India’s perilous foreign relations

The Indian roller coaster

As Shivshankar Menon argues in his book, India and Asian Geopolitics: The Past, Present, India’s foreign relations – both with its neighbours and the rest of the world – have been on a roller coaster since the country’s independence in 1947. And as I write today, India’s foreign relations are in a precarious state.

Menon is a hands-on retired Indian diplomat, who served as National Security Advisor to Prime Minister Manmohan Singh, and as the Foreign Secretary in the Ministry of External Affairs. But his book would be worthy of any academic historian. This article is partly based on material drawn from this book.

At the end of World War II, India and Asia were still largely colonised. The departing colonial powers left India and much of Asia poor, backward, and weak. Further, Asia was a collection of subregions – East Asia, Southeast Asia, South Asia, West Asia and Central Asia – not a cohesive region..

Today, China, India and many other Asian countries are at the center of world politics thanks to their rapid economic development. Asia can also increasingly be thought of as a region, due to dense regional flows of trade, investment, energy, and technology, as well as infrastructure linkages across the continent.

As a consequence, geopolitics makes Asia an increasingly cohesive unit. There is however a negative side to such regionalism, as finance from West Asia (the Middle East) finances terrorism in South and Southeast Asia (including in India).

According to Menon, since independence India’s foreign policy has gone through three geopolitical phases. Nevertheless, Indian foreign policy has always been guided to varying degrees by a philosophy of “strategic autonomy”, even if different terms have been applied over time. This means that India has shunned strategic alliances, and chosen to go its own way.

India and the early Cold War

The first geopolitical phase was the bipolar (US and USSR), nuclearised, Cold War period from 1947 to the 1960s. India made the brave choice to remain non-aligned, not affiliated with either bloc. India sought to take a leadership role in the Third World by advocating decolonisation, nonalignment, disarmament, and multilateralism.

But India’s attempted leadership role was upset by China’s annexation of Tibet during this period – an act which displeased India, but which India was incapable of responding to militarily. As a result, India inherited a 3,500 kilometre land border with China. It is a largely undemarcated and disputed frontier, primarily located in the Himalayas, and has long been a source of conflict between the two nations. This is the first time that India has had to face Chinese troops on its border. Indeed, this is the world’s largest disputed border.

Further, India’s relations with Pakistan were poisoned by the bloody and tragic “Partition” of the two countries at their independence, and moreover by Muslim-dominated Kashmir’s decision to join India rather than Pakistan. Kashmir remains a major thorn in the side of India/Pakistan relations. India and Pakistan have engaged in four wars since their independence – in 1947-48, 1965, 1971, and 1999 – with the primary point of contention being Kashmir. During the early days, both the US and the UK tended to side with Pakistan on this rivalry, in part at least to serve their own geopolitical interests.

India’s poor relations with Pakistan, which continue until this day, pose a security challenge to India, rob the country of political energy which could be more usefully employed elsewhere, and result in South Asia having the lowest level of economic integration of any of the world’s regions. In sharp contrast, East Asia’s high level of economic integration, through rich supply chains, has been a key element in the region’s economic success, something which South Asia can only envy.

Towards and beyond the end of the Cold War

The period from the early 1960s to the mid-1980s saw drastic shifts in Asia, with the Sino-Soviet split in the early 1960s and a de facto Sino-US alliance following US President Nixon’s visit to China in 1972. India responded by tightening links with the Soviet Union. India did suffer humiliation at the hands of China again, losing a war in 1962 when a border dispute escalated into an armed conflict. India’s support for Bangladesh in its war of independence from (West) Pakistan further exacerbated relations with the latter country.

The end of the Cold War in 1989 saw the beginning of the third phase in India’s post-independence geopolitics. This was the US’s unipolar moment. It coincided with the opening of India's formerly inward-looking economy to the world (starting in 1991) which generated annual economic growth rates of around 6-7 percent. The advent of the post Cold War period saw a warming of India’s economic and political relations with the US.

India/US partnership

The US became India’s leading export destination, including for trade in IT services, which has been boosted by the large Indian community in the US, many of whom play a leading role in the tech sector. The US is home to the largest overseas Indian population in the world, totalling 5.4 million people out of the US overall population of 345 million. Indian American households have a significantly higher median income – $151,200 – than Asian-headed households ($105,600) and the US national median of $78,538.

Another major development was the Indo-US Civil Nuclear Agreement, a bilateral accord which allows for the transfer of nuclear technology and fuel from the US to India for civilian nuclear energy purposes, in exchange for India placing its civilian nuclear facilities under IAEA safeguards. The agreement marked a significant policy shift for the US, ending a decades-long ban on nuclear trade with India, which had previously been imposed due to India's nuclear weapons program and its non-signatory status to the Nuclear Non-Proliferation Treaty.

The agreement is seen as crucial for India's energy security, providing access to nuclear technology and fuel to meet its growing energy demands. It also strengthens the strategic partnership between the US and India.

India confronts the China challenge

While the US and India were moving closer together, China was continuing to test India’s foreign relations, including via China’s close relationship with Pakistan. June 2020 saw a conflict break out between Indian and Chinese troops in the Indian territory of Ladakh, and these tensions have not yet been resolved. Indeed, the frequency and intensity of the Sino-Indian border crises have only increased since 1962 – notably the 1967 Nathu La Crisis, the 1986–87 Sumdorong Chu Crisis, the 2017 Doklam Crisis, along with the 2020 Ladakh conflict.

Beyond these crises, China has been working to narrow India’s strategic space by penetrating its neighbourhood. China is rapidly transforming Pakistan into its strategic surrogate in South Asia, notably through the China–Pakistan Economic Corridor of the Belt and Road Initiative, which passes through Kashmiri territories claimed by India.

Another factor has been Chinese investments in ports along the Indian Ocean littoral in Cambodia, Myanmar, Sri Lanka, Pakistan, and the Maldives. Indeed, maritime security in the Indian Ocean is critical for India’s future. Today, many countries have vested interests there, because it accounts for the transport of 70 percent of oil, 50 percent of container traffic, and 35 percent of the world’s bulk cargo. The challenge is how to build capacity and create international will to keep the Indian Ocean region open and free and secure.

Fundamentally, China insists on being Asia’s hegemon, and wants India to know its place in the Asian hierarchy. China wants to create anticipatory compliance with its wishes. But India cannot submit to China’s ambitions to constrain India’s rise. Notwithstanding the intense rivalry, trade between the two countries is booming, though imbalanced as India has a large trade deficit with China.

India is in an invidious position in light of the power gap between the two countries. In 1990, the Indian and Chinese economies were of a similar size. But by 2023, China's GDP was significantly larger than India's, with China's GDP at over $17 trillion and India's at $3.5 trillion.

Not only is China way ahead of India in terms of GDP, it is also a leader in technology and participation in global supply chains. And as China is resolute in accumulating power, it has also led Asia’s unprecedented arms race. Asia is one of the most heavily armed parts of the world. And India lives in one of the most nuclearised neighbourhoods, with both India and Pakistan being unofficial nuclear powers.

In sum, Sino-Indian rivalry shows no signs of abating, although it appears that uncertainty inspired by Trump’s America has led to very recent Sino-Indian talks with a view to dialing down the temperature.

The Modi factor

Menon is somewhat critical of the foreign policy of the Bharatiya Janata Party (BJP) government under Prime Minister Narendra Modi, which has been in power since 2014. The BJP is a conservative pro-Hindu political party in India. Modi’s government has spoken of India as “a leading power” and a world teacher. The chest-beating narrative about India as a great power seems driven more by a desire for status and recognition and probably plays well with Modi’s core Hindu constituency at home.

But it is hardly realistic in a country where large parts of the population still live in poverty or near-poverty, and suffer from illiteracy. India’s economy may be the world’s fourth largest in terms of GDP at market prices, but this is mainly because of it having the world’s largest population. As impressive as India’s thirty year growth rate of 6-7 percent may be, the country slipped further behind China which grew even faster over this period, as mentioned above.

Relations with Pakistan have only deteriorated under Modi’s leadership. The 2003 ceasefire along the Line of Control between India and Pakistan has broken down, and political communication between the two states is minimal today. We are a long way from the promise of the 2004–2007 period, when India and Pakistan appeared close to addressing the issues between them, when terrorism declined, and it seemed possible that the two countries would find a way to live together in peace, no matter how fragile. Relations were exacerbated by the Modi government’s decision to reduce the level of provincial autonomy in Jammu and Kashmir and reorganise the state into two union territories, administered from Delhi.

Under Modi’s leadership, and partly in response to the China challenge, India/US relations have gone from strength to strength. This includes defense agreements for interoperable military communications and bases. India is also a member of the Quadrilateral Security Dialogue (“the Quad”) of four regional democracies—Australia, India, Japan, and the United States — which was revived in 2017 to act as a counterpoint to a more aggressive China. India’s reliability as a Quad partner has however been greatly undermined by its enormous purchases of Russian oil, which has supported the latter’s war effort against Ukraine.

Trump’s America

Like everyone, India has been hit by Donald Trump’s trade tariffs. Trump first announced 27 percent tariffs on Indian goods on 2 April. The tariffs were initially paused until 9 July, and the US later extended the deadline to 1 August. As of writing, India and the US would be close to a deal, according to Trump.

In any event, India must now adapt to the new world. Trump’s America has decided that the old postwar order was not working for it. Trump is recalibrating America’s relationship with the world. Indeed, under Trump we may be watching the dismantling of the West as a geopolitical unit.

Menon argues that we are between world orders. The unravelling of the unipolar moment began with the Afghan and Iraqi wars, 2008 global financial crisis, and the consequent turning inwards of the US. The parlous state of the international system is evident in the weak national commitments in the Paris climate change accord, and the lack of a coherent global response to the Covid pandemic – in sharp contrast to the coordinated response to the global financial crisis.

What does this mean for India?

Menon argues that India’s priority must be “self-strengthening”. A strong economy is the basic source of geopolitical power. India has in fact fallen further behind China over recent decades, as mentioned above.

India’s economy has always performed better in response to policy openness, according to Menon. But over the past eight years or so India has been raising tariffs, which undermines India’s competitiveness. This has effectively kept India out of global supply chains for manufacturing. India has not been a beneficiary of “The China Plus One” strategy whereby companies aim to mitigate risks associated with over-reliance on a single country and create more resilient supply chains. India has been beaten to the punch by countries like Vietnam and Thailand.

Key to economic self-strengthening is fostering cooperative relationships with its neighbourhood. Economic integration in South Asia is the weakest of any of the world’s regions, as already mentioned. Deepening economic and institutional links with East and Southeast Asia, the world’s fastest growing regions, is also key. India’s economic linkages to these regions is currently underdone. Countries like Japan and Australia have mobilised great efforts to improve trade and investment linkages with India, only to see disappointingly poor results. India is basically a difficult country in which to do business.

Menon is particularly disappointed that India pulled out of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement, which brings together ASEAN, North East Asia and Australia and New Zealand. India was a party to eight years of negotiation before it withdrew. Had it not withdrawn, it would have had 20 years to adjust to the agreement. By withdrawing, it implies that India does not expect to be competitive in 20 years time. In addition, India is disappointingly absent from the region’s other major trade agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, as well APEC (Asia-Pacific Economic Cooperation).

In sum, India cannot transform itself into a modern prosperous and secure country on its own. It needs its neighbours and the rest of the world for access to markets and also for technology. Further, India needs the rest of the world for energy resources and non-ferrous metals. In addition, India needs to work to constrain China’s hegemonic ambitions, by strengthening middle power cooperation with countries like Japan, Australia and ASEAN.

All things considered, India faces a very challenging agenda. Even before the return of Trump to the US presidency these challenges were enormous. Today these challenges look perilous.