One month into 2023, and India is well underway with preparations for a pivotal year. In the coming 11 months, India is expected to surpass China as the world’s most populous nation (and by some estimates already has), and to continue on a trajectory of rapid economic growth. In assuming the presidencies of both the G-20 and the Shanghai Cooperation Organization (SCO), India is set to host leaders from across the globe as the country prepares for its own general elections in 2024. With all eyes on India, New Delhi may be increasingly sensitive to global perceptions of how it handles possible shocks — external or internal — ranging from escalation on its borders to incidents of communal violence.
USIP’s Sameer Lalwani, Daniel Markey, Vikram Singh and Tamanna Salikuddin discuss to watch in the year ahead for India.
1. India on the World Stage: Showcasing a Multi-alignment Foreign Policy
Lalwani: In 2023, India seeks to raise its leadership profile as a bridging power between various poles of the international system, both East and West as well as North and South.
As India deepens cooperation with the West through “minilaterals” like the upcoming Quad Leaders’ summit in Australia this May, it will also chair the SCO and play host to Eurasian leaders, likely including Russia’s Vladimir Putin and China’s Xi Jinping. And even as India is likely to once again be invited as a guest attendee to the elite G-7 Summit in Japan, it plans to champion the voice of the Global South throughout the year while leading the G-20 presidency and hosting the body’s summit in September.
At present, India is in a strong position to work across global cleavages. As the one of the world’s fastest-growing economies, India is courted by — and can potentially be a bridge to — all sides. India is poised to be one of the fastest-growing economies with the IMF forecasting it to grow at 6.1 percent in 2023 and 6.8 percent in 2024. It has been the darling of the Davos crowd, sought after by investors because of its growing market, digital economy and digitization of payments, favorable demographics and a government determined to bring in foreign direct investment and move up the value chain manufacturing iPhones and semiconductors.
Most of India’s multilateral institutional pursuits have more of a steady-state flavor. At the SCO, India will prioritize Eurasian connectivity, counterterrorism and the stabilization of Afghanistan. In the Quad, India prefers to foreground global public goods initiatives on vaccines, infrastructure and supply chains, while quietly proceeding with the incremental operationalization of existing security agreements. For instance, India and its Quad partners hope to fully implement the Indo-Pacific Partnership for Maritime Domain Awareness throughout the Indo-Pacific region to fuse multiple intelligence sources to detect illicit activity at sea.
At the helm of the G-20, however, India seeks to establish its global leadership bonafides. Traveling through an Indian airport or major metropolitan area, one cannot avoid encounters with splashy India-G-20 posters and billboards. This India coming-out party on the global stage feels faintly reminiscent of the Beijing Olympics in 2008.
Playing host to world leaders at the G-20 summit in September will validate India’s rising importance; brokering substantive consensus on pressing global concerns will certainly demonstrate its international influence. India is determined to steer the forum clear of divisive geopolitical issues like the Russia-Ukraine war or values clashes between democracies and autocracies, and instead concentrate in a more inclusive manner on the collective concerns of climate change.
Instead, India plans to champion a climate and development agenda that signals its own climate credentials and bridges the priorities of industrialized nations with the climate finance priorities of the Global South. New Delhi wants to fulfill the promise of $100 billion a year for clean energy and adapting to climate change for poorer nations. India aims to champion the G-20 to unlock money from multinational development banks and international financial institutions and support new climate finance instruments like blended finance to mitigate risk. A successful outcome to its G-20 leadership can validate India’s “multi-alignment” approach to geopolitics even as major powers enter a more competitive environment.
2. A “Year of Cognitive Dissonance”: India’s relations with Russia and China
Markey: When it comes to India’s relations with China and Russia, 2023 may very well be described as the “year of cognitive dissonance.” New Delhi appears to hold mutually contradictory beliefs about its ties with both Moscow and Beijing, leaving others — including U.S. policymakers and sometimes even the Indian public — unclear about where India really stands. And although it is possible that India will resolve some of these contradictions in the coming year, there are better reasons to expect persistent ambiguity.
With Russia, the puzzle is whether New Delhi sees its ties with Moscow as a wasting asset and Cold War legacy, or as a crucial partnership necessary for achieving its aims of strategic autonomy in a world order increasingly characterized by multipolarity. Despite its disastrous war in Ukraine, Russia is both for India and will likely remain so throughout 2023. New Delhi will no doubt appreciate, on the one hand, that military and strategic logics should lead it to engineer an expedited shift away from an unreliable Russian defense supplier and to worry about the consequences of closer Russia-China ties. On the other hand, India will welcome Russian participation when New Delhi plays the host of the SCO summit, will buy as much cheap Russian oil as it can, and will expect new Russian-built air defenses and other sophisticated weapon systems to serve as vital tools of national security.
With China, India seemingly perceives Beijing as both an urgent threat and a necessary partner. The 2020 India-China border dispute remains unresolved at either a tactical or strategic level, and as recently as December 2022, Chinese forces struck an Indian camp at a scale too large to be accidental. India’s strategic elite and broader public increasingly view China as enemy number one. Yet, simultaneously, bilateral trade is up, and Prime Minister Narendra Modi anticipates that Chinese leader Xi Jinping will join other world leaders in visiting New Delhi for the first time since 2019, thus reinforcing India’s (and Modi’s) self-image as a “vishwaguru,” or world leader.
3. An Eye to General Elections: Looking Ahead to 2024
Singh: As in the United States, elections in India are a constant, and the year ahead of a general election drives the focus on any administration. Prime Minister Modi’s government will use 2023 to lay the groundwork for a successful 2024 campaign. This effort will rest on two macro trends: India’s emergence from COVID-19 and expected return to world-topping economic growth and India’s growing prominence on the global stage, marked by its G-20 and SCO chairmanships.
The 2024 budget announced this week shows proactive investment in several key areas: a 33 percent increase capital expenditure on infrastructure, especially urban infrastructure; lower tax burdens and a simplified tax regime; and investment in green energy (called “green growth” in the budget). Many analysts were surprised by reductions in welfare and poverty alleviation programs in this budget, which might have been seen as populist initiatives ahead of the election. But the most important schemes like free grain for 800 million people and government-funded water connections remain. The government is banking on jobs creation by new investments and post-COVID economic growth to pay political as well as economic dividends.
Indian leaders always focus mainly on domestic policies and politics, but Modi will lean into to India’s growing international stature in 2023. Indian leaders are positioning the country as a bridge between traditional U.S.-centered Western alliances and the developing world and a model for inclusive economic growth that offers partnership rather than dependency or exploitation. While foreign policy plays a very small role in Indian electoral politics, building an Indian vision for the world contributes to Modi’s image as a strong and competent leader.
One big contrast for Indian leaders to make is with China, which is viewed as a predatory lender and constant threat along the disputed border, the Line of Actual Control. India seeks to manage its tensions with China without escalation, but China is deeply unpopular in India, with only about a quarter of the population viewing Beijing favorably. Demonstrating that India stands up to China without being belligerent; charts its own course even as it draws close to the United States, Europe and Australia; and attracts attention from global leaders and investors, Indian leaders expect to boost national pride and popular support. For the United States, the Indian imperative to stand up to China continues to present an opportunity for deepening cooperation.
4. Crisis Possibilities and Shocks to Watch
Salikuddin: As India is raising its international profile, its leadership sees itself firmly in charge of managing the country’s rise to global prominence. Given the many shocks of the last few years, India has proven resilient, managing the pandemic, internal protests, climate-induced disasters and economic shocks. Given its role on the world stage hosting the G-20 and SCO, India will seek to control its image and not be mired in any crisis. There is some risk of communal violence given the right-wing nationalist politics in India heading into elections in 2024, but Modi’s BJP-led government has been able to manage its international status while avoiding major domestic unrest. However, both its borders with Pakistan and China have the potential to spark crisis that New Delhi may not be able to prevent.
The last major crisis between India and Pakistan was in 2019 with the Pulwama attacks. Since February 2021, the border with Pakistan has been remarkably quiet with a cease-fire in place that has led to a notable reduction in cross-border firings and cease-fire violations. However, the cease-fire has not led to normalization or a thaw in other areas of the India-Pakistan relationship (i.e., things like resumptions of cross-border trade, etc.). India remains worried about the threat of escalation, especially in light a of a potential terrorist attack that can be traced back to Afghanistan or Pakistan. India and Pakistan are both headed into election years — with general elections anticipated in Pakistan this year and India’s in 2024. This may add pressures to leadership to show resolve if there is another crisis. Notably, the 2019 crisis came ahead of India’s last general election, and India’s response was seen as favorable for the Modi-government's electoral prospects. There may be precedent set for responding to any terror attack in India that is seen to be linked to Pakistan.
The December 2022 clashes along the Line of Actual Control (LAC) between India and China resulted in dozens of injuries though no officially reported deaths, but these did highlight the extent that the border tension remains unresolved. As India and China work to solidify positions along the LAC and build up infrastructure, there are likely to be more tension points for escalation between patrolling troops — particularly in un-demarcated areas of high mountain terrain. While India and China view the potential for escalation of clashes on the border to be low — this does increase Indian concerns of facing risks on both its borders (with Pakistan and China).