The same forces that increasingly divide the United States and China are now pushing the United States and India closer together. Although getting its own house in order remains America’s top global competitiveness priority, few, if any, bilateral relationships match the potential of closer U.S./India alignment. There is a great deal of speculation and enthusiasm, but what can we realistically expect over the long course of the 2022s? Can leveraging India help the United States countervail today’s rapidly rising China?
The surface case for India as an alternative to China is compelling. While these two nations couldn’t be much more different historically, politically, and culturally, both countries also have much in common: Decades-long efforts to lift their people out of poverty; vast domestic markets; huge numbers of skilled scientists, engineers, and technicians; large supplies of low-cost labor; a global diaspora of multilingual students, professionals, and entrepreneurs; and deep information technology (IT) capabilities.
The surface case for closer U.S./India alignment is also compelling. Both are democracies, with strong linguistic, legal, and cultural affinities. And like the United States, India sees China as a geopolitical and military rival. Moreover, India has the potential to become an important global manufacturing hub for U.S. companies seeking an alternative to China, and the giants of the U.S. technology industry are well-positioned to succeed in what will soon be the world’s most populous nation.
Yet, there is another, potentially more worrisome parallel. Although COVID-19 has made America all too aware of its dependence on China for many essential manufactured goods, our rapidly increasing reliance on India for important hi-tech services gets far less attention, even as most of America’s leading companies have either set up large technology operations in India or continue to rely heavily on India-based IT capabilities. The similarities between the way American enterprises depend on India for IT services and China for manufacturing are striking. Moreover, even if India becomes a stronger partner and ally now, this does not mean they will remain one in the years ahead.
Looking forward, America must also see these dynamics through the eyes of India, which has its self-reliance movement (Atmanirbhar Bharat) and history. While India greatly values the ready access to the U.S. market its large technology services firms (e.g., HCL, Infosys, TCS, and Wipro) enjoy, it’s also wary of becoming too dependent on companies such as Google, Facebook, Amazon, Walmart, and Microsoft. And like the United States, India needs to carefully balance its fears, opportunities, dependencies, and tensions with China.
Taken together, the interplay between the United States, India, and China will shape global competition and digital innovation for years to come. I argue that, although the “India as a supplier” dimension is the most important today, all four dimensions (INDIA AS A MARKET, SUPPLIER, COMPETITOR, GLOBAL PLAYER) will prove critical throughout the 2020s, with each requiring a different set of supporting government policies. While there is a wide range of possible scenarios, two things are clear: India should be an essential part of U.S. efforts to compete with and reduce its dependence on China, and this will inevitably expand America’s global dependencies from manufacturing to services.
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