Why India is a Critical Geopolitical Partner for the United States
Author: Shruti kapil, researcher – Security and mutual dependence desk. Over the past decade, the United States and India, the world’s two largest democracies, have forged a strategic partnership shaped by shifting global dynamics. India’s increasing significance in United States foreign policy can be attributed to three key factors: its emergence as one of the fastest-growing economies, positioning itself as a leader of the Global South; the expanding influence of China in the region; and the shared democratic values that unite the world’s largest and oldest democracies. India and the United States have a comprehensive global strategic partnership, and this relationship will continue to receive bipartisan support whatever the outcome of next week’s election. Historical context The India-US relationship has seen it all – the good, bad and ugly. The Cold War era had strategic divergences between the two countries. The 1971 India-Pakistan war had a significant impact on India-US relations because, despite the evidence of atrocities committed by the Pakistani Army against its own citizens in East Pakistan (now Bangladesh), the Nixon administration supported Islamabad. This led India to forge even closer ties with the Soviet Union, which culminated in a 20-year Treaty of Friendship and Cooperation. The relationship hit a new low when the US imposed sanctions on India after its 1998 nuclear tests. However, as the new millennium approached, the relationship between the two countries began to shift, gradually changing course amid the ever-shifting tides of geopolitics. In 2016 the US designated India as a “major defence partner”. This relationship has deepened with the 2+2 dialogues that began in 2018, and several defence agreements signed including the Logistics Exchange Memorandum of Agreement (LEMOA), the Communications Compatibility and Security Agreement (COMCASA) and the Basic Exchange and Cooperation Agreement (BECA) in 2020 which facilitates the exchange of geospatial intelligence. These agreements have established a foundation for defence cooperation, further strengthened by joint military exercises and intelligence sharing. India and the US have evolved significantly, transforming from estranged democracies into comprehensive strategic partners. India’s growing economic power In 2023, India overtook China as the most populous country in the world. China had its first negative population growth in 60 years while India is growing at 1%. A generation from now India’s working population is expected to be 50 percent larger than China’s. India’s demographic profile is of a young, tech-savvy, English-speaking workforce and with a strong work ethic. China has an ageing population like the US and that poses challenges to its economic and social structures. According to the IMF, China will grow at 3-4% while India will grow at 6-7%. Overall, India’s growth prospects look positive for the next 10-15 years. With the world’s largest population, the fourth largest stock market, the highest growth rate among large countries, substantial foreign investment inflows, the rise of start-ups, key player in global AI ecosystem and digital India initiatives, India is expected to grow dramatically during the next 30 years. Also, as the world’s largest democracy, India offers greater stability, unlike its authoritarian neighbour. This stability is a distinct advantage for India which the US highly values. The economic triangle of India, China and the US encompasses multiple facets – trade, investment and strategic concerns. In 2022, U.S.-India trade reached $191 billion, nearly double the level of 2014. The US was India’s largest trading partner in 2021-22 and 2022-23 and has been the primary source of FDI for the second year in a row. The trade dynamics show a $37 billion trade surplus in India’s favour, mostly due to the progress in areas of technology and manufacturing. When it comes to the India-China economic relationship, imports from China have continued to grow unabated. In 2023, China overtook the US to become India’s number one trading partner. The situation has resulted in a trade deficit of $85 billion for India, meaning India is heavily dependent on Chinese manufacturing. Similarly, in 2022, the US trade deficit in goods and services with China reached $367 billion, marking the highest deficit in all its bilateral trade relationships. The India-US economic ties are a strategic alternative to India’s dependence on Chinese imports, as the US is also trying to reduce its dependence on China. India can play an important geopolitical role for the US by providing an opportunity to de-risk from China’s manufacturing sector. India’s ability to balance relations with both China and the United States will be critical to its long-term economic independence and position on the global stage. Rising Chinese influence in Indo-Pacific The Indo-Pacific is of immense strategic importance because of its critical sea trade routes which connect the Middle East, Africa and East Asia to Europe and the US. The Indo-Pacific region, spanning from India to the western Pacific, is inhabited by over 3.5 billion people and has a combined GDP exceeding $20 trillion. These routes facilitate most of the world’s oil trade and a third of global trade. There are choke points along this route that if blocked could disrupt the global economy. Moreover, this region has three of the world’s biggest economies—China, India and Japan—and seven of the largest militaries. India’s 9000 miles of land borders limit cross-border trade due to political, security, and difficult terrain issues. This makes the Indian Ocean region crucial as a key driver of India’s future economic growth. The importance of the Indian Ocean Region to India is multifaceted: geography, energy, trade routes, natural resources, sea lines of communication, security concerns and regional geopolitics. Given these factors, Prime Minister Narendra Modi has made the Indian Ocean Region a priority which is evident from India’s maritime initiative—Security and Growth for All in the Region (SAGAR). China’s aggressive expansionism poses a serious challenge to India, stretched to both land and maritime domains in the Indo-Pacific region. China’s territorial ambitions have led to regional instability, directly impacting India’s interests—from the contested border and the violent 2020 clashes between Indian and Chinese forces to Beijing’s claims over Arunachal Pradesh and encroachments into Bhutan and Nepal. And China’s
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