From the sandstone walls of the 17th-century Red Fort in India’s capital, Prime Minister Narendra Modi sent a warning shot this week to his counterparts in Islamabad and Beijing.

Modi’s reference to disputed territories on Monday during his annual Independence Day speech — his most high-profile appearance of the year — signaled that India would become more aggressive in asserting its claims to Pakistan-controlled areas of Kashmir. The region is a key transit point in the $45 billion U.S. China-Pakistan Economic Corridor known as CPEC that will give Beijing access to the Arabian Sea through the port of Gwadar.

“This is a recalibration” after Modi’s overtures to Pakistan and China failed to yield results, says Harsh V. Pant, a professor of international relations at King’s College London. It’s also a message to China: “You may be investing a lot in Pakistan, and think that CPEC is a done deal, but without India’s approval you might find it difficult to follow through.”

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A more vocal India threatens to raise tensions in a region rife with deep-seated historical animosity that has made South Asia one of the world’s least economically interconnected regions. Various insurgents and militant groups threaten both China’s investments in Pakistan and progress in India-controlled Kashmir, where recent violence has killed about 60 people.

While India is more likely to redouble efforts on developing transport links with Iran and Afghanistan than sabotage China-Pakistan projects, the sabre-rattling may deal a setback to investor confidence in the region, according to Michael Kugelman, senior associate at the Woodrow Wilson Centre in Washington.

“The bottom line is that in a volatile region like South Asia, you don’t need actual aggressive actions to cause economic consequences,” he said. “Mere threats can have a very real effect on the economic state of play as well.”

In a bold rhetorical move on Monday, Modi overtly referred to the region of Balochistan, a resource-rich, insurgency-riven Pakistani province that is home to the strategic deep-water port of Gwadar. He also mentioned Gilgit, a Pakistan-administered region that borders China and Afghanistan — the northernmost edge of the planned economic corridor.

“I want to express my gratitude to some people — the people of Balochistan, Gilgit and Pakistan-occupied Kashmir — for the way they whole-heartedly thanked me, the way they expressed gratitude to me, the way they conveyed their goodwill to me recently,” Modi said in his speech.

The mention of Balochistan was particularly provocative. Pakistan has long accused India of backing rebels in the region, a charge governments in New Delhi routinely denied even while they blamed Pakistan for backing militants in Kashmir. While Pakistan condemns Indian security forces in Kashmir, human rights groups have expressed concern about disappearances and extrajudicial killings in Balochistan by Pakistan’s military, intelligence and paramilitary forces.

Modi’s comments prove Pakistan’s contention that Indian intelligence agencies are “fomenting terrorism in Balochistan,” Pakistan’s foreign ministry said in a statement on Monday. It also said the remarks were meant to divert attention from protests in the Indian state of Jammu and Kashmir, where dozens of protesters have been killed in the past month.

On Wednesday, in response to an invitation from Pakistan, India’s foreign secretary conveyed his willingness to travel to Islamabad for bilateral talks on cross-border terrorism and Jammu and Kashmir, according to an official with knowledge of the matter.

China has long played a role in developing parts of Kashmir in Pakistan. It helped build a highway through the region that opened in the 1970s, and recently conducted joint patrols with Pakistan in the area.

China’s foreign ministry didn’t reply to faxed questions on Modi’s comments. The ministry has repeatedly said that China hopes India and Pakistan can resolve Kashmir territorial disputes through peaceful means.

“The CPEC is not a zero-sum game where Pakistan gains and India loses,” Global Times, a state-owned Chinese newspaper, said on Tuesday. “If economic co-operation between China and Pakistan can improve infrastructure in the region, including in the Kashmir area, India will have an opportunity to expand trade routes to Central Asia.”

Modi’s remarks tap into historic grievances in a sensitive and contested part of Asia.

The dispute over Kashmir dates from the partition of the subcontinent in 1947. Like Kashmir, the Khanate of Kalat — which makes up much of modern day Balochistan — didn’t immediately choose to join India or Pakistan at the time of partition. Gilgit-Baltistan, which borders Jammu and Kashmir, is a majority Shia area in Sunni-majority Pakistan, and has in recent years seen sectarian strife.

Indian and Pakistani armies fought over Kashmir and settled into a stalemate with a de-facto border along the so-called Line of Control. In 1948, Pakistan forcibly annexed Balochistan, and its army has in recent years “crushed” several insurgencies and revolts there, according to Husain Haqqani, Pakistan’s former envoy to Washington.

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“By speaking of human rights violations in Balochistan, Prime Minister Modi has upped the ante in India’s tense relations with Pakistan,” Haqqani wrote in an e-mail. While Modi probably hopes his comments will dissuade Pakistan from doing the same thing in Indian-controlled Kashmir, such rhetoric is only likely to “exacerbate the paranoia that has characterized Pakistan’s attitude towards India.”

Modi’s remarks are the clearest signal yet of Indian concern over Pakistan-China economic co-operation, according to Ashok Malik, head of the New Delhi-based Observer Research Foundation’s Neighbourhood Regional Studies Initiative.

“When a prime minister says something of this nature on Independence Day, he’s not floating a balloon,” Malik said. “It means India will use its muscle, its propaganda muscle at least, to talk about Balochistan and trouble in Balochistan.”

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