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Approach:

  1. general intro.
  2. Mention the geopolitical developments.
  3. Chart out India’s risks & opportunities.
  4. Conclusion.

Geopolitics is in efflux. Four geopolitical developments mark significant shift in regional and global geopolitics.

The 4 geopolitical developments:

(a) withdrawal of US and NATO forces from Afghanistan and its complete Taliban control;

(b) significant domestic political changes in China, including ideological & regulatory assault against its dynamic private high-tech companies and real estate companies. This has heightened risk perception among global businesses, who had seen China as huge commercial opportunity;

(c) the AUKUS alliance, representing a major departure in US strategy and reflecting a clear strategic choice by Australia to be on the US side despite considerable economic & commercial equities in China; and

(d) convening of the QUAD physical summit in Washington is a major step towards formalising as an influential grouping in the Indo-Pacific, beyond security.

These 4 developments present India with risks as well as opportunities.

India’s risk & opportunities:

  • Afghanistan situation is a set-back for India in the short run. The political capital & economic presence that it had built over the past two decades lies eroded. The Taliban government will help deliver Pakistani agenda, preventing a revival of Indian diplomatic presence & developmental activity in Afghanistan. In the longer run, it seems unlikely that Taliban will abjure its obscurantist & extremist agenda. This may lead to domestic inter-ethnic & sectarian conflict, denying both Pakistan & China the anticipated pay-off from US withdrawal.
  • This presents an opportunity to India to bide its time, strengthen defence against cross-border terrorism, keep faith with ordinary Afghan people, provide refuge and join international effort to deliver humanitarian assistance. This will place India as an important stakeholder in Afghanistan.
  • Domestic political change in China has reigned in the vibrant private sector, while the State Owned enterprises are taking the central role. This has led to deepening concern among foreign investors. E.g., Blackstone & Qualcomm, both are heavily invested in China, but are reconsidering exposure there. If India can play its cards well, significant capital & technology flows can be diverted towards India from US, Japan and Europe.
  • India’s benign political partnership with US, Japan and Europe is constrained by policy unpredictability, regulatory rigidities, and bureaucratic red-tapism. Some of these issues are being addressed like, dropping off the retrospective taxation. In this context, India should consider joining the RCEP. Applying to join the more ambitious Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) signals India’s determination to be back at the centre of the Asian economy. India should also revive its application to join APEC.
  • The AUKUS and the progress of QUAD serve to raise the deterrence level against China. This presents an opportunity, as, being preoccupied with threats from eastern flank, China could reduce tensions on its western flank, chiefly with India. From the Chinese perspective, now, QUAD is a second order threat. This suits India, which is not ready to embrace a full-fledged military alliance, thus creating manoeuvring room for itself.

Some bold initiatives are needed to take advantage of the short-lived narrow window that has opened up. This will shrink the power asymmetry with China & expand India’s diplomatic options. Faced with enhanced uncertainty and danger in the Indo-Pacific, India should not be caught off guard. Failure of deterrence in the Indo-Pacific will have consequences beyond the region, changing geopolitical context for India. Now, time is unexpectedly propitious for India to advance its economic prospects.

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