India as an Emerging Power

Author(s): Satya R. Pattnayak

Source: India Quarterly , January-March, 2007, Vol. 63, No. 1, Special Issue: Emerging
Powers (January-March, 2007), pp. 79-110
Published by: Sage Publications, Ltd.

Stable URL: https://www.jstor.org/stable/45073224

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 India as an Emerging Power
Satya R. Pattnayak*

^N/iuch has been written since the mid-1990s about the

arrival of India on the world stage.1 Most of it portrays the
best possible scenario for the country in the second half of
the twenty-first century. In the best possible scenario, India
would be able to negate the extra-regional forces in South
Asia, act as an influential player in the extended
neighbourhoods of South-East Asia, Middle-East, Central
Asia, and Africa; and figure as a power that other major
powers, in particular the United States, would take into
account while formulating foreign and military policies in
the world.2 There have been a few dissidents however,
warning about the possible crash of these highly inflated
hopes, largely due to the perverse levels of poverty and
socially constricting demographic and attitudinal traits.3

Both sides of this conundrum have been amply captured in

a recent book on India.4 The author, Edward Luce, concludes
that "India is not on an autopilot to greatness, but it would
take an incompetent pilot to crash the plane." Luce has served

* Professor, Department of Sociology and Director, Latin American

Studies Programme, Villanova University, Villanova, Pennsylvania,
USA.

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Satya R. Pattnayak

in India as the correspondent for the inquisitive newspaper

Financial Times from 2001 to 2005. The view of an outsider
with a few years of coming in contact with India's multitude
of actors, groups, parties, and problems has been formed
with the Anglo-American standard of progress as the
yardstick.

Is there any validity to views of outsiders, such as Mr. Luce?

He is not alone in this enterprise. In the past several years, a
number of books and articles have appeared in the western
press, either praising India's economic rise in unqualified
terms, or downgrading India's potential by using the colonial
yardstick of yester-years.5 Of course, many domestic
observers of Indian economy, politics, and culture have long
held the view of India's eventual rise to greatness on the
world stage. But can a reasonable assessment be made of
India's actual power status in the contemporary world? The
primary goal of this article is to engage in a comprehensive
appraisal of India's status as an emerging power.

"Power" refers to the ability of a country, in particular its

governing authorities and their civilian associates, to
influence developments both domestically and
internationally. If there is resistance, then, power can be used
to negate such reaction without affecting the probabilities of
a certain expected outcome.6 If India indeed has acquired a
major power status, then, not only the country should
influence events beyond its borders, but also it should be
able to withstand the resistance from other powers with
regard to accomplishing its objectives, whatever they may
be.

Hard Power

Social scientists have long argued that if a country scores

comparatively high in economic, military, technological, and

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 India as an Emerging Power

cultural terms, then, it should be considered a potential

power. According to the World Bank data for 2004, of the
190-odd countries the Gross Domestic Product of India is in

10th position, ahead of Brazil, Mexico, and South Korea,

amounting to US$700bn, which is about 6 per cent of the US
economy.7 India now has the largest economy in dollar terms
in the developing world outside of China. This is all the more
impressive since most of the increase has been achieved since
1991, the watershed year generally used to mark India's
structural transition towards relatively pro-market polices.
It is worth noting that in 1990, the GDP of India was in
number 14 in the overall ranking.

It is expected that by 2025, India's GDP will account for 11

per cent of the world GDP, larger than Germany's of today.
In comparative terms, it would be about 60 per cent of the
US economy, larger than Japan's relative economic weight
of today.8 The increase in the economic might was not
achieved overnight. The upsurge in GDP growth rate
actually emerged in 1980, and has continued since, with an
exceptionally low growth during 1990-1992, which prompted
the pro-liberalisation reforms, In a time-series analysis of
growth rates, the Indian economy has averaged about 5.7per
cent a year of GDP growth during 1980-1994. Since 1994, the
average GDP growth rate has increased to over 6per cent;
for the past 3 to 4 years, it has indeed surpassed the 8per
cent annual growth rate.9 And the official target rate is to
exceed 9per cent soon.10

The economic intelligence units of major investment firms

on the Wall Street, such as Goldman Sachs, have predicted a
drastic restructuring of the world economic balance of power
in the next several decades. In a predictive assessment of
the key emerging economies, a 2003 Goldman Sachs report
stated that in absolute size India's economy would be larger

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Satya R. Pattnayak

than Japan's by 2032, smaller only to the economies of the

United States and China.11 Other economists have examined
the purchasing power-parity among the economies. In that
assessment, India already figures in the top four economies,
trailing only the United States, China, and Germany.12

Of course, many of these predictive assessments are based

on a set of assumptions about the rate appreciation of
currencies, sustained growth in incomes and demographics,
global demand patterns, and political stability, among others.
For example, the prediction in 2003 is based on the
assumption of maintaining an average growth rate of 5per
cent a year. But since India has been exceeding 7-8per cent
annual growth rate in recent years, it would expedite the
rise of Indian economy vis-à-vis other major economies of
today.13

Of the highly touted four BRICs (Brazil, Russia, India, and

China) countries, the demographic trends put India in an
advantage over the others. Because India has a greater
percentage of the young in the total population, it would
sustain a high GDP growth rate well into the second half of
the 21st century; therefore, it may in all likelihood surpass in
size even the United States and possibly China by the end of
the twenty-first century.14 How ironic would it be to prove a
point of pivotal importance to westerners about the cyclical
movements of civilizations in the larger scheme of things? It
is worth-noting that as recently as the early 1800s, both China
and the Indian sub-continent possessed the two largest
economies in the world in Gross Product terms; and by 2080s
the two are expected to recapture these positions once again.15
In simple terms, it points therefore to the arrival of India as
an economy of scale and consequence in the next decades.
As social scientists would point out, economic potential is
manifested in exerting political, diplomatic, and cultural
influence if nurtured properly.16

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 India as an Emerging Power

Technologically, Indian engineers and scientists have

demonstrated significant programming capacity in
computing and software. Although in theory, India is
supposed to tap into its widely available pool of cheap labour
to manufacture labour-intensive products, it has
simultaneously moved into highly skilled computer
programming and education.17 In particular, the expanded
pool of highly educated workers in the fields of engineering,
mathematics, and natural sciences has permitted a great
many Indian companies to capture a significant portion of
the worldwide market for project management, web-based
solutions, product development, and improved
communication technology.18 Such success would contribute
to the rise of a strong Indian private sector that would be
highly competitive internationally in providing service sector
technology to other markets and countries.

The added priorities underlined in the 10th Plan (2003-2007)

amply demonstrated the desire to boost hard power. For
example, poverty eradication, infrastructure development,
fiscal discipline, and enhanced manufacturing efficiency
have been highlighted as the primary action areas.19 In
addition, peak customs tariff rate has been reduced to 25per
cent for all except for agricultural products. These tariff levels
are comparable with the countries in India's extended
neighbourhood. The development of modern highways, sea
ports, railways, and deregulation of the domestic airline
industry all point to a concerted effort to boost India's
capacities as a highly modern economy.20

In addition, the liberalisation of capital account has given

foreign investors greater confidence to invest in India. In
particular, the change in ceiling to 74per cent for maximum
foreign equity participation in high priority infrastructure
development has added much needed confidence in eager

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Satya R. Pattnayak

foreign investors. The reinvestment ceiling of lOOper cent

for foreign investment in areas of roads, ports, and power
generation has been well received by foreign sources of
capital.21

In terms of military capacity, observers have noted that India

possesses the capacity of a regional military power, albeit
not a global one. It has a large military of 1.1 million soldiers,
perhaps as many in paramilitary uniforms. It possesses about
800 combat aircrafts and 3500 tanks.22 But a significant
portion of this arsenal is rather outdated Soviet built Mig-
21s and T-72 banks, which need a badly needed overhaul. It
has regionally capable navy, which demonstrated its
competence in the aftermath of the Tsunami rescue and
reconstruction efforts in late 2004 and early 2005. Reports
indicate that efforts are underway not only to acquire nuclear
submarines from Russia but also to build them domestically
in order to better protect the navigational waters of the Indian
Ocean littoral.23

If nuclear capacity is included, then, India forms part of the

eight known members of the nuclear weapons club, although
its arsenal is estimated to be much smaller than the top five,
namely, the United States, Russia, China, UK, and France.
The remaining two members of the nuclear club include
Pakistan and Israel. As of late 2001, India was estimated to
have acquired nuclear material equivalent of 400 nuclear
weapons, compared to Pakistan's arsenal of similar weapons
numbering between 20 and 30.24 Indian missile capacity has
also been evident in recent years with short-range Prithvi
missiles and intermediate range Agni II missiles.
Furthermore, India has entered into advanced stages of
negotiations to acquire theatre missile defence capabilities
(TMD) in cooperation with the US and Israel. If the
negotiations succeed, then, such capabilities may be in place

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 India as an Emerging Power

by 2010, at which time, TMD may negate Pakistan's threat

of first use nuclear strike.25 But it has its down-side, since
both Pakistan and China are likely to construe this as a
weapon meant to neutralise their capabilities, thus injecting
ammunitions for a new arms race in South Asia.

India's space technology has continued to improve in recent

years. India's entry into the space would mean better
predictive capacity in dealing with natural disasters, reading
changes in weather patterns, and expanded future capacity
in inter-continental ballistic missiles (ICBMs).26 Military
analysts have maintained that India would need enhanced
military capacity in naval, aerial, and spatial matters in order
to better protect its own as well as world commerce flowing
through the waters of Indian Ocean between the Strait of
Malacca and the Gulf of Hormuz.27

But a few observers have categorised India as a third-level

nuclear power, far behind the first-level powers, such as the
US and Russia, and the second-level nuclear weapon states
in China, UK, and France. Even though by themselves the
nuclear capabilities do not characterise a global military
power, as will be argued in a subsequent section, India's
potential to link up with other major powers in strategic
regions and in specific sectors could give it an edge in
influencing developments in the surrounding arena.

Soft Power

The display of India's soft power is manifest in diverse forms,

and in many ways could be more effective in projecting the
country's current and future influences.28 Indian civilization,
dating back 6000 years, is one of the four or five major cultural
formations in the world. Despite the colonial domination in
the late 18th through the mid 20th centuries, Indian

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Satya R. Pattnayak

contributions to the world civilization are significant. Being

the birth place of four major world religions and home to
about 20 per cent of the world's Muslims gives India a unique
place in the world of diverse cultures and values. It is a multi-
ethnic, multi-religious, and multi-linguistic society; and its
democratic political system is an inspiration to millions
worldwide. In particular, the rise of previously
disadvantaged castes and groups in political power in several
of the key Indian states demonstrates the open nature of the
system. The features of federalism in the Indian Constitution
give significant autonomy to the provinces in important
educational and cultural matters. The 'clash of cultures', so
often the hottest topic in popular discourse in Europe and
the US, largely due to the influx of millions of non-white
immigrants, is not a contentious issue in India. The
coexistence of diverse strands of sub-cultural milieu is an
Indian constant from times immemorial.

The exportation of Indian cultural products has a worldwide

market. In particular, the Indian movie industry -
Bollywood - based in Mumbai has carved out important
niches in diverse markets of West and Central Asia, Southeast
Asia, China, Russia, and the Caribbean.29 The attraction of
Indian cultural products and cuisine is sustained through
the presence of a vibrant diaspora of about 25 million persons
of Indian origin worldwide. They form a significant part of
the population in many countries of South America and the
Caribbean as well as Southeast Asia, West Asia and North
Africa, UK, and North America.

In particular, the Indian diaspora presence has been quite

influential in recent years in US policy toward the sub-
continent. Using its affluent economic status, the group has
been quite busy in cultivating political influence in the US
capital, thus emerging as a powerful lobby in US-India

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 India as an Emerging Power

dynamics. The existence of sizeable Indian working diaspora

in the Gulf states creates all the more reason to formulate
coordinated policies to protect Indian citizens from the
possible abuse of their human rights. Remittances from
Indians abroad to their family members and relatives in India
have been in hundreds of billion dollars over the years; and
helped ease the foreign exchange problems in the past.30

The government of India has reciprocated to such resource

flow by forming a separate Ministry of Overseas Indians. A
combined rise of Indian exports, its prized place among
western companies seeking out off-shoring opportunities,
the emergence of a 'flat world' in terms of satellite and
telecommunications has made Indian cultural images readily
available worldwide, including far-off places such as Latin
America and Africa. Several Indian banks have been in

operation in places like Panama City for decades indicating

a vibrant Indian merchant base in places not expected in the
popular construction of Indian commercial reach.31

Many of the hard and soft power projections in the previous

sections have been used by optimists to make predictions
about India's power, which are based on the spectacular
growth of the Indian economy in the past several years.
Extreme optimists have been quick to claim that perhaps
India is on its way to become a pivotal power on the world
stage in the not-so-distant future. Extreme pessimists point
out to the darker side of the new "Shinning India," which
has laboriously yet quite unsuccessfully attempted to address
the desperate economic needs bedevilling about 35per cent
of its vast population of 1.1 billion people.

To address these rival claims, it is necessary to conduct a

multi-level analysis of India's potential and achievements.
First, it would be important to see India's capabilities to

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Satya R. Pattnayak

address the uncertainties in the immediate neighbourhood

of South Asia. Second, an appraisal must be made of India's
potential to address the problems in Asia, in which the
situations in Southeast Asia, East Asia, West Asia, and
Central Asian regions would be evaluated. Third, India's
relations with the major powers, in particular the US, Russia,
and China, need to be reassessed in light of the new realities
on the ground since the demise of the Cold War. Fourth, the
capabilities of the Indian state domestically to address the
economic, political, and social problems would educate the
reader about the base from which India is supposed to launch
its regional and global ambitions. Finally, a set of overall
conclusions about India's power status is drawn.

Immediate Neighbourhood
Since 1947, independent India has been involved with
recurring conflicts with its immediate neighbours in South
Asia. Of course, the most bitter of these have manifested in
multiple wars and near-wars with Pakistan over the
contested terrain of Kashmir,32 a border war with China in
1962, border and water disputes with Bangladesh since 1971,
tense periodic disagreements over the conduct of foreign
relations with Nepal and Bhutan, and a clash of worldviews
with Sri Lanka and Myanmar.33

In many respects, India has limited influence in the

immediate neighbourhood than beyond. It is a rather
complicated neighbourhood with cross-cutting ethnic,
religious, and sub-regional interests which pre-empt clear-
cut national strategies in bilateral relations.

Each of the neighbouring countries contains sizeable

ethnicities that are also found within the borders of India.

Although the territorial boundaries are demarcated and

reasonably enforced, the cultural inter-connectedness of

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 India as an Emerging Power

these populations in neighbouring countries and their co-

ethnics within India complicates the picture. Bengalis in both
Bangladesh and India, Punjabis in both Pakistan and India,
Tamils in both Sri Lanka and Southern India, Gurkhas and
other tribes in both Nepal and India, co-tribals on both sides
of the Indo-Myanmar and Indo-Bhutanese borders sustain
identities not bound by clear national demarcations. The
enforcements of national priorities may not be shared by co-
ethnics on both sides of these borders.

Pakistan, for example, because of its sheer territorial size and

military power, could be a middle power in any other region
of the world, but is not given such status in South Asia,
largely because of its vicinity to much larger powers in India
and China.34 The tensions with Pakistan are likely to be a
drain on India's big power ambitions. The settlement of the
Indus river issues in the 1970s over the sharing of waters
could be used as an example to solve the dominant issue of
Kashmir.35 Greater cooperative efforts in areas, such as
bilateral trade and investment, may create enough economic
stakes for other tensions to recede gradually.

Both Nepal and Bangladesh have sent a significant number

of students to Indian universities, yet the relations between
India and these countries are no better.36 Some of that tension

can be alleviated by creating joint economic projects,

including hydro-electric generation plants, where India can
provide technological and financial help to generate alternate
sources of energy for the economies on both sides of the
border. Similar economic projects on the Indo-Myanmar
border in the area of natural gas exploration may help
alleviate not only India's dependence on imported oil abut
also help Indian companies gain access to Burma's huge
untapped deposits of precious minerals and metals.

Sri Lanka and India can gain from a mutually beneficial free

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Satya R. Pattnayak

trade agreement. But the political problem of the Tamil

insurgency in the north of Sri Lanka has to be settled. The
bad military experience of the early 1980s for the Indian Peace
Keeping Force does not have to be repeated.37 Perhaps the
Indian elites can mediate for a largely autonomous economic
and cultural unit for Tamils in northern Sri Lanka. But much

of it depends on astute political leadership in New Delhi.

Both Afghanistan and Bhutan are expected to be net

recipients of foreign aid from India. Such aid may be used
to cultivate greater entry for Indian corporations in the
exploration of mining and the opening up of badly needed
industries, and military training in these countries. For
example, since the fall of the Taliban, Indian government
has given aid to Afghanistan in the amount of SUSóSOm.38
India can always increase greater educational and cultural
interaction with all its neighbours; and build its diplomacy
on its 'soft power' capabilities.

Resolving outstanding disputes and tensions in the

immediate neighbourhood goes a long way in elevating the
status of India on the world stage. Thus far, with a few
exceptions, Indian leadership has largely engaged in jealous
arguments, petty fighting, and bureaucratically suffocating
strategies to stymie regional initiatives. It is worth-noting
that failed states in the neighbourhood may create more
problems than the present.39 A magnanimous Indian
leadership is badly needed. It is in India's interest to help
solve major bilateral and regional problems in South Asia.40
In that case, if successful it would release resources for other
issues that may jeopardise India's economic rise in the distant
neighbourhood, such as Southeast Asia or West Asia.

It is unfortunate that although economic cooperation has

been in existence in South Asia since 1985 in the form of

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 India as an Emerging Power

South Asian Association for Regional Cooperation (SAARC),

its scope and impact have been quite limited due to the lack
of political will.41 But since 2006, South Asian Free Trade
Area (SAFTA) has come into force. Unlike SAARC, it is a
comprehensive mechanism of trade liberalisation. Unlike
previous arrangements, SAFTA addresses a broader range
of trade-related issues, such as the harmonisation of
standards and certifications, customs clearance, and fair rules
for competition, among others.42 Efforts such as this augur
well for the future of South Asia as an integrated economic
unit.

In GDP terms, according to the 2004 data, the combined

economies of Afghanistan, Bangladesh, Bhutan, Nepal,
Pakistan, and Sri Lanka only account for 26 per cent of the
Indian economy, a share that is only likely to grow smaller
with each passing decade.43 With such structural asymmetry
in economic and corresponding technological capacity,
Indian interests are better served by pushing hard for a
greater economic integration of the neighbouring economies.
Such efforts are not only likely to harness the untapped
economic potential of these countries but these will also
benefit the further consolidation of the Indian private sector.
With greater economic integration, the non-economic areas
of contention are expected to diminish in significance or are
likely to be settled rather quickly.

Expanded Neighbourhood
As the Indian economy gains traction and launches forward
in developing stakes in other regional markets, the foreign
policies followed during the Cold War have become
irrelevant. During the Cold War, most countries of Southeast
Asia (or ASEAN) considered India to be strongly in the Soviet
camp, thus were not interested in much mutual activity. But

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Satya R. Pattnayak

since the 1990s, the Indian leadership has shown considerable

pragmatism in developing several beneficial relationships
with Southeast Asia.44 It is a good sign that a series of new
agreements to counter terrorism and boost mutual trade has
been signed with the ASEAN nations.

Joint military exercises have taken place with Indonesia,

Malaysia, and Singapore since the 1990s. High level visits
by Indian military leadership have tried to assure ASEAN
nations that India has no ulterior designs on the area.45 On
the contrary, joint exercises are useful in combating piracy,
terrorism, and natural disaster management. Indian naval
diplomacy in the Bay of Bengal has stood out. Since the mid-
1990s, the navies of Bangladesh, Indonesia, Malaysia, Sri
Lanka, and India have participated in joint naval exercises,
joint rescue operations, and seminars on environmental
protection, pollution control, and disaster relief.46

India has been engaging Southeast Asian nations since 1992.

It became a full dialogue partner in 1995.47 Economic
engagements have taken place through the formation of joint
trade committees, joint business commissions, India- ASEAN
Business Council, and ASEAN-India Joint Management
Committee. ASEAN-India Working Group on Trade and
Investment and ASEAN-India Fund have been created to

bolster trade, tourism, and science and technology

cooperation between the two partners. Since 1996, India has
become a member of ASEAN Regional Forum ( ARF), which
is a cooperative platform to coordinate efforts on security
matters.48 Since India does not have any outstanding
maritime border disputes with any of the Southeast Asian
nations, these overtures are quite beneficial at least in
economic and security terms for both partners.

The proposed Asian Economic Community (AEC), once in

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 India as an Emerging Power

operation, will include Japan, ASEAN, China, and South

Korea, along with India. The overtures of India in Southeast
Asia may reap greater benefits if the countries in the area
begin to feel the weight of China; they may want to use Indian
economic and military cooperation so as to balance their
relations with China.

In East Asia, Indian relations with Japan and South Korea

have improved significantly. Both Japanese and Korean
investments in the Indian economy are substantial in
important sectors of automobile, electronics, and
telecommunication. Such involvement is only expected to
increase with the rise of China, as both Japan and Korea have
historic reasons to feel China as a potential challenger.
Observers have noted that there is significant room for
complementarities between the South Korean and Indian
economic interests, as both seek to diversify into areas that
each can contribute while using the other's advantage.49 For
example, the synergy in electronic hardware, where South
Korea has a proven advantage, will complement nicely with
India's expertise in soft ware and chip design.50 Furthermore,
India has had significant investment from South Korea in
manufacturing and infrastructure development.

Most of Japan's sanctions after the 1998 nuclear testing have

been reduced or have been withdrawn. This indicates that

the Japanese realise the stakes of not engaging India, as it is

expected to play an important role in the strategic balance
of power in the evolving geo-strategic situation in Asia. Japan
and India share similar views on North Korea's nuclear

weapons programme; and the common security interests also

include a future potential danger in the rise of China.51 In
addition to Japan's world renowned expertise in motor
vehicles, electronics, and entertainment technology, India-

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S a ty a R. Pattnayak

Japan collaboration can also facilitate India's rise in robotics,

bio-technology, and the space sector.

West and Central Asian countries are likely to figure more

prominently in Indian geo-strategic calculations, as the
Indian economy sprints forward and demands greater
sources of energy. For the oil rich West Asian countries,
except for Iran, the question of Kashmir and the dispute with
Pakistan over it may still prove to be an irritation. The rise
of religious fundamentalism in many of the West Asian states
might make India's energy dependence on them problematic.
Such tension opens up the potential for India to reach out to
the equally energy-rich Central Asian countries. Largely
secular in nature, many of these, such as Kazakhstan,
Uzbekistan, and Turkmenistan, are former Soviet Republics,
and already inherit a long history of cultural relations with
India.52 Indian energy companies have reached out to these
countries for joint ventures in the areas of natural gas and
oil. Until India develops its own sources of energy at home
that would satisfy the limitless new demand for energy, it
might increasingly seek out Central Asian sources rather than
from West Asia.53

Using the good will of yester-years, India has indeed reached

out to many African countries. Through these efforts, Indian
companies have been able to gain contracts to assemble
automobiles in countries, such as Senegal.54 Indian
government has also engaged the continent's New Economic
Partnership for Africa's Development (NEPAD). The main
motto of NEPAD is to seek increased economic and political
collaboration with non-African countries.55 With similar

legacies of colonial domination by Europe, African countries

are likely to open up to Indian economic ventures in energy,
technology, and industrial production. As of 2003, Indian
companies had 43 on-going projects in Egypt alone,

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 India as an Emerging Power

amounting to at least $US 350 million.56 By 2003, the Indian

Oil and Natural Gas Corporation (ONGC) has invested about
$US1.6b in pipe line and oil refinery sector in Africa. The
fact that all foreign investment in the entire African continent
amounted to $USllb in 2002, this constitutes a significant
investment by any standard.57

India had politically engaged many African nations since

their independence, in particular Ghana, Tanzania, and
Kenya. But with greater stakes involved in searching for
alternate sources of energy and friendlier markets for its
booming private sector, India would be well advised to
invoke the spirit of Bandung of the 1950s. India's long and
cherished history in participating in several of the UN Peace
Keeping missions in Africa already bodes good will among
interested African partners. From Tanzania to Namibia to
Senegal to South Africa, India has untapped sources of
markets, political partners who would support its
ascendancy on global stage, and sources of energy that must
be explored in earnest. Both China and Japan are ahead of
India in engaging African countries. In that context, Africa
takes on greater urgency.

A vibrant Indian diaspora exists in the Caribbean, in

particular in Trinidad & Tobago and, to a lesser extent, in
Jamaica, and two countries in northern South America in
Guyana and Surinam. People of Indian origin constitute
powerful political presence in all of them, except Jamaica. It
would make sense to reach out to them in terms of engaging
these countries in the areas of industrial and technology
cooperation, and seek political partnership on the key global
issue of agricultural subsidies by western countries.
Complaints are frequent that the Indian government treats
those expatriate communities as second class citizens, a far
cry from the preferred treatment it regularly bestows on the

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 I

Satya R. Pattnayak

more affluent Indian communities in the UK, Canada, and

the US.58

Insofar as the main Latin American countries of Brazil,

Mexico, and Argentina are concerned, a greater collaboration
can be, and indeed are, in the offing in the areas of trade,
investment, and technology joint-ventures, in particular
software development and energy. Brazil and Mexico have
supported India in the Doha rounds of trade negotiations
over agricultural pricing and subsidies. A few Indian
companies, such as Tata Consultancy Services, Infosys and
Wipro, have also reached out to countries like Uruguay and
Argentina to open up call centres. Indian software
programming can have a potential market of over 600 million
customers in the Spanish- and Portuguese-speaking
countries of Latin America if only reliable and skilled
engineering workforce can be found. Brazil, Argentina,
Uruguay, Mexico, and Chile in that regard provide
tremendous opportunities for joint ventures with Indian
computer and engineering companies. Such potential must
be tapped with earnest.

Great Powers

The relations with the great powers have drastically changed

since the end of the Cold War when India was universally
portrayed as a supporter of the Soviet Union. Perhaps for
the first time in history since its independence from Britain
in 1947, the relations with all major powers have been cordial.

The former superpower in the Soviet Union has transformed

itself into a modern capitalism-friendly bureaucratic state
of Russia. After the Russian debt crisis of 1998, it seems the
country has turned the corner. With the oil prices hitting all
time high, Russian government is now inundated with hard

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 India as an Emerging Power

cash, which it may use to improve the domestic economy as

well as the foreign economic and political relations.

Long a reliable supplier of military hardware to India, in

particular when western supplies had dried up under
repeated sanctions of one sort or another, in recent years
Russia has found China to be a bigger market for its weapons.
Although Russia has proposed a friendship and security
treaty to include both China and India, the gesture has not
been reciprocated by the Indian leadership, largely due to
the warming up of relations with the US. But it is important
to remember that Russia will continue to make inroads as

an economic power and, as a consequence, its political

influence will only grow in its under-belly states. India may
be well-advised not to close the Russia gate yet, but that it
should use the opportunities in Russia in the areas of
petroleum, natural gas, and as a destination for Indian goods
and services.

Russian space technology is still world-class, and Russia still

possesses as many nuclear weapons as the US; hence in
military terms it is a super power, although its potential to
use such power has been diminished, largely due to the
decline in its economic ability. But the economic downturn
is only temporary. According to the BRICs reports, Russia is
expected to be one of the 6 largest economies by 2050, so
there is all the more reason to build on the historically tested
warm relations.59

In the past decade or so, the European Union has indeed

emerged as a strong counter-weight to the US economic
domination. With 25 nations on-board, its combined GDP is
as large as that of the US, therefore making it the second
biggest market for Indian products. In addition, the presence
of a significant Indian diaspora in UK can be used as a

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Satya R. Pattnayak

stepping stone into the remainder of the European Union.

Recent changes in policy in France and Germany to
accommodate technology centres with relaxed visa
regulations for qualified personnel from overseas are
something that the Indian government must take notice of.
In particular, in Germany, there is a vibrant intellectual
support base for India, thanks to perceived historic links of
language and race. The older colonial attitudes are likely to
fade away, at least in public fora but to engage in world
power politics in an aggressive way does not mean repeating
the colonial politics of yester-years.

The relations between India and the US have undergone

significant transformation since the early 1990s. During the
Cold War, the US regularly supported Pakistan and China
in its global chess game against the former Soviet Union,
thus making India feel encircled. But since the early 1990s,
the emergence of new Russia and the rise of Indian economic
potential have led to considerable rethinking in Washington
toward a coherent India policy. In particular, since September
11 of 2001, the US and India have moved closer in their joint
assessment of emerging terrorist threats in South Asia and
the Indian Ocean littoral.60

Since the 1990s, on many pivotal issues, the US and India

have shared similar concerns or positions. These issues
include anti-terrorism, combating piracy, and deterring the
proliferation of weapons of mass destruction (WMD).61 The
rise of China as a world power has made Washington uneasy,
and it is only natural that some rapprochement be made
between Washington and New Delhi. Since the border war
with China in 1962 and the Chinese nuclear testing in 1964,
India has steadfastly maintained China as a national security
threat. Although in recent years, the Sino-Indian relations
have thawed, and the bilateral trade relations have reached

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 India as an Emerging Power

over $US20b in 2005, in the security calculations of the

Pentagon, India could potentially protect the warm waters
of the Indian Ocean from the Chinese influence.62

Although under the Clinton administration, the emphasis

on containing India's nuclear capability, and eventually roll
it back did not carry much favour among the Indian elites,
active intervention by the US in negotiating a diffusion of
tension over Kargil in 1999-2000 was seen positively in India.
It dispelled the popular notion in India that the US generally
supports Pakistan on critical issues affecting the Indo-Pak
relations. Clinton's visit to India in early 2000 created
considerable good-will which has been carried through by
the successor Bush administration.63

In the aftermath of September 11 of 2001, however, India's

status in a key region that became a major front in the fight
against terrorism has led to a considerable revision of the
US strategy. India stands as a potential partner in the security
arena, which is expected to further expand US weapons
purchase, technology transfer in key military weaponry, and
joint military exercise and cooperation in the Indian Ocean.
Since India has always looked for military hardware
overseas, the emerging US-India cooperation in security
matters may pave the way for greater integration of military
intelligence and installation of joint military programmes.64
However, the US government activities are still constrained
by its steadfast adherence to the Nonproliferation Treaty
(NPT) and Missile Technology Control Regime (MTCR),
although circumvention may be possible for most weapons
categories in view of the growing 'strategic partnership'
between the two countries.65

All indications are that the tensions with India during the
Cold War are things of the past for the US. Since the

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Satya R. Pattnayak

establishment of full diplomatic relations between India and

Israel in 1992, India-US military cooperation has significantly
increased. Even though increased cooperation has been
underway along with greater trade and investment relations
between the two partners, the question of arms control visits
time and again both capitals, in particular Washington.

The civilian nuclear cooperation framework, worked out

during George Bush's visit to India in 2005 paved the way
for further consolidation of military cooperation. This
agreement will require US to supply the badly needed
enriched fuel for nuclear reactors geared towards civilian
energy production. While it would keep the defence oriented
nuclear reactors away from international supervision, it
indicates the US willingness to engage India on its own terms,
a strategy that has long eluded the bilateral relations.66

Capping the rethinking of US's global outlook, the most

recent national security strategy reflects a major change in
tone. For example, the National Security Strategy of 2006
discusses how the US could link up with other centres of
power around the world. It succinctly states:

South and Central Asia is a region of great strategic

importance where American interests and values are
engaged as never before. India is a great democracy, and
our shared values are the foundation of our good
relations.... We have made great strides in transforming
America's relationship with India, a major power that shares
our commitment to freedom, democracy, and rule of law. In
July 2005, we signed a bold agreement - a roadmap to realize
meaningful cooperation that had eluded our two nations for
decades. India now is poised to shoulder global obligations
in cooperation with the United States in a way befitting a
major power.67

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 India as an Emerging Power

Such emphasis on emerging India though is pleasing to the

Indian ears may be viewed with caution. If autonomy was
the catchword during the Cold War, when the Nehruvian
logic precluded any direct co-habitation with one of the two
rival camps, "smart power" has become the buzzword in
the new US-India partnership. There are signs of concern,
however, that Indian elites would be well advised to
consider.

US economic interests are never permanent. US companies

always go in favour of countries that provide a protection of
profit, hassle-free labour control, and educated labour force.
Thus far, India has done well in this regard, but many reports
have cited a soon-to-be occurring shortage of technically
educated man-power in India, which may stall the economic
expansion of domestic industry.68 This may negatively affect
the entry of foreign investment into the hinterlands. Poor
existing infrastructure and restrictive labour codes have been
quite detrimental to foreign companies that are considering
investment in Indian states known for labour militancy.
Unless such internal structural obstacles are addressed,
Indian economic growth would only be confined to the major
cities with brewing popular discontent in the countryside.

Although India has been a frequent victim of terrorism in

recent years, these events are hardly mentioned in the global
discourse on terrorism in Washington. The policy statements
would include Madrid, London, Manila, Bali, Riyadh, Casa
Blanca, and other world cities where such events have indeed
occurred but never India or Indian cities that have been
victims of multiple acts of terrorism that have taken countless
innocent lives.

It may be tempting to count India as a member of the political

west against the global alliance of authoritarian and corrupt

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Satya R. Pattnayak

regimes, but it is of greater advantage for India not to get

carried away in that regard.69 A membership in the political
west may very well be just that - a hollow recognition with
pitfalls in every possible way. Such recognition of India by
western governments would harm the potential Indian
economic expansion in the markets of Africa, Latin America,
and West and Central Asia.

Domestic Challenges
The challenges of infrastructure development, education,
water and sanitation provisions for millions in impoverished
locales, and energy for the increased demands of a rising
power are enormous on the domestic front. The quality of
life for the majority of Indians is pitiful by international
comparison. The UN Human Development Index ranks
India at no. 124 in a pool of 173 countries. The score for India
is far behind that of many smaller countries of Central
America and Africa. For example, the Indian Human
Development Index score is lower than Guatemala,
Nicaragua, Honduras, Bolivia, and Guyana, all countries in
Latin America at the lowest level of overall of regional
development.70 Similarly, India has lagged behind Morocco,
Namibia, and Gabon in Africa in the overall human
development. In Asia, India scores lower than many
countries, such as Indonesia, Philippines, and Sri Lanka, not
to mention China. Big power ambitions must correlate with
higher scores on the quality of life.71 Although since 1975
this index for India has increased by 42 per cent, much more
needs to be done and fast. But the movement seems to be in
the right direction

In order for India to facilitate a higher quality of life,

improvement on the adult literacy rate is primordial.
Education facilitates high level of human capital formation

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 India as an Emerging Power

in the long-run. Indian adult literacy rate is currently about

57 per cent, far behind all the powers that it seeks to compete
against. Brazil's adult literacy rate at 85 per cent, Mexico's
91 per cent, and China's 84 per cent far exceed that of India.
Sustained effort must be made to close this gap if India is to
sustain its march toward brighter economic future.72

There are other indicators which point to serious deficiencies

in the Indian road to healthy human capital formation, so
essential to sustaining the big power ambitions for years to
come. According to a recent UN Report, 47 per cent of Indian
children under five are underweight. Only 31 per cent of
India's population use adequate sanitation facilities. Only
48 physicians are available per every 100,000 people in India,
compared to 127 in Brazil and 186 in Mexico.73 These figures
are low for a country on the threshold of being counted as a
major power on the world stage.

But India has high potential in the eyes of foreign investors

who are projected to inject between $US 10 and 12 billion
per year, which would place India only behind China, Brazil,
and Mexico among the emerging economies in investment
by foreigners.74 But putting together modern infrastructure
in order to further attract foreign investment in the untapped
sectors of the Indian economy would be challenging but a
high priority job for Indian elites both at the federal and the
provincial levels.

Conclusions

All said and done, India is certainly not a push-over. It was

not one in 1947, and it is unlikely to start now. Undoubtedly,
it has acquired new economic and technological capabilities
that may be used to better influence events both within South
Asia and beyond. But the manner in which such gains are
achieved would determine whether India's rise would be

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Satya R. Pattnayak

benign or it would be correlated with heightened big and

middle power tensions in strategic areas around the world.
If the second half of the twenty-first century is indeed going
to be an Asian century, then, the potential areas of conflict
among the three major powers of the continent need to be
solved. Japan-India relations have continued to improve
since the 1998 nuclear testing, and India is now the larger
recipient of Japanese developmental aid than China. With
Japan, as well as China, the softer aspects of Indian power
must be used to their fullest. The historic ties of religion and
spiritualism would eventually tease out the instrumental
areas of disagreement.

With China, as bilateral trade and investment ties increase,

the older border disputes are likely to recede. Some have
predicted an eventual clash of the two mega economies of
Asia in a few decades over Southeast and Central Asia. But

none of this is inevitable. Historically, China and India have

never fought major wars against each other in their 6000
years of recorded history. Why start now? In fact, specific
issue-based alliances in energy, trade, space technology, and
mitigating the influence of US would create a competing
joint-pole of international power.

The case of Russia has to be handled with greater

pragmatism. It is unlikely that Russia will stay down for ever.
Its nuclear arsenal already deters the US in bull-headed
intrusion into the former Russian sphere of influence.
Indications are that Russia has come out of the systemic crisis
of transformation, thanks to the favourable prices in the
world market for its main product of exportation -
petroleum. An energy starved India would be better placed
in maintaining cordial relations with Russia; more so as
Russia also emerges as the pivot of energy supply lines going
west.

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 India as an Emerging Power

Finally, a physically distant super power in the US presents

both opportunities and challenges. In terms of opportunities,
the relative helplessness of India in the immediate
neighbourhood of South Asia is unlikely to deter Washington
to forge ahead in creating an issue-specific alliance with
India, in particular in confronting terrorism and maintaining
the overall security in the Indian Ocean region. But the more
entangled India becomes with the US in the matter, the noise
of domestic political resentment is only going to be that much
louder, as it defies the decades-old post-1947 tradition of non-
intervention and non-alignment. It is expected to be a delicate
political game indeed. But is the Indian leadership, both in
the governing coalition and in the opposition, ready for what
is going to be a wild roller-coaster ride?

Endnotes

1 Baldev Raj Nayar and T. V. Paul, India in the World Order:

Searching for Major-Power Status (Cambridge: Cambridge
University press, 2003); George Tanham, Indian Strategic
Thought (Santa Monica, CA: Rand, 1992); George Perkovich,
India's Nuclear Bomb: The Impact on Global Proliferation
(Berkeley, CA: University of California Press, 1999); K.P.S.
Gill (ed.)., Terror and Containment: Perspectives on India's
National Security (New Delhi: Gyan, 2001); H.V. Pant, "India
and Nuclear Arms Control: a Study of CTBT," Comparative
Strategy, 21 (2002): 91-105; Mario Carranza, "At the
Crossroads: US Non-proliferation Policy toward South Asia
after the Indian and Pakistani Tests," Contemporary Security
Policy, vol. 23, no. 2 (2002): 93-128.

2 Stephen Cohen, India: Emerging Power (Washington D.C.:

Brookings Institution Press, 2001); Anthony Cordesman, The
India-Pakistan Military Balance (Washington D.C.: Center for
Strategic and international Studies, 2002).

3 Pankaj Mishra, "The Myth of New India," (Op-Ed) New Y ork

Times, July 6, 2006.

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Satya R. Pattnayak

4 Edward Luce, In Spite of the Gods: The Strange Rise of

Modern India (New York: Double Day, 2007).

5 John Burns, "India Carries out Nuclear Tests in Defiance of

International Treaty," New York Times, May 12, 1998

6 For power-related literature, see Daniel Egan and Levon

Chorbajian (eds.), Power: A Critical Reader (New York:
Pearson-Prentice hall, 2005); Gwynne Dyer, Future Tense: The
Coming World Order (Toronto: McLelland and Stewart, 2004).

7 The World Bank, World Development Report, 2006.

8 Arvind Virmani, A Tripolar Century: USA, China and India,

(New Delhi: Working Paper No. 160, Indian Council for
Research on International Economic Relations, March 2005).

9 Indian Economy: Overview (http://

www.economywatch.com/indianeconomy/indian-
economy-overview.html), pp. 1-2.
10 Ibid.

1 1 Dominic Wilson and Roopa Purushothaman, Dreaming with

BRICs: The Path to 2050, Global Economics Paper No. 99,
Goldman Sachs at htpps:// www.gs.com. Also see, Morgan
Stanley, "India Economics; the next trillion-dollar economy,"
Equity Research Asia/Pacific, January 2003.

12 www.en.wikipedia.org/wiki/economy_of_India - 216k

13 Dominic Wilson and Roopa Purushothaman, n. 11, Pp. 6-9

14 Ibid.

15 Martin Wolf, Why Globalization Works (New Haven: Yale

University Press, 2005).

16 Larry Diamond, "Power-Dependence Relations in the Worl

System," Research in Social Movements, Conflicts and
Change 2 (1979): 233-58.

17 C. Alan Garner, "Offshoring in the Service Sector: Economic

Impact and Policy Issues," Economic Review, Third Quarter
(2004): 12-13.

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 India as an Emerging Power

18 Ibid, pp. 14-15.

19 Reserve Bank of India, Annual Report 2002-3 (Mumbai: RBI,

2003).
20 Ibid.

21 N. Kumar, Towards an Asian Economic Community: the

Relevance of India, Discussion Paper No. 34, Research and
Information System for Non- Aligned and Other Developing
Countries (RIS) (New Delhi, 2002).

22 Stephen Burgess, India's Emerging Security Strategy, Missile

Defense, and Arms Control, INSS Occasional Paper No. 54
(USAF Institute for National Security Studies, 2004), pp. 34-
35

23 Ibid, pp. 25-26.

24 Ibid, p. 36

25 Ibid, pp. 38-39.

26 Rodney Jones, Minimum Nuclear Deterrence Postures in

South Asia: An Overview (Fort Belvoir, Virginia: Defense
Threat Reduction Agency Report, 2001).

27 G.V.C. Naidu, "Whither the Look East Policy: India and

Southeast Asia," Strategic Analysis, 28, no. 2 (2004): 331-346.

28 With regard to the literature on soft power, see Joseph Nye,

"Soft Power and American Foreign Policy," Political Science
Quarterly, 119, no. 2 (2004): 255-269.

29 www.jahajeedesi.com, various issues (2001-2004).

30 India expects $500 billion remittance from India's NRI

expatriate community - when will the exploitation end?
(http://www.indiadaily.com/editorial/3261.asp)

31 Panama City was enriched in the past century by American

influences in terms of addition to the population... white 10
per cent, Amerindian 5 per cent, Asian 5 per cent (Chinese
and East Indian). ...en.wikipedia.org/wiki/
Demographics__of_Panama - 35k

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Satya R. Pattnayak

32 Shaun Gregory and Maria Sultan, "Towards Strategic Stability

in South Asia," Contemporary South Asia, 14, no. 2 (2005):
135-140.

33 Bruce Vaughn, "Indian Geopolitics, the United States and

Evolving Correlates of Power in Asia," Geopolitics, 9, no. 2
(2004): 440-59.

34 Denis Kux, "India's Fine Balance," Foreign Affairs, 91, no. 3

(2002): 93-106.

35 Hamir Shani, "The Politics of Water in South Asia: The Case

of the Indus Waters Treaty," SAIS Review, 26, no. 2 (2006):
153-165.

36 Dana Dillon, "Preventing the Maoist Overthrow of Nepal,"

Heritage Executive Memorandum, February 2003; E.
Sridharan, "Improving Indo-Pak Relations," Contemporary
South Asia, 14, no. 3 (2005): 321-339.

37 Sonia Bouffard and David Carment, "The Sri Lanka Peace

Process: A Critical Review," Journal of South Asian
Development, 1, no. 2 (2006): 151-177.

38 C. Raja Mohan, "India and the Balance of Power," Foreign

Affairs, 85, no. 4 (2006): 17-24.

39 C. Raja Mohan, "What if Pakistan Fails? India isn't

Worried... Yet," The Washington Quarterly, 28, no. 1 (2004-
5): 117-128.

40 Rajen Harshe, "India-Pakistan Conflict over Kashmir: Peace

through Development Cooperation," South Asia Survey, 12,
no. 1 (2005): 47-60.

41 A. Sarma and P. K. Mehta, Exploring Indo- ASEAN Economic

Partnership in Globalizing World (New Delhi: Bookwell,
2002).

42 http://www.saarc-sec.org/main.php?id=12&t=2.1
43 Calculated from World Development Report 2006
(Washington D.C: Oxford University Press, 2006).

44 G.V.C. Naidu, n. 27, pp. 331-346

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 India as an Emerging Power

45 Ibid.

46 Ibid, pp. 335-6.

47 N. Kumar, Towards an Asian Economic Community - Vision

of Closer Economic Cooperation in Asia: An Overview,
Discussion Paper no. 32, Research Information System for
Non- Aligned and Other Developing Countries (New Delhi,
2002).

48 Ibid.

49 Mukul Asher and Sadhana Srivastava, "India and the Asian

Economic Community," Draft Report (Singapore, 2003).

50 Ibid.

51 C. Raja Mohan, n 38

52 "India Stepping up Diplomacy in Central Asia," (http:

www.stratfor.com), August 9, 2002,

53 S. Chatterji, "India, Kazakh to Cooperate in Defence Field

India This Week, June 7, 2002.

54 Ernest Harsch, "Africa and Asia Forge Stronger Alliances

Africa Recovery, 18, no. 1 (2004): 1-12.

55 Ibid.

56 Ibid., p. 7

57 Ibid, p. 9. Also see, "Africa Emerges as China and India's Ne

Economic Frontier," (http://web.worldbank.org/wbsite/
external/news/O.

58 The issue is often discussed in the community web site for

the Caribbean Indian Diaspora in Guyana, Caribbean
Trinidad & Tobago, T&T, Trinidad, Tobago, Caribbean Indian
Diaspora in Guyana, ... www.jahajeedesi.com/ - 111k

59 Goldman Sachs, Global Economics Paper No. 99, 2003.

60 The National Security Strategy of the United States of

America, 2002

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Satya R. Pattnayak

61 National Strategy to Combat Weapons of Mass Destruction,

(Washington D.C., 2002)

62 Stephen Burgess, India's Emerging Security Strategy, Missile

Defense, and Arms Control, INSS Occasional Paper No. 54
(Colorado: USAF Institute for national Security Studies, 2004).

63 C. Raja Mohan, n. 38

64 Stephen Burgess, "India's Emerging Security Strategy and

Defense Capabilities," paper presented in the proceedings of
the Annual Meeting of the American Political Science
Association, 2002.

65 Stephen Burgess, n. 62

66 C. Raja Mohan, n. 38

67 The National Security Strategy of the United States of

America, March 2006, p. 39.

68 Catherine Mann, "Globalization of IT Services and White

Collar Jobs: the Next Wave of Productivity Growth," Institute
for International Economics, International Economics Policy
Briefs, No. PB03-11, December, 2003.

69 This argument is developed by C. Raja Mohan, n. 38.

70 United Nations, Human Development Report, 2002.

71 All references to data are from the United Nations, Human
Development Report, 2002.
72 Ibid.

73 Ibid.

74 See for investment related assessment and projections a

http:// www.atkearney.com/main. taf ?p=l, 5, 1,151

■■

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