The Republic of India is an economic, military, cultural and technological giant, occupying a strategic geographical position. New Delhi sits in a pivotal position in the Indian Ocean, a key arena in some of today's most important geopolitical issues.
India's economic growth is unstoppable and could soon overtake its Chinese rival, further consolidating its regional and global power . Since 1995, the country's nominal GDP has jumped more than 700%.
In 2019, India became the world’s fifth largest economy, according to data from the IMF’s October World Economic Outlook. When ranked by nominal GDP, the country leapfrogged France and the UK. India is likely to become the world’s second-largest economy by 2030, next only to China and overtaking the US.
The recent history of this state dates back to the XVI century. European powers such as Portugal, France, the United Kingdom, the Netherlands and Spain began to send their fleets to the Indian Ocean.
In the 17th century, the British East India Company was founded with the aim of controlling trade in the Far East. At the beginning of the 19th century, this company took control of a large part of the Indian territory, the monopoly of trade and acted as a representative of the British Empire. In 1857, after the failed attempt in the First War of Independence, the British Crown dissolved the East India Company and created the British Raj.
During the Second World War (1939-45), many villages under the rule of the British Raj took the opportunity to revolt. After a non-violent struggle led by Gandhi, India declared independence under Jawaharlal Nehru in 1947.
In 1947, the state of Pakistan was founded. The partition of India would initiate violent clashes between Hindus, Muslims and Sikhs. The Kashmir region would become a source of controversy and gave rise to the First Indo-Pakistani War (1947-1949). More than 70 years and two wars tensions between India and Pakistan over Kashmir, now with both actors nuclear armed, remain latent.
Nehru drafted with Beijing the Five Principles for Peaceful Coexistence with China. However, good intentions did not prevent 1962's military confrontation, from which Beijing emerged victorious. Despite this, border disputes and the sovereignty of Tibet continue to pit New Delhi and Beijing against each other.
Internally, in 1950, the Constitution of India was adopted and the following year, India held its first elections, making it the largest democracy in the world.
Nehru led a state with a disrupted economy whose wealth had been eroded by colonization and with 370 million malnourished people. To overcome this issue, Nehru adopted the USSR's central planning system, with the establishment of five-year plans and export prohibition mechanisms. These policies led to progress in education, health and infrastructure.
These policies promoted by Nehru and followed by former Indian Prime Minister, Indira Gandhi did not favor India’s economic development and would limit the country's potential, especially in the computer industry.
In the 1980s, former Indian Prime Minister Rajiv Gandhi took small steps to liberalize the Indian economy. He succeeded in reducing tax evasion and removed all tariffs and bans on computer imports. This became a window of opportunity for India to lead the software industry.
Despite this change, the collapse of the USSR and the Gulf War brought India to the brink of bankruptcy in 1991. Following this crisis, New Delhi was bailed out and the Indian government led by Manmohan Singh, Minister of Finance, made a 180-degree turnaround.
Manmohan Singh encouraged the access of private groups, the reduction of tariffs, foreign investment, and increased the bulk of exports. These policies would open India to the free market and would have immediate results. New Delhi began a rapid upward career, with growth rates close to 6% per annum, its consumption capacity increased, as well as investments and exports . Increased exports drove economic development, especially in IT and technology services.
Graph 1: Poverty in retreat in India. Source: https://www.washingtonpost.com/news/worldviews/wp/2018/07/10/india-is-no-longer-home-to-the-largest-number-of-poor-people-in-the-world-nigeria-is/
All of this led to dizzying economic growth. In 2017, India overtook France as the world's sixth largest economy. India has become a leader in sectors such as information technology, renewable energy, and startups and innovation.
The country's potential is incalculable. Half of its population is under 25 years old and, with more than 400 million users, it is the second largest Internet market after China. Currently, the middle class in India constitutes 19% of the total and is expected to reach 70% in the next 30 years.
In the last decade, Indian foreign policy has become more active due to a more unstable regional landscape. China's growing presence in the region with the New Silk Road initiative and the Sino-Pakistan Economic Corridor project has important strategic implications for the regional balance. India's current Prime Minister, Narendra Modi has strengthened ties with ASEAN members but also with Japan, the US and Israel .
India's growing economic, military, cultural and technological weight is evident, for example, India has one of the largest diasporas globally, with more than 15.6 million. Furthermore, over the last decades, New Delhi has become an important player in Africa. Despite India’s internal tensions and inequalities, New Delhi's will further consolidate in the medium term.
Suggested readings:
1- Majumdar, D.R. (2023) India Economic Outlook, January 2023, Deloitte Insights. Deloitte. Disponible en : https://www2.deloitte.com/us/en/insights/economy/asia-pacific/india-economic-outlook.html
2- Revenga , L. (2022) La India en Asia Central, ¿Otro actor clave?, El Rincón de Laura Revenga. Disponible en: https://www.elrincondelaurarevenga.net/post/la-india-en-asia-central-otro-actor-decisivo
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