As China, the current economic superpower of the East, becomes increasingly unstable and its markets unpredictable, many are focusing newfound attention southward on India. With its economy growing at a rate of seven percent, India is poised for an economic surge similar to that of China, with the benefit of drawing greater appeal from foreign investors who are deterred by the communist and authoritarian rule of India’s northern neighbor.
Apple CEO Tim Cook has already taken note. iPhone sales are recording their first-ever decline in China, just as sales in India are up by 76 percent last quarter. India provides a younger market for potential businesses looking to locate there, and Prime Minister Narendra Modi has made clear his vision for a more technologically advanced and innovative India. Cook praised India during a call with investors last month saying, "The demographic is incredibly great for a consumer brand and people want best products. The government too is interested in economic reforms. All speaks for a really good future business environment."
Modi is trying to move his country further along in becoming a global power. He has launched progressive initiatives such as the Clean India Mission, Make in India, and Digital India—all efforts to advance India through infrastructural improvements and innovation. His non-traditional approach to shake up Indian bureaucracy has gained him wide support among younger voters, and Modi is the second most followed politician on twitter, just behind U.S. President Barack Obama.
The Prime Minister has a progressive national security policy. For years, New Delhi has practiced a policy of “strategic autonomy,” keeping Indian armed forces out of regional conflicts. In today’s highly connected world, India has developed political and economic ties far beyond its borders.
Modi seeks to establish security ties with new partners, such as Japan, Vietnam, and Australia, and the Prime Minister has spoken about reforming the defense forces with an aim to create “capabilities to win swift wars, for we will not have the luxury of long drawn battles.” India is the world’s largest democracy, neighboring on primarily authoritarian regimes, each presenting potential complications to regional stability.
Strong ties between the U.S. and India will be essential in the event of conflict with China. Joint Indo-U.S. naval exercises began in 1992 and have taken place annually, with the exception of 1998 to 2002, following the 1998 Indian test of nuclear weapons. Singapore, Australia, and Japan have all previously participated in the exercises, prompting serious concern in Beijing. In 2015, Japan’s Japanese Maritime Self-Defense forces were installed as a permanent participant in the Malabar exercises—sending a clear sign to Beijing that the countries will continue to be united in the face of an increasingly emboldened China.
Always underlying the Indo-American relationship is the United States’ important but tenuous relationship with Pakistan. The United States and Pakistan maintain a delicate relationship in order to combat terrorist efforts in south and central Asia. India and Pakistan remain sworn enemies, with frequent territorial conflicts severely increasing tensions in the region. As with all love triangles, no party is happy about the others’ relationship.
Prime Minister Modi’s meeting with his Pakistani counterpart last December helped to briefly ease tensions, though January’s terror attack by on an Indian airbase by presumably Pakistani militants quickly disrupted hopes of achieving peace.
The Cipher Brief’s experts stressed the need for a constant dialogue between Washington and New Delhi, as India becomes an increasingly attractive partner for foreign investment and security alignment. At the same time, the U.S. must acknowledge when to get involved in regional conflicts, and when it is best to lead from behind.
India is without a doubt on the rise as Apple’s Cook has noted, saying, "During hard times like now, it provides an opportunity to invest in newer markets such as India where there are long-term prospects." As their respective private sectors pursue stronger ties, it will be up to the leadership in New Delhi and Washington to ensure that the two allies strengthen their cooperation, in turn.
Alexandra Viers is an International Producer with The Cipher Brief.
