Economic interest has emerged as the main component of India’s foreign policy.’ Discuss the statement in the light of India’s initiatives to improve relations with China, Japan and the Central Asian republics. (2015, 15 Marks)
Since 1991, India’s diplomacy has increasingly served its development requirement: capital, technology, markets, energy and minerals. Sanjaya Baru (Strategic Consequences of India’s Economic Performance, 2006) argued that India’s global influence would rest on its growth, and Kanti Bajpai identifies a neoliberal school that treats economic strength as the foundation of power. The three relationships largely bear the statement out, but each also shows where security still overrides economics.
China: economics as a stabiliser
- Xi Jinping’s visit (September 2014) pledged about $20 billion of investment over five years; Narendra Modi’s visit (May 2015) produced business agreements worth about $22 billion. India also became a founding member of the AIIB and the BRICS New Development Bank.
- The limits: the boundary was never subordinated to trade. India left RCEP (2019), screened Chinese FDI after Galwan (2020) and banned apps. Yet dependence grew: in 2025-26 trade reached $151.1 billion with a deficit of $112.2 billion, and China became India’s largest trading partner. At their September 2026 meeting, Modi and Xi committed both to a “fair, reasonable and mutually acceptable” boundary settlement and to addressing the imbalance. Economics manages this rivalry; it does not resolve it.
Japan: the clearest case
- The Special Strategic and Global Partnership (September 2014) came with a pledge of 3.5 trillion yen over five years, followed by the Mumbai-Ahmedabad high-speed rail agreement (December 2015) and Japan Plus.
- The 2025 summit set a 10 trillion yen private-investment target; the July 2026 summit with Sanae Takaichi adopted a Joint Declaration on Economic Security Cooperation on semiconductors and critical minerals.
- Economic and strategic logic converge: Japanese capital builds Indian manufacturing and, through the Indo-Pacific, balances China.
Central Asian republics: resources and connectivity
- Connect Central Asia (2012) and Modi’s visit to all five republics (July 2015) prioritised energy: a long-term uranium contract with Kazakhstan (2015), hydrocarbons and the TAPI pipeline.
- Denied transit through Pakistan, India pursues Chabahar, the INSTC and the Ashgabat Agreement (joined 2018). The first India-Central Asia Summit (January 2022) and the fourth Dialogue (June 2025) added rare earths and critical minerals.
- The limits: trade remains marginal, and Chabahar’s US sanctions waiver lapsed in April 2026. The motives are equally strategic: counter-terrorism, Afghanistan, and a Eurasian presence through the SCO.
Weighing the claim
- For: in the terms of Robert O. Keohane and Joseph S. Nye (Power and Interdependence, 1977), interdependence has multiplied India’s stakes; growth now sets the agenda in Tokyo, Beijing and Astana alike.
- Against: the realist reading holds that the state, not the market, remains the agent. S. Jaishankar warned against “globalization without a cost-benefit analysis” when India left RCEP (2019); India protects agriculture and decouples selectively from China.
Conclusion
Economic interest has become the principal organising determinant, not the sole one. Japan shows economics and security reinforcing each other, China shows economics bounded by security, and Central Asia shows ambition limited by geography. India practises economic nationalism through open-economy instruments.