Global Corporations and Economy
India’s Growing Strategic and Economic Interests in the Quad

India’s new readiness to engage with the US and its two major Asian treaty allies, Australia and Japan, in the so-called Quadrilateral Security Framework is widely viewed as a major departure from its traditional policy of non-alignment. But a closer look suggests that Delhi did experiment with close alignments in the past, when its core national interests faced serious threats. Beyond security, India’s embrace of the Quad and its associated arrangements like the Quad Plus could turn out to be even more significant in the economic domain, as Delhi seeks to decouple from China-led economic globalisation, writes C. Raja Mohan, Director of the Institute of South Asian Studies at the National University of Singapore.


On the face of it, India’s growing enthusiasm for the Quad, or the Quadrilateral Security framework, that brings Delhi together with Canberra, Tokyo and Washington, seems at odds with its long-standing principles of strategic autonomy and non-alignment. It also seems incongruent with its ties to Russia and China in the BRICS forum along with Brazil and South Africa. India is also an active participant in the Shanghai Cooperation Organisation (SCO), which was founded by, and nurtured through, the joint-leadership of Beijing and Moscow. 

Although the Quad is a long way from matching the levels of collective activity or institutionalisation achieved under the BRICS and SCO formats, it draws much greater international attention. This is probably due to the concern or expectation that the new coalition marks a major shift in the geopolitics of the East, marked by India’s participation in a security coalition with the US and its allies. 

India’s growing strategic engagement with the Quad is rooted in the structural changes in the distribution of power in Asia, and is likely to be an important part of Delhi’s international relations in the coming decades. India’s participation in the Quad is easier to understand if we look at India’s past turn to the BRICS at the turn of the century. 

Quest for a Multipolar World

Delhi’s fears about the unipolar world order after the collapse of the Soviet Union and the end of the Cold War were real and rooted in US attempts in the 1990s to ‘revolve’ the Kashmir dispute between India and Pakistan as well as Washington’s international campaign to ‘roll back’ the South Asian nuclear and missile programmes.  

Delhi, which had signed a security treaty with the Soviet Union in 1971 at the height of the Cold War, sought to limit the dangers of a unipolar world by agreeing to the Russian proposal to build a ‘Strategic Triangle’ involving Russia, India and China in the mid-1990s. The resulting RIC forum was soon followed by the creation of the broader BRICS forum. India’s interest in the Eurasian forum, SCO, was also part of the effort to limit US regional hegemony.  

The Quad represents a significant change in India’s threat perception. If the fear of a unipolar world drove Delhi to join the BRICS, fears of Chinese hegemony in a ‘unipolar Asia’ are nudging India into the Quad. India’s engagement with the US in the first two decades of the 21st century saw the resolution of their nuclear dispute and the marginalisation of the Kashmir question in bilateral relations. 

Fear of a Unipolar Asia

Even as the mutual trust between Delhi and Washington improved, it began to diminish between India and China. A number of factors contributed to this transformation. Since the end of the 2000s, China had become far more assertive in its territorial disputes with India. This steady increase in tensions led to serious military crises on the border in 2013, 2014 and 2017. The Indian Army and the PLA are now settling down for a prolonged military show-down in the High Himalayas. The face-off could continue through the harsh winter. 

Delhi was also upset with Beijing’s moves to block the historic civil nuclear initiative led by the US to end India’s isolation in the global nuclear order. China is also the only permanent member of the United Nations Security Council that is unwilling to support India’s campaign to expand the P-5. On the economic front, Delhi has been unable to persuade Beijing to address the mounting trade surplus in favour of China. In 2019, the trade surplus was worth nearly $55 billion. 

The extended military standoff in the summer of 2017, coupled with the widening range of serious differences, probably convinced India of the need to balance China. India, which was reluctant to embrace the Quad, was now ready for its revival.  And as India confronted fresh aggression from China on its frontiers in the summer of 2020, the case for the Quad has become irresistible in Delhi.  

Reviving the Quad 

The accidental origins of the Quad go back to the Boxing Day Tsunami in the eastern Indian Ocean at the end of 2004, when the navies of the four nations came together on short notice to coordinate the regional relief efforts. Soon after, in 2007, Shinzo Abe, the then-Prime Minister of Japan, articulated the concept of the Indo-Pacific and urged the collaboration between US and three democracies in the region — India, Japan and Australia—to stabilise the new strategic geography. 

But the Quad went into a coma, after the first round of meetings in 2007, as Canberra dissociated itself from the concept. The other three members shared these reservations about the Quad. All that has begun to change in the last couple of years as the relations between China and all the members of the Quad began to rapidly deteriorate. But the scale of the immediate threat that India confronts from China is far more serious than what the others face. 

The US and Australia are far from China and their threats are not territorial. Japan shares a disputed maritime periphery with China and sharpening military tension. However, that does not compare with the massive territorial dispute between India and China, which has spread all along the Great Himalayas. To make matters worse, India’s disputed frontier with China meets India’s contested borders with Pakistan in the Ladakh region of Kashmir. China’s huge investments in the strategic partnership with Pakistan over many decades has made the prospect for a two-front war more real than ever before.  

India’s response therefore to the Chinese aggression has been intense and has involved some unexpected moves. On the one hand, India has matched the Chinese military mobilisation by deploying troops and heavy weapons at 14,000 feet and above. On the other hand, India has also chosen to escalate horizontally—in the commercial domain.

Economic Decoupling 

Since the crisis began, India has begun to limit Chinese foreign investments into India, imposed significant tariffs on imports from China, cut Chinese companies out of major public procurement contracts, and banned a large number of Chinese digital apps, including TikTok, which is hugely popular. All indications are that Delhi is prepared to go considerable distance down this path to impose economic costs on Beijing. 

India’s economic measures against China coincided with the post-Covid efforts led by the US to mobilise support for reducing international reliance on China-centred supply chains. Since the middle of this year, the US has initiated ‘Quad Plus’ consultations to draw in South Korea, Vietnam and New Zealand into the Quad conversations on coping with the pandemic. Israel and Brazil have also occasionally participated in these conversations. 

As part of its own national response to the Covid-19 crisis, India has announced a comprehensive overhaul of national economic strategy to create fresh incentives for foreign investment into India’s manufacturing sector that has been battered by imports from China over the decades, opened its farm sector for agri-business, and liberalised the labour laws.   Meanwhile digital dissociation from China has opened up room for deeper ties between US tech giants and Indian majors, like Reliance, that have ambitious plans to expand into e-commerce and other domains.  

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In the end, the success of India’s engagement with the Quad and Quad Plus depends on three important factors. One, despite the growing volumes of foreign direct investment into India, the country remains a less inviting destination than others like Vietnam that are taking advantage of the rearrangement of the supply chains away from China. Two, there is some uncertainty on how the administration of Joe Biden might deal with China on both the security and economic fronts. Three, there is a very faint possibility that China might conclude that it has overreached with India and that a measure of mutual accommodation might be preferable to pushing Delhi into Washington’s arms. Whatever the eventual outcome, India’s security and economic policies have now moved beyond its old moorings. 

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.