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 “debt-trap diplomacy” in Pakistan and Sri Lanka makes India’s strategic situation more complex. Meanwhile, China’s String of Pearls and OBOR (One Belt, One Road) has expanded its reach across the Indo-Pacific and connected to the West. As part of this, Chinese commercial and military bases pose a big threat to India’s national security by encircling the country and threatening its power projection, trade and territorial integrity.
For the US, China’s rise is its “biggest geopolitical test” of the 21st century, according to Secretary of State Antony Blinken. The Indo-Pacific has become a key focus of US foreign policy, and India is at the centre of it because of India’s geography, population and growing economy. The US acknowledges India’s role in countering China and maintaining stability in South Asia, as this is directly linked to Indo-Pacific security. Any conflict between Asia’s two biggest economies and military powers will have a domino effect and impact the overall stability of the Indo-Pacific region. To support India, the US has been sharing real-time intelligence with India, particularly on Chinese military movements. In 2023, the US Senate further solidified this partnership by officially recognizing Arunachal Pradesh as Indian territory, a strong message against Chinese claims.
The US and India share a common vision of a “free, open and inclusive” Indo-Pacific but approach China from different strategic vantage points shaped by trade, geography, history, and immediate neighbourhood concerns. For the US, China’s aggressive actions in the South China Sea and beyond are seen as a challenge to the rules-based international order and hence a more direct and confrontational approach. Being a neighbour, India is more cautious, balancing deterrence with diplomacy to prevent escalation that would have an immediate and potentially destabilising impact on its security and economy.
As a balancing power, India does not have the luxury of being confrontational like the US. It seeks stability and cooperation with China to manage its differences. While the US sees India as a key partner to counter China’s regional influence, India is wary of being drawn into a Western alliance that demands confrontation with the nuclear-armed neighbour. For instance, the outcomes of the recent 16th BRICS Summit in Kazan and India’s bilateral meetings with China show that India has managed to roll back to pre-2020 positions on the Line of Actual Control (LAC), underscoring the beneficial role of India’s strategic autonomy. India’s participation in the Quad (with US, Australia and Japan) and opposing groups like SCO and BRICS shows it can manage these relationships to serve its national interests. By walking the tightrope between Western alliances and regional relationships, India wants to maintain stability in its backyard while aligning with broader Indo-Pacific principles.
Shared democratic values
Another crucial aspect of the India-US strategic partnership is that both countries share democratic values and uphold the rules rules-based international system. India as a thriving democracy positions itself as a leader of the Global South. Unlike its neighbours, the Indian state’s constitutional framework has withstood the test of an independent, democratic society with multiple castes, linguistic groups and religious communities. The US has a choice between the two Asian giants and chooses to support a stable growing democracy like India as a better choice to protect its strategic interests. India’s growth in the region is beneficial for the US and the global order amid rising Chinese influence.
Opportunities and Challenges
The Russia-China axis poses a substantial challenge to the US-led global order, with India’s longstanding relationship with Russia adding further complexity, but perhaps some advantages also. Despite criticism from the US, particularly following the Russia-Ukraine conflict, India has upheld its strategic autonomy, choosing not to align with any specific bloc and positioning itself as a potential mediator. Similarly, India’s millennia-old ties with Iran reflect a divergence from US interests. India has consistently emphasised its commitment to strategic autonomy, prioritising national interests above all. This stance explains India’s reluctance to join exclusive military alliances, while maintaining close relations with countries like Russia and Iran and cooperating with China, approaches that do not fully align with US policies.
Despite their differences and divergent approaches, India has become an indispensable geopolitical partner for the United States—the two largest democracies in the world—are closer than ever. The US Secretary of State recently said “The United States can be secure only if Asia is” highlighting the need for regional stability and a sustained American presence in the region. As one of Asia’s major powers with an impressive growth trajectory and vibrant democratic values India is poised to play a vital role in the Indo-Pacific region.
Emerging as a vishwa mitra—a “universal friend”—India advocates for a free, open and inclusive Indo-Pacific for all which aligns with US and strengthens their natural partnership. Furthermore, India is uniquely placed to bridge the divide between the Global South and the Global North. While it has a close strategic relationship with the US it also shares many of the challenges of the developing world. This potentially places India in a leadership role for the Global South, and as a stabilising force, which the US can garner. India is vital to the national security strategy of the United States; therefore, the relationship will continue to strengthen, regardless of the outcome of the US elections. While the two administrations will prioritise and address multiple fronts differently, the partnership is expected to deepen as a stronger, stable, and prosperous India aligns with US strategic interests.
