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2 July 2015, Gateway House

Why middle powers matter to India

Narendra Modi, who spent nearly two months abroad in his first year as prime minister, helped India cultivate a wide range of bilateral and multilateral relationships. But of these, it will be the middle powers that hold the key, economically and geopolitically to India’s growth and security, and Modi must continue to widen his middle powers arc

Senior Researcher, Gateway House

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By the time Prime Minister Narendra Modi completed his first year in power on May 26, he had spent an unprecedented 53 days outside India—or almost twice as many as Manmohan Singh’s 30 days overseas in his first year as prime minister in 2004-05.[1]

Modi’s international engagements were a continuation of India’s foreign policy under the preceding Congress government, but he injected a new energy into the relationships with neighbours like Bhutan and Nepal, and major powers like China and the U.S.—which has been widely commented on.

He also visited Japan and Australia, and is scheduled to visit Israel and Saudi Arabia later this year—but his equally noteworthy engagement with these and other middle powers has been relatively unnoticed.

Political compatibility

Deeper ties with middle powers like Australia, Canada, France, Germany, Israel, Japan, and South Korea are important for India at a time when the magnitude of the U.S.’s global influence is declining due to the rapid growth of China and the improving growth trajectories of numerous middle powers. Collaborating with these countries can help India progress from being a South Asian power to an Asian and eventually global power.

Even though the U.S.’s influence is declining, many of the middle powers remain U.S. allies. The Indian economy’s projected growth, along with the country’s Modi-driven improved relationship with the U.S., have enhanced India’s status with many of these powers.

China lacks the breadth of allies that the U.S. has, with only two firm friends—Pakistan and North Korea—both globally perceived to be trouble-makers. Other Asian countries like Cambodia, Sri Lanka, and Myanmar are dependent on China’s financial largesse, but prone to resist when the terms of repayment become too onerous.

Modi’s visits to middle power countries are aimed at strengthening partnerships in a changing global scenario. For instance, India is now more open about its relations with Israel, and Modi plans to be the first Indian prime minister to visit the country later this year. His visit will be part of an attempt by India to engineer a three-way balancing of its relations with West Asian middle powers, including Saudi Arabia and an Iran that may soon re-emerge from international isolation.

Apart from West Asia’s strategic significance in a region beset by Islamist terrorism, which also impacts India, the oil-rich region is critical for India’s massive energy requirements. India also has a large diaspora in West Asia that sends home around $35 billion in remittances annually. [2] India’s own sizeable Muslim population has cultural and religious ties to the region.

To the east, Modi visited South Korea, Japan, and Australia; all are middle powers that are deeply connected to China economically, but are treaty allies of the U.S. And all are potentially useful economic and strategic partners for India. A partnership with India will create more balance in a region increasingly dominated by China, and it will be endorsed by the U.S.

Japan and Australia are integral to India’s aspirations of becoming a net security provider; and India and Australia have already signed a Framework for Security Cooperation in November 2014. Along with India and the U.S., these two countries constitute the “strategic diamond” promoted by Japanese prime minister Shinzo Abe.[3] They can be critical to the U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region,[4]  signed by Modi and President Barack Obama in January, and to India’s own strategic influence in Asia.

Economic compatibility

The potential economic and energy benefits of India’s partnerships with the middle powers are equally significant.

Japan is the world’s third-largest economy, which first provided loans to India in 1958.[5] Since then, India has become the largest recipient of Japanese official development assistance[6], and the Japanese public sector and private sector are involved in various projects—from infrastructure to manufacturing—in India.

India requires $1 trillion[7] over the next decade to upgrade its infrastructure, for which it needs foreign direct investment—and Japan is already invested in the Delhi-Mumbai Industrial Corridor project. An infrastructure build-out will also need investment and technology from such countries as South Korea and Canada.

In the coming years, Japan will remain crucial to India for nuclear energy. The deals India has concluded with Australia in November 2014[8] and Canada in April 2015[9] will provide the uranium, but it is Japan that holds the key to unlocking the India-U.S. civil nuclear agreement. Companies that manufacture nuclear technology in the U.S., like Westinghouse and GE, are part-owned by Japanese firms Toshiba and Hitachi, respectively. A nuclear agreement between India and Japan is therefore necessary for building nuclear reactors in India.

Additionally, Japan, Australia, and Canada are members of the four technology denial regimes—the Nuclear Suppliers Group, the Wassenaar Arrangement, the Australia Group, and the Missile Technology Control Regime. With deeper ties to these countries, India’s support base for membership to these regimes can widen.

The middle powers will also be critical partners for India’s indigenous defence production and to reduce the country’s defence import bill. Although major powers Russia and the U.S. have been the biggest sources of defence exports and co-production, deals such as the October 2014 one with Israel on the Spike missile defence system will help unlock India’s defence manufacturing capabilities.

Building skills is a major pillar of Modi’s ‘Make in India’ programme, and he has signed agreements with Germany, France, and Canada to strengthen India’s manufacturing through skills development across various sectors like the railways, apparel, agriculture, and healthcare.

These, in the long run, will help India and its economy far more than massive import-heavy trade relationships with major powers such as the U.S. and China.

In his second year, Modi must prioritise the UK, Nigeria, and Indonesia—all of which have deep historical, cultural, trade, or economic links with India. By deepening bilateral relations with them, Modi can continue to build India’s critical partnerships with middle powers.

Karan Pradhan is a Senior Researcher at Gateway House: Indian Council on Global Relations.

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[1] Mallapur, Chaitanya, ‘Modi v/s Manmohan- who’s the bigger globetrotter?’, Business Standard, May 2015, <>

[2] Parween, Arshiah, , “Invisible” White-Collar Indians in the Gulf, Middle East Institute, August 2013, <>

[3] Livemint, Shinzo Abe: Asia’s democratic security diamond, December 2012, <>

[4]The White House, U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region, January 2015, <>

[5] Ministry of Foreign Affairs of Japan, Overview of Japan’s ODA to India, June 2011, <>

[6] Ibid

[7] Department of Economic Affairs, Indian Ministry of Finance, Government of India, The Indian Infrastructure Debt Funds, May 2014, <>

[8] Ministry of External Affairs, Government of India, MOUs/Agreements signed during the visit of Prime Minister of Australia to India, September 2014, <>

[9]Ministry of External Affairs, Government of India, India-Canada Joint Statement: New Vigour​, ​New Steps”, April 2015, <>


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