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Why Middle Powers Matter to India

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The Pulse

Why Middle Powers Matter to India

Middle powers hold the key – economically and geopolitically – to India’s growth and security.

Why Middle Powers Matter to India
Credit: Flickr/ MEAphotogallery

By the time Prime Minister Narendra Modi completed his first year in power on May 26, he had spent an unprecedented 53 days outside India—or almost twice as many as Manmohan Singh’s 30 days overseas in his first year as prime minister in 2004-05.

Modi’s international engagements were a continuation of India’s foreign policy under the preceding Congress government. But he injected a new energy into the relationships with neighbors like Bhutan and Nepal, and major powers like China and the U.S.—which has been widely commented on. He also visited Japan and Australia, and is scheduled to visit Israel and Saudi Arabia later this year. However, his equally noteworthy engagement with these and other middle powers has been relatively unnoticed.

Political compatibility

Deeper ties with middle powers like Australia, Canada, France, Germany, Israel, Japan, and South Korea are important for India at a time when the magnitude of the United States’ global influence is declining due to the rapid growth of China and the improving growth trajectories of numerous middle powers. Collaborating with these countries can help India progress from being a South Asian power to an Asian and eventually global power.

Even though U.S. influence is declining, many of the middle powers remain U.S. allies. The Indian economy’s projected growth, along with the country’s Modi-driven improved relationship with the United States, have enhanced India’s status with many of these powers.

China lacks the breadth of allies that the United States has, with only two firm friends—Pakistan and North Korea—both globally perceived to be trouble-makers. Other Asian countries like Cambodia, Sri Lanka, and Myanmar are dependent on China’s financial largesse, but prone to resist when the terms of repayment become too onerous.

Modi’s visits to middle power countries are aimed at strengthening partnerships in a changing global scenario. For instance, India is now more open about its relations with Israel, and Modi plans to be the first Indian prime minister to visit the country later this year. His visit will be part of an attempt by India to engineer a three-way balancing of its relations with West Asian middle powers, including Saudi Arabia and an Iran that may soon re-emerge from international isolation.

Apart from West Asia’s strategic significance in a region beset by Islamist terrorism, which also impacts India, the oil-rich region is critical for India’s massive energy requirements. India also has a large diaspora in West Asia that sends home around $35 billion in remittances annually.  India’s own sizable Muslim population has cultural and religious ties to the region.

To the east, Modi visited South Korea, Japan, and Australia; all are middle powers that are deeply connected to China economically, but are treaty allies of the U.S. And all are potentially useful economic and strategic partners for India. A partnership with India will create more balance in a region increasingly dominated by China, and it will be endorsed by the United States.

Japan and Australia are integral to India’s aspirations of becoming a net security provider; and India and Australia have already signed a Framework for Security Cooperation in November 2014. Along with India and the U.S., these two countries constitute the “strategic diamond” promoted by Japanese prime minister Shinzo Abe. They can be critical to the U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region, signed by Modi and President Barack Obama in January, and to India’s own strategic influence in Asia.

Economic compatibility

The potential economic and energy benefits of India’s partnerships with the middle powers are equally significant.

Japan is the world’s third-largest economy, which first provided loans to India in 1958. Since then, India has become the largest recipient of Japanese official development assistance, and the Japanese public sector and private sector are involved in various projects—from infrastructure to manufacturing—in India.

India requires $1 trillion over the next decade to upgrade its infrastructure, for which it needs foreign direct investment, while Japan is already invested in the Delhi-Mumbai Industrial Corridor project. An infrastructure build-out will also need investment and technology from such countries as South Korea and Canada.

In the coming years, Japan will remain crucial to India for nuclear energy. While the deals India has concluded with Australia in November 2014 and Canada in April 2015 will provide the uranium, it is Japan that holds the key to unlocking the India-U.S. civil nuclear agreement. Companies that manufacture nuclear technology in the U.S., like Westinghouse and GE, are part-owned by Japanese firms Toshiba and Hitachi, respectively. A nuclear agreement between India and Japan is therefore necessary for building nuclear reactors in India.

Additionally, Japan, Australia, and Canada are members of the four technology denial regimes—the Nuclear Suppliers Group, the Wassenaar Arrangement, the Australia Group, and the Missile Technology Control Regime. With deeper ties to these countries, India’s support base for membership to these regimes can widen.

The middle powers will also be critical partners for India’s indigenous defense production and to reduce the country’s defense import bill. Although major powers Russia and the U.S. have been the biggest sources of defense exports and co-production, deals such as the October 2014 one with Israel on the Spike missile defense system will help unlock India’s defense manufacturing capabilities.

Building skills is a major pillar of Modi’s ‘Make in India’ program, and he has signed agreements with Germany, France, and Canada to strengthen India’s manufacturing through skills development across various sectors like the railways, apparel, agriculture, and healthcare.

These, in the long run, will help India and its economy far more than massive import-heavy trade relationships with major powers such as the United States and China.

In his second year, Modi must prioritize the UK, Nigeria, and Indonesia—all of which have deep historical, cultural, trade, or economic links with India. By deepening bilateral relations with them, Modi can continue to build India’s critical partnerships with middle powers.

Karan Pradhan is a Senior Researcher at Gateway House: Indian Council on Global Relations. This article was originally published at Gateway House: Indian Council on Global Relations, a foreign policy think tank in Mumbai, India, established to engage India’s leading corporations and individuals in debate and scholarship on India’s foreign policy and the nation’s role in global affairs.