The future of the region doesn’t necessarily belong to China but to India.

As India marked its Republic Day on January 26, the nation’s ascent within the spheres of regional and global economic and security leadership has been both pronounced and resonant, yet paradoxically underappreciated, even neglected—eclipsed by the meteoric rise of China and the narrative of a so-called Chinese Century.

For long, China’s economy and expansive market were preordained to be the vanguard of the forthcoming century, a projection made against the backdrop of a purportedly waning West. However, Beijing’s recent economic slowdown coupled with internal socio-demographic shifts have disrupted this forecast, illuminating the West’s enduring resilience and, by extension, capacity for alternative leadership.

Yet, there’s a vital element that has been conspicuously absent from the global calculus: India’s strategic role as the counterbalance and contender to China’s assertion of regional supremacy. Despite Beijing’s swift ascendancy over the last thirty years—a reshaping of the regional power dynamic—there has been a palpable absence of a commensurate counterweight, with the West being the sole contender until now.

Enter India—a nation whose potential as a pivotal player has been either underestimated or misconstrued, leaving global strategists perplexed about the appropriate mode of engagement. Acknowledging the fact-based trajectory ahead, we must anticipate a recalibration of international responses and policies—a reorientation that promises to bolster regional stability and fortify the foundations for future resilience.

The next economic powerhouse

In an impressive leap, India claimed the title of the world’s fifth-largest economy with a gross domestic product (GDP) reaching $3.75 trillion by September 2022, a climb from tenth place in 2014. According to the latest forecasts, India is on track to become the third-largest economy by 2027—within a mere three years—signifying a pivotal shift in the global economic landscape.

This ascent positions India as a crucial counterforce to China’s dominance, offering an alternative axis in the realms of supply chain management, mineral resources, and foundational economic sectors including market consumerism, trade, and a burgeoning digital, technological, and innovation-driven economy. Notably, India’s stock market became the world’s fourth-largest as of last May, and the nation is poised to maintain its status as the fastest-growing major economy, expanding at a rate threefold that of the global average, with projections of a 6-7% growth rate through the decade’s end.

The National Bureau of Economic Research in Cambridge has shed light on the long-term economic prospects, suggesting that by the year 2100, India could be poised to command the world’s second-largest share of global GDP, accounting for a staggering 16%. If current trends in productivity persist and demographic projections hold, India might very well ascend to the pinnacle of the global economy, comprising a third of worldwide output by the turn of the next century.

India’s demographic dividend: A strategic advantage

India’s most formidable asset for future growth lies in its demographic profile. Now the world’s most populous nation with 1.4 billion citizens, India boasts a median age of just 28 years, with about 900 million individuals within the working age bracket of 15 to 60 years. This youthful demographic represents 65% of the nation’s population, which carries profound implications for not only the regional landscape but also the century ahead. This stands in stark contrast to the demographic trajectories of China and other regional neighbors like Japan, as well as Europe, all of which are experiencing a demographic downturn. In stark contrast, both India and the U.S. are set to reap the demographic dividends, bolstered by their burgeoning young workforces and a rising segment of productive citizens.

India is projected to contribute approximately 25% of the global workforce expansion over the next decade. The country’s higher education system, renowned for its robust output of skilled graduates, especially in the fields of science, technology, engineering, and mathematics (STEM), is expected to add 2.4 million graduates annually—comprising the world’s largest pool of STEM-educated individuals.

The dividends of this demographic boon are manifold for New Delhi, not only fueling consistent levels of productivity and innovation that are vital for regional leadership but also providing a vast reservoir of skilled labor that will enhance both economic and military capabilities. Innovations in military strategy and the agility of command structures, underpinned by a youthful armed force, add a new dimension to India’s geopolitical heft.

Amidst China’s much-publicized narrative of lifting millions out of poverty, a lesser-known yet equally significant transformation has unfolded in India—over the past nine years, 248 million Indians have risen above multidimensional poverty, a testament to the nation’s burgeoning economic vitality.

The narrative of India’s development is a chronicle of burgeoning urbanization, industrialization, and increased household incomes. Under Prime Minister Modi’s governance, a series of policy reforms have been implemented that are reshaping the nation’s future. Ambitious initiatives like the Smart Cities Mission, Digital India, and Make in India are the bedrock of Modi’s vision for a new India—a nation poised to play a transformative role over the next millennium, pivoting on strategic policy maneuvers that target poverty alleviation, housing, and income disparities.

The digital revolution in India has been staggering, with Internet penetration swelling to 840 million users, underpinned by some of the most affordable rates globally. This digitization has catalyzed a financial technology renaissance, redefining India’s economy into an increasingly cashless society, propelled by open-stack technologies.

From 2014 to 2019, India’s digital economy burgeoned at a pace 2.4 times faster than the broader economy, generating approximately 62.4 million jobs and expanding from $108 billion to $223 billion. This growth trajectory mirrors the foundational shifts in infrastructure that have long characterized American development. India, too, is overhauling its infrastructural backbone—a colossal endeavor reflected in the rapid expansion of highways and railways, and a doubling of airports in just under a decade.

Policy reforms are the linchpin of this infrastructural metamorphosis, essential for enhancing business conduciveness and attracting investment. Simplified land acquisition processes, labor law overhauls, and streamlined regulatory frameworks have been pivotal. The Make in India initiative, since its 2015 inception, has focused on invigorating 27 sectors of the economy, aiming to elevate manufacturing’s contribution from 13% to 21% of GDP by 2031.

The regional geopolitical landscape is being redefined by the energy transition and a global pivot towards sustainable energy sources. India’s role in this transformation is becoming increasingly pronounced, as it is projected to account for a quarter of the global increase in energy demand over the next two decades. With ambitious targets for net-zero emissions by 2070, India is positioning itself as a leader in renewable energy, ranking third on the global attractiveness index for renewable investments.

Innovation is at the forefront of India’s economic expansion, exemplified by its burgeoning startup ecosystem. Home to the world’s third-largest number of startups, India has witnessed exponential growth—from 600 startups in 2016 to over 119,000 today, including 111 unicorns with a combined valuation near $350 billion.

As India’s global stature grows, so does its diplomatic outreach and international obligations. Initiatives like the One Future Alliance and the ‘Aarogya Maitri’ project underscore India’s commitment to leading the Global South, offering solutions to pressing global challenges and providing essential aid during crises. This leadership cements India’s role as a reliable partner to its neighbors and developing nations, contributing to a stable and economically vibrant regional order.

India’s Act East Policy and the Indo-Pacific Oceans Initiative (IPOI), both spearheaded by Modi, align with the Association of Southeast Asian Nations’ (ASEAN) vision for the Indo-Pacific. Together, they aim to foster maritime resilience and cooperation, and contribute to the broader objectives of the Indo-Pacific Economic Framework (IPEF), marking India’s strategic rise as an indispensable link in the Indo-Pacific paradigm.

Power balancer and new power support for the Indo-Pacific and Malaysia

The Indo-Pacific, the nexus of modern manufacturing, economic vigor, global commerce, and investment, is witnessing a paradigm shift. Anchoring this transformation is India, steadfastly adhering to the principles of trust, transparency, and timeliness.

Coined with the mantra “One Earth, One Family, One Future,” India’s strategy provides a counterweight to Beijing-centric power dynamics, aligning with Western alliances to foster a dependable, trust-based model of international cooperation.

The Indo-Pacific region, home to over 64% of the world’s population and accounting for more than 60% of global GDP, stands on the cusp of change, with India at its core. This is not merely a region in flux but the future unfolding, one not solely dictated by Beijing’s regional ambitions.

India’s role as a partner to Malaysia exemplifies its indispensable nature, maintaining a strong partnership through fluctuating political climates. India’s strategic position as a counterbalance to China offers Malaysia an opportunity to diversify its geopolitical and economic alliances, rooted in shared history and cultural ties.

As a burgeoning manufacturing powerhouse, India’s potential for reciprocal investment with Malaysia, which boasts a high globalization index, signifies a profound opportunity for mutual growth and security collaboration. This partnership is poised to shape a more secure alliance, serving the interests of both nations.

The push for sustainable energy is another arena where India’s trajectory as a future energy leader converges with Malaysia’s ambitions. Collaborative ventures in renewable energy and green technologies like green hydrogen represent a synergistic path forward, with India’s advancements complementing Malaysia’s green energy aspirations.

The Indo-Pacific stands at the threshold of a new economic era, guided by a commitment to infrastructure innovation, high-impact job creation in burgeoning industries like semiconductors and digital economies, and a dedication to values that enshrine human rights, climate responsibility, the rule of law, and democratic principles.

Amidst Beijing’s fluctuating economic foothold, India emerges as a credible successor, poised to champion a democratic and economic ethos more attuned to a diverse global tapestry. In this context, Malaysia could become a linchpin in this new strategic power construct.

New Delhi’s rise—marked by its peaceful and often underappreciated ascent—establishes it as a pivotal stabilizing force in the region, fostering a values-driven and peace-centric engagement model. The trust and confidence that India instills are indispensable, laying the groundwork for a collaborative, free, and rules-based regional order.

India’s inevitable rise to regional and global prominence opens new avenues for security strategies within the region, providing an essential economic and security safety net predicated on a history of trustworthy and consistent conduct.
In the Indo-Pacific’s evolving landscape, India’s role transcends economic and security dimensions, embodying the aspirations of a region striving for stability and prosperity based on shared values and mutual trust.