India: Two Hundred Years
India as a World Power
For Principled Neutrality
A New Appraisal of Indian Foreign Policy
Has India an Economic Future?
America and Russia in India
India and the World
India After Indira
Against Nuclear Apartheid
India and the Balance of Power
The India Model
America's New Strategic Partner?
India's Democratic Challenge
The Promise of Modinomics
How the New Prime Minister Can Bring Back Growth
Modi's Money Madness
Will the BJP Learn the Wrong Lessons From Demonetization?
India at 70
The World's Biggest Democracy Celebrates Its Birthday
Will India Start Acting Like a Global Power?
New Delhi’s New Role
The country with the world’s third-largest military by personnel strength, fifth-largest defense budget, and seventh-largest economy isn’t a member of the UN Security Council. It isn’t even a member of the G-7, the exclusive club of major industrialized economies. It is India, a country long regarded as an emerging power rather than a major global player.
In fairness, for years, this assessment was not off the mark, and India’s reality did not match up to its vaunted potential. And indeed, India still faces daunting developmental challenges. It is home to around 270 million people living in extreme poverty. Its infrastructure is in need of major investment—to the tune of $1.5 trillion over a decade, according to India’s finance minister. Discrimination among India’s famously diverse population persists, whether on the basis of gender, caste, religion, or region.
Because of these challenges, and because the country has been kept on the margins of the global institutions central to U.S. diplomacy, India’s impressive economic power and defense capabilities have often gone unnoticed. But that is changing. A more confident India has already begun to shape the global agenda on climate change, clean energy, and worker mobility. And spurred by China’s increasingly assertive regional posture, India has ramped up its own military capacity.
India has long chafed at the fact that despite its size and its democracy, the world does not see it as a major power. Unlike China, it does not have a coveted permanent seat on the UN Security Council. Considering India’s growing economy and enhanced military capabilities, Indian leaders are pushing for their country’s “due place in global councils,” as former Prime Minister Manmohan Singh put it. Under the current prime minister, Narendra Modi, India has begun to see itself as a “leading power,” laying overt claim to a new, more central place in the world.
As India leaves behind some of its old defensiveness on the world stage, a vestige of its nonaligned worldview, it is time for U.S. policy to evolve, as well. Relations between the United States and India have come a long way from the days in which the diplomat and historian Dennis Kux could write of the two as “estranged democracies,” and both countries now talk of being “strategic partners”—a relationship of cooperation, but not a formal alliance. U.S. President Donald Trump has not yet fully articulated his plans for relations with India, although he did remark in June that they have “never looked brighter,” and in a departure from the Washington playbook, he has explicitly asked India to do more on economic development in Afghanistan.
As the president and his team grapple with India’s rise, they should reconceptualize the U.S.-Indian relationship to better manage differences with a power that prizes policy independence above all. And they must address the inequity of India’s exclusion from major institutions of global governance by championing Indian membership and giving New Delhi a long-overdue place at the table.
Working with a rising India will not always be easy. The country remains fiercely protective of its policy independence, shuns formal alliances, and remains ever willing to break global consensus, as it has done most famously on trade negotiations. It can be a close defense partner, but not in the familiar template of most U.S. alliances. India wants an improved trade and economic relationship, but it will not be easily persuaded by U.S. entreaties for increased market access. Still, Democratic and Republican administrations alike have prioritized forging closer ties with New Delhi, rightly regarding a tighter relationship as a vote for the importance of democracy and a bet on shared prosperity and stability in Asia.
PROSPERITY AND POWER
As with China, the economy has been at the center of India’s global transformation. While many outside India are aware of the country’s great potential, few realize that the Indian economy, with a GDP of over $2 trillion at current exchange rates, has now surpassed the economies of Canada and Italy (both members of the G-7). U.S. government projections anticipate that India will be the world’s third-largest economy by 2029, lagging behind only China and the United States. A slowdown in China and contractions in Brazil and Russia have increased India’s share of global GDP as measured by purchasing power parity, which the International Monetary Fund (IMF) projects will exceed eight percent by 2020—above that of Japan in 1995 and that of China in 2000. If the world at large doesn’t yet see India as akin to those economic powerhouses, CEOs around the world do: a 2016 survey conducted by the firm KPMG found that India had moved up four notches to become their top pick for growth opportunities in the next three years.
India’s sheer size and its youthful demographics offer the prospect of enormous economic growth. According to UN estimates, India will overtake China as the world’s most populous country sometime around 2024, and it will do so with a significantly younger population. India’s large working-age population will continue to grow until 2050, while Japan, China, and western Europe age. By then, Japan’s median age is expected to stand at 53 years, China’s at nearly 50, and western Europe’s at 47. The median-age Indian will be just 37 years old.
Although India remains home to the world’s largest number of poor, its middle class is growing and now consists of anywhere from 30 million (as the Pew Research Center estimates) to 270 million people (as the National Council of Applied Economic Research estimates), depending on how “middle class” is measured. A 2007 McKinsey report estimated that the Indian middle class, if defined as those with an annual disposable household income of $4,000 to $22,000, could balloon to nearly 600 million people by 2025. A growing middle class wields market power, which explains why giant multinational companies, from Apple and Xiaomi to Bosch and Whirlpool, have India in their sights: all those four are now manufacturing goods in India for the growing Indian market. India surpassed China as the world’s largest market for motorcycles and scooters in 2016, but it has also become a global hub for automobile manufacturing, producing nearly one in three small cars sold worldwide. India does not yet come to mind as an automotive powerhouse, but Ford, Hyundai, Maruti Suzuki, and Tata are all making cars there. Collectively, the Indian automotive industry built only slightly fewer automobiles in 2016 than South Korea and more than Mexico, both major car-producing nations. Although India needs to do much more to develop its manufacturing base, its advances in the auto industry represent an about-face from just 15 years ago.
India has begun to see itself as a “leading power,” laying overt claim to a new, more central place in the world.
Increasingly, India is translating its economic might into military power. It already counts itself as part of a select club of countries with advanced defense technology, including a nuclear weapons program. India is also a space power: it sent a probe to the moon in 2008 and has another in the works, and in 2014, it placed a vehicle in orbit around Mars (at a fraction of the cost of NASA’s latest Mars orbiter).
With its sights set on primacy in the Indian Ocean, New Delhi is strengthening its defense ties with countries across the region and building a blue-water navy. According to the International Institute for Strategic Studies, India now has a force strength of nearly 1.4 million troops on active duty and nearly 1.2 million reservists. The Stockholm International Peace Research Institute estimates that India became the world’s fifth-largest military spender in 2016, ahead of France and the United Kingdom. Now the world’s top importer of military equipment for the last five years, India has accelerated its procurements from U.S. companies from essentially zero to more than $15 billion worth over the past decade. But even as defense ties with the United States grow, India is not going to end its long-standing relationship with Russia, and recognizing that is part of working with New Delhi. Indeed, Russia remains a major defense supplier for India, as are France and Israel; India is simply diversifying its strategic bets by doing business with multiple partners.
India is also increasingly producing its own advanced defense technologies, instead of importing them. Although it recently replaced its aging aircraft carrier in a much-delayed deal with Russia in 2013, it now has a second carrier under construction, developed and built at home, although it may not be ready for as long as a decade. India has a third carrier scheduled for construction, also to be made domestically, and it has plans to add at least three nuclear-powered submarines to its fleet. In fact, in a major departure from the past, the country has begun to export military equipment to other countries in the region. India began transferring a series of naval patrol vessels to Mauritius in 2015, and it has been in discussions with Vietnam to sell it cruise missiles.
A NEW SWAGGER
A more confident India, eager to shape, rather than simply react to, global events, has already made its presence felt diplomatically. Take climate change. In the long-running multilateral climate negotiations, India moved, in less than a decade, from playing defense to taking the lead in setting the global climate agenda. For years, India had refused to acquiesce to proposals to cap carbon emissions. Indians considered it deeply unfair that the developed West was looking for cuts from developing India, a country with a historically small contribution to climate change, low per capita emissions, and large future development needs. But at the 2015 Paris climate conference, a new Indian stance emerged. Along with François Hollande, then France’s president, Modi announced a new international solar power alliance to be headquartered in India, with a focus on promoting the rapid deployment of solar energy and cutting the costs of financing and development. Given India’s ambitious and expensive goal of ramping up domestic solar energy production to 100 gigawatts by 2022, the alliance has allowed India to take on an international leadership role that complements its preexisting domestic energy plans. The Paris agreement showcased a different style of Indian diplomacy—this was not the India that helped scuttle the World Trade Organization’s Doha negotiations in 2008 but a new, problem-solving India.
On defense and security, India has strengthened its capacity over the past decade to such an extent that U.S. secretaries of defense now routinely refer to India as a net provider of regional security. India’s maritime ambitions, especially its goal of primacy in the Indian Ocean, are a response to China’s more assertive presence across South Asia. Beijing’s intensified infrastructure development assistance to Bangladesh, the Maldives, Sri Lanka, and, especially, Pakistan—as well as a new military base in Djibouti—have expanded China’s Indian Ocean reach. A 2012 decision upped India’s naval ship requirement to 198 from its earlier level of 138. In 2015, New Delhi quietly reached an agreement with the Seychelles to host its first overseas military base. That same year, India took the lead in rescuing nearly 1,000 foreign citizens from 41 countries stranded in Yemen, including Americans. And when Japan joined India and the United States that year as a permanent participant in the annual Malabar naval exercises, India was able to showcase its warships, planes, and submarines beside the two most powerful democracies in the Asia-Pacific region.
While deepening its ties with the West, New Delhi has also shown a determination to invest in alternative international organizations over the course of the past decade. India does not seek to overturn the global order; rather, it merely wants such institutions as the UN Security Council, the Asia-Pacific Economic Cooperation (APEC), the World Bank, the IMF, the Nuclear Suppliers Group, and others to expand to accommodate it. But as reform of these organizations drags on, New Delhi has put some of its eggs in other baskets.
Take the BRICS, comprising Brazil, Russia, India, China, and South Africa. In less than a decade, the group has become an important diplomatic forum and has accomplished more than most observers expected. At their 2012 summit, the BRICS began discussions on the New Development Bank—which announced its first loans in 2016—an institution in which these five countries could have an equal voice, unlike their disproportionately low representation in the World Bank and the IMF. And in 2014, they agreed to form the BRICS Contingent Reserve Arrangement, an alternative to IMF support in times of economic crisis. India also supported the Chinese-led creation of the Asian Infrastructure Investment Bank, and it is now the bank’s second-biggest contributor of capital.
In 2017, India also joined the Shanghai Cooperation Organization, and it maintains an active presence in other institutions far outside the United States’ orbit, such as the Conference on Interaction and Confidence Building Measures in Asia. Although New Delhi’s top priority remains a seat commensurate with its size and heft within the traditional global organizations still dominated by the West, India has shown that it is also willing to help build other arenas in order to have a greater voice. India will likely continue to maintain this diverse array of relationships even as it strengthens its ties with the United States; regardless, granting New Delhi the place it deserves in major Western international forums would help, rather than hinder, U.S. interests. At a time when international coordination has become far more complex, the increase in new organizations creates “forum-shopping” opportunities, as the political scientist Daniel Drezner and others have argued. More forums and more options make it harder to get things done internationally—and also decrease Washington’s influence.
A SEAT AT THE TABLE
Successive U.S. administrations have viewed the relationship with India as one of the United States’ great strategic opportunities, offering a chance to overcome historical differences and strengthen ties with a fast-growing market, a stable pillar in a region of turmoil, and a large country that can provide a balance of power across Asia and a bulwark against Chinese dominance. The George W. Bush administration sought to reframe the U.S.-Indian relationship by striking a 2005 deal concerning civilian nuclear cooperation, bridging what had been a 30-year divide on nonproliferation. The Obama administration continued the momentum, with various efforts to expand defense, economic, and diplomatic cooperation.
But shared goals do not always translate into shared approaches. Such was the case with Russia’s annexation of Crimea: Indian officials walked a tightrope, saying little publicly about it beyond an anodyne tweet from a Ministry of External Affairs spokesperson (“We are closely watching fast evolving situation and hope for a peaceful resolution”) rather than clearly condemning Russia’s violation of Ukrainian sovereignty.
On questions of grand strategy, India’s desire to be recognized as a major global power includes an indelible commitment to its own ideas of autonomy. Although New Delhi has shifted over the years from reflexive nonalignment to a recent philosophy of “strategic autonomy” to the present Indian government’s vision of “the world is one family” (from the Sanskrit phrase vasudhaiva kutumbakam), the connecting thread remains policy independence. But that sense of independence can sometimes clash with the United States’ tendency to believe that its partners and allies should support it across the board.
Part of the problem is that Washington has no template for a close defense relationship outside of the obligations inherent in a formal alliance. The U.S. government’s designation of India last year as a “major defense partner”—a status created and accorded only to India, as a means to facilitate advanced defense cooperation—illustrates the unique situation and marks the beginning of a new way to think through this relationship. Even though New Delhi seeks deeper ties, including obtaining U.S. technology, Indians do not want to sign themselves up for every U.S.-led initiative around the world. There is a difference between being “natural allies,” in the words of former Indian Prime Minister Atal Bihari Vajpayee, and the extensive commitments of a formal alliance. New Delhi seeks the rhetorical flourish of the former without the restrictive expectations of the latter.
Given that U.S. and Indian interests are converging across Asia, military ties between the two countries will no doubt deepen. But as they do, U.S. policymakers will have to manage their expectations and not be disappointed when India, say, improves ties with Iran. In order to ward off frustrations with India’s inevitable departures from U.S. preferences, the United States should frame its relationship with India differently, conceiving of it more as a joint venture in business than a traditional alliance. That would mean insulating shared initiatives from areas of disagreement, such as policy toward Iran or ties with Russia.
Given the size of India’s economy, it is past time for the country to be brought into agenda-setting institutions.
On economics, too, Washington at times differs sharply with New Delhi, despite a commitment on both sides to expanding bilateral trade. Indeed, India has never hesitated to break global consensus to protect its perceived economic interests. A decade ago, New Delhi and Beijing made common cause to protect their agricultural sectors, leading to the July 2008 stalemate that ended the Doha round of international trade negotiations. Then, in 2014, India backed out of the Trade Facilitation Agreement, which sought to cut red tape, despite having previously agreed to it. It took extensive talks to revive the deal. More recently, India’s powerful information technology sector has raised trade in services to the very top of India’s economic negotiating agenda, since one way to provide information technology services is to perform work on location—including in another country. New Delhi is pushing other countries to accept greater numbers of Indian temporary workers while remaining resistant to opening its own market further to goods and services. In 2016, India filed a formal dispute against the United States in the World Trade Organization over increases in visa fees that India claimed would hit its information technology workers especially hard; the outcome will set a precedent for managing worker mobility across the globe.
Despite these disagreements, there is ample room for progress on the economic relationship. India’s global ambitions rest on sustained economic growth, and for that, India needs to maintain ongoing reforms. While only India’s own political process will determine the trajectory of those efforts, the United States can and should do a better job of including India in the international networks conducive to economic growth and job creation. Historically, decades of self-sufficiency and a relatively small economy locked India out of productive economic institutions such as APEC, the Organization for Economic Cooperation and Development (OECD), and the International Energy Agency (IEA)—all bodies that set standards and provide a meaningful place for cooperation on trade, development, and economic policy.
Given the size of India’s economy, it is past time for the country to be brought into such agenda-setting institutions. An APEC missing Asia’s third-largest economy lacks legitimacy and makes little economic sense. Washington should support Indian membership, something it has so far refrained from doing. The same argument holds for the OECD, especially because India has emerged as a major donor of development aid across South Asia and Africa. In recent years, the OECD has created a category of states called “key partners”—a group that includes India, along with Brazil, China, and Indonesia—which it consults but does not count as members. Locking India out of the OECD also keeps it out of the IEA, for arcane historical reasons, thus excluding one of the world’s largest energy consumers. If the G-7 is to remain a central economic-agenda-setting institution for the world’s leading democracies, at some point, it, too, will have a hard time rationalizing its exclusion of India given the rapidly growing size of the Indian economy. Concerns that bringing India into the fold will disrupt consensus in these economic institutions are overblown, since these are not binding negotiating forums. If anything, giving India a place at the table will help pull it into a cohort of countries already committed to economic openness and transparency.
Finally, on the security front, India is right to see its continued exclusion from permanent UN Security Council membership as unfair, given its population and contributions to UN peacekeeping (India is among the top troop contributors annually). Washington should seek to make good on its promise of working toward permanent membership for India “in a reformed and expanded” Security Council, as President Barack Obama pledged before the Indian Parliament in 2010. Promoting India’s membership could present challenges to many U.S. positions, but the perspective Indian diplomats bring on some of the world’s most intractable problems deserves to be heard in the same room as the perspectives from China, France, Russia, and the United Kingdom. Unfortunately, the UN Security Council has not budged on the issue of expansion since Obama first voiced support for Indian inclusion. Reform has been held hostage to competing demands from other deserving countries—such as Brazil, Germany, and Japan—not to mention a lack of consensus on the size of expansion and whether new permanent members should have veto powers.
Even if the UN remains plagued by inertia, there are many other forums where India could make a contribution, with a little help from Washington. The United States must do a better job of normalizing the reality of India’s rise and overtly emphasizing the country’s importance to U.S. national interests and to the world, just as Washington assumes the importance of so many of its close European partners. Despite their political differences, both Modi and his predecessor, Singh, shared a conviction: that for India on the world stage, “our time has come.” Washington should embrace—rather than merely await—its arrival.