As PM Modi Steps Into His Third Term, India’s Foreign Policy Challenges Ahead

Foreign policy has been the Narendra Modi government’s strong point throughout his first two terms in power. The world cannot ignore India thanks to its size, its large domestic market, and its growing economic clout, though the growth has not been equitable. There will not be much change in foreign policy in Modi’s third term as India has so far managed well, but there are some tricky issues that the government has to carefully navigate. While India – US ties are on a high, New Delhi has cleverly managed to work with the US without compromising its relations with traditional ally Russia. Delhi has excellent relations with Washington and Europe, ASEAN, Australia and Japan as well as the Global South, where it is competing for leadership with China.

Washington has given New Delhi a wide berth, despite New Delhi’s back-sliding on the democracy index and its refusal to side publicly with the West on Ukraine. “India is a compelling example of a country that successfully navigates relationships with both the United States and Russia, even amidst their adversarial dynamic,” says Ali Mammadov of the Johns Hopkins School of Advanced International Studies.

“This isn't unique to India; Turkey, for example, a NATO member, also maintains positive relations with Russia. Despite the tensions, neither the United States nor Russia can pressure India or Turkey to sever ties with the other.”

“In the current scenario, the U.S. relies on India to counterbalance China, while Russia also sees benefits in partnering with India. The multipolarity allows middle powers like India to maintain beneficial relations with all major players, securing resources and cooperation from multiple fronts.”

Yet this can change if the current situation changes. “If the great power competition between the United States and China intensifies significantly, potentially involving Russia, it will become increasingly difficult for these middle powers to remain neutral. In such a high-stakes environment, the circumstances may force them to choose sides, which would ultimately constrain their strategic autonomy and could work against their best interests.”

Another pressure point between India and the West is overtaking our “enemies of the state” operating on foreign shores. Going after individuals who threaten Indian interests may play well to the strong Indian narrative admired by the domestic audience and the larger Hindutva family but being caught red-handed while doing so can lead to embarrassment on the international stage for Prime Minister Narendra Modi’s government.

It began with Canadian Prime Minister Justin Trudeau pointing to India’s involvement in the fatal shooting of Canadian citizen and Khalistan activist Hardeep Singh Nijjar in Vancouver in 2023. This was followed by the arrest in the Czech Republic of Nikhil Gupta, an Indian national accused in a plot to kill Gurpatwant Singh Pannun, another Khalistan leader operating from the US. Gupta has pleaded not guilty and will be tried by a Manhattan Court. The third major incident was reported from Australia. In 2021, Australia’s intelligence chief Mike Burgess spoke of a “nest of spies” operating in the country. He, however, did not name the country or what action was taken. But it now appears it was an Indian spy ring, four Indian agents were quietly expelled. None of this is good optics.

As Mammadov points out strategic interests of the US and its allies have ensured that this did not take a more serious turn. The US-China rivalry has helped New Delhi as Washington looks to India to balance growing clout in Asia and is handling India with kid gloves.

China

Managing ties with China will remain a pivotal challenge for Modi in the next five years. The military face-off between the Indian army and the PLA in the summer of 2020 on the Ladakh border brought matters to a head between the two Asian giants. While the peace has held tension continues. Will Modi try to break the gridlock with China?

Experts like Alka Acharya of JNU think that pragmatism demands an easing of tension with China. “The challenge is huge but India cannot be in a time warp,” says Acharya. While India is the fastest-growing global economy, growth has yet failed to generate enough jobs for India’s young population. This was a key election issue for the Opposition. Modi 3.0 will have to tackle the problem of jobless growth. For economic growth India, as all other countries, including the US, have to do business with China.

Despite New Delhi asserting that it cannot be business as usual after Galwan and banning over 230 or so Chinese apps, the economic clout of China is such that India continued to do business all through this period. In fact, China has replaced the US as India’s largest trading partner with bilateral trade between the two Asian countries going up to USD 118.4 in the fiscal 2023-2024, according to the latest data from the Global Trade Research Initiative. The Modi government knows well that Chinese investments are needed to create more jobs. Modi will have to take a call. “Taking all this into consideration some movement on the China front may be expected,” says Acharya.

“The most formidable challenge for Modi 3.0 in the area of foreign policy would be dealing with China. It has become quite clear that China is not willing to relent and step back from the LAC. Xi Jinping has not sent a message of Congratulations to PM Modi on his 3rd consecutive victory while he did so to both Shehbaz Sharif and Sheikh Hasina,’’ says Ambassador Ashok Sajjanhar.

Unlike Acharya, Sajjanhar does not see room for forward movement. “While not being provocative, India will need to stand firm, continue to reinforce infrastructure and its military presence and prowess on the LAC, focus on ‘’Make in India’’, strengthen its economy, and enhance its partnership with its strategic partners like the US, the Quad, Europe and others.’’ The Modi government has done exactly this since 2020.

The Modi government’s “Neighbourhood First Policy’’ has had hits and misses in the last ten years. That will continue as India and China compete for relevance in Bangladesh, Maldives, Sri Lanka and Nepal. These countries will try to balance both India's and China’s interests and attempt to take advantage of the rivalry to suit their national interests.

India-Pakistan ties remain in deep freeze and are unlikely to see major improvement in the near future unless the PM dramatically changes his views and looks at his legacy as leaders tend to do. A breakthrough with Pakistan would be a lasting legacy for any Indian leader. Atal Bihari Vajpayee tried and failed.

“China will continue to try and constrain India’s influence and connect with its neighbourhood and expand its own footprint in India’s proximity as well as the Indian Ocean. India will have to reach out to its neighbours and strengthen its political, security, economic, trade, cultural and development cooperation partnership and people-to-people contacts with them. In the competition to maintain its vigorous partnership with its neighbours, India enjoys many strengths including historical, cultural, social and linguistic connections, and it should leverage them to the maximum extent possible,’’ says Sajjanhar.