Jun 29, 2024 11:46 PM IST
How India can delay the backlash that its economic rise will inevitably bring
All rising powers face contestation and containment. How should India prepare for it? China had a 10-year honeymoon when it went from a $1.2 trillion economy to a $6.5 trillion economy between 2000 and 2010. The United States (US) facilitated China’s entry into the World Trade Organization (WTO) as US consumers benefitted from lower prices, US companies got cheaper supply chains, bigger profits, and ultimately a large market to sell into. It was only with Xi Jinping’s appointment as general secretary in 2012 that there was a change in tone and tenor in China’s attitude to the US. Xi mounted a challenge to US supremacy and sought a redrawing of the world order to accommodate China’s rapid rise. This led to a growing backlash against China which is now at a fever pitch with tariffs and non-trade barriers imposed by the US with bipartisan support. What should India learn from this? Can it use its soft power to extend the honeymoon phase to 15 years rather than China’s 10?
The 30-year globalisation phase post the collapse of the erstwhile Soviet Union is under major challenge today. The electorate in many countries is upset by what they believe globalisation has done to their lot. Populist Right-wing leaders in many western countries have blamed globalisation for the stagnation in living standards, growing inequality, and joblessness in their country. So, there is a return to nationalistic jingoism and a reaction against free trade and immigration, whatever the long-term costs. Supply chain disruptions during Covid have further spurred self-reliance and a return to industrial policy, witnessing the US IRA and our own production-linked incentives-type actions across the world. The WTO is giving way to regional and bilateral trade deals. Geopolitical agility is now a requirement for countries and companies alike.
India is in a bad neighbourhood. China and Pakistan are hostile nations. Other neighbours such as Afghanistan, Nepal and Myanmar are unstable. Despite this, geopolitically, this is India’s moment. The US has shifted its attention to the Pacific and India belongs to useful US-led arrangements – Quad (US, Japan, Australia, India), I2U2 (India, Israel, US and UAE), and the Indo-Pacific Economic Corridor (IPEC). Yet it has retained workable relations with Russia and Iran. At the same time, it has strengthened its relations with Saudi Arabia and the United Arab Emirates and has good relations with the United Kingdom (UK) and Europe. It has also reached out to African nations with success.
The backlash against China has created space and opportunity. Despite India’s fast growth and its ascent on the Gross Domestic Product (GDP) league tables, today it is not seen as threatening as it only accounts for 3.6% of global GDP. It remains a poor country with a per capita income below $3,000 and is not expected to reach developed status till 2047 even by its own estimates. India must use its soft power to extend this honeymoon period and be allowed to grow without containment for the foreseeable future.
A word on using soft power. Soft power is the ability to co-opt rather than coerce. It involves shaping the preferences of others through appeal and attraction. Soft power is non-coercive, it uses culture, political values, and foreign policies to enact change. India has a long tradition of soft power, which originates with its ancient belief in Vasudhaiva Kutumbakam or (the world is one family). During the Independence struggle against the British, Mahatma Gandhi’s actions and the poetry of Ravindranath Tagore increased India’s soft power and embarrassed the British, creating global goodwill for India.
The world sans China and Pakistan does not feel threatened by India’s rise. India’s soft power is rooted in the core Indian values of secularism, tolerance, inclusiveness, and assimilation of multiple cultures in its civilisation. So much so that William Dalrymple writes, “India has always had a strange way with her conquerors. In defeat, she beckons them in, then slowly seduces, assimilates, and transforms them.” Today this is enhanced by India’s democracy, food, movies, music, inclusive non-missionary religion, the easy use of the English language, and respected higher education institutions. Its technology services companies and global capability centres (GCC) have created a strong services brand. In fact, the number of GCCs has doubled in the last 10 years. Its diaspora in the US and UK is especially strong. It is rich and well-placed in academia, business, health care, technology, and politics. Top US companies have CEOs of Indian origin, the US vice-president and the UK prime minister belong to the Indian diaspora. Just as an example, I was in a Seattle nightclub pub a few years ago and a mixed crowd were all dancing to Bollywood hits.
Yet we must recognise that the soft power of the US is, in fact, as strong as its hard power (nuclear, military, technology, economic, space). Despite major errors in Iraq, Afghanistan and now Gaza, US soft power cannot be underestimated. It is further bolstered by the opinion-shaping role of the Anglo-Saxon press and Hollywood movies. I don’t know whether the US dollar is a soft or hard power – but it is clearly a superpower. The US still defines who the bad guys are!
We need to recognise that an “opportunity” is not the same as an “outcome”. Our soft power needs constant strengthening. We must nurture our respected institutions and take steps to fix what is currently broken, like primary education, health care access and delivery, and strengthen corporate research and development further. Complacence, in today’s context, is a death wish and yet the opportunity before India is like never before.
Janmejaya Sinha is chairman, BCG India. The views expressed are personal
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