Focus India

According to the latest report by CRISIL (an Indian analytical company that provides ratings, research, and consulting services on risks and policies, a subsidiary of S&P Global), it is predicted that the Indian economy will experience consistent growth of 6.7% annually from 2024 to 2031. CRISIL attributes this growth trend to the government’s efforts towards public spending and significant investments during a period when the private sector hesitated to make substantial investments. The substantial increase in capital expenditure by the government, support for infrastructure projects, and offering interest-free loans to states have been identified as crucial factors.

The latest monthly economic analysis by the Ministry, published on January 30, also states that, based on reasonable assumptions, India can aspire to become a $7 trillion economy by 2030, adding that in the next three years, the country should become a $5 trillion economy, the world’s third-largest. The government has set the even more ambitious goal of becoming a “developed country by 2047.”

In the report, the Chief Economic Advisor of the Ministry of Finance, V. Anantha Nageswaran, and his team also stated that India will continue its upward growth trajectory due to stable and robust domestic demand, expansion of private consumption, new investments, and new structural reforms.

Strategic Geographical Position

India’s geography and demographic size make it a key player in global affairs. Occupying a dominant position at the head of the Indian Ocean and projecting its influence to the Equator, India is at the crossroads between the turbulent Middle East and the most influential actors in Southeast Asia, while sharing a contentious border with China. Its economic rise and the future projection of its growing demographic and economic power have exponentially increased India’s strategic value for the West and have the potential to alter the balance with its neighbors if not properly managed. Given China and Pakistan’s nuclear capabilities, tensions in the Indian subcontinent are of global relevance.

India and China

It is India’s northern neighbor that is seen as its main threat: relations between China and India are mostly conflictual. The two countries are first and foremost commercial rivals: they are in competition not only for their respective areas of expertise (China dominates manufacturing and infrastructure, while India excels in services and information) but also for natural resources (oil, coal, and iron ore) and capital (investments made by North American, European, and Japanese companies). But the points of friction do not end there.

Tensions exist at every point of contact between the two countries. Tension on the Himalayan border remains high after India’s humiliating defeat in 1967: troops clashed for the last time in December 2022, resulting in the deaths of four Chinese soldiers and 20 Indians. The disputed border represents a litmus test for India-China relations, considering its proximity to Pakistan, India’s other troublesome neighbor funded and supported by Chinese investments, and the contentious Tibetan issue, with which India often interferes by allowing Tibetan refugees to enter. Other areas of tension are represented by the maritime projections of both countries in their adjacent bodies of water, the Indian Ocean and the South China Sea. India signed an arms supply agreement with Vietnam in June 2023 and has continued to increase its presence in Southeast Asia, aligning with the Philippines against China in sovereignty disputes in the South China Sea and strengthening defense cooperation with Indonesia. At the same time, China has competed with the Indian Ocean island states, considered under India’s influence, such as the Maldives and Sri Lanka, by offering investments and financial support.

India-Middle East-Europe Economic Corridor

September marked the tenth anniversary of the Belt and Road Initiative (BRI), the Chinese economic strategy aimed at financing and building infrastructure to connect China with the rest of the world. The BRI has often been accused of damaging European cohesion, trapping countries in debt, expropriating critical infrastructure, and eroding liberal rules and values. In response, in recent years, the EU, together with partners such as the United States and Japan, has sought to establish sustainable, transparent, and rules-based alternative infrastructure initiatives. It is in this context that, in December 2021, the European Commission launched the Global Gateway, its strategy to mobilize up to €300 billion for high-quality infrastructure projects and establish safer and diversified value chains.

During the G20 summit held in New Delhi last September (to which Chinese President Xi Jinping was not present), representatives from India, the United States, the United Arab Emirates (UAE), Saudi Arabia, France, Germany, Italy, and the EU jointly signed a memorandum to establish the India-Middle East-Europe Economic Corridor (Imec).

This project, widely seen as an alternative to the BRI, aims to create a railway and maritime route between India and Europe through the Middle East. The Imec, which is expected to become the flagship project of the Global Gateway and partly financed by it, will not only bypass the congested Suez Canal but also initiate a new phase of economic integration between Europe, India, and the Middle East.

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