will impact the lives of billions and build a better future.
  • The starting capital of the bank was $100 billion, equivalent to 2⁄3 of the capital of the Asian Development Bank and about half that of the World Bank.
  • Three categories of votes exist: basic votes, share votes and founding Member votes.
    • The basic votes are equal for all members and constitute 12% of the total votes, while the share votes are equal to the number of shares. Each Founding Member furthermore gets 600 votes.
  • Fourteen of the G-20 nations are AIIB members including India, China, France, Germany, Italy and the United Kingdom.
  • China is the largest shareholder with 26.61 % voting shares in the bank followed by India (7.6%), Russia (6.01%) and Germany (4.2 %).