By Collins Chong Yew Keat
India celebrated its Republic Day on January 26. Its rise in the regional and global economic and security leadership has been phenomenal and resonating, and yet has been largely misunderstood and ignored, and overshadowed by the rise of China and the perception of the Chinese Century.
China’s economy and market have been deemed to be the primary driver of the next century amidst the misperceived decline of the West. Beijing’s recent economic and internal socio-demographic decline has put a halt to this narrative, and the West’s sustained resilience has strengthened the alternative capacity.
The biggest piece of the puzzle that is missing is India’s role as both the balancer and the primary power challenger to China’s regional hegemonic dictate. Beijing’s rapid ascendency in the past three decades has transformed the entire power and economic equation in the region, and until recently, there is no adequate power balancer to this new power dynamic apart from the West.
In comes India, a power that has been largely ignored or confused by other players as to how to properly respond or engage. With these fact-based prospects shortly, the inevitable repositioning in responses and policies should be seen, for the better of regional stability and future resilience.
The Next Economic Powerhouse
India became the 5th largest economy (GDP of US $3.75 trillion economy) by September 2022, rising from 10th position in 2014 to 5th largest in 9 years. In the latest projections, India is set to become the world’s 3rd largest economy by 2027, in the next three years, providing the critical buffer and alternative to the Chinese-led dominance in the supply chain, critical minerals, and core economic fundamentals of the market, consumerism, trade and digital, technology and innovation-led economy. India’s stock market became the 4th largest in the world last May in 2023. It will remain the fastest-growing major economy, expanding three times the pace of the global average with a growth rate of 6-7% until the end of this decade.
Projections for 2100: National Bureau of Economic Research Cambridge has produced the projections and simulations for the next century that by 2100, India is set to become the world’s second-largest with 16% of 2100 world GDP. If recent productivity continues and demographic projections prove accurate, India will become the world’s largest economy accounting for one-third of world output in 2100.
One of India’s greatest future potential and strength is its demographic advantage. It is now the most populous nation on Earth with a population of 1.4 billion. Most importantly, the median age is just around 28 years, and a rising population of about 900 million is the working age (15-60 years). It remains a relatively young nation with 65% below the age of 35 years.
This carries significant weight and implications for the next century in the region, especially when compared to the declining demographic advantage of China and other regional neighbors including Japan. Europe will also see a similar decline in demographic advantage but India and the US will both reap the fruits of their young working population and a rising productive segment.
About 25% of the incremental global workforce over the next decade will come from India. The blossoming higher education returns in terms of producing productive and skillful graduates in serving economic and industrial needs are reflected in the addition of 2.4 million graduates every year with the largest pool of graduates with a Science, Technology, Engineering, and Mathematics (STEM) background.
The dividends in demographic advantage for New Delhi have not only created a reliable and consistent productivity and innovation level for India to assume the role of regional leader but most importantly, the ready capacity and pool of skilled and productive workforce and human capital will create a more potent and comprehensive military and security resilience. Increased innovation and a more flexible and adjustable military command and improvisation in command and control with relatively young forces further add credence to the power equation and disposability of India.
While China has been leading the drive to record the world’s largest poverty escape over the past decades, the overlooked fact remains that 248 million people have come out of multidimensional poverty in the last nine years in India.
Domestic Reform Making India a Dependable Reliance Factor
Rapid growth in the past several decades has seen an acceleration in urbanization, industrialization, and household incomes. Policy reforms undertaken by Modi have seen several long-term strategic action plans in place, from Smart Cities Mission to Digital India and Make in India initiatives.
Startups, digital creators, unicorns, and gig economy, are the new vocabulary of the new Bharat, as argued by Modi and the dream of the next 1000 years hinges on the chess moves set by Modi in his reform drive and in tackling core fundamentals including poverty, housing, and income levels.
The rising internet penetration has seen the number of internet users increase to 840 million broadband users, having among the cheapest broadband prices in the world.
Digitalisation of the economy creates a new fintech reform and innovation, transforming India’s digital economy into a cashless domain driven by an open stack technology. India’s digital economy grew 2.4 times faster than the economy between 2014 and 2019 generating around 62.4 million jobs. The size of the digital economy has grown from $108 billion in 2014 to $223 billion in 2019.
As the US rebrands and transforms its infrastructure and domestic hard asset development, India is overhauling its local infrastructure domain in a massive leap of physical development. Highways are built at a rate of 28km a day, and railways at 12km a day. The number of airports has doubled in the last 9 years to 148 now.
The need to undertake policy reforms is critical in improving the ease of doing business and a greater investment inflow, which has seen reforms in land acquisition, labor laws, and regulatory frameworks being simplified. The Make in India initiative that was launched in 2015 covered 27 sectors of the economy and the manufacturing sector in GDP is set to increase from 13% to 21% of GDP by 2031.
Energy transition and new energy drive have been the core of regional geopolitics, driven by the scramble for energy and food security and assurances in supply chain and maritime domain security. India’s role in the global energy transition is increasingly clear.
For the next 20 years, 25% of the increase in global energy demand is going to come from India, with the target of net zero emissions by 2070. New Delhi is ranked 3rd in the renewable energy country attractive index.
Innovation remains the periphery of India’s new economic drive, and is now home to the world’s third largest Startups at 119,000 at present from a mere 600 in 2016, with about 111 unicorns valued at about US$ 350 billion, as of late last year. It presently has the third-largest unicorn base in the world.
As powers rise, obligations and responsibilities to other nations and the world see a similar rising projection. The One Future Alliance serves to offer solutions for leading the Global South in addressing the world’s most pressing challenges.
The ‘Aarogya Maitri’ project will see India provide essential medical supplies to any developing country affected by natural disasters or humanitarian crises, further reinforcing its role as the leader of the Global South in filling the gap and fast becoming the source of trust and confidence to regional players and members of the South in serving as the long term nucleus and dependence of both economic and hard power stability.
The Act East Policy provides credence to India’s vision of Indo-Pacific Cooperation. This includes the Indo-Pacific Oceans Initiative (IPOI) of India launched by Modi in 2019, in seeking to synergise and empower regional maritime resilience. This complements the ASEAN Outlook for the Indo-Pacific (AOIP) and contributes to the realization and implementation of the Indo-Pacific Economic Framework (IPEF)
Power Balancer and New Power Support for the Indo-Pacific and Malaysia
The Indo-Pacific region is emerging as the center of manufacturing, economic activity, global trade, and investment. Underpinning this new outlook is India’s steadfast drive and purpose on the three pillars of Trust, Transparency, and Timeliness.
The Indo-Pacific region remains an Indian prospect and venture, with its “One Earth One Family One Future” mantra, in providing the right balance and alternative power dependence away from Beijing-centric power concentration. This serves as a vital link-up to the West’s alliance overtures and friendshoring reliance, and strengthening the existing and future bulwark of the dependable and trust-based model of the alliance. This region is the future, and that future is not necessarily confined to the Beijing-led regional power dictate.
The Indo-Pacific is home to more than 64% of the global population and contributes over 60% of global GDP. At the center of its future projections is India’s similar rise and prospects.
For Malaysia, India remains an indispensable partner, despite the rollercoaster ride in the bilateral ties under different premierships.
For Malaysia to escape its forever China power trap and equation, India remains the most critical partner in providing both economic and security deterrence and support and a future power partner and guarantee that is rooted in historical and cultural ties and affiliation.
India as an emerging global manufacturing hub, and Malaysia with the one of highest ranking globalization index is reflective of a great potential for two-way investments which will create the more important facet of security alliance and partnership in serving the mutual interests of both countries.
Malaysia’s quest to develop its energy transition capacity will need India’s rising future power in this domain. Greater participation and technology collaboration by Indian companies in Malaysia’s Renewable Energy and green energy sector. Green hydrogen and new energy alternatives that are resilient and lasting remain the primary capacities and pathways that remain exciting and impactful for both countries, particularly Malaysia, in leveraging on one another’s key strengths.
Values and Trust-Based Rising Power Model
Priorities on infrastructure creation and upscale high-impact job creation in critical industries of the future including semiconductor and digital economy, provide immense openings for the region to be part of the new spectrum of economic leadership that is moulded on the crest of value-driven and responsible models and approaches that prioritise human rights, climate responsibility, rule of law and democratic principles.
With Beijing’s weakening economic fundamentals and nearing its peak power prime, India is looked at as the only worthy and well-deserved successor to cement its democratic and economic version that is vastly different from Beijing and more accommodating to both the East and West and the North and South.
India’s peaceful rise has often been underappreciated, and Malaysia can spearhead this new regional bulwark of strategic power tie-up.
New Delhi remains an ever more critical anchor of stability, trust and norms in maintaining regional stability and in promoting a value-based engagement and peacebuilding efforts. Trust and confidence provide the critical foundations to secure joint aspirations of a free, open, and rules-based regional order.
India’s inevitable regional and global leadership provides a much welcomed new opening for the country and the region in their security calculations and options. It remains the region’s most important Asian partner in providing the economic and security fallback that is based on values, trust, and proven expectations on its trajectory of behaviors and intent.