India has emerged as a major global power capable of shaping events beyond South Asia. Experts from CFR and elsewhere examined the future of India and how the country’s economic trends, domestic politics, and foreign relations have affected its rise and viability as a critical international actor.
This event was made possible by the generous support of the Hauser Foundation.
LINDSAY: Hello, everyone. Welcome to the Council on Foreign Relations and to the opening session of this year’s Hauser Symposium on “The Future of India.”
I’m Jim Lindsay, director of studies here at the Council on Foreign Relations. We are absolutely thrilled to be able to hold this annual symposium both in person and virtually.
One of the things I really want to do here is to recognize Rita Hauser, who is here with us today. (Applause.) Rita has been a very big and generous supporter of the Council, and this symposium is made possible with the great support of the Hauser Symposium. And so, Rita, as always, thank you.
We have three sessions today. They’re going to examine India’s future. We’re going to look at the country’s economic trends, its domestic politics, and its foreign relations, particularly in light of how these are affecting India’s rise and its influence as a critical global actor.
With that introduction, please join me in welcoming the panelists for our first session. It’s entitled “India’s Economic Rise—Continued Ascent or Turbulence Ahead?”
Our presider for this session will be Seema Mody, who is a global markets reporter for CNBC. Over to you, Seema.
MODY: Thank you. Thank you so much, James. And welcome to today’s Council on Foreign Relations Hauser Symposium. This session is titled “India’s Economic Rise—Continued Ascent or Turbulence Ahead?” And I’m honored to be joined by Pravin, Arvind, and Aseema, who is joining us virtually.
I guess we’ll start with what happened on Tuesday night, if anyone was tuning in to that high-profile hearing, the U.S. House China panel hearing on Tuesday where we had Matt Pottinger, the former national security adviser; House Ranking Democrat Congressman Raj Krishnamoorthi, among others, really emphasizing the need to strategically decouple from China. And it’s no secret that India is seen as a natural beneficiary of this China-plus-one strategy. I guess the question, Pravin, is: Will India benefit from this? And what steps has the country taken over the last three to six months to show that it’s ready to rise up to this opportunity?
KRISHNA: Great. So the question of whether India can take some of China’s market share in the world economy, whether it could serve as that China-plus-one partner to trading partners in the rest of the world, that’s been in the air for some time.
As far as what the Indian government has actually done to take advantage of this possibility, there’s been kind of a general, I would say, impressive liberalization in terms of FDI regulations, encouraging FDI from the rest of the world to come in. There’s been one or two elements of trade and industrial policy, most notably a policy referred to as the PLI—the production-linked incentives—where the government pays a bit of a subsidy to firms that are coming in or domestic firms as well to get into these sectors that potentially could eat into China’s market share. Beyond that, more generally there’s been, I would say, a very impressive investment in physical infrastructure, with good results; impressive investment in digital infrastructure, also with good results.
Now, whether all of these things put together will be sufficient to—for India to kind of, in a very, very rapid clip take away some of China’s market share, serve as, like, a China-plus-one partner, is still open, I think, to question. There’s—
MODY: Still open for discussion.
KRISHNA: Still, I think, open for discussion. There are some small successes. Apple is invested in India. There’s talk about expansion of Apple’s footprint in India, other cellphone companies, and so on and so forth. But China still is, I think, manufacturing exports probably five times as large as India. FDI stock in China is probably about the same ratio, five times as much as India. There are challenges, despite all of these infrastructure improvements and other things—regulatory challenges, various other things that inhibit India’s productivity growth to bring it to that threshold point where firms in the United States, elsewhere in the world see this as an attractive destination of sufficient quality that it can steal—they can consider relocating at scale away from China. I think some of that will happen perhaps less quickly that many in India would like for it to be.
MODY: Arvind, Prime Minister Modi has enacted a number of reforms that have helped the economy, arguably, over the last four years—four or more years. But where has he fell short?
SUBRAMANIAN: I think if I can step back, because we might just build on what Pravin said. I think just to kind of make it a little bit come alive, I would say that, you know, one way to think about this question is exactly what Pravin said. Apple, this iconic company, has made a bet on India, right? So the question is: Is this signal, you know, a harbinger of something more, or is it noise to be dismissed because the underlying fundamentals aren’t quite there yet? So is it signal or noise?
And I think at the moment I’m skeptical. I’m more on the noise side, not willing to concede that it’s a signal. And four, I would say—once you think about it in four ways, I think, right?
One is all this rah-rah around India has to be first placed against what the facts are on the ground. The facts are, yes, very recently, the last one year, the Indian economy has been doing very well. It’s, you know, posted the highest growth rates in the world. But if you see through all the ups and downs of COVID—so compared to pre-COVID—the Indian economy has grown at about 3 ½ percent a year, which is, you know, good, modest, but nothing to merit the rah-rah stuff.
I think the achievements—I would call just the hardware achievements—you know, physical infrastructure, digital infrastructure, you know, Modi’s ability to deliver goods and services to people, what I call the new welfarism—and recently services exports have once again taken off. So the hardware stuff is there. But the facts are a bit more sobering than rah-rah. Manufacturing exports are now—basically, been declining for the last one year. Global market share is flat. FDI for all the noise is actually either flat or declining over the last few years.
And I think this—in answering this will India become the next Apple, we have a natural experiment already. So now capital is moving away from China because of geopolitics, but ten years ago it kind of moved away for organic reasons. China was becoming more competitive. You know, its labor-intensive things were being uncompetitive. And so in that phase after the global financial crisis, China gave up about $150 billion worth of exports. It vacated that space, and India was able to occupy very little of that. So that is the first natural experiment. Now we hope and we think that it might be better but the jury’s out on that, which brings me to what my two biggest concerns are about India, right.
I think India has genuinely embarked on a new trade and development strategy promoting national champions—we saw the fallout from that recently with the Adani thing—production subsidies to attract investors, as Pravin said, and on the out—in terms of the rest of the world, you know, a creep up in protectionism and also a kind of wariness about engaging in free trade agreements.
So especially Asia we stayed out, and, you know, I think one should—in all these things we should, first of all, see what government is saying before trying to overanalyze, and I would encourage all of you to go and see what the commerce minister said three months ago—three days ago in a big conference in India. Basically, he said any foreign company or anyone else—and this was echoed by the foreign minister—that if you import that kind of anti-national and unpatriotic—I think you should actually go and see what he said.
So the whole inward turn worries me because in order to become internationally competitive you need to do that. And then so the last—I’ll stop here, which we’ll come back to—my biggest worry is what I call the software of policymaking, the fact that a level playing field is not level between investors, the fact that institutions are being undermined, very selective application of rule of law.
There’s a famous—you know, a Peruvian president said to my friends everything, to my enemies the law. I think we see some of that happening in India. So I think that, you know, one has to be a bit cautious. I still think, you know, we should be—we should keep our things open, and I’m going to come back at the end and say kind of the U.S. foreign policy establishment is kind of not very helpful in understanding, you know, what—where India is headed or where India should be heading, and we’ll come back to those two points at the end.
MODY: Thank you for that lay of the land.
Aseema, I want to come to you on what you would like to add to the conversation. You have often discussed the politicization of Prime Minister Modi’s economic policy.
SINHA: Yeah. So, you know, I’m a political scientist with an interest in economic policy so I think about the political possibilities and what is politically rational for the government to do. So let me talk of a couple of positives and then talk of the challenges, keeping in mind the political possibility.
So the popularity of this government has given it a(n) autonomy bonus. It has actually room to maneuver to focus on economic policies in the way Arvind and Pravin talked about. You know, the BJP government just won two elections in the northeast. Even though the 2024 elections are coming up, it does have the room to maneuver to focus on economic foundations.
I think the government realizes that it will—you know, that focusing on a labor intensive economic strategy can be politically powerful but also economically necessary and it’s also in India’s global interest.
So what is domestically important? Employment, well distributed GDP, labor intensive exports that also enhance India’s power at the global level. So that’s another strength. I think the government realizes it.
The third strength is that almost every policy is aimed with the inclusionary focus and that is good because it has an economic logic of creating bottom-up demand and participation. So those are the positives: autonomy bonus, a realization that economic policy can be a win-win for the people as well as for global power of India, and inclusionary focus.
Now, the challenges, I think, are also quite serious and I would point to the fact that the government is focused on schemes, projects, and national champions in a targeted and centralized way. Its approach has been personalized, publicity seeking, and credit cleaning before even the results are out and so what it needs to do, in my judgment, on the challenges to actually focus on policies rather than schemes, where the interconnections between different arenas are addressed.
So, for example, I’ll give an example of the government just came out last—a year ago in its semiconductor policy. And so in the semiconductor policy, there are lots of moving parts. There are lots of—you know, government is focused on the PLI scheme on infusing credit and investment.
But in addition to that, the fabs need technology from outside so you have to have an open, you know, approach to bringing in the technology. Sixty percent of silicon wafers are produced in China and so the regional tensions could affect that. And then India needs a skilled workforce. Now, everybody talks about India’s skilled workforce but to create computer fabs you actually need a specialized skilled workforce.
So I think what I’m saying is the challenge is to focus on policies rather than specific schemes where the interconnection and the coordination between different aspects like employment, skills, technology, and energy are addressed.
But we all—India also needs to address the micro supply chain and this is—you know, it’s a very important question. How are markets to be created if—you know, I think the long-term challenge is to create markets in these sectors.
So I think the creation of a(n) interlinkage between different policies is a very important challenge that India needs to address and that’s a(n) issue about the coordination and the linkage between policies.
MODY: Aseema makes an interesting point, Pravin. Is Prime Minister Modi’s policy much more siloed to tackle certain issues that, in a way, aren’t comprehensive enough?
KRISHNA: Well, look, I mean, I agree with her point. As such, the policy challenges themselves are interlinked so then there’s kind of a balance that one needs to strike. These are difficult challenges.
Just look at trade policy. Arvind pointed out this issue that we haven’t done quite as well in international trade and manufacturing exports as we should have. In fact, there were declining exports.
One possibility for the Indian government a few years ago was to join the Regional Comprehensive Economic Partnership. So, on the one hand, this is a massive trade agreement in Asia, actually relatively easy agreement for India to sign on to because it wasn’t encumbered by some of the other issues that, let’s say, an American trade agreement would have involved—labor regulations, environmental regulations, and so forth. It was very nuts and bolts let’s talk about trade type of an agreement.
So, on the one hand, you have this potential joining this very large Asian trade group, lots of possibilities for attaching one’s self to the global value chains, et cetera, and bringing all of that to it.
On the other hand, within the context of this agreement you have the challenge that you have a ballooning trade deficit issue and this is before the—kind of the border conflict with China even began in 2020.
And so it’s a real policy dilemma. What would you do? You’ve got a trade deficit that was $60 billion then. It’s about $100 billion today per year. And, yet, this is the kind of agreement that you need in order to become competitive in the international trade system in order to improve the—kind of the productivity of your manufacturing—(inaudible).
And so there are real issues here, real challenges. I agree almost completely with the points that Aseema made and Arvind as well that this particular direction that Indian trade and development policy has gone, which is the production-linked incentives, this is a scheme rather than a policy.
It might succeed in some modest—in its own modest terms maybe in industry, maybe a factory here, maybe something else there. But in terms of the complete overhaul of the Indian manufacturing sector, I don’t believe that this is the scheme that can achieve it.
India has done other things from a policy standpoint to improve the competitiveness of manufacturing. But I don’t think PLI is what’s going to take us, which is really now the—kind of the signal or signature scheme of the government in this area that this is what is going to take us to where we need to go in terms of true competitiveness in manufacturing—I mean, expanding our manufacturing footprint.
MODY: So to expanding our manufacturing footprint when I was in D.C. recently, Arvind, speaking to lawmakers one of the biggest issues they have is tariffs. India has not let go on increasing tariffs on inbound imports. Why is that and does that change—
MODY: —if the goal is to attract investment?
SUBRAMANIAN: Yeah. I think what happened around 2017-18 was India made this—you know, broke with a thirty-year consensus of slow and steady liberalization in favor of this, you know, more.
I mean, to be fair, it’s not as if tariffs have gone, you know, up to 25 (percent), 30 percent. They’ve been increased by on average about 5 (percent), 5½ percent percentage points, although it covers a fair amount of ground.
But I think as to why, my first and simple and obvious answer is, you know, the government does believe that, you know, focusing on the domestic market. So Prime Minister Modi has a—used to say, you know, India’s three big Ds are demography, democracy, and demand. So the notion that you have a very big market that—you know, that’s going to be the source of your strength is what underlies part of this, you know, turning inwards.
There’s a genuine—so it’s borne partly out of conviction, but partly out of just the confidence. You think that, you know, the Indian market would be big enough. And, of course, that’s not true at all because as Shoumitro Chatterjee and I calculated, you know, the Indian middle class market for, you know, consumption demand is something like, you know, between half a trillion and a trillion dollars. You know, China’s is about seventy-eight times that and the global economy is, like, twenty-five times that.
So I think that’s, I think, the reason why. But I want to come back to something, a very interesting point that was raised. You know, is it because there’s a focus on schemes rather than policies? Maybe. You know, that’s, I think, certainly, a(n) interesting perspective.
But my sense is that it’s much more about what Josh Felman and I call, and recently in our Foreign Affairs piece also, is the software of policymaking because policymaking requires, you know, predictability, you know, stability, you know, rule of law, which is generally—well, let me give you one example foreigners might be interested in.
For every Apple that has come into India, you know, there have been three other companies that have been actually adversely affected by the reversal of some of the FDI liberalization that Pravin was talking about, notably in the e-commerce sector. So Google, Walmart, Amazon, have been, I think, taken away.
Similarly, the auto manufacturers. In fact, three days ago when the commerce minister, he actually singled out some Korean foreign manufacturers as having not done this. So I think there’s a—and the other point it’s—Aseema raised, which was very fair, is that, you know, policymaking in India requires a lot of decentralization, you know, letting the states also, you know, do their own thing, find their own way through this, and to overly centralize everything is—and I think the Adani episode kind of brings to light the kind of—you know, the asymmetric favors that are given in India, the asymmetric application of the law, and we see that not just in economics but, you know, in politics as well.
So if you believe that—as, you know, Aseema just said you want to create a market economy—then these kind of what you would call the software, you know, predictability, data being reliable, you know, people know what the rules are, they will be fairly enforced, I think that is—I see that as the bigger challenge rather than not dealing with policy per se.
Even if you take—for example, even if you take the trade policy, you know, there’s a kind of inconsistency between saying, on the one hand, we will give you all these subsidies to attract you but on the other hand we’ll raise tariffs to make you uncompetitive in global markets.
So it’s that kind of a policy, the software missing more broadly, which I think is the challenge.
MODY: I want to pick up on the Adani story. Pravin, you’re the former chief economic adviser to India.
KRISHNA: Arvind is. Arvind is.
SUBRAMANIAN: I’m happy to pass it back along to someone else. (Laughter.)
KRISHNA: No, Arvind is a very distinguished former CEO.
MODY: When you were there from 2014 to 2018 under Prime Minister Modi, now reflecting on how his commentary—how has it changed over the last four years since you held that seat and do you think he would have handled the Adani debacle similarly back then versus now?
KRISHNA: You know, the response to this is the stuff of memoirs that have to be written, you know, five, ten years after—
MODY: What’s your hot take?
KRISHNA: My hot takes and my CNBC hot take, I do—let’s be clear. I think Mr. Modi was, on the one hand, pro-business to begin with and I think he came in with that reputation of decisive, pro-business, tackle corruption, et cetera.
But there was always an ideological strain in his party that was very nativist, and over time I think that nativist thing has taken the upper hand. And so I do think—see, but here’s—but let me just say one thing just to be—you know, just to make things a bit more complicated.
When it comes to trade there’s this nativist thing which has gained the upper hand. But when it comes to wooing foreign capital this government is no less assiduous as any free market neoliberal who wants to attract foreign capital.
I mean, this government woos foreign capital as assiduously as anything else. So there’s a kind of strange schizophrenia that—you know, more protectionist inward looking on the trade side but on capital the country wants a lot of foreign capital and the government as well, and that’s something that—you know, that itself is a—there’s a bit of a tension there, which I think speaks to the kind of policy, you know, tensions that we’re speaking about.
MODY: Let me add, Aseema, when you see an iconic businessman like Gautam Adani lose over $140 billion in totality when looking across his six companies, I mean, is this a reality check for Indian regulators? Banks? Do you think this really pushes them to enact change?
SINHA: Yes, I think they should because I think this is similar to what I said earlier, which is that, you know, specific national figures or champions, you know, they have to be complemented with policies and supporting ecosystems, what the government recognizes as the need for ecosystem across different forms and different sizes. And so it is a wakeup call in many ways but it tells us that the distributional basis of capitalism, if it is crony capitalists then it actually can hurt foreign investor sentiment and it will hurt the—you know, the foreign—the attraction of foreign investment, too.
I mean, I just want to pick up on one thing that—building on the software idea that Arvind mentioned. I completely agree with him. You know, in addition, if you focus on policies you also must know what to do and how to do it, and there I want to emphasize that during the high growth phase of the Indian economy between 1990s and 2011 the economic governance track was somewhat insulated from politics and we—and I think what we need to do now is that experts and experts who disagree with the government, who have those—who have the ability to look at policies holistically across trade, employment, technology, and energy, they are consulted and they are given autonomy.
So the—one aspect of the software is actually giving more room to experts. So, you know, again, the semiconductor policy there seems to be a recognition that it is going to be placed and given more autonomy in this so-called mission. But the governance model needs to be insulated from constant political pressure.
Political pressure can go on the electoral track. Atul Kohli—actually, Professor Atul Kohli has a distinction between electoral track and governance track, but the governance track has to be insulated and the power has to be decentered and that is part of the software I would emphasize, which is it’s only when we have enough knowledge—a body of knowledge about how policies have to be pursued that we can think about creating new markets. But I think the—yeah, so that’s what I’d say.
KRISHNA: Could I make a quick point about this issue of interlinkages, which Aseema raised a little earlier and I think Arvind hinted at as well?
One of the reasons New Delhi is skeptical of trade policy as a way of achieving a bigger manufacturing footprint or an export footprint is if you look at India—the history of Indian trade policy what was—what were Indian tariffs before the 1990s? The highest tariffs were over 300 percent. The average tariff was about a hundred and fifty (percent), a hundred and ten percent, depending on how you calculated it.
So you went from tariffs that were that high to maybe an average tariff level of about 50 percent a couple of years ago, OK, and yet, despite this very dramatic reduction from a hundred and ten (percent) to 50 percent, the size of the manufacturing sector has been pretty much flat, almost a constant.
So if one goes out, as I’ve done occasionally—Arvind has done—to New Delhi, makes the argument about free—freer trade and says, well, let’s have further reduction in tariffs, you face this argument. We’ve reduced tariffs this much and there’s been no effect on manufacturing. Why should we listen to you?
Part of the answer as to why the manufacturing sector has not grown is that in addition to these tariff reductions—and maybe further rationalization is necessary—there’s a long list of additional policies that need to be put in place or policy reform that is necessary.
One example of this is if you look at the Indian export structure probably 500 to a thousand of the top firms out of a hundred thousand exporting entities account for 90 percent of India’s exports and, yet, Indian policy and policy discourse is very heavily focused on small-scale and medium-scale firms. OK.
And so why is this the case? Maybe there’s kind of a welfarist idea about wanting to support small firms or medium-scale firms, and yet the real action in terms of who’s actually exporting is happening at the top (half ?). OK.
And so unless these—some of these inconsistencies are somehow resolved, there’s a tendency, again, in India to kind of protect. It’s got regulations on workers that keep firms small. You got to be under a certain size or you get subject to a whole host of new regulations by the state, and so forth.
So scale, et cetera, various Indian policies that have kind of conspired together to keep manufacturing inefficient, to keep our trade footprint small and so it’s—on top of international trade policy you need a resolution of all of these things as well.
There’s been, I think, some progress to report on each of these dimensions, but maybe we’re not quite there yet to kind of rapidly take over China’s space, which was the question that Arvind raised in his Foreign Affairs piece quite recently.
MODY: That’s true. A closer—upon closer examination of China’s economy, Arvind, growing at 4.4 percent, inflation is ticking up higher, but so—but it’s moving higher in many countries. But is that the biggest concern or is it the manufacturing—the lack of manufacturing progress we’re seeing in India? Biggest challenge right now?
SUBRAMANIAN: You know, when you reduce it to one or two things it gets tough.
You know, I think the inability through manufacturing it’s been a longstanding one. Let’s not—I don’t think we should just blame this government for the inability to do manufacturing. It’s been a longstanding problem and, therefore, a lot needs to go right.
The thing was—I mean, what was exciting is that is genuinely an opportunity from, you know, capital trying to move out of China and so this is a moment which can be seized. But the question is whether, you know, the government has the, you know, capability to seize that—has the right mindset to seize it.
And I think so it’s not a matter of, therefore, maybe using, you know, Aseema’s thing about it’s not a matter of, you know, doing one more scheme or one more thing. But I think just stepping back and, you know, getting the broader, you know, software of policymaking right, which would require quite a sea change in the attitude of the government. You know, it’s not a lever that you can pull or a button that you can press and say, you know, this is happening. It’s part of the DNA of the government and I think, you know, changing DNAs I don’t know how easy or difficult it is.
MODY: It takes time.
At this time I would like to invite our members and guests in New York and over Zoom to join our conversation with their questions. A reminder that this meeting is on the record, and we will take our first question here in New York. Get them ready. You can raise your hand whenever you have them.
Q: Mark Rosen—
MODY: If you can please introduce yourself.
Q: I’m Mark Rosen, formerly of the International Monetary Fund.
I wonder if you could talk about economic policies or trade agreements or anything that you think the U.S. and Europe could do to help the growth of India and make India more attracted to being in the orbit of the West.
SUBRAMANIAN: See, I think—let me start from a cynical perspective.
I think the U.S.—if there’s bipartisan consensus in the United States on two things it’s anti-China and anti-trade. So I think it’s kind of a nonstarter to say, you know, can the U.S. do more for to engage India on trade.
But let’s assuming we can overcome that barrier. OK. Let’s also be little bit fair to the government because in the last year the Indian government has been trying to kind of partially redress some of this inward turn by trying to negotiate some free trade agreements. It has negotiated a free trade agreement with Australia, another with the United Arab Emirates and, you know, suddenly there are talks with the United Kingdom ongoing.
My acid test for this is the following, that you can only liberalize as part of any of these agreements if, fundamentally, you’re willing to lower your barriers, you know, and in the last four or five years, you know, the country has been raising barriers rather than reducing them.
Now, you could make the case that no, but if it were to come to these partnership agreements India would be willing to, you know, go back and actually reverse the reversals, as it were. So if—so the proof of that would be if India were to, say, you know, reengage with Asia in a serious way or reengage with Europe because I think, again, the U.S. is a nonstarter.
If the U.S.—so if India were to seriously reengage with Asia or Europe that would also mean automatically that it would be willing to reduce its barriers. So it has to be a kind of serious and with big trading partners for this to be a kind of meaningful, you know, turn back towards openness.
I don’t see that happening from the United States. Maybe Europe, but, certainly, vis-à-vis China, vis-à-vis Asia. I think also we have to be a little bit fair on this. You know, while Pravin and I would agree that India should reengage with Asia but the point is that, you know, reengaging with Asia on trade means basically opening up to China and that’s—you know, RCEP is basically an Indian free trade agreement with China. I mean, I’m making—I’m exaggerating a little bit. And, you know, both the politics of that and even the economics of that, given the way China trades, you know, is not easy.
So I don’t think we should be, you know, too unfair to the government. I think there is a basic problem of turning inward. But I do think that there are problems with, you know, engaging internationally.
KRISHNA: Let me add a couple of points to the question about free trade agreements as well.
So India at the moment already has maybe a dozen free trade agreements, and when you look at what was actually negotiated in the context of those agreements you start to realize what it is that India actually seeks out of free trade agreements. Most of these agreements were negotiated through what’s called the enabling clause of the World Trade Organization, which is a special window, if you will, that allows you to negotiate if you’re a developing country, allows you to negotiate a trade agreement that is less than fully comprehensive.
And so the Indian agreements, the dozen or so that have already been signed, is very limited shallow agreements. So from a headline perspective India signed a trade agreement with, you know, Country X or Country Y but when you actually look at the number of relevant tariff lines, so where you were actually importing goods and you had a liberalization, it’s very, very tiny.
The consequence of all of this is that ten—you know, nearly fifteen trade agreements later India’s trade with those trading partners with whom it has trade agreements has basically not even moved 1 percent. OK, and so extremely shallow agreements.
Now, that seems to have changed a little bit. The noise, kind of the discussions one hears in New Delhi recently over the last, you know, twelve months or so, seem to be more positive, seem to be more energetic.
They’re suggesting a shift from the past. We’ll see what happens in the context of the India-U.K. free trade agreement that, you know, several months ago I heard it was just a month away but that was twelve months ago. So we’ll see. Trade agreements are hard to negotiate.
But the fundamental instinct of negotiators, of just kind of the trade policy establishment as such in New Delhi, is not to negotiate broad expansive agreements but to kind of get the deal done and protect yourself as much as you can by negotiating shallow agreements and then not front loading any of the liberalization.
So let’s have a ten-, fifteen-year phase-in period and we’ll do all the liberalization in year fifteen. So that’s the—this is not going to be, as far as I can see, a very rapid path towards kind of gaining access to markets in the rest of the world.
MODY: These aren’t one-pager trade agreements, right?
KRISHNA: These are not one page. They’re thousands of pages.
SUBRAMANIAN: I think—Aseema, yeah.
SINHA: Can I—yes, I wanted to just add an addition to this, which is that trade agreements, you know, Pravin mentioned are shallow and I think one reason is that there is a lot of domestic lobbying and, now, there is no doubt that India has taken a strategic decision to invest in these agreements in the last two, three years. It actually just happened last year when they began to sign these deals.
But one way in which some countries manage trade agreement(s) is actually use it to enlarge performance of their domestic players, to actually say that we are part of these agreements. You will have to export. You will have to produce goods of quality. And this was done very early on in South Korea but it also can be done. This is called tying your own hands. So the government can tie its own hands to its own producers and the lobbying groups and say that you have to achieve performance targets.
Now, I have not seen any evidence whether the Indian government does it but I think that will be a strategy that will affect—you know, it could also affect the lobbying power of these groups, but that India—the government will take a strategic approach to its own companies and say, you have to compete in international markets.
It may require what Arvind is calling a change in mindset. But, you know, there are—there is a mindset that India needs to be economically powerful at a global level. So if India needs to be powerful then its company needs to be powerful at the global level. And so, you know, it could be a(n) interesting strategy to use the trade agreements to nudge domestic companies to perform according to the export—quality of the goods needed.
SUBRAMANIAN: So can I just on the—just to build on that, there’s an interesting, again, contrast between China and India here which kind of speaks to the innate kind of, you know, anxiety that Indian leaders and policymakers have towards freer trade is that, you know, both countries had a very difficult colonial past, but what has been really different between China and India, until the recent time, of course, is that China actually used international engagement to further domestic policy reforms. When China joined the WTO, you know, there were all kinds of things going on, but one of the things was Zhu Rongji. He wanted to clean up the public sector, you know, and open up the economy. So it used international engagement to further domestic reforms, in a very unprecedented way.
India has never done that. So India, the free trade agreements that were negotiated—actually India has quite a few free trade agreements in Asia, as Pravin was saying. Japan, Korea, Singapore, ASEAN—India has ASEAN. They’re shallow, as he said—(inaudible). But those were all kind of foreign policy—mostly foreign policy driven. And international trade engagement was never used for furthering domestic reforms. And that hasn’t changed.
MODY: Good point. We will take our next question from over Zoom.
OPERATOR: We’ll take our next question from Tara Hariharan.
Q: Thank you so much. My name is Tara Hariharan. I work for NWI, a hedge fund based in New York.
Just to expand on this conversation about how India can, in a sense, recapture manufacturing market share from China, and benefit from near-shoring and re-shoring, I wanted to ask about a very important structural aspect of India. And that is the fact that we have an enormous population, and relatively low labor force participation, and a dire need for skills training in order to be able to keep up with the sort of high-skills manufacturing capacities that China and East Asia have. So what is the government specifically doing on this side? Because it's one thing to court investment into India to participate in these sectors, but in terms of the actual training, labor force training, skills training, what is going on, on the ground? Thank you.
MODY: Pravin, would you like to take that?
KRISHNA: Sure. So let me—let me just put a number on that as well. so the Indian demographics are such that India is a very young country. So the fraction of the population less than fifteen years of age is about 30 percent. So large numbers of people entering the labor force every year. I think there was some estimate that even at the current rates of kind of female labor force participation, that you needed to generate something like one new—one million new jobs a month, about ten to twelve million new jobs a year, and 150 million new jobs in ten years, which is essentially the size of the entire U.S. labor force. So an enormous challenge.
I think most would agree that an important piece of that, or how to solve that, is to get workers out of agriculture, into manufacturing, and then we get back to the problem we’ve been discussing now for a while: How do you increase productivity in manufacturing? What part—you know, what role does international trade play in that? And what part kind of overall does domestic policy reform of various sorts play in that? And how much success are we seeing or not, right? So this has been slow. We have not created jobs in the way that we ought to have been.
On the question of whether they have the right skills, there’s an enormous skills mismatch. When you talk to employers in the manufacturing sector, they say: We are looking for workers. We don’t have the kind of workers that we need. And as far as, like, if I’m not mistaken, the government statistics themselves will indicate that maybe 2 percent of the Indian workforce is actually skilled. And so what is the government actually doing about that? I don’t think very much. I’m not sure how one solves this problem at a governmental level either for—you know, it’s a very, very large-scale issue, and I’m not sure that that much has been done.
Some of this may just have to be factories that open up, train their workers to kind of do the kind of factory jobs and get fairly efficiently quickly about the China model, in a certain sense. I don’t necessarily think that the Chinese engaged in very large-scale skilling programs. This was done factory by factory, farm by farm. This is the sort of thing that needs to happen in India as well.
MODY: This is to Arvind. One of the responses I’ve been getting from a number of Fortune 500 countries as to why they haven’t moved more production to India is the quality of talent, finding individuals who are trained. What is the government doing there, or why aren’t they acting fast enough to address this issue?
SUBRAMANIAN: Yeah, I honestly—I think this is a—you know, education and skill is just a very big agenda, on which I don’t know that much about. But what I can say is that, you know, even if you look at this—one of the big government schemes that Pravin also referred to, the production-linked incentive scheme, which is about, I don’t know, $20-30 billion, what is striking about it is that, you know, leaving aside the rights and wrongs, pros and cons of this, if you look at the sectors to which—for which—in which these subsidies are being given, the labor-intensive industries are generally—you know, the textiles, clothing, leather, footwear, toys, you know, those kinds of things—actually they’ve not got very much—you know, they’re pretty low down on the subsidies that are getting.
So it seems like even in terms of government priorities for manufacturing, they’re much more kind of—the gaze is directed at the more skilled, more technology-intensive, capital-intensive industries. And I think that’s—you know, if you have to reclaim low-skilled manufacturing, and given that skilling and education are, you know, fairly difficult things to get done quickly, and it can’t be done by the government alone, you would think that at least, you know, if you believe that you can attract them through subsidies, at least the kind of way you would put these subsidies would kind of reflect the underperformance on low-skilled manufacturing. And that, I don’t see, certainly in this—in these schemes, yeah.
MODY: Agenda? Perhaps to come.
I will take our next question.
Q: Hi. I’m Marshall Sonenshine with Sonenshine Partners and Harvard Law School.
Modi is, at once, wildly popular, but also not infrequently accused of democratic backsliding. And the phenomenon reminds me that a little before his ascension, my wife and I took our three sons to India, toured around for two weeks with a very educated guide, who told us somewhere midway through those two weeks, you know, this is really a quasi-democracy here in India. Which I thought was an admission against interest for a guide, and probably a fireable offense for the touring company. But I’m wondering, since you have raised some important issues more on the trade side, protections, et cetera, I’m wondering what any or each of the scholars speaking today think are the deficiencies in Indian democracy today—recognizing that all democracies are deficient in some ways, including this one. But what would you put top of the list for the problems of democracy for the country?
MODY: Well, perhaps, Aseema, you can take a stab at that, as a political strategist.
SINHA: Sure. So, you know, first let me just say a—(inaudible)—word. The question is, is democratic sliding for growth and economics? And any government or investor looks at political risk. What I think is more specific about the impact of democratic backsliding for investors is credibility risk. If you are not sure whether the government will go and target the BBC office or Center for Policy Research, then you may not—you cannot be confident that they will change their policies in the future. So the political analysis, the political risk, is really about credibility that weakness of democracy hints at.
The second thing I want to say is that, you know, the—whether India’s democracy—what is the—what is the weakness? For economic policy, it is very independent research think tanks have been targeted. So which expert would like to consult with the government and give them truth—speak truth to power? So the arrest of media and opposition leaders, or at the least the dampening of media institutions and targeting of them, creates a question about credibility. Even if investors bracket the issue of, you know, democratic backsliding because India is too powerful in the global system right now, especially the competition to China, but there is an indirect effect.
The other thing I would say is that India likes to talk about its democratic soft power. And the government actually is very good at deploying soft power through yoga and its—you know, G-20 said India is the mother of democracies. But in order to have an effective soft power strategy, especially in this global, visible age where every media arena is linked to the other and you cannot hide your democratic—or non—anti-democratic actions. So in order to have an effective soft power strategy, you have to uphold and implement your values and ideas. And so you can’t uphold democratic values and undermine inclusiveness or, you know, the independent third state either of experts or of media—you can’t just challenge them while claiming to be the mother of democracy in the world. And these discrepancies are visible.
SUBRAMANIAN: Sorry. Go ahead.
SINHA: Yeah, go ahead. Yeah.
SUBRAMANIAN: You know, as—you know, whether India even qualifies as a quasi-democracy I’ll leave Pratap, and Ashu, and others to opine on. But I think the relevant question is, you know, Aseema also said, is what is the impact on the economy? You know, how does politics affect economics? And I think that’s an important and a fair question. So, you know, full disclosure, when I use the word “software of policymaking,” I’m trying to kind of get at those aspects of politics which can also affect economics. Just to give you, you know, just a couple of examples.
One is, you know, if the government becomes so powerful, especially if it’s validated electorally, and acquires so much power, and is willing to use that power not just against the population but against, you know, business interests, et cetera, and does it selectively, then clearly, you know, it’s going to impact the environment. And, you know, one of the things about the national champions that I think it’s worth commenting, which is related to this, is that, you know, there were two very big national champions that the government was promoting.
And I always said—you know, Ashu and others have written about the Gilded Age of American capitalism. You know, the Indian behemoths, economic behemoths, the family behemoths, the difference with the robber barons were, you know, the robber barons were all one-trick ponies, or maybe at most two tricks. Elon is trying to do a third trick and is failing. But, you know, the Indian behemoths are octopus-like in their spread in the Indian economy. Therefore, what happens is that—the perception that they are favored and power can be used on their behalf has a chilling effect on other investors as well.
So that’s an example of—and then, of course, the last point I would say is institutions. You know, the supreme court, the reserve bank of India, you know, various regulatory authorities, if they are going to be used, you know, by not very—by a kind of semi-authoritative type of thing, that also has a big effect on the economic climate.
MODY: We’ll go to our next question on Zoom.
OPERATOR: We’ll take our next question from Marshall Bouton.
Q: Can you hear me?
Q: Thank you. Hi, Arvind, Pravin, Aseema. Nice to see you all. And I want to thank the Council and I want to thank Rita Hauser for making this possible. This is the largest event that I’m aware of in recent history the Council’s put on focused exclusively on India, and it’s very timely.
I want to ask the panelists to bring us back to the larger umbrella or topic of this symposium, which is the future of India. And I would like to ask you to talk about the implications of everything that you’ve spoken of so thoughtfully, in terms of the deficiencies in the Indian economic policy, as well as some of the successes of recent years. And the implications for India’s GDP growth, employment, macroeconomic stability going forward. The media, here and elsewhere, have given a lot of focus to India’s going to be the fastest-growing economy in the—major economy in the world in 2023, 2022, you know, who knows—the picture is changing as we speak.
What are the implications? Can India grow again at 7, 8, 9 percent, as it did in the mid-late ’90s and into the 2000s? It doesn’t sound like it, from all you’ve been saying. Now, the international conditions are not favorable right now. But if you could speak to that, I’d be much appreciative.
KRISHNA: Thank you. You know, so 7, 8 percent as such of the external environment had been what it was a decade ago, I—or two decades ago—I don’t think this is beyond India’s reach. I think actually India’s in a better position today than it was at almost any time in the past to achieve those kind of growth numbers. Of course, we’re in a very difficult moment at the present, which is you’ve got, you know, some part of the world out of kind of the COVID crisis. It is still not fully gone. You’re looking at serious macroeconomic imbalances globally, including the United States, Europe. Recession on the horizon.
And so in the immediate future this year, the coming year, are we going to hit those 7, 8, 9 (percent) numbers? I would be skeptical. I think we’re already seeing evidence, including the numbers Arvind spoke about, the decline of manufacturing exports over the last year of about 10 percent, maybe a little more even, for India to hit that. But if this had not been the external circumstance, without these external challenges in terms of shrinking global demand, I think India is as well positioned as it has ever been, at least, economic fundamentals, to achieve those type of numbers.
MODY: That’s encouraging. I think we have one more question on Zoom.
OPERATOR: We’ll take our next question from Arun Kumar.
I just wanted to go back to the title of the session, “India’s Economic Rise.” And I was wondering, if you took a non-monolithic view of India and look at the states, what would your comments be? How would it change? Because you do see a wide variety of states of development among the various parts of the country.
MODY: Arvind, would you like to take that question, please?
SUBRAMANIAN: Yeah, I think it’s a great question. In fact, if you look at the history of India from 1980, it’s really—it’s amazing how divergent the performances have been, especially the southern and the peninsula states have done much better than the other states. Now, but the reason why that was allowed to happen was because, you know, India opened up. It liberalized. But that was also associated with giving states more agency and decentralizing—you know, political power got decentralized because the monopoly of the congress went away. And economic thing also got decentralized because, you know, the government liberalized more broadly. And that manifested in very different performances.
Now, even today I think you see, you know, very different performances across states. You know, if you take a state like Punjab, for example, doing very badly, you know, at this stage, despite the green revolution and the aftermath. And some of the southern states are doing very well—still doing very well. So it is true that, you know, you know, you are looking at very different Indias. But the counterpart of what I just said is that, so if then you start recentralizing power again, then the ability of the states to express and exercise agency, and, you know, for the good states to do good things, that gets checked once again.
So intrinsic therefore to an India where, you know, a thousand flowers are blooming and a hundred schools of thought are contending is, you know, the economic and political decentralization that happens. And if the reverse happens, which is what seems to be the case, then that, you know, divergent diversity of, you know, outcome and performance, will also be affected, I think to India’s detriment.
MODY: OK. Our next question. Yes.
Q: Thank you. My name is Dharna and I work for the Tata Group in North America.
So I think all of us would agree that India is in a very unique position in terms of the kind of neighborhood that it sits in, with Pakistan on one side, China on the other, and Sri Lanka on another. I think if the panel could talk a little bit about the economic policy in light of that neighborhood, and what that mean for forums like the Quad, and the partnerships that India is trying to forge with the rest of the neighborhood. What impact that might have from a future policy point of view. Thank you.
MODY: Great question. Aseema, should we start with you?
SINHA: Sure. So there are two parts to this. I think China has realized the value of, certainly, Pakistan. It is developing strategic alliances and economic alliances with BRI and also Sri Lanka. And India came a little late in the game, but did realize that there were economic as well as strategic implications of the neighborhood links with China. And, you know, I think what I would say is that in 2014 there were positive signs the government was going to focus on the neighborhood in terms of its foreign policy, including economic and trade links. And but then the government pivoted away from that—from that idea that India could be a center of an economic community in the region.
So there are certain challenges as a result of China’s actions in the region in different parts, even—you know, even in Burma and Myanmar, and certainly Sri Lanka and Pakistan. So we have to manage those strategic tensions. But I think the Indian government’s own policy of seeing, you know, Pakistan as an enemy created—you know, India potentially had the opportunity to become the magnet of economic policies, provide investment to all the neighborhood countries, and also—you know, and also use them for markets. But that has been circumvented by a pivot away from this idea that the South Asian neighborhood is—needs to work together, to the divisions that have come up.
So the—so the South Asian region is—does have some challenges, which are—partly because of China’s role. But those could be circumvented by creating—you know, creating an Indian economic union, which are, I don’t think, being talked about. They are politically not on the table currently.
MODY: OK. We have reached 1:30 so we will have to leave this robust discussion on India there. My sincere thanks to Pravin Krishna, Arvind Subramanian, Aseema Sinha for lending your expertise on a country that I think we all feel very passionate about. Thank you to the Council for hosting this event. The video and transcript of the symposium will be posted on CFR’s website. Please join us for Session Two, entitled “India’s Democracy—Resilient or Endangered?” That will begin in fifteen minutes’ time. Thank you. (Applause.)
GHOSH: Shall we begin? Good afternoon, everyone. My name is Bobby Ghosh. Welcome to today’s Council on Foreign Relations Hauser Symposium. This session is entitled “India’s Democracy—Resilient or in Danger?”
And my three distinguished guests to discuss this topic are—I will start with Lisa, who is on screen. Lisa is chair and professor of Anthropology and History, the Department of South Asian Studies at the University of Pennsylvania; Pratap Bhanu Mehta is the Laurence S. Rockefeller Professor for Distinguished Teaching at Princeton University; and Ashu Varshney is the Sol Goldman Professor of International Studies and the Social Sciences director of the Saxena Center for Contemporary South Asia at Brown University.
I have asked each of them to prepare an opening statement, if you like, an outline of their argument. They’ll each take five minutes, and then I will ask them a few questions, and then throw the session open to questions from you, the audience.
Lisa, would you like to get us started?
MITCHELL: Certainly. Thanks so much, Bobby. It’s nice to be with you all today, and I’m sorry I can’t be there in person.
I guess I’ll just start by saying that the democracy indicators for India all suggest that India has been becoming less democratic. We have the Economist’s Democracy Index for 2022 that places India in the category of a flawed democracy. We have India’s global rank as a democracy dropping from number twenty-seven in 2014 to number fifty-three in 2020, and then rising slightly to number forty-six in 2021 and 2022 reports, probably largely because of the government’s repeal of farm sector laws, which we can talk about a little bit later.
I think the largest decline, according to the Economist, is in the area of civil liberties where India has declined from a 9.41 on a ten-point scale in 2014 to around five-and-a-half in 2020. Similar reports are made by Freedom House’s most recent annual report on political rights and civil liberties, which ranks India as partly free. They’ve also dropped significantly India’s ranking in civil liberties.
And just this morning, V-Dem from the University of Gothenburg in Sweden released their 2023 democracy report which actual names India as a top autocratizing country, showing a continued drop in democratic indicators from last year, particularly on its liberal democracy index where it drops to ninety-seventh out of a hundred and seventy-nine countries. And even organizations like Reporters Without Borders in Paris, on their annual Press Freedom Index, have shown that India has dropped from a ranking of eightieth in the world, out of 180 countries in 2002, to 150th out of 180 in 2022.
Now I think that said, it’s also true that there has been an overall decline in democratic indicators worldwide during this same period. The U.S. has also been downgraded in recent years with the Economist now rating it a flawed democracy since 2016. And Freedom House reports that in 2005, 46 percent of the world’s population lived in a country ranked as free, but today, only 20 percent do with 80 percent of the world living in countries ranked as partly free or not free, and that in fact there are more dictatorships in the world now than liberal democracies. And I guess the other thing that I would add is that this isn’t the first time that India’s democracy rankings have experienced a dip, with the most notable comparison being the emergency period under Indira Gandhi from 1975 to ’77.
I think—one of the things that I think I’d like to highlight in my contribution as a historian of India is that, both in the past and I think today, some of the factors that have enabled or led to the decline in India’s democratic indicators I think have actually been the overzealous use and recourse to legal mechanisms that were actually inherited by India from the British colonial state that were never removed or repealed after independence. So things like the sedition laws, section 124A of the Indian Penal Code, which is very broad and vague, but which makes it a criminal offense to bring or attempt to bring into hatred or contempt, or excite disaffection toward the government, and it’s widely used today, even seventy-five years after India’s independence, to criminalize any kind of dissent and arrest any kind of peaceful critic of the government.
We’ve seen sedition cases increase by at least 20, 28, 30 percent under the recent government and, you know, I think more recently the supreme court, in response to rampant misuse, has tried to halt the use of this law in May of 2022, but the government wants time to reexamine and reconsider the law.
But there’s other laws. There’s unlawful assembly—section 144 of the Indian Penal Code—that gets widely used; there’s preventative detention that allows individuals to be taken into police custody solely on the basis of suspicion that they might carry out a crime. And then the use of emergency powers and emergency executive orders, so in June of 2020, it was used to change the rules governing the agricultural sector. The legislation was rushed through with no debate, no scrutiny, and no consultation with stakeholders. Even things like the 2016 demonetization, or most recently, the government has compelled coal-based power plants in India to generate power at full capacity in the summer months to reduce blackouts. And that was done under emergency powers as well. And then other things being the president’s rule and Unlawful Activities Prevention Act, which was further amended in 2019 to make it possible for the government to designate an individual as a terrorist and hold them without any formal judicial process.
I don’t want to go on too long, but we can maybe come back to some features which might be more resilient—(laughs). I think there’s at least a couple of things, but I’ll stop for now.
GHOSH: Thank you. Ashu, your five minutes start now.
VARSHNEY: Yeah, so five points, one minute each.
GHOSH: One minute each.
VARSHNEY: It’s important to draw distinction between the electoral side of democracy and the liberal side of democracy. We can all agree, as democracy scholars have, with the principle, no elections, no democracy. That is the minimum requirement.
There’s a larger requirement of democracy which pertains to what happens between elections, and there the notion of liberalism—which is complicated, but with respect to democracy it’s clear in the literature. There are at least four freedoms or protections that are important: freedom of expression—between elections; freedom of association, which pertains mostly to civil society, non-governmental formation of associations and their freedom; freedom of religious practice; and minority protection after the horrors of the—the horrors in Europe between the two world wars. Liberalism did not include minority protections classically, but after 1945 a democracy has to be liberal, has to have minority protections after those horrors.
Point number two: Electorally, India—there may be doubts about whether the Indian electoral process is as sturdy as it was, but I don’t think we can say its integrity has collapsed. In particular, the current regime has accepted negative electoral verdicts. In twelve, now, out of twenty-eight states of India, BJP does not rule.
Three, generally speaking, since 1952, India’s electoral democracy score has been higher than its liberal democracy score. So there is a problem, right since the beginning, about freedom of expression especially, and India’s first constitutional amendment—America’s first constitutional amendment made expression—speech absolutely free, including making very prejudiced statements, which are covered by that law. And India’s first constitutional amendment puts restrictions on freedom of speech, especially for public order—(inaudible). So India’s electoral score has always been better than the liberal score. However, its deficit today—deficits from 1914 has been wider than ever before with the exception of the emergency. Three.
At least discursively, in this political discourse if not in laws, India’s current regime—especially the prime minister—has been talking about the priority of duties over rights—he also wrote an op-ed for the New York Times on that—that duties should be given priority over rights. India’s constitution does not say that. Duties are listed under Article 51, and they are the so-called directive principles, not justiciable in court. But taking of your rights, that is justiciable. It can—the government can be taken to court for that.
So this idea that rights of citizens are less important than the duties has been discursively promoted, which creates a very different kind of environment about what citizens can do, what their rights are, and whether they can protect their rights. And second discursive move is that rights should be assigned to communities and not to individuals, and on the—these are a discursive move so far, not a legal move yet—that communities should be given rights on the basis of their loyalty to India or their role in history. Therefore, Muslims cannot be equal to Hindus because, in this discourse—whether or not historians can prove it—in this discourse, Muslim rulers of India were fundamentally disloyal to India. Therefore, Muslims today cannot have the same rights as Hindus.
I have a fifth point, but I think that should cover it. There is a fifth point, which is—OK, briefly, Mr. Modi has been good at state building. The extent to which what Arvind has been calling new welfarism in his work has now reached millions of people—toilets, cooking gas, now water. It was not—I don’t think it was conceivable earlier that Indian state would deliver these things to millions of people. And Indian state under Mr. Modi is delivering these to millions of people, which is the positive side of this regime as far as I am concerned. But while state building has been done, nation building is seriously harmed, and these are two different things. They need to be separate.
GHOSH: We’ll try going back to that later in the conversation.
Pratap, your turn.
MEHTA: OK, just to build on that, I think we need to put this in a slightly larger historical frame. So one way of thinking about this current moment is that you have a Hindu nationalist government in power, and it has a very specific project about nation building, right? And this project is actually a very European Western project. In India democracy can work if it bucks the trend of how Europe built nation-states. Reenacting that project in India would be a catastrophe because of its diversity.
What this government wants to do is, in a sense, enact exactly that kind of nationalism and that kind of project. All European nation-state building was majoritarian and authoritarian throughout much of the nineteenth century, with all the catastrophic consequences it unleashed. And given that that is now the project of nation building, those projects usually don’t end well, at least in the scale of violence.
Second, I think this government’s attempts to control one central element of democracy; namely the information order—free press, free academic, freedom of expression more generally, the importance of independent institutions, and more importantly, the deep alliance between Indian capital and the authoritarian state because that all needs financing, right? That infrastructure, that alliance between capital and the state is now very, very deep.
Third, you have a regime that openly glorifies violence, vigilantism, and the institutionalization of vigilante behavior within the structures of its political party, right? So a lot of the intimidation is, in a sense, at that level. Now the challenge that poses is—and this is I think in my mind the biggest risk here—which is India so far has had peaceful transitions of power during elections. But if you are in a position where the ruling dispensation systematically targets almost all the opposition leaders, right, it creates an infrastructure of civil society violence, right, and is ideologically committed to majoritarianism, will such a dispensation easily reconcile itself to a transition of power should it appear that they are going to lose an election? And I don’t think that is now a fact we can take for granted. I mean, the repudiation of this government would have to be massive because the structure—just the rational conditions. Think of what Mr. Amicha (ph) might be thinking if he tomorrow loses an election and what an opposition might do to him. So I don’t think the confidence we had about smooth transitions can be taken for granted.
Having said that, the last point about democracy—it is also true at the same time that large numbers of Indians do see this government as empowering in two ways: one, the general expansion of state capacity—which is not just this government’s achievement. It is a kind of general trend since 2002 onwards. But it is true that a large number of Indian citizens feel empowered in ways—at least in material terms, and possibly in cultural terms as well; that there is a very complex internal civilizational dialogue about the Indians in which politics is constructed, the imagination—cultural imagination which, in a sense, was privileged. And I think this government has, you know—even the question of, for example, language, right—whether a(n) elite, English-based secularism could actually move mass politics in that way. So there are lots of people feeling empowered at the same time as all these corrosive processes are going on.
GHOSH: Lisa, let me ask you—I’ll ask all three of you this question, but we’ll start with Lisa.
There is a mental model of India in the West, particularly here in this country, of being a democracy and member of the democratic comity of nations, mother of democracy—or mother-in-law of democracy. There is a sense that because it is a democracy, it automatically follows that it will and should pursue the same interests as other democracies around the world—not just here in the West but, you know, there are democracies in other parts of the world, in Latin America, in East Asia—Korea, Japan—in other parts of Africa—that there should be a commonality of interests, there should be a commonality of purpose and action. And it is taken for granted that since India is a democracy, since that’s the mental model we have, all these other things will follow.
And every time there is a—every time that doesn’t actually happen, the tendency here is to sort of gloss over that fact and say, well, there are certain internal sort of inconsistencies, but on the whole, India is on the right side of history.
Is that model of India a useful model for the West to follow? Should that model change? And if so, how should it change?
MITCHELL: Thanks, Bobby. So I think that model is coming from a number of different places. One of them obviously is free elections—or the existence of elections. But I think there is a broader understanding of election, or awareness of elections that, as Ashutosh said, moves beyond into the period in between elections. And I think we have to recognize that India does possess several things that are vibrant, but perhaps endangered; that being opposition parties and a tremendously vibrant civil society. And I think, you know, we can talk in more detail about both of those factors. I think Ashutosh pointed out that at least twelve states do have opposition parties in power, and I think we’re seeing a lot of resiliency from the south, in particular; a little bit from the east, but there are certainly regions that have offered alternatives or are offering alternatives. What becomes of those I think is an open question.
The other is just the vibrant civil society. I think Indians in general have become accustomed to expressing—to reaching out to their state, to expecting accountability from their state. The recent examples of the farmers’ protests, which actually resulted in the repealing of three agricultural laws is a case in point—resistance to the Citizenship (Amendment) Act. I think these are other things that are part of the model and that actually are possibly even more vibrant, but also endangered—but more vibrant than in other places in the world.
VARSHNEY: I think the protesting genes, the mobilizational genes of Indian masses, going all the way back to Gandhi’s mobilization and the independence movement, millions coming out—literally hundreds of thousands going to jail at the time, turning prisons into places of pilgrimage. What a remarkable inversion of meanings that was.
I think India’s protesting genes, mobilizational genes, civil society genes will be very severely tested now, and Pratap’s point about whether, in the coming future, in the coming years, there will be peaceful transitions of power is an extremely serious point, and to be worth deeply thinking about.
The civil society infrastructure today, despite the rather successful baharajariatra (ph)—millions of people came—despite a reasonably successful mobilization against civil—CAA—Citizenship (Amendment) Act—reasonably successful—it was—actually it was COVID that killed it. It could have gone on for several more—so COVID that killed it. You couldn’t get more than four people out, right, because of COVID in March.
But there is another civil society here which is non-governmental but connected to the government which makes public statements about genocide, which says Muslims ought to be killed, in big conferences—that sort of civil society. That civil society is connected to the government, but is not government, right? And therefore, what that civil society, which has some protection from the government—some civil protection of the government, what that civil society will do to the proverbial mobilizational and civil society genes of India, which are about protest, is now a very important question, both for India’s political future and its demands.
GHOSH: Bhanu, is the Western sort of habit of thinking of India in a particular way, is it just—is it lazy? Is it out of date? Should we change?
VARSHNEY: Sure. So I just—
GHOSH: No, I’m asking Bhanu. I’m asking Bhanu that.
MEHTA: So look, I think this point is worth making, right, which is I think we need to rethink the histories of all our democracies, and I think it is important if you want to understand what is going on in India not to think of as something that’s a part of this moment or something that’s exceptional to India. Internal to workings of democracies, and including this one—especially this one, actually—has always been this big question of what constitutes national identity. And for most of this history of this country, this country was—arguably still remains a majoritative democracy in some ways. Think of Jim Crowe, think of 1960s, right?
I think it is important to bear that in mind because if we look for what’s happening in India in terms of something very peculiar and exceptional about India, rather than look to ask difficult questions about the internal logics of democracy, I think we will be seriously misled, right?
Obviously, a country as complicated as India, with this kind of cultural creativity, civilizational depth, it’s hard to imagine, right, any kinds of political structures and institutions being able to box such a country in permanently, particularly because you’ve not had a history of that kind of a repressive apparatus, so one of the things we always talk about, right, is the role of the army, right? You cannot imagine that degree of control being exercised without the kind of mobilization of army that has happened in other authoritative clampdowns. I think on that score there’s probably still reason to be slightly optimistic, you know, about India.
What I think we can say—if I can stick my neck out—is that we are going to go through a phase of very deepening and protracted conflict. If this government consolidates power, then you have the risk of communal majoritarianism and authoritarianism and all the backlash that it generates. If it risks its—if it thinks it’s losing power, right, then it tries to ensure that the transition is as messy as possible, right, in some ways, and it is doing its best to ensure that the structures of state, structures of civil society are institutionalized in ways, right, that it doesn’t have to suffer the consequences of a big defeat.
GHOSH: Go ahead.
VARSHNEY: We are, here in New York and in the United States of America, talking about the wider, deeper logic of democratic evolution. And Pratap mentioned—very meaningfully, I think—America’s Jim Crowe period. And perhaps two minutes on that are very important because—so Jim Crowe reversed two of the emancipatory constitutional moves in post-Civil-War America in the former Confederate states. One was the fourteenth constitutional amendment that provided civil equality. That was a civil-society-based idea. You could—Blacks could go anywhere, could buy anything, could form any associations, et cetera, could also go—think of sending their kids to the same school—all of that—what is covered under civil rights.
Then the fifteenth constitutional amendment was about giving Blacks equal voting rights. Jim Crowe, through constitutional and legal methods after 1890—the 1880s was a period of extreme violence, including rise of lynchings—between 1890 and 1910 there were Jim Crowe constitutions all over the American south, which took away the right to vote in all kinds of legally ingenious ways which we may not have done. It’s not—they didn’t say Blacks cannot vote, but effectively Blacks couldn’t vote, right?
Similarly, they didn’t say that Blacks are not equal as civic members of American society, but effectively that’s what it meant. Much of what—if you think of CAA and the National Register of Citizens in India, if this project goes through—which I don’t think will until twelve state governments also with BJP, which they are not with BJP. Without the cooperation of state governments, Indian states cannot count people.
MEHTA: But that is the effort. The effort is to—yeah.
VARSHNEY: The idea was there. If that happens, then it would be like the reversal of the fifteenth constitutional amendment. It’s probably going to lead to disenfranchisement of Muslims—probably, right? And civil equality is, in any case, being challenged in a very serious way, in any case. But the franchise could also go if appropriate conditions—and mind, those conditions are not there, and they—Delhi cannot push it beyond a point.
GHOSH: We’ve reached the stage where we are to take some questions. Where are we going to take questions? We’re going to take questions from the audience here and, through Zoom, the audience outside the room.
And just a reminder that this is all on the record, and I will take the first question here: the lady on the far side of the room.
Q: Thank you. Sonya Stokes, term member at the Council.
I’m curious what the panel perceives in terms of U.S. policy and engagement with India’s treatment of its minorities. I ask this because U.S. policy is evolving, regarding the treatment of minorities in other countries, such as China. How do you perceive the U.S. stance towards India’s treatment of its minorities? Is it changing over time? And what types of influence does the U.S. actually have in this respect? Thank you.
GHOSH: Good question. Pratap, do you want to take that?
MEHTA: Yeah, so, at the risk of being completely graceless—(laughter)—the U.S. uses human rights, democracy, and minority rights as a tool of geopolitical power, not as a—something worthy of intrinsic ideological allegiance.
And in that sense, the U.S. embrace of those values, without consistency and purpose, does actually more harm to those values across the world, than the U.S. recognizes. That—I think it has to be stated as clearly and as boldly as possible.
Second, I think it is also important not to overestimate U.S. power. The nature of the world has changed profoundly, right? And you know, to its credit, I think that parts of the Biden administration, that seem to actually, I think, in some senses, recognize that change.
So, I think what is important is in a sense, to document, to talk about these things, but the minute—at least, as somebody who cares about the future of democracy, I actually think the entanglement of the U.S. directly is going to be counterproductive, and not even effective.
GHOSH: Lisa, I want to ask you. Do you think that the U.S. has a position on India’s treatment of its minorities? Does the Biden administration have a position? I struggle to think of one.
MITCHELL: I wouldn’t say that there is a strong existing opinion. I would say that there are other factors in the United States. I mean, one of the things that we’re noticing right now is just an explosion in applications to American universities. As people are becoming frustrated with the lack of freedom in Indian universities, there’s a turn to, you know, coming abroad to study.
You know, and that is probably a much softer form of power, and probably not even an explicit kind of intervention.
But I know that there are discussions, certainly in many universities, about how minorities in India can be supported by American university institutions.
GHOSH: You wanted to say—
MEHTA: Can I also say one more thing on this?
One place where I think the U.S. could help, potentially—so, one way of thinking about the crisis of Indian democracy is focusing on the current moment. There are other ways to look at it, as I said, a larger historical perspective, where there has been an internal debate in the subcontinent since 1857 about the form that different nationalisms will take in this region, South Asia, the debate over the nature of Muslim representation, and the sharing of political power.
And one reading of the current moment is that this is just one more episode in that long conversation. India is having a particular version of that debate. Pakistan is having a God-knows-what version of that debate, as is, by the way, Bangladesh—
GHOSH: Bangladesh, yes, of course, yeah.
MEHTA: —another democracy that’s going to be, in some sense, in danger, right?
And the destructiveness of external powers, in thinking about the South Asian region, where any state that made itself a frontline state to external powers, right, the nexus between commerce, arms, and supporting authoritarian elements in all of those states for short-term strategic reasons, those have been profoundly destructive. And you can see—you can see Pakistan as a case in point, right?
So, if U.S. has some constructive ideas about how to rethink the region as a whole, in which it doesn’t become a playground for these kinds of short-term forces that constantly circumvent the larger dialogue about democracy and representation, that could be a very useful thing.
GHOSH: I’m going to—I’m going to come back to this. I recognize that there are plenty more questions to come.
We’ll take the next one via Zoom.
OPERATOR: Our next question will be from Razi Hashmi.
Q: Hi there. This is Razi Hashmi. I am a term member with the Council on Foreign Relations, but also work at the State Department in the Office of International Religious Freedom. Really do appreciate CFR hosting this, and Bobby Ghosh for moderating, and really the panelists.
But—and I agree. The United States needs to remain humble. We’re struggling with democracy everywhere. But our attorney general is bringing January 6th insurrectionists to justice, as well as those who shot up a Sikh gurdwara in 2012 to justice. We’ve even highlighted victims of hate crimes at the United We Stand summit in the White House last year.
However, what recommendations—and I’m going to kind of tease a thread that you had raised earlier, about the recommendations you have for U.S. policymakers, ensuring an equitable partnership that can both balance regional interests, but also advocate for human rights and religious freedom, while holding perpetrators accountable? Thank you.
GHOSH: Ashu, can both those needles be threaded? (Laughter.)
VARSHNEY: No, I mean, the—historically, as we’ve learned in political science for years, and years, and years, after 1945, the United States’ commitment to democracy—worldwide, I’m not talking about the internal issue in the civil rights movement in the ’50s and ’60s—has—that commitment to democracy has always conflicted with geostrategic objectives. And the embrace of Saudi Arabia, or the embrace of Egypt, or the embrace of, you know—Pakistan, and all of that suggested that it’s the geostrategic part of foreign policy that is more important for United States historically, than a commitment to democracy.
And now India is in a sweet spot because, you know, geostrategically, China—there is bipartisan consensus on the Hill that China has to go down now, or China is an anti—China is an anti-American entity, which must be countered. And India is very useful for that.
So the—India’s commitment to democracy, India’s commitment to minorities, et cetera, all of that is going to be—going to be sidelined for the sake—or for the pursuit of the geostrategic objectives.
VARSHNEY: Regardless of what the attorney general is doing inside here. Yeah, so the foreign policy will be separated from the work the attorney general is trying to do with respect to January 6th, and the rest.
MITCHELL: So, yeah, I’m not sure I actually have anything to add to what Ashutosh has said here.
GHOSH: Oh, sorry.
MITCHELL: We may take another question?
MITCHELL: Or unless Pratap has—
GHOSH: Let’s take a question with—from the room—yeah. You’ve been waiting for a while.
Q: Oh, is that on? Yeah, Bill Spindle. I worked extensively in India as a journalist for the Wall Street Journal. I was a Council on International Affairs fellow there last year.
If—talking about digital and cyber issues, if Europe, on the one hand, has set up a lot of pretty vigorous protections, and China, on the other hand, has set up some very systematic ways of deploying of these to control society, where is India landing on this at this point, in your—in your sense, with Aadhaar and the—and the incredible expansion of mobile internet and digital payments, and that sort of thing?
MEHTA: So, at one level, right, the government is selling India’s digital story, not just as a demonstration of India’s capabilities, as an instrument of state-building, but as an instrument of economic inclusion. And there is no question, right? I mean, just if you speak anthropologically, the last ten, fifteen years, we were talking about India’s big companies, most Indians associate now, reliance with cheap data, right? And it has been experienced as incredibly empowering. So that’s one side of the story. And India’s digital infrastructure is something, I think, to be proud of, right?
On the other hand, on the other hand, as you know, India also submits some of the largest number of requests to censor videos, take legitimate news videos off. I mean, the BBC has technically not been banned, they’re just—(laughs)—they’re just—companies have been asked to take down, or not post, right, a BBC documentary.
The civil society vigilantism that Ashu mentioned, the ruling dispensation has effectively institutionalized it as an instrument of hate and intimidation, using exactly those same techniques—I mean, right—the ownership of media companies.
So, in a way, what it has done is, it has used institutional power, right, to produce some of the same effects of censorship, surveillance, and deterrence—that, in a sense, the Chinese state would, in a sense, like to do—without formally repealing, you know, what, on the face of it, seem to be relatively liberal laws.
MITCHELL: Bobby, I can—
GHOSH: Yes, Lisa, come in.
MITCHELL: So I can add to that.
I mean, I think, you know, we’ve seen with the recent censorship of the—of the BBC documentary, the use of the legal structure as a kind of punishment for, you know, refusal to take something down, or even for producing something that is not approved of.
But I also think that the question of surveillance is a really important one. Cities like Hyderabad in the south, India’s fourth-wealthiest and fourth-largest city, is quickly becoming one of the most densely surveilled cities, largely through the encouragement of, you know, neighborhood welfare associations installing cameras in their housing complex. But it’s now a deeply surveilled city. And you know, even though, you know, it’s in a state which is still an opposition to the center, that’s—you know, that doesn’t diminish the fact that even opposition parties are implementing these kinds of tactics and practices.
GHOSH: Did you want to comment?
VARSHNEY: Yeah. I mean, I think the idea that the digital spread has empowered lower orders of society—quote/unquote, “lower orders of society,” the plebeian orders, right—is absolutely correct. I mean, the geo-revolution under—is a very serious one, for—India’s phone calls, India’s access to digital infrastructure, could be cheapest in the world right now. I think there are some—I’ve seen some working papers on that, people trying to work out—it’s cheapest in the world.
So—and it’s going to spread further. So it’s empowering the people who didn’t have access to this infrastructure in India, but it’s also a huge, huge tool, and readymade for surveillance and repression at the same time. It has—it has a schizophrenic character, empowering as well as repressing. And you can add neighborhood cameras, and et cetera to that, which—and yes, a lot of—it’s not simply BJP doing that. That’s also true. The other governments are also doing it.
GHOSH: We’ll take the next question on Zoom.
OPERATOR: Our next question will be from Raj Bhala.
Q: Hi, this is Raj Bhala. I’m a distinguished professor at the University of Kansas Law School. And I’ve been studying India for many decades, the legal, and political, and trade dimensions, and writing about it.
And I’d like you, please, to comment on caste, because as I reflect back on many events over these last several decades, it seems that the discussion of caste is perhaps a bit limited to a certain group of scholars, who sort of say, well, isn’t that quaint, or isn’t that something that’s sort of interesting, and let’s be very, you know, careful and respectful. And that’s all good.
But at the end of the day, when we’re talking about what is handicapping India, we don’t say enough about caste, or do we?
MEHTA: (Laughs.) So you’ve raised a very important question. And you know, to be honest, a lot of the discussion in Indian social science used to be that the only thing we discuss is caste, actually; people—you know, people just vote their caste. And there was a kind of overdetermination, where caste was the readymade explanation for pretty much everything, right?
Having said that, I think, two important things. One, of course, caste, inequalities, still persist in horrendously mutilating forms. And anybody who denies them is still not confronting the full reality of India, despite the progress that it has made.
But I think, the second thing, I think, politically, that’s interesting at this moment, which is over the course of the last thirty, forty years, there were a lot of social reform movements and political movements mobilizing castes, right, to assert their political power against the dominance of hitherto upper castes, right.
Now—and it was always assumed that that form of caste mobilization would act as a check on Hindu nationalism, because it’s a cross-cutting cleavage, right, and that Hindu nationalism is largely an upper-caste phenomenon.
A couple of things have happened, which are very significant. One, the momentum of that form of caste mobilization, agglomerating into larger groups, has come to more or less a standstill. Caste still matters, and caste mobilization still matters. But now, the logic of caste mobilization is to actually mobilize in smaller sub-groups, to share out, for example, reservation—(inaudible).
And that has actually given Hindu nationalism a remarkable look, actually, because I don’t think you should assume that the cross-cutting cleavages of caste will now naturally act as some kind of check of Hindu nationalism, right?
The second, I think, is running out of ideas on the instruments that can actually help you overcome the historical inequities of caste. The most important instrument was reservation in quotas, which have been institutionalized and still remain in place, and India has made its peace with them.
But the serious question, you know, as—(inaudible)—said, what will destabilize caste relations is the dissociation of caste with employment. That can happen only with a growing economy, moving people off agriculture, and second education, right?
There are hundreds of agitations in India around reservation. I have not yet seen a single political party mobilize around the quality of education, right? Reservation has become the cheap ticket to saying this is the one key that’ll unlock these caste hierarchies. Where there’s actually a lot of action, in some senses, happens in the economy, happens through these indirect processes.
GHOSH: Just for the sake of those who—I mean, reservation is often a shorthand used in Indian conversation; it has a different context in the U.S. Reservation here means quotas, quotas in jobs, in university positions, and so on.
VARSHNEY: Basically, India’s affirmative action.
GHOSH: It is a form of affirmative action, yes.
VARSHNEY: So, in the last election in 2019, 45 percent of India’s other backward castes, just below the upper castes, voted for BJP, 45 percent. And 33 percent of Dalits, below the—below the other backward caste—the other backward castes, you can see them as middle, but they were not upper. They were also denied a lot of privileges, historically.
So, if you think of India as a caste structure as consisting of three levels, generally speaking, upper caste, the OBCs, or the middle caste, and the Dalits—roughly 17, to 18, maybe 20 percent now, of Indian population—33 percent of Dalits voted for BJP, 45 percent of OBCs.
So, this is a huge—
GHOSH: This is the party—this is the party that has historically been seen as a party of the upper class.
VARSHNEY: That’s right. So these groups are opposed to the upper caste. Their politics were organized very differently. And the—one of the greatest political achievements of Indo-nationalism under Mr. Modi is the incorporation of the lower castes under—in what was an upper-caste party to begin with.
VARSHNEY: Right? This would explain why BJP would get something like 37.5 percent of votes. Upper castes are not more than 16 percent, 15 percent, if that. We don’t have the exact numbers, 15, 16, 17 percent of India.
But BJP gets 37 percent of votes now, in places—in some states, gets 50 percent of the vote now. And that is not possible without incorporation of Dalits. So, this is a huge development. It’s not clear how the lower castes will be now extracted into another political formation, and by what slogans.
And on reservations, I think I completely agree with what Pratap has said, that it’s a cheap ticket. The latest example of that is the congress party, three days ago, including reservations—affirmative action—in the private sector. It has been confined to the public sector, so far, in—over the last seventy years or so—now, making the argument that it—that extension of reservations, or affirmative action, to the private sector will be part of its campaign. It’s simply one of the cheapest ways to think about caste politics in India. And it’s not clear what it will do without further expansion of economic opportunities.
GHOSH: Lisa, you wanted to comment on this?
MITCHELL: Yeah, if I can just add, one of the things I’ve always been very, very struck by in India is that on the ground voters tend not to vote along ideological lines as much as they do for candidates who inspire confidence that they’ll keep their campaign promises, or that they’ll open up channels of opportunities, and access to things like government jobs and reserved educational seats, affirmative action. And I think—and I think, you know, voters will vote for whatever party they think is going to best open up those opportunities.
And so when we talk about caste today in India, I think one of the biggest fault lines is the debate over affirmative action reservations, which are now at, what, 59 percent. Under this recent administration, the expansion for the first time beyond caste to a new category that has never before been incorporated into affirmative action of economically weaker sections. And by opening that up to caste Hindus who previously were not eligible, the current administration has made a move that’s been widely critiqued, but also widely popular on the ground.
Because they’re—again, going back to history, one of the earliest and most effective routes to social mobility was access to government employment or university education—government seats in universities. And generations have been what their predecessors have—how their predecessors have benefited from these opportunities and want those same opportunities. Never mind that the number of government jobs and the number of—you know, has declined by about 20 percent in the wake of liberalization of the economy and privatization.
GHOSH: Ashu, you had a thought, but we’ll take one more question before we go.
VARSHNEY: Yeah. In Indian democracy, there is, so far, no political room for a pro-economic growth politics. In Indian democracy, the pressure is towards getting a bigger slice of what exists. And I’m not against affirmative action. That’s not what I want to say. But the question of where it should be applied and to what extent is an important question. And I have—I may disagree with what Congress Party has said about the reservation in the private sector now, but I’m not against affirmative action.
But for reasons that remain unclear, there has never been a pro-growth—room for pro-growth, economic growth politics. There has not been, beyond a couple of states, political room for pro-education policy. There has not been room, as in America—or, maybe that happens only at high levels of income; we have to investigate that as scholars—for a pro-health politics. Pro-health, pro-education, pro-growth. There is not much political room for—we haven’t seen a great deal of political room in Indian democracy for that.
GHOSH: We have time for maybe one final question. We’ll take it on Zoom.
OPERATOR: We will take our next question from Marshall Bouton.
Q: Hello, everybody, again. Hi, Pratap. Hi, Ashu.
What’s emerged from your wonderful discussion for me is a sense of almost a historical inevitably of the present setup. The success of the BJP, the success of the majoritarian appeals, the success of caste consolidation, which you’ve just described very well—politically, that is. My question is, is there a counterfactual in the possibility that if there were an effective opposition, led vibrantly by an effective Congress Party mechanism—and we can separately talk about what the problem is with the Congress Party. But let’s just imagine the Gandhis and we all went away tomorrow and the Congress Party was open for grabs and stuff as THE vehicle for mobilizing opposition to the BJP. Would it happen? Or are we past that point where it’s even possible?
GHOSH: We’ve got four minutes left, so I’m going to—(laughter)—pressure all of you to answer that—(inaudible). Lisa, let’s start with you, because you flicked at this at the beginning when you pointed out that we’ve been here before with the emergency. We came out of it. Can you see that happen again?
MITCHELL: So think Pratap pointed to something early on in his opening comments about language. And I think there is great ambivalence about the role that English plays in India today. And I don’t think what’s in India is inevitable today, but I do think that we’re facing a very real set of frustrations that have resonated with a wide swath of the population. People both want to acquire English for social mobility, but they resent the fact that English plays such an outsized role. And so, yeah. I think we’ve talked more about the regional differences as they relate to both Hindi and English, but I know we’re running out of time, so.
VARSHNEY: I don’t think, Marshall, democratic politics have at least medium to long term, certainly long term, inevitably is built into them. In the medium to long run, certainly long run, there is something open about—right, there is openness to democratic politics, how they evolve. And you can see—you probably see a new chapter emerging if the following condition can be met. That condition is: Is the BJP going to be reduced from 305 to 220? We don’t know. Maybe it’s 220 will—then they’ll need another fifty-three to put together a majority. If they need only thirty, then that’s not a problem. If they need twenty-three, that’s not a problem. If they need fifty-three, it’s a problem.
Once the—I think the logic of the way politics operate in India is simply that if you can create an opening in institutional politics, in parliamentary politics, in election politics, you will open up many more avenues, right? And so I have not given up on the belief that something quite substantial might happen on 2024, though odds are—the odds are that BJP would be if not getting the majority next year, probably getting pretty close to it, right?
GHOSH: And you raised some fear about what if they didn’t and didn’t want to hand power over.
VARSHNEY: Yes. That’s a very important question. (Inaudible.)
MEHTA: So just two quick points on this.
GHOSH: Really quick.
MEHTA: So one, given all the stuff we heard in the economics panel, clearly there is raw material for an opposition politics to work with. I think the economic performance will be not as great as the government thinks, although I don’t think it’ll be as catastrophic or as bad as I think the critics of the government think. And I think it’s a dilemma for the left and center.
But the most important thing I’d say about the inevitably, Marshall, which is—and you look at right-wings across the world, not just in India—the right takes politics seriously. It thinks of politics as a generative activity, where you go out and create new identities, you know, create new forms of mobilization. The left and center, and all our social scientists, we have become socially deterministic. You know, we keep running these numbers about caste divisions, what the political arithmetic is. The right has done the civil society mobilization. It has created groups that think beyond the next electoral cycle, to bring about long-term ideation and cultural change, right? And I don’t think the left and center in India is even remotely thinking of that space.
GHOSH: Oh, you were talking about India. I thought you were talking about their country.
MEHTA: Yeah, exactly, as I said, right? All over the world. So I’m afraid it will come down to good, old-fashioned politics, which we don’t see yet to the center and left here in India.
GHOSH: Right. Well, I thought that was a remarkable conversation. I felt like we could go on for a very, very long time, but we will be driven off the stage in a moment. A quick bit of housekeeping before we go. In fifteen minutes the next session begins on the topic of Indian Foreign Policy in the era of geopolitical competition. Please note that the video and transcript of this discussion will be on CFR’s website. And that leaves me with the task of thanking our guests, Lisa Mitchell, Ashu Varshney, and Pratap Bhanu Mehta. Ladies and gentlemen, your panel. (Applause.)
AGRAWAL: All right. Hello, everyone. Welcome to the third and final session of today’s Council on Foreign Relations Hauser Symposium. This session is titled “Indian Foreign Policy in an Era of Geopolitical Competition.” I’m Ravi Agrawal, the editor in chief of Foreign Policy magazine, and I’m presiding over today’s discussion. This meeting is on the record, but I’ve been assured it won’t stop our guests from being frank. So let’s introduce them all and give them a round of applause afterwards.
Alyssa Ayres, to my left, is the dean of the Elliot School of International Affairs at George Washington University. She’s also an adjunct senior fellow for India, Pakistan, and South Asia here at CFR.
To her left, I have two virtual guests.
And they are, in order of—to the left of Alyssa we’ve got Ashley Tellis. He’s the Tata chair for strategic affairs and senior fellow at the Carnegie Endowment for International Peace. He’s also a CFR member.
And to his left we’ve got Robert Blackwill, the Henry Kissinger senior fellow for U.S. foreign policy at CFR. He was also a U.S. ambassador to India from 2001 to 2003.
Welcome all of you. Quick round of applause, please.
It's great to be able to do some of this in person. So we’re going to have a discussion for about thirty minutes, and then I will invite those of you who are here in the audience and also our virtual audience to join in and ask some questions. So we’ll have another thirty minutes for that. I expect us to cover several issues today. I’m interested in India’s presidency of the G-20 this year, what it can accomplish through that framework. We’re going to look at India-U.S. relations, especially in light of the war in Ukraine. And then there’s India and China and, of course, many other dyadic, many-lateral and multilateral ways through which to consider India’s foreign policy.
So, Alyssa, I thought I’d start with you. The news emerging from India today is really interesting. New Delhi is not issuing a joint statement after today’s foreign minister’s meeting—this is the G-20 foreign ministers—because there were angry exchanges over Russia’s war in Ukraine. Indian Foreign Minister Jaishankar said he wanted to discuss other issues at this meeting, but they couldn’t because, quote, “the gap between countries was too much.” Just talk to us a little bit about what happened and what that means for India’s leadership of the G-20 this year going forward.
AYRES: Thanks, Ravi. I suppose it isn’t a surprise that it was difficult for twenty participating countries to agree on how to describe Russia’s war in Ukraine. I think that was the central issue at stake here. What the G-20 has decided to issue is a chair’s communique. It’s a very similar process to what happened with the finance minister’s meeting a couple weeks ago in Bengaluru. Again, they could not agree upon the precise terms and ways to describe the war that Russia has launched with Ukraine. You can imagine that Russia, a member—
AGRAWAL: Well, they didn’t even want to call it a war.
AYRES: They didn’t want to call it a war. You can imagine that Russia did not want to sign on. China did not want to sign on. I think we saw the same thing happen today. Is this a question for Indian leadership? I think that’s an interesting question here. I am not sure that it would be possible for any leader to be able to thread the needle on the question of how to describe, in terms that everyone could sign onto, ways to describe Russia’s war in Ukraine. I think that is a pretty high bar to try to clear, but I do think that India has tried to craft for itself this year of the rotating presidency of the G-20 as an opportunity for India to put its special stamp on global leadership.
And so you can see that with the terms that India is using to describe this year’s theme for the G-20. One Earth, one family, one future. Not so much unanimity today—(laughs)—as it turns out. But this really has echoes of the way Prime Minister Modi has described India and its desire to see the world as one family, harkening back to a Sanskrit saying of the world is one family. So one Earth, one family, one future. Pretty hard to get everybody in the G-20 to agree that there is one view of current events in the world.
I think you also see with the G-20 India’s desire to establish itself as both a leader of the world’s major economies, which is exactly what the G-20 format is, as well as a global representative of the global south. And you see that in the kinds of themes that the tracks that India is pushing forward in the G-20, taking up multilateral development bank reform and the importance of sustainable development, climate change. These are tracks that would be important. They were important in Indonesia’s leadership, but you see India focusing on these as themes where Indian wants to continue to highlight its own leadership of these themes on the world stage.
AGRAWAL: So let me bring in Ashley. And, Ashley, I want to unpack, you know, what’s happening at the G-20 meetings in India a bit more with you, but also in light of India’s larger strategy under the Modi administration, its foreign policy, essentially—which Foreign Minister Jaishankar has described as multi-alignment. So not nonalignment, but multi-alignment; this notion of an ala carte kind of pick and choose—pick your allies when you need them, have strategic interests in mind when you think about the world. And many of us watching that have wondered, well, how long can you keep picking and choosing in this way? When do these choices collide with each other? When do you interests collide with your values, if you center values at all in your foreign policy? So when you look at what’s happening in the G-20 meetings right now, is it your sense that India’s encountering serious turbulence in how it sort of wants to practice multi-alignment?
TELLIS: Oh, without doubt, Ravi. Without doubt. The whole idea of having multi-alignment and a sort of ala carte foreign policy, ala carte alliances or partnerships worked wonderfully in peacetime and when the world is a quieter place. It’s a strategy that only promises gains with no downsides. And I think India is now beginning to realize that in a world that has become far more conflictual than it was a few years ago, it’s going to take all of India’s creativity and leadership to be able to sustain that. I mean, take the point that Alyssa started out with, which I think was central. The fact that they cannot issue a single statement on the part of these twenty countries—and they aren’t talking of the U.N. General Assembly here. We’re just talking of twenty countries. (Laughs.) Tells you how difficult it is to bridge what are very deep divides in the international system.
And I think India’s coming face to face with two realities, both uncomfortable. That when there are big divisions in the issue of high politics, those divisions really impact your ability to have this omni-directional foreign policy. That’s the first reality. And then the second reality is, when you have big divisions in high politics, those divisions seep into low politics as well. And so even though India may want to separate, for example, the issues of managing debt, providing more creative solutions to climate change, creating a universal data regime that would be responsive to the needs of developing countries—all these will quickly become hostage to the crisis that we are facing with respect to great-power competition, whether that competition is triggered by Russia’s war in Ukraine, or India’s own problems with China, or the U.S. problems with China. So India is actually trying to navigate very treacherous waters at this point. And it’s not even clear what success would mean.
AGRAWAL: And, Ashley, just one more beat on that. At the start of the year India hosted a conference in which it sort of, slightly grandiosely, wanted to call itself the voice of the global south. Do you see that as overreach?
TELLIS: Well, the global south is the one arena where India believes it has leverage, because it can bridge multiple worlds. But it’s becoming very clear that India is not simply another global south country. It is a country that is a rising power, by many stakes. It has interests in many ways that are closer to the West than they are with many global south partners. And so it’s one thing for India to declare itself the voice of the global south or the champion of the global south, but on many specific issues India’s interests don’t neatly align with those of the global south. And so I suspect that there’s a lot of rhetoric—there is a lot of rhetorical attractiveness to pretending to be the voice of the global south, but I suspect in practice that’s going to be a harder act to act on, grow on.
AGRAWAL: And it’s already proving to be so.
Bob, let me bring you in. And I want to ask you about the U.S.-India relationship. You know, I think from—there’s a very clear trend in the relationship from when you were ambassador, you know, in part because of your work on the relationship and some of the others. This is a relationship that has strengthened over the years quite clearly, despite differences between these two large democracies.
On the issue of the war in Ukraine, I’m curious how you see the need to foster this partnership further, while still—when you consider the fact that India has dramatically ramped up its crude oil purchases from Russia. I believe it was at 0.2 percent of its total crude purchases that came from Russia before the war, and today it’s somewhere in the 23 to 25 percent range of the total pie that it sort of consumes. When you look at that and the damage that that causes to the U.S. sanctions regime on Russia, how do you see the relationship moving forward? How much of a challenge do you see India’s multi-alignment to the trajectory of where Washington and Delhi can cooperate and compete in the future?
BLACKWILL: Well, good to be here. Let me put your question about Ukraine in some context, building on what Ashely just said. And I will be provocative, as is my habit. Let me begin by asking this question: Which country, India or the United States, needs the other more regarding the challenge from China? I would argue that India needs the United States, Asia’s prime balancing power, more than the United States needs India, although, of course, it values India as a partner. If that is the case, why is Washington, nearly twenty-five years after the transformation of U.S.-India relations, nearly always the demand-doer in the bilateral relationship? It is the diplomat’s dream to always be asked and never to ask, and India has managed that. One could call it a triumph of Indian diplomacy.
But perhaps it is time for the United States to press India more than it has to stop the talk of strategic autonomy and classic nonalignment and so forth, and to be more forthcoming regarding America’s national interests in the G-20, the global south, the Asian Quad, at the U.N., at the WTO, and so forth. Because isn’t the conceptual basis of India’s strategic autonomy in the end that the United States would help India respond to Chinese aggression, no matter what India says now about strategic autonomy. If that isn’t the conceptual basis that I don’t think strategic autonomy makes sense for India, but I think they are confident that they can talk about strategic autonomy now, and depend on the United States if there’s Chinese aggression.
But with respect to India’s future and strategic autonomy, I just raise these perhaps pertinent questions: What would be India’s reaction to a crisis in the South China Sea? In the East China Sea? In the Taiwan Straits? On the Korean Peninsula? In a crisis between Japan and China? Would it remain neutral in all these confrontations, as if it were a nation in Central America? Does it not wish to have an influence, a diplomatic influence, on the outcome of these crises? And what does India, speaking of the global south, say to developing countries now about China’s predatory trade policies and its geoeconomic coercion?
Now, to the chairman’s question about Ukraine. I’m perhaps in a minority, but I exclude this one-off problem of New Delhi’s policy on Ukraine, because I respect its profound dependence on Russian weaponry. If I were an Indian policymaker, I would adopt the same policy as the current Indian government. And, by the way, Alyssa didn’t have the chance to say, Prime Minister Modi gave a speech today at that G-20 foreign ministers meeting and did not mention the word “Ukraine,” showing, again, what we’ve been saying on this panel about the difficult position India finds itself on Ukraine. But not with me. I think that they have a sound policy regarding Ukraine, and I don’t think it can be generalized.
One final question that’s on my mind, if perhaps no one else’s. And I ask it like this: Is there a point in which Prime Minister Modi’s Hinduization of India, Hindutva, damages congressional and U.S. support in the public for the U.S.-India relationship? I worry, maybe others don’t, that we’re headed in that direction. Thank you.
AGRAWAL: Those are great questions that you raised, Bob. And, you know what? I’m going to pose some of them to Alyssa and Ashley, just to see if we can answer some of them. Does America need India more than India needs America? Alyssa?
AYRES: I think I agree with Bob. I mean, I do think that India needs the United States more to realize what it seeks on the world stage than the United States needs India. But I think we’ve had, again, since Bob’s time as ambassador in New Delhi, we’ve had a very engaged U.S. foreign policy that’s been focused on helping India realize its own rise to power. There have been some bumps in that road. There’s no doubt about that. I think some of the projections and enthusiasm, including my own, that India’s economy would expand faster than it has.
There have been some disruptions in that process. COVID recently has been a major setback, so I think that has been a challenge for India and for the U.S. relationship with India in economic terms. I think some of the democracy issues that have emerged particularly in more recent years have called into question whether India will continue to be an irate, raucous democracy, the kind of place where you’ve got a million opinions and they’ve all got a home somewhere—
AGRAWAL: So but let me ask you this. Given all you’re saying, and given that the consensus now seems to be that India needs America more than the other way around, why is it—I mean, to a casual observer, looking at how India has managed to sort of get what it wants? It’s managed to have this ala carte system where it gets to pick and choose when it wants to do what, and when it wants to support countries or not, when it wants to be someone’s ally or not. How is that the case? I mean, it’s a paradox.
AYRES: Well, it’s not a paradox if you want to be everybody’s ally or, in fact, no one’s ally. India does not really have alliances. It has relationship. It has strategic partnerships. It has global and strategic partnerships. But it doesn’t really have alliances. I think Ashley’s point here is really important. That works when the system gives you enough headroom and there aren’t deep, deep divisions. But in the last five years, the geopolitical environment has sharpened. And we’ve seen divides, like the U.S.-China tensions. These are very serious tensions. In that case, India leans much more in the direction of the United States, because that’s very helpful to Indian foreign policy. But the longstanding relationship with Russia, in another context, India needs that longstanding relationship. It’s a very important relationship to New Delhi. So it does not want to choose, in that case.
AGRAWAL: Ashley, I think we’re all picking up on your point that in times of war choices—these ala carte choices are much harder to sustain. But let me pick up on Bob’s other very astute question, which also ties together the previous two sessions on democracy and some of economics. At what point will Prime Minister Modi’s pro-Hindu agenda—at what point will democratic erosion in India, and all of its attendant problems, at what point will those trends, and we can call them trends—at what point will they hurt India’s foreign policy and its relationships with other countries?
TELLIS: So I will answer that question, Ravi, but I also want to go back at some point to the question that Bob asked. But let me start by answering your question directly. There are two kinds of events that I think would be very costly for India, would be very costly for the U.S.-India relationship. One is if the current trends in India end up with another major bout of communal violence—internal pogroms, which appear to have either state acquiescence or state support. I think that would be a very costly event for India’s reputation and, particularly, for the U.S.-India relationship. So we can live with a lot of democratic backsliding, as long as its gradual and subtle. But once it crosses the threshold of widespread bloodshed, I think that is going to change the character of the way we think and look at India.
The second would be if you had an electoral crisis in India, of the kind where the governing party or the party in power very clearly loses an election but attempts to manipulate the instruments of state in order to continue in office. We’ve never seen that—
AGRAWAL: And, Ashley, I just want to point out, that was a big part of the previous session. Both Pratap and Ashutosh brought up that point. But do continue.
TELLIS: But that is—that is something that has never happened in India before. Governments that have lost elections have actually gracefully demitted office and waited for their chance to come back. But it is possible to imagine a future where a government in office losing and election and refuses to leave. And if that were to happen, then, again, I think it would warrant a revisiting of India on the part of many elites and, you know, communities around the world.
If I could come back to the question that Bob asked, because I think it is in many ways the question we have to get our grips around. And my answer would be something like this: India has done a fantastic job, through very creative diplomacy, in persuading the United States that Washington needs Delhi more than Delhi needs Washington. And India has lost no opportunity to pursue it as if it—to pursue it about exactly that fact. That we have been persuaded I think raises some very tricky questions, and difficult questions, about the character of our own strategy towards India. And I think the faster we become realistic, less romantic, with respect to our expectations of India, the more stable the bilateral relationship will actually be.
Because on current trends, we are positioning ourselves for a crisis, which will come, because we have these overblown expectations of India. And then India chooses to act in its own interest and chooses to do things that we may not like. Then, at that moment, we are suddenly shocked that the friend that we imagine India to be does not turn out to be the case. And we got a small, small taste of that in terms of India’s response to the Ukraine war. But you could imagine bigger crises of the sorts that Bob identified, where we might be in for some very rude shocks if we don’t recalibrate our expectations of India quickly.
AGRAWAL: Bob, I want to get to China—India’s relationship with China. And, you know, this has been a relationship that has been troubled over the last few years. They’ve had skirmishes on the border. India has lost some parts of its territory to China, even though it doesn’t like to admit that publicly, certainly not to the Indian media. How do you see India’s engagement with China and its ability to defend its borders with China playing out in the next few years? And what do you see as America’s goal in that process?
BLACKWILL: Well, I think you start in trying to answer that central question by recognizing that the power relationships are deeply asymmetrical. What has happened in the last decade-plus is that China has been widening the gap between itself and India in every respect—in every respect. And therefore, India, as it tries to manage this relationship with China, is in a weak position. And that has come out in some of the comments—controversial comments made in the last month in India, I won’t mention names here, but in which that’s been widely discussed. That is why India needs the United States more than the United States needs India.
Now, more specifically, India in dealing with China in the context I described could, of course, as Japan has done, the new South Korean government has done, as the Australians have done, is come closer to the United States in the way that many Americans would like. But there’s one hindrance to that, which is deeply rooted in India, which is that it will go out on this limb with the United States and discover that its out on the limb by itself. And that the Americans will do a U-turn and suddenly decide that the best way to manage world order is some version of the G-2.
And we saw that in some days or hours from the president of the United States, Donald Trump, who talked about such a U.S.-India management of the international system. So Indians, and they’re not making this up, worry about the credibility and the sustainment by the United States of its current hardline approach to India. And our record for consistency over long periods is not exemplary, if I may put it like that. So one can understand India’s caution. One last point, of course, it’s up to India to narrow the gap between itself and China, not anybody else. And that gap, as I said, has been getting bigger.
AGRAWAL: Another beat on China. Ashley, I saw you nodding quite vigorously when I was pointing out that India hasn’t really admitted that it has lost some territory to China. Do you think it will need to at some point? And what are the flashpoints that we need to keep in mind that could, you know, pop up in the next couple of years in the India-China relationship?
TELLIS: Well, the biggest danger is that you now have a change of environment, both at the border itself and within the two capitals—in Beijing and New Delhi—which narrow their room for maneuver vis-à-vis the other. So what’s the situation on the border? For the last forty-odd years this was, for all practical purposes, an unmanned border. You never had more than a few thousand soldiers on either side. Today, there is the equivalent of six divisions facing each other in very close proximity. Three Indian division equivalents and three Chinese division equivalents. Even the smallest skirmish, if repeated, could get out of hand. And it’s not getting out of hand in a border which is unpopulated with no firepower. Now there is an enormous amount of firepower concentrated along a very small piece of territory. So you could imagine things getting out of control very quickly. So that’s the change that has occurred at the border and persists as we speak.
The second change the changes in capitals. For a while there, both Delhi and Beijing had looked for ways not to box the other in. They wanted to make certain that there was a certain modicum of cooperation in the relationship. So even when things went back, there were opportunities for dialogue and there were opportunities to maneuver. Now that has completely disappeared. And it’s disappeared at precisely the point that these asymmetries are very stark. India’s weaknesses are very pronounced, and the Indians are very conscious of those weaknesses. So that immediately limits their freedom to move in ways that they might like. The Chinese have extraordinary superiority over India, not in a military sense but in the sense of broad capabilities. And so they don’t feel compelled to cut the Indians any slack.
And so from Beijing’s point of view, the options are narrowing in the sense that they don’t need to exhibit any liberality vis-à-vis India. So both countries find themselves in a bit of a cul-de-sac with no easy ways out. And the way India’s responded to this has been by, you know, a feckless attempt at sort of killing Chinese apps, which I’m sure does not cause any sleepless nights in Beijing, while continuing to lean even more heavily on the United States, which I suspect infuriates the Chinese government all the more. And so we are locked into a confrontation from which I do not see any easy way out.
AGRAWAL: OK, I think it’s time to take some questions now from our audience. And I’ll begin with a question from here in the room before I go to Zoom. Just a reminder that this is all on the record. I see a hand over there, if we can go to the gentleman in the beige jacket.
Q: Hi. Bill Spindle. I worked with the Wall Street Journal for a number of years in India.
What is the endgame with the Russian relationship? I think everyone understands it can’t be changed immediately, it can’t go quickly. But it is harder and harder to understand what the endgame really would be. I’m curious your thoughts on that.
AGRAWAL: Alyssa, would you like to take that on?
AYRES: I’m not sure New Delhi is looking for an endgame with its relationship with Russia. I think it would like to try to maintain as positive a ties that it can for as long as it can. Again, the theory is to try to maintain ties with as many countries as possible. The world is one family.
AGRAWAL: And there’s an economic element to this as well, right, because buying Russian oil at a steep discount is not a bad place to be.
AYRES: That’s certainly the development of the last year or so. The longstanding defense relationship with Russia goes back decades. Even though India has been diversifying its procurements—its military procurements from around the world in the last fifteen years, it still has a preponderance of its arms from Russia. So it remains a very important supplier in that sense. And then, as the war in Ukraine, Russia’s war in Ukraine, wears on, and as the West has created a sanctions regime and tried to create a sales cap for Russian oil, India has picked up the slack. So India has become a much more important procurer of Russian oil. If you talk to Indian officials, the Indian foreign minister has been very public about the fact of saying that India will not apologize for wanting to take advantage of low prices that will help fuel the Indian economy at a time that it needs this fuel. So again, I don’t think they’re looking for an endgame in the relationship with Russia.
AGRAWAL: Bob, do you have a take on that?
BLACKWILL: Well only that I agree entirely with Alyssa. And only to say there’s also the history of this relationship between New Delhi and Moscow. As we know, for forty years India’s most reliable international partner was Russia, the Soviet Union. And this generation that’s currently leading India remembers that. It may be the last one that remembers it vividly. (Laughs.) But it does remember it. And they were steadfast, loyal friends of India, as the United States, in India’s eyes, continually betrayed it, especially with regard to Pakistan. So that’s also a factor. But I think Elizabeth’s absolutely—or, Alyssa’s absolutely right. They don’t foresee ending this. Russian leaders come and go, and the India-Russia relationship abides.
AGRAWAL: You know, I just have to remark that it took thirty-seven minutes for the word “Pakistan” to come up. And I remember a time when a discussion like this could have only been about Pakistan.
But let’s take some more questions from the audience. There was a gentleman there in the middle. Yes, sir.
Q: Ron Tiersky from Amherst College.
We haven’t talked about public opinion at all yet. Can you talk a little bit about whether there is, to what extent there is, an Indian public opinion, given how complex it must be? And what are the attitudes of Indians, or what is—what is the attitude in Indian public opinion toward the United States these days?
AGRAWAL: OK. Ashley, would you like to take that question?
TELLIS: Well, it’s a hard question to answer, because there are public opinions and there are public opinions, depending on what the issues in play are. But I would say broadly, Indian public opinion is highly nationalist on matters of national security. The Indian public defer very much to the choices of their governments. There is a broad measure of support for the United States, but not necessarily because there is affection for the United States. There is a measure of support for the United States because I think there’s an intuitive understanding about how important the United States is for Indian national interests.
But, oddly, that respect for the United States, as it were, is also married to a degree of suspicion that is quite enduring. And that degree of suspicion has long roots, primarily because of our position in the international system. The Indians see the United States as being a constraining power because of our longstanding partnership with Pakistan, which, you know, evokes very neuralgic sort of responses. And because, at the end of the day, the Indians still see their country as a rising state that has not yet risen. And that trajectory of getting to the point of being risen depends greatly on the choices that the U.S. makes with regard to India.
And that’s not a nice or a comfortable position to be in. And so much as India wants to be a partner of the United States, it will never get to a position where it sees the United States as either the sole partner or the exclusive partner for India, particularly in the strategic realm. So the Indian approach is one of sort of portfolio diversification, in that sense. And it sort of testifies to the sort of inner conflicts that exist in the Indian mind about the relationship with Washington.
BLACKWILL: Ravi, can I just chime in and agree entirely with Ashley? But also say, I think that the Indian mass doesn’t have as sophisticated a view of the U.S.-India relationship as the elite, of course. And one of my successors in New Delhi, when asked this same basic question said: Well, if you wonder what ordinary Indians think of the United States, have a look at the visa line outside the American embassy.
AYRES: Can I just add to that? I just wanted to say that I think perhaps a generation and a half ago many Indian prospective students might have wanted to study in the U.K. Now, in the United States at any given time we’ve got more than two hundred thousand Indian students studying here, which is a really important place where people do come and think of the United States as a place to grow, and learn, and develop themselves. I would also add, the rising prominence of the Indian American community in the last decade creates different role models. Look at our tech sector, right? Our tech sector has all these CEOs from India. So this is a place where people have come and succeeded at the very highest levels.
AGRAWAL: You know, that resonates for me. I made a similar journey. But it has become harder, however, to get a visa, to not only come here, but then to stay here afterwards. So that is a source of tension. But people, as you point out, keep voting with their feet.
We have a question on the virtual platform.
OPERATOR: We’ll take the next question from Raghav Rao.
Q: Hi. This is Raghav Rao from Ernst and Young. Thank you for doing this session.
So at the end of the day, you know, economic prosperity tend to ease other differences. So in that context, can India use its three Ds dividends—the democracy, the demography, and the demand—as the forces to truly be the arbitrator of international conflicts?
AGRAWAL: Alyssa, would you like to try that one?
AYRES: Well, that is a tough one. Can India use democracy, demography to be the arbiter of international conflict? It’s hard to arbitrate international conflict. And the kinds of conflicts that we see today in some ways are not lending themselves very well to that kind of arbitration. There was a spate of newspaper stories maybe eight months ago about whether India might be trying to position itself as a mediator in the Russia-Ukraine war. That hasn’t come to pass. Perhaps it may down the line, never doubt what could happen in the future. It doesn’t seem like it.
AGRAWAL: You’d have to—you’d have to call it a war, for starters. (Laughter.)
AYRES: Right, exactly. Well, I mean, I’m not—so it is the case that Prime Minister Modi has said: Now is not the era of war. He has said that. But they could not get people to agree on this communique. But, in any case, the geopolitical environment is one in which I think you need to have parties willing to have a mediator first for mediation to succeed. And I do not know that our current conflicts are those that lend themselves in that way.
AGRAWAL: I want to see if there are more questions in the room. There’s one here, one there. OK, I did have more questions on my own, but I’m going to bring you in first. There, please.
Q: Thank you. My name is Dharna and I work for Tata Sons in North America.
My question is to the panel to ask—we’ve spoken about India’s prerogatives, and India’s discourse, and India’s course of action. What do you think is the United States’ course of action if India was not to play a key role in the Indo-Pacific strategy? What would be the U.S. alternative fallback options be in that scenario?
AGRAWAL: Bob, would you like to take that one?
BLACKWILL: Well, India’s a central part of the Indo-Pacific strategy. Not least because it hasn’t occurred in the last decade and a half. It’s been announced but not implemented, essentially, although the Biden administration is trying to take steps in that direction. But this government and at least its immediate predecessor, and below the president, regarded India as a crucial partner in this regard. The problem is—in that respect, as we’ve been saying, is India’s very hesitancy to go very fast in this direction in ways that might compromise its relationships with others, especially China and Russia. So I wouldn’t expect it to accelerate. I wish, as I said, that the U.S. would put somewhat more pressure on India to go faster.
But you could put it like this, I think: Over the long term, the United States cannot successfully apply—conceptualize and then apply an effective strategy toward the Indo-Pacific without India. And so the challenge for Washington is to show patience at the right time and show insistence at the right time. And of course, that’s a delicate diplomatic task to make real over time.
AGRAWAL: Ashley, I want to ask you a related question to this, on China. There are two ways of looking at, you know, India’s place at a world in which the U.S. and China are competing more and more, perhaps decoupling, perhaps, you know, embarking on an era of a new Cold War, as some call it. One way of looking at it could be—for New Delhi, from New Delhi’s point of view—one way of looking at it could be that New Delhi doesn’t want a world in which China slows too much. It doesn’t want a world in which there is decoupling, because that’s not good for the region. But there’s another way of looking at it, which is that if companies and countries are cut off from China, then it creates friendshoring opportunities in India. How does New Delhi balance geopolitically the China challenge?
TELLIS: So the Indian view of what is a desirable order really starts from the premise that the United States assisted the rise of China, and Washington is now paying the price for doing so. Now, given that they think that the U.S. is slowly gravitating to its senses, what New Delhi would like us to do is to build India as the counterweight, given that China’s trajectory is going to prove troublesome to the United States and to many other Asian partners. So that’s where the Indians are coming from.
Now, what’s the difficulty with the logic? The difficulty with the logic is this: Even as China becomes a troublesome player in Asia and globally, from the point of view of our interests, it is still likely to remain a central economic player in the Asian geopolitical order. And no matter how much we talk about decoupling, I can promise you I don’t expect to see serious decoupling anytime soon. Not in this decade, not in the next. And that is become China has made some very strategically sensible choices, from the viewpoint of its own interests.
And India still finds it difficult to complete with China’s attractiveness as a recipient of foreign direct investment. India wants the U.S. government to enforce friend-shoring. It wants the U.S. government to push U.S. companies into investing in India. But at the end of the day, unless you are in a wartime situation, the U.S. government simply does not have the statutory authorities to do enforced friend-shoring. So friend-shoring, if it is to be successful, will happen only to the degree that India’s economic environment is appealing enough for those companies that are desirous of exiting China to go to India.
And thus far, I must say with a great degree of regret, that India’s shift in the direction of external openness to the world market is still extremely tepid and extremely hesitant. So even though at the abstract level India wants everyone to come and do business in India, with India, for India, in practice we are having enormous difficulties in making good on that vision. And simply appealing to the United States, as is often the case now—every dialogue ends up with an appeal to the U.S. government to create new sort of institutional mechanics to increase investment in India.
But, you know, those appeals are going to fall on flat ears if at the end of the day you cannot convince corporate America that India is a good enough place to grow roots in and to make money. And on that count, the Chinese have done remarkably well. And have, you know, been laughing for the last thirty years all the way to the bank and will continue to laugh all the way to the bank for at least another two decades.
AYRES: Can I just add to that? The Indian government has put in place—and it began this right before the pandemic started. So, again, the pandemic has been hard for economies around the world. But the Indian government has put in place a series of what they call PLIs, production linked incentive schemes or programs, designed precisely to try to encourage companies from around the world to invest in manufacturing in India. And the idea is, you know, taking it—this was, I think, discussed in the first panel—the idea is to take advantage of the opening and companies’ desires to diversify away from China.
Has this yet born fruit? It may be too early to tell. It’s an important step. But as the last panel we heard just discussed, politically it’s very difficult to make the case for a free market system. So it’s pretty difficult politically to make the case for this. So you see these incentive schemes put in place, even as the trade environment—you know, tariffs have gone up. So it’s made it harder for India to be a place where it can become a center of value chains.
How long will India wait before it sees change in this direction? I don’t know the answer to that. But I think it’s vitally important that, for India’s own desire to realize its strength as a power, it needs to see greater economic growth. And that is something that successive Indian governments have been trying to work towards for twenty years, nearly. And it still hasn’t quite gotten there. And I think that’s a big concern for all economic policy planners in India. This is a very real concern.
AGRAWAL: It’s certainly issue number one.
We have another question on the virtual platform.
OPERATOR: We’ll take the next question from Stefano Vaccara. Mr. Vaccara, please go ahead. Looks like we’re having technical difficulties.
Q: Can you hear me now?
AGRAWAL: We can. Go ahead, sir.
Q: Stefano Vaccara, La Voce di New York. I’m a journalist here at the United Nations.
And so my question is about what do you think about the chance that there will be a reform, a Security Council reform, where India is finally getting that permanent seat that its asking for now many years? There’s been a—I mean, it’s been a debate for over twenty years here, but it looks to me that India in recent months had the success to have a part of France and U.K., but also United States, declaring—the president himself in September—that India deserved that seat. And if now what just happened, that India said it’s been abstaining on all these resolutions presented by United States—if this can change this push that the United States is doing so far. And because the discussion has been always of this between—the relations between China and India, I mean, how eventually—how could this happen with this big obstacle of China, being they’re not so happy for probably for India to be a permanent member? Thank you.
AGRAWAL: All right. Thank you for that. Since we’re almost out of time, I’m just going to couple this together with another question or two from the audience, and then see if our panel can address them together. Right in the front here, and then one more there. Two questions from the audience, and then that’s it.
Q: Is it on? India-Israel relationship has been blossoming, especially when Netanyahu’s in power. In the interests of time I’ll simply say, would any of the panelist have any comments on that?
AGRAWAL: OK. Let’s hold that, and then one last question there, and then we’ll jump back to the panel.
Q: Hi. My name is Helena Arose. I’m with the Antiquities Coalition.
I wanted to ask—we’ve been following India’s efforts to repatriate its stolen cultural heritage. And we’ve seen this as a big priority in the G-20, both in the theme and on the agenda. So I wanted to ask the panel what role does cultural heritage play in India’s current foreign policy?
AGRAWAL: All right. Thank you. OK, so panelists, pick any of these that you want to touch on. Alyssa, I’ll start with you.
AYRES: Maybe just quick an answer on the Israel question. It’s true that India’s ties with Israel have been growing dramatically. It’s got a strong security relationship. It also maintains strong ties with many other countries in the Middle East. It maintains ties with the Palestinian Authority as well. So I think this is another example of a case where you see India looking to maximize the number of strong relationships that it has.
AGRAWAL: They’ve formed an I2U2 partnership along those lines.
Ashley and then Bob, answers to any of the questions you’ve just heard, or final thoughts.
TELLIS: Well, I’ll address the question of the UNSC. If you look at the five permanent members of the Security Council, four of them have endorsed India as a future member of the U.N. Security Council. This has to be the noblest of all lies that has—(laughter)—told to India. Every one of them would like to avoid expanding the UNSC, if they have their way. And I would argue that if we ever get to the point where we are contemplating UNSC expansion, there’s going to be a wicked debate about whether India ought to be on it. And I would suspect that many of the four countries that have endorsed membership will find creative ways to renege on that commitment.
AGRAWAL: Bob, I’ll give you the last word.
BLACKWILL: The chances of India joining the Security Council in the foreseeable future are zero or less. (Laughter.)
AGRAWAL: Less than zero is a great thing to contemplate today. With that, I’m going to close. Alyssa, Ashley, Bob, thank you so much for your time. (Applause.) And a video and a transcript will go online at the CFR website. Thank you, everyone.