India’s Regional Rise to Power – National Press Foundation

In recent years, India’s population and economic prowess have increased. At the same time, they are reentering the global trade arena, to impressive results. While threats from China loom, what approaches is India taking to its trade strategy? Amitendu Palit, Senior Research Fellow and Research Lead at the Institute of South Asian Studies at the National University of Singapore, and James Crabtree, executive director of the International Institute for Strategic Studies-Asia, explain the relationship between India, China and the rest of the world [Transcript | Video].

4 takeaways:

➀ As globalization increases, India enters the fray.

“The roots of the world order are changing, roots of trade are changing,” Palit said. India, once secluded, has reformed economically and has begun outreach to Southeast Asia and Northeast Asia, which it previously had little contact with. In the last three years, in particular, India has had a period of high proactivity. “There are FTAs which have been concluded in record times,” Palit said. India’s latest agreements are with G7 countries and its top trade partners, like the United Arab Emirates. Also, “there’s a lot of trade that India is talking from its side outside of the free trade agreements,” Palit said. India has risen to a key role in the region. “At a very high level, if India’s growth continues on the path that it is, I suppose we would expect global trade to become more India-focused,” Crabtree said.

➁ The Indo-Pacific Economic Framework gives India unique regional influence. 

India’s rulemaking powers in the IPEF mean it is much more influential in regional trade. It can contribute to standards corresponding to supply chains, new technologies, digital economies and more, “which the world and the region will live within the foreseeable future,” Palit said. The new framework gives India the opportunity to regain goodwill from regional partners after it refused to join the Regional Comprehensive Economic Partnership. It also allows India to connect with non-ASEAN regional powers, like Australia, Japan and Korea. “So I think there’s this very clear understanding that trade for India will no longer be an exclusive option,” Palit said. “It’ll be an option which will be looked at very closely with the national security and national interest priorities taken together with the evolving geopolitics.”

➂ India’s contributions are specific.

“I always look at India as a country which is probably going to make a huge contribution to the world economy, not through manufacturing at large,” Palit said. “And I’m choosing my words very carefully, not manufacturing at large, but selectively in manufacturing but largely in services.” Roughly two-thirds of India’s economy is comprised of services. India’s growth, too, isn’t necessarily a growth in jobs. “The growth may not necessarily be job-inducing and it is very unlikely to be,” Palit said.

➃ India and China are competitive, but India is cautious. 

Historically, India and China have had conflicts. Now, India is hesitant to build ties with Taiwan because although it competes with China, it chooses its battles carefully. “India sees China as a threat, but it doesn’t want to antagonize China unnecessarily, because China then has the capability of holding various Indian interests at risk,” Crabtree said. Geopolitically, India feels threatened from China’s entry into the Indian Ocean, a strategic space for India to reach Myanmar and Bangladesh. India is also economically and militarily weaker than China. To assuage this threat, India is increasing its connection with the U.S.

*This fellowship is part of an ongoing program of journalism training and awards for trade coverage sponsored by the Hinrich Foundation. The National Press Foundation is solely responsible for the content. All programs are on the record and resources and transcripts from this and previous fellowships are published.