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1
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The Council on Foreign Relations (CFR) is an independent, nonpartisan membership organization, think tank, and publisher dedicated to being a resource for its members, government officials, business executives, journalists, educators and students, civic and religious leaders, and other interested citizens in order to help them better understand the world and the foreign policy choices facing the United States and other countries. Founded in 1921, CFR carries out its mission by maintaining a diverse membership, with special programs to promote interest and develop expertise in the next generation of foreign policy leaders; convening meetings at its headquarters in New York and in Washington, DC, and other cities where senior government officials, members of Congress, global leaders, and prominent thinkers come together with CFR members to discuss and debate major international issues; supporting a Studies Program that fosters independent research, enabling CFR scholars to produce articles, reports, and books and hold roundtables that analyze foreign policy issues and make concrete policy recommendations; publishing Foreign Affairs, the preeminent journal on international affairs and U.S. foreign policy; sponsoring Independent Task Forces that produce reports with both findings and policy prescriptions on the most important foreign policy topics; and providing up-to-date information and analysis about world events and American foreign policy on its website, www.cfr.org.
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List of Figures and Tables ix
Acronyms and Terms xi
Part One: Looking Back
Prologue 3
1. Introduction 11
2. India and the World 37
3. Opening to the World 67
Part twO: Transition
4. Seeking India’s Rightful Place 95
5. A Cautious Power 125
Part three: Looking Ahead
6. India’s Changing Global Role 163
7. A Changing Economic Future? 183
8. How the United States Should Work with a Rising India 207
Epilogue 243
Acknowledgements 247
Notes 251
Bibliographic Note 289
Bibliography 291
Index 323
LIST OF FIGURES AND TABLES
Figures
3.1 Overseas Trade of India (2300 bc–800 ad) 71
5.1 A trader with mock chains around his wrists and a gag tied around his mouth attends a protest in New Delhi, September 27, 2012 144
7.1 Ambassador cars outside the Ministry of Finance, 2009 184
8.1 What Americans Feel about India 214
Tables
1.1 IMF Staff Estimates: Ten Largest Global Economies, GDP (PPP), 2015 and 2016 12
1.2 India and China Population Growth, 2015 to 2050, in billions 13
1.3 Ten Largest Global Economies, GDP (PPP) Share of World Total, % 29
4.1 H-1B Petitions Approved by Country of Birth (% of all beneficiaries) 115
7.1 Automobile Domestic Sales Trends 197
8.1 Leading Destinations of U.S. Study-Abroad Students, 2014–2015 236
8.2 Enrollments of Selected Foreign Languages in U.S. Higher Education, 2013 237
8.3 Foreign Language and Area Studies Funding, by World Area in FY 2015 238
8.4 National Resource Centers Funding by World Area in FY 2015 239
ACRONYMS AND TERMS
AAP Aam Aadmi Party (“Common Man” Party)
AIIB Asian Infrastructure Investment Bank
APEC Asia-Pacific Economic Cooperation forum
ASEAN Association of Southeast Asian Nations
BCCI Board of Control for Cricket in India
BIMSTEC Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation
BJP Bharatiya Janata Party (“Indian Peoples’ Party”)
BRICS Brazil-Russia-India-China-South Africa
CFR Council on Foreign Relations
CICA Conference on Interaction and Confidence-Building Measures in Asia
CII Confederation of Indian Industry
CPI Communist Party of India
CPI(M) Communist Party of India (Marxist)
CTA Central Tibetan Administration
DHS U.S. Department of Homeland Security
DMK Dravida Munnetra Kazhagam, a Tamil Nadu-based party
EAS East Asia Summit
ECI Election Commission of India
FCRA Foreign Contribution Regulation Act, 2010
FDI Foreign Direct Investment
FICCI Federation of Indian Chambers of Commerce and Industry
FTA free trade agreement
GATS General Agreement on Trade in Services
GDP Gross Domestic Product
GST Goods and Services Tax
G4 Group of Four (Brazil, Germany, India, and Japan)
G6 Group of Six (France, Germany, Italy, Japan, United Kingdom, United States)
G7 Group of Seven (Canada, France, Germany, Italy, Japan, United Kingdom, United States)
G8 Group of Eight (Canada, France, Germany, Italy, Japan, Russia, United Kingdom, United States)
G20 Group of Twenty (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States, and the European Union)
HRW Human Rights Watch
IBEF India Brand Equity Foundation
IBSA India, Brazil, and South Africa
ICC International Cricket Council
ICCR Indian Council for Cultural Relations
IEA International Energy Agency
IFES International Foundation for Electoral Systems
IIIDEM India International Institute of Democracy and Election Management
ILO International Labour Organization
IMF International Monetary Fund
IONS Indian Ocean Naval Symposium
IORA Indian Ocean Rim Association
IPL Indian Premier League
IT Information Technology
ITECH Indian Technical and Economic Cooperation Program
LEMOA Logistics Exchange Memorandum of Agreement
Lok Sabha India’s lower house of parliament, the “house of the people”
NAM Non-Aligned Movement
NASSCOM National Association of Software and Services Companies
NATO North Atlantic Treaty Organization
NDA National Democratic Alliance
NDB New Development Bank, the “BRICS Bank”
NETAP National Employability Through Apprenticeship Program
NGO nongovernmental organization
NITI Aayog National Institution for Transforming India Aayog (replaced the Planning Commission)
NSA National Security Advisor
NSDC National Skill Development Corporation
NSG Nuclear Suppliers Group
OECD Organisation for Economic Co-operation and Development
PPP Purchasing Power Parity
Rajya Sabha India’s upper house of parliament, the “council of states”
RCEP Regional Comprehensive Economic Partnership
RSS Rashtriya Swayamsevak Sangh
SAARC South Asian Association for Regional Cooperation
SCO Shanghai Cooperation Organization
TPP Trans-Pacific Partnership
UN United Nations
UNCTAD
United Nations Conference on Trade and Development
UNDEF United Nations Democracy Fund
UNDP United Nations Development Program
UNHRC UN Human Rights Council
UPA United Progressive Alliance
USCIRF U.S. Commission on International Religious Freedom
WEF World Economic Forum
PART
ONE Looking Back
Prologue
When I first set foot in New Delhi for a semester abroad program in September 1990, India seemed very far away, not just in distance but in mind. Crinkly aerograms took two weeks to reach home, and longdistance “trunk calls” needed advance booking. India made the news in America mainly when catastrophe struck—whether the toxic gas leak in Bhopal, Hindu-Muslim riots, or the insurgency in Kashmir. More often than not, American media depicted India as a land of saints and beggars, a place defined by an admixture of faith, deprivation, and no small measure of chaos. Few American companies had stakes in India, as the reforms that ended its economic isolation were yet to begin. Although New Delhi and Washington shared the bedrock values of democracy and pluralism, that never was enough to overcome chronic estrangement from each other. Formally nonaligned, in practice socialist India tilted heavily toward the undemocratic Soviet Union.
None of those concerns was on my mind when I began my semester abroad, eager to experience one of the world’s great civilizations. But nothing prepared me for the crises roiling the country. That September began India’s autumn of discontent. The coalition government headed by then Prime Minister V. P. Singh was sinking in a bitter political fight over affirmative action. The prime minister had announced his plan to implement “reservations,” or quotas, in government and in public universities for people from historically low-caste backgrounds as a means of righting centuries of discrimination. The social earthquake about to follow would take his government down.
Barely a few weeks after my arrival in Delhi, a student set himself on fire to protest the reservations policy. Others copied him in the days to follow. All told, some seventy students self-immolated against affirmative action. Cities, including the capital, shut down for days to prevent violence from spiraling out of control. My enduring memory of that month will always be images of bodies ablaze—I had never seen this form of protest before, and could not understand it. The student protests created an opening for the Bharatiya Janata Party (BJP) to withdraw its support for the coalition government and launch a movement to build a temple at an historic site it said had been taken from Hindus by Muslims more than four hundred years earlier. By November, the government had collapsed. Another short-lived coalition followed.
I had expected that semester abroad to consist of a lot of classroom as well as experiential learning. I had not adequately appreciated the extent to which history would unfold before me. Here was an India wrestling publicly, and violently, with questions of caste, faith, and history, and how to create more equal opportunities for its citizens. That September was a turning point for India’s trajectory on caste and social discrimination, and the reservations policy implemented then remains in place to this day. Meanwhile, the BJP, which began its drive to power with the movement to build a temple to the Hindu god Ram, now leads the national government.
I didn’t know it at the time, but my own long passage to India, both personal and professional, had already begun. Against my parents’ advice—they worried that my pursuit of India studies would never lead to a job—I returned to spend the following summer in India just as the country found itself amid new turmoil. Former prime minister and Congress party president Rajiv Gandhi had just been assassinated on the campaign trail by a member of the Tamil Tigers, a Sri Lankan terrorist group. After an unexpected leader, P. V. Narasimha Rao, emerged from internal party politicking, Congress formed the next coalition government. In June, Rao was sworn in as prime minister just in time for India’s economic crisis. India’s currency reserves were dwindling, and in May 1991 the government resorted to airlifting crates of gold bars to Switzerland as collateral for a loan.1 But the collateral didn’t last very long, and by June India was staring at default. Driven in part by International Monetary Fund (IMF) bailout requirements, India— under the new Rao government, with finance minister Dr. Manmohan
Singh at his side—began wide-ranging economic reforms. The Rao government moved to open the economy by devaluing the rupee, ending much of the licensing regime that stifled business, and finally allowing the beginnings of foreign investment in some sectors.
India’s 1991 opening to the world would be an historic turning point. The beginning of liberalization would, over the next fifteen years, propel the country’s rapid growth and its rise as an international economic force. Notably, these 1991 reforms took place in an atmosphere of crisis, and were done under duress. As important, they remain incomplete.
But the crises of the early 1990s now seem a lifetime ago. The India of more recent years is a vastly different place, and it interacts with the world in very different ways. If the India of the nineties was a place that attracted the spiritually hungry, more adventurous tourists, and committed academics, today it is just as likely to draw investors seeking deals and Fortune 500 CEOs looking to grow their company’s bottom line. The pre-liberalization marketplace of deprivation—an academic adviser suggested back in 1990 that I should bring plastic placemats as gifts for people—has become a consumer land of plenty. The nondescript youth hostel I stayed in during the fall of 1990 now houses India’s preeminent software industry association, the National Association of Software and Services Companies (NASSCOM), whose members have seen their exports explode from $100 million in 1990 to around $100 billion by 2015.2 Lured by India’s large and growing middle class, major U.S. companies all have an India strategy and some of them have tens of thousands of employees based there. Lately I’ve been hearing more and more about the new adventurous Americans—some of Indian descent, some not— interested in heading to India to found start-ups. It’s another world.
This growing sense of ambition and possibility, an optimism about India’s global importance, contrasts sharply with the past. Bitter political fights still unfold, but no one worries these days about chronic government instability as they did in the 1990s. Governments last their full term. And the social change that has accompanied increased urbanization and a communications revolution has shaped the country’s dreams for itself and its children. India’s two most recent prime ministers have come from backgrounds not of privilege, but of sheer grit: former Prime Minister Manmohan Singh—once Rao’s finance minister—studied by candlelight as a child before scholarships to Cambridge and Oxford launched his
career as an economist, then he became a trusted political appointee, and eventually made it to the top. And Prime Minister Narendra Modi has traversed a path from hawking tea on rail platforms to state-level leadership and then all the way to the prime minister’s office. The message is that drive can take individuals to wherever they want to go, infusing Indians with new visions for what they can do. That same ambition is pushing the country to envision a larger role for itself on the world stage.
India is now on track to become the world’s third-largest economy at market exchange rates over the next fifteen years. Using another measure—purchasing power parity (PPP), which accounts for price differences across countries—India became the world’s third-largest economy in 2011, surpassing Japan.3 As annual economic growth soared from 4 to more than 8 percent in the mid-2000s, crossing 10 percent by 2010, more than one hundred sixty million people moved out of abject poverty in the period from 2004-5 to 2011-2, according to World Bank figures.4 Economic progress has moved India from a minor player on the international stage to a major one. Its politics are covered by the mainstream media in the United States—although not as much as they should be— and major Indian news makes the U.S. headlines. The country’s increased visibility has made Indian culture more familiar to Americans, yoga is ubiquitous, and even Bollywood needs no further introduction.
Economic growth has changed individual lives in India, and the rise of new opportunities—as well as resulting social changes—has been well chronicled. India’s role as an emerging power and increasingly consequential actor on the world stage has happened in a less obvious and less discussed fashion. In a world of low growth in the developed markets, India’s large population and comparatively high economic growth rates have made it a crucial place to be for global companies, likely for decades to come. Within global institutions, as a vocal World Trade Organization (WTO) member, an emerging-market leader in the Group of Twenty (G20), and a critical player in global climate talks, India now plays a greater and more visible leadership role than it did, say, during the days in which the handful of Group of Seven (G7) countries could expect to set the global economic agenda.
But New Delhi continues to chafe at its exclusion from a permanent seat in the UN Security Council, and still feels that the World Bank and International Monetary Fund should better reflect the changing
clout and interests of emerging markets. Even while pressing for reform of these twentieth-century global organizations to account for India’s rising global voice, New Delhi has asserted at the same time its commitment to new multilateral groupings like the Brazil-Russia-IndiaChina-South Africa (BRICS) cohort and the Shanghai Cooperation Organization (SCO).
It’s time to get used to the fact that while India still struggles at home with poverty and a plethora of social issues—and likely will continue to for the forseeable future—it is less and less reticent about its global ambitions. In other words, while many of the internal cleavages that have preoccupied India for decades remain unresolved—in that sense, a status quo—at the same time, the country has embarked upon a larger role for itself internationally. It is India’s more confident quest for global prominence that forms the subject of this book.
Former foreign secretary and former Indian ambassador to China and the United States Nirupama Rao described this as a sensibility, a consciousness within India that “India has not got its due on the world stage” despite its size, its democracy, and its accomplishments.5 Senior politician Baijayant “Jay” Panda, a member of the Biju Janata Dal party and a longtime chair of the India-U.S. Forum of Parliamentarians, added another layer to that description: “I see India as a re-emerging great power.” In his view, India’s previous foreign policy of diffidence is being gradually supplanted, as a result of India’s opening to the world, by a larger sense of landscape and responsibility.6
That sense of destiny, as the following pages explore, appears focused first and foremost on attaining recognition for India as one among the world’s powers. The pursuit of recognition—status—has a corollary desire: larger roles for India in global institutions such as the UN Security Council. While India is not a revisionist power seeking to overturn the global liberal order, New Delhi does seek for the institutions of global governance to accommodate it with greater voice and the heightened status many feel has been unfairly denied. In the arena of trade and global commerce, India’s stock has risen quickly, and it would be hard to find a major corporation without deep stakes in India. But the geopolitical world has been slower to adjust.
What New Delhi seeks to do on the world stage as a global power remains a work in progress. India has largely refrained, apart from crises
in its own neighborhood, from taking major positions on unfolding peace and security matters that preoccupy the transatlantic diplomatic agenda. But a new focus on attaining primacy in the Indian Ocean, and a declared willingness to serve as a “net provider of regional security,” suggests an expanding sense of responsibility for itself in the security sphere, such as providing humanitarian assistance beyond its own citizens in distress, and an emerging new program of security assistance to Indian Ocean countries and Vietnam. India is beginning to position itself in different ways, too, shedding the oppositional stance so characteristic of the Non-Aligned Movement and forging strong partnerships with many Western liberal democracies, the United States included. In recent months, India stood firm on its commitments made under the Paris Agreement, stepping up as a global climate leader just as the United States took a step back. At the same time, its ties with Russia remain deep, and its self-identification as a prominent voice of the global South remains strong.
Despite India’s emergence as a top-ten world economy, its selfperception as a developing country remains ineradicable, and its stances in international trade matters reflect this view. As Fareed Zakaria has observed, the world has new powerhouse economies now—China, and now India—which have grown large in the aggregate even while remaining comparatively poor.7 China’s economic heft has given it the throw-weight to push what it wants either through inducements or assertiveness in a growing number of places around the world. India, by contrast, still lacks the deep pockets that have made Beijing a consequential sovereign investor, and it cannot necessarily determine global outcomes on its own. (Although these days, it’s harder and harder for any country to single-handedly shape global decisions.) In many contexts, India shies away from or remains ambivalent about pushing its own views, often preferring to remain quiet or offer carefully crafted positions designed not to offend. In this sense, India treads carefully— cautiously—where others might employ a more vocal approach.
That said, while India remains some distance behind China, the days of being seen solely as a careening overcrowded land of poverty are long gone. India’s transition includes a self-belief that India’s ascent to power on the world stage is deserved, and unfolding now. In a 2015 speech delivered in Kuala Lumpur, Prime Minister Modi conveyed an
assuredness about India’s moment: “Now, it is India’s turn. And we know that our time has come.” His conviction about both time and India’s place echoed those of his predecessor Manmohan Singh eight years earlier: “I am confident that our time has come. India is all set to regain its due place in the comity of nations.”8
Despite the hurdles India still has left to clear, India has already become a consequential global actor. As it continues to shed its past diffidence it will realize its ambitions as a global power, likely in its own more cautious way, in the decades to come in a way that was unimaginable twenty-five years back. This book is about that process as Indian citizens make their country’s place in the world.
