By : Glory Saikia, Research Analyst, GSDN

Samsung hires an average of 2,000 people a week for its production facilities in Vietnam. The diversification of the global supply chain has created opportunities for Vietnam for industrial transformation. It is no longer seen only as a low-cost manufacturing country, as it is among the top three most promising manufacturing hubs in Asia, according to the Asia Manufacturing Index 2026. In recent years, the country has attracted more investment in electronics, semiconductors, and high-tech industries. Samsung now produces a large share of its smartphones in Vietnam, while other technology companies are increasing investments in AI, chips, and electronic equipment. This shows how it is slowly transforming from a “cheap factory destination” into a higher-value manufacturing and technology hub. 

Vietnam has emerged as one of the most attractive destinations for manufacturing. Its rise is driven by cost-effective labor, expanding trade architecture, a favorable investment climate, regulatory reforms, and better access to global markets through major trade agreements. The roots of this emergence can be traced back to the Doi-moi reforms of 1986 that marked a significant shift towards a market-oriented economy. These reforms opened Vietnam to foreign investment while simultaneously retaining one-party control.  

The remarkable rise of Vietnam also raises an important question on how the country emerged as a destination of manufacturing, the structural challenges it is facing, the geopolitical implications of it rise and what reform policies are necessary to continue its growth. 

China+1 Strategy Driving its Integration in the Global Production Hub 

The most important driver is the China+1 strategy, where firms diversify their production beyond China to reduce risk and dependency. Nearly one-third of the supply chain leaders moved out of China or were planning to do so due to rising labour costs, trade war tariffs, and supply chain concentration risk. Vietnam’s geographic proximity to southern China reduced the complexities related to logistics. It emerged as a critical destination for sourcing operations in Asia as part of this strategy, making significant changes in its legal framework and infrastructure investments. These efforts have succeeded in attracting telecommunications companies, including Samsung, to relocate to Vietnam. Vietnam’s real GDP grew with the average rate of 7.4% between 1991-2009. Its productivity increases under the condition of international trade as it focuses on the production of the good with its absolute advantage.  

Another central driver is foreign direct investment. There are several reasons for which Vietnam has been able to attract a large amount of Foreign Direct Investment: its strategic location in a fast-growing region, a stable political and economic environment, abundant natural mineral resources, a young and relatively well-educated labour force, a large and growing domestic market, its potential as an export platform for EU and US markets, and a liberal investment framework backed by the government’s consistent commitment to economic reform. 

Many global firms like Samsung, LG, Panasonic, and Microsoft are active in Vietnam, with Samsung being one of the largest foreign investors in the country, with $9 billion invested, and an additional $3 billion smartphone factory under development. It employs over 5,000 production workers and software engineers. Vietnam is the second-largest employment base for Microsoft after the United States. Additionally, LG and Panasonic have set up production facilities in the north to manufacture white goods (for example, refrigerators, washing machines, and air conditioners). 

Vietnam has signed a broad network of trade agreements that have amplified foreign investments. These agreements have opened market access and reduced tariffs, making Vietnamese exports more competitive. Starting from its 1995 accession to ASEAN and the ASEAN Free Trade Agreement (AFTA), followed by the ASEAN+ agreements from 1997, Vietnam has laid the foundation for regional integration. Its bilateral trade agreement with the US in 2000 granted access to the world’s largest export market without discrimination. Consequently, agreements, such as the 2009 Economic Partnership Agreement (EPA) with Japan and the major trade deals around 2015, including the Trans-Pacific Partnership (TPP) and the EU-Vietnam Free Trade Agreement (EVFTA), also introduced high-standard trade frameworks covering diverse sectors. 

Vietnam is integrated into global value chains, and it exports and imports through three key industries. The textile and garment sector grew after the 1986 reforms and received a boost after WTO accession in 2007. Vietnam ranks 4^th among the world’s largest clothing exporters behind China, Bangladesh, and India. Moreover, it is the third largest exporter of shoes and handbags after China and Italy. The footwear industry, it employs around one million workers in around 600 companies. Bilateral trade between Vietnam and the United States reached US$123 billion in 2023, up from US$92 billion in 2021, making the U.S. Vietnam’s largest export market. 

Vietnam has placed itself among the most open economies in the ASEAN region due to its high import-export turnover. It has earned its name in the global value chain, especially in sectors such as electronics, textiles, and agricultural products, which are globally popular under the tag “Made in Vietnam”. It is also gradually moving towards production stages that involve high technical standards. Relations between the USA and Vietnam are reaching new heights, as evidenced by their dynamic, with the USA remaining Vietnam’s largest and most important export market. The USA also ranks 11th among key foreign investors in Vietnam. Vietnam also has 266 investment projects in the US with a total registered capital of nearly US$ 1.4 billion. 

Assembly Platform Trap 

Several structural weaknesses accompany Vietnam’s rise as a production hub in the global supply chain. The biggest problem is that Vietnam mostly does the lowest-value work. It assembles finished products but does not design, brand, or innovate them. The World Bank describes Vietnam as an “assembly platform” that carries out the cheapest and least skilled steps of production. This implies that even though Vietnam exports a lot, the real value that is gained within Vietnam remains relatively low. The link between foreign companies and local businesses is another weakness. Much of Vietnam’s export success comes from foreign firms that are not fully connected to the domestic economy. For example, in 2011, only 37% of the value in exports came from the local suppliers, while 67% came from foreign firms. The Vietnamese companies also struggle to absorb new technologies, and over time, the productivity growth has slowed down. The infrastructure and human capital gaps add to these challenges, as transport and logistics systems also need serious upgrades to keep up with the growing trade. The economy has developed into a “two-track system,” where foreign firms do very well, but domestic firms struggle to compete or connect. 

However, Vietnam should be cautioned that the shift in factories from China to Vietnam is just a “low-hanging fruit” strategy, as moving production out of China is extremely expensive, estimated at around $1 trillion for US and European companies. Another risk associated with this is that Vietnam might be seen just as a cheaper alternative to China rather than an independent economy. The success stories, like the PAN group, show that transformation is possible but rare. These companies benefit from the finances and support from the government, but without broader reforms, it will remain an exception. To move beyond the low-value assembly and become a high-value economy in the long run, Vietnam needs to strengthen its domestic industries, boost productivity, and build stronger institutions. 

However, despite its success, Vietnam remains largely dependent on low-value assembly work, foreign firms, and export-led growth, with limited domestic technological spillovers. This reflects its dependency structure, as even though it has attracted significant Foreign Direct Investment (FDI), much of its profit and intellectual property remain centred in the Multinational Corporations based in the developed economies.  

Geopolitical Implications of Vietnam’s Rise in the Global Supply Chain  

The rise of Vietnam as a production hub in the global supply chain has implications well beyond the economic dimension, as it also leads to the restructuring of production networks driven by the rivalry between the US and China. It also reflects how middle powers can navigate this production competition and become beneficiaries. The political and economic interests of major economies in Vietnam may have a broader impact on its economic development and trade. If there arises tension between the major economies or when the global supply chain gets disrupted, it may lead to the development of new sectors. The shifting geopolitics have opened a door for Vietnam to step into the semiconductor industry that China has long dominated. It has been actively attracting foreign investment and high-tech industries, gradually securing a key role in the global chip supply chain. 

The leading firms, including Boeing and SpaceX, also chose Vietnam as part of their broader supply chain diversification between 2020 and 2024. This pattern confirms that geopolitical friction, rather than purely economic logic, has become a primary force reshaping where production occurs globally. Vietnam’s government has responded to these dynamics with calculated pragmatism. Hanoi has pursued “bamboo diplomacy” that maintains flexible and non-confrontational relationships with all major powers, simultaneously boosting the economic prospects created by the geopolitical competition 

However, the escalating geopolitical conflicts and trade disruptions can also negatively affect Vietnam since its economy remains highly dependent on global trade. Its future as a global production hub is filled with both opportunities and challenges. It must build stronger domestic supporting industries and generate genuine technology spillovers from the Foreign Direct Investments (FDI) to address the structural limitations. It must improve product quality, standardize the production process, and accelerate digital transformation. By making effective use of strategic partnerships while strengthening the internal capabilities of domestic enterprises, Vietnam can not only maintain its current role but also gradually move to a higher position in the global value chain.  

In Vietnam’s motor vehicle industry, Tier 1 suppliers Yazaki, Sumi Hanel, and Sumidenso run various large operations. Robotics and Additive Manufacturing (AM) have opened up new jobs for engineers who can run programs and make robots. This leads to better-paying and high-skilled jobs which is good for Vietnam. It should start setting up training centers to provide them with Additive Manufacturing (AM) skills and use them in many industries. 

Vietnam’s Bet on Reforms 

The recent wave of optimism around Vietnam focuses on the new set of government reforms where Resolution 68 is the most important. It emphasizes the private sector as the most important driving force of the national economy. It also honors the entrepreneurs as the ‘new warriors on the economic front’ and aims to double the number of private firms to 2 million by 2030. It calls for building 20 globally competitive private companies. The government has also committed billions to physical infrastructure and greenlit a US$67 billion high-speed rail line connecting Hanoi and Ho Chi Minh City, shrinking a 30-hour journey to five. It also plans to spend $25 billion on its airports by 2030. 

The Vietnam Economic Update report highlights that Vietnam’s reform agenda is progressing in the right direction. However, to turn these reforms into concrete outcomes, it requires various efforts to ensure that the investments are productive with sufficient financing. The level of implementation should match the level of ambition. These reforms can create a positive cycle of investor confidence and increased private investment, which in turn will create greater resilience, supporting Vietnam’s progress. 

Logistics and connectivity infrastructure are essential for Vietnam to sustain economic growth across all sectors. Among the logistics service providers, healthy market competition is necessary to ensure domestic firm participation and linkages with regional and international market providers. If Vietnam balances domestic and foreign market participation, it will maximize spillover effects while ensuring equitable service provision. It must continue investments in logistics infrastructure from a macro perspective and give priority to investing in human resources development by providing necessary skills for all levels of authorities and enterprises. 

Conclusion 

Current and future trends of the global economy will shape the evolution of its export competitiveness. The trade agreements could allow Vietnam to continue its growth as an export platform in the global production hub. Vietnam’s government has implemented comprehensive policy measures to create a business-friendly environment. Its rise as a manufacturing hub is also linked to the convergence of forces such as the China+1 strategy and a reformed investment framework. However, there are several structural problems hindering its rise. It continues to function as an assembly platform while lagging in domestic value addition. 

To ensure long-term development, it must strengthen its domestic economy and promote technology spillovers. Otherwise, it risks capturing only a small share of the value they generate. 

 

By: Khushbu Ahlawat, Consulting Editor, GSDN

Introduction

When Japanese Prime Minister Sanae Takaichi landed in New Delhi on 1 July for the 16th India-Japan Annual Summit, much of the commentary that followed her three-day visit — including from Beijing’s own strategic community — framed the outcome primarily through the lens of China. The summit was read as a hedge, a counterweight, a piece on the board in the wider India-Japan-China-US contest for the Indo-Pacific. That framing is not wrong, but it is incomplete, and it risks obscuring the more important story: that India’s deepening partnership with Japan is not merely a reaction to Chinese pressure, but a structural response to India’s own long-standing vulnerabilities in technology, defence manufacturing, and critical-resource supply chains. Seen from New Delhi rather than Beijing, the summit was less about containing China and more about India finally building the kind of institutional depth with a like-minded partner that its own strategic autonomy has always required.

This matters because the two readings lead to different conclusions about durability. If the partnership is fundamentally anti-China, it is contingent — it rises and falls with the temperature of the China relationship, and a thaw in Beijing-Delhi ties could just as easily loosen it. If it is fundamentally about India’s own developmental and security needs, it is structural — it will persist and deepen regardless of how the China relationship evolves, because it is solving problems India has to solve one way or another. The evidence from the summit itself, and from the pattern of India-Japan engagement over the past year, points more strongly toward the second reading.

What Actually Came Out of the Summit

The 16th India-Japan Annual Summit produced sixteen formal outcomes and three joint statements spanning defence, supply chains, energy, and finance, alongside roughly $12.5 billion in fresh Japanese investment pledges from around 150 firms and more than 129 memorandums of understanding signed at the accompanying Joint Economic Forum. This was not a symbolic visit padded with communiqué language; it produced the kind of institutional scaffolding — joint statements, ministry-to-ministry agreements, financial-sector cooperation frameworks — that tends to outlast the political moment in which it was signed.

Three outcomes deserve particular attention because they map directly onto India’s own structural weaknesses rather than onto any China-specific calculation.

First, defence co-development. India and Japan signed their first-ever joint defence co-development project during the summit, centred on a Naval Radio Antenna Programme — a genuine technology-sharing arrangement rather than the joint exercises and training that had defined the relationship until now. For India, whose defence-indigenisation push (Atmanirbhar Bharat in defence manufacturing) has long been constrained by a shortage of high-end co-development partners willing to actually transfer design and systems knowledge rather than simply sell finished platforms, this is significant on its own terms. Japan’s advanced radar, antenna, and maritime-domain-awareness technology fills a specific capability gap in India’s naval modernisation that has nothing to do with China as an abstract rival and everything to do with India’s own maritime security needs across the Indian Ocean Region.

Second, the Joint Declaration on Economic Security. This established a framework across semiconductors, critical minerals, information and communications technology (including artificial intelligence), clean energy, and pharmaceuticals — five sectors where India has been trying, with mixed success, to build domestic capacity for over a decade. Energy security was addressed through a separate Joint Statement on Energy Resilience between the two countries’ energy ministries, aimed at strategic petroleum stockpiling and joint investment in maritime energy transport, plus a Memorandum of Cooperation on batteries supporting India’s electric-vehicle manufacturing ecosystem.

Third, and most consequential in the medium term, critical minerals. India imports close to 93 percent of its rare-earth magnets from a single external source, a concentration risk that became impossible to ignore after Beijing tightened export controls on materials such as dysprosium, terbium, and gallium through 2025 and into 2026. The summit’s Memorandum of Cooperation between India’s Geological Survey and Japan’s Organization for Metals and Energy Security establishes a framework for joint geological surveys and mineral exploration, with both agencies working together to identify and assess upstream mineral resources. This builds on an existing, if underdeveloped, foundation: Toyota Tsusho’s rare-earth processing venture in Andhra Pradesh, running since 2012 through its subsidiary Toyotsu Rare Earths India, already processes rare-earth oxides for export to Japan and demonstrates that India-Japan mineral cooperation can move from memorandum to functioning supply chain rather than remaining aspirational.

The Logic of Diversification, Not Confrontation

It is worth being precise about what this cooperation is and is not. None of these three pillars — naval technology, economic-security coordination, or critical-minerals exploration — requires India to frame its relationship with China as adversarial in order to make sense. Each addresses a concrete input India needs and currently cannot reliably source or produce at scale on its own: advanced defence electronics, semiconductor and AI-relevant technology, and processed critical minerals. India’s pursuit of these inputs through Japan sits within a much broader diversification strategy that has nothing uniquely anti-Chinese about its structure — India has, over the past two years, signed critical-minerals cooperation frameworks with roughly two dozen countries spanning North America, Europe, Africa, West Asia, Central Asia, and Southeast Asia, and is in active negotiations with a dozen more. Japan is one node — an important one, given its processing technology and capital — in a wider hedging strategy that India would be pursuing in some form regardless of the state of Sino-Indian relations, precisely because concentration risk in any single supplier relationship is a strategic vulnerability on its own terms.

This is also why the Quad’s institutional architecture matters here. The Quad Critical Minerals Initiative Framework, announced in May 2026 at the Quad Foreign Ministers’ Meeting in New Delhi, gives India, Japan, Australia, and the United States a standing multilateral mechanism for exactly this kind of coordination, meaning the bilateral India-Japan minerals push is not a standalone bet but one layer of a broader, overlapping set of frameworks — the Quad initiative, the Supply Chain Resilience Initiative, and the Indo-Pacific Economic Framework’s supply-chain pillar — that collectively reduce India’s dependence on any single external actor for strategic inputs.

Strategic Autonomy as the Organising Idea

To understand why India resists framing this relationship in confrontational terms, it helps to place the Japan partnership within India’s broader post-Cold War foreign policy doctrine: strategic autonomy. This is not neutrality in the classical non-aligned sense, but a deliberate practice of multi-alignment — maintaining substantive, simultaneous partnerships with actors that are themselves in tension with one another, without treating any single relationship as exclusive or defining. India’s foreign policy establishment has applied this logic consistently across the last two decades: deepening defence and technology ties with the United States and its allies while maintaining a decades-old defence-procurement relationship with Russia; participating in the Quad while remaining an active member of the Russia- and China-anchored Shanghai Cooperation Organisation and BRICS; and now expanding with Japan while continuing high-level engagement with Beijing itself, as reflected in Wang Yi’s own visits to Delhi around the same period as the Takaichi summit.

Viewed through this lens, the Japan partnership is not an exception to India’s strategic autonomy doctrine but an application of it. Multi-alignment only works as a strategy if each individual partnership is pursued on its own substantive merits — technology access, capital, defence co-development, mineral security — rather than as a proxy contest against a third country. The moment India’s Japan policy becomes primarily legible as anti-China policy, it stops being autonomy and starts being alignment, which is precisely the trap Indian strategic thinking has tried to avoid since the early 2000s. This also explains why India’s own public communications around the summit so consistently avoided China-referencing language, in contrast to the framing adopted by Chinese commentary and, at times, by Japanese officials themselves, who have been more explicit about the Indo-Pacific’s containment logic.

This distinction has practical consequences for how the partnership should be evaluated going forward. A relationship built on proxy-contest logic tends to be reactive and front-loaded with symbolic gestures — joint statements, naval visits, diplomatic signalling — that can be dialled up or down depending on the temperature of the China relationship at any given moment. A relationship built on strategic-autonomy logic tends instead to accumulate slowly through unglamorous institutional work: geological surveys, ministry-level supply-chain coordination, joint-venture financing, defence-technology transfer protocols. The India-Japan relationship since 2025 has visibly more of the second character than the first, which is itself evidence for reading it as structural rather than reactive.

Reading China’s Reaction Correctly

Chinese strategic commentary on the summit, unsurprisingly, read the visit as adversarial in intent — describing it as a trip driven by “anti-China intentions” designed to pressure Beijing from the southwest and reinforce an upgraded “Free and Open Indo-Pacific” concept, while flagging particular concern over the joint defence R&D commitments and the prospect of cooperation extending toward India’s northeast and the Andaman and Nicobar Islands. Beijing also moved diplomatically before and around the visit: reaching out to Washington to invoke prior understandings on “strategic stability” regarding Taiwan, and separately urging India’s National Security Advisor to manage the relationship “from a strategic perspective” and reaffirm India’s position on the one-China principle.

This reaction is worth taking seriously as a data point about how Beijing perceives the relationship, but it should not be mistaken for an accurate description of India’s own motivations. States frequently — and rationally — interpret another country’s diversification and capacity-building as directed at themselves, especially when they are the dominant incumbent supplier in the relevant sectors. China’s dominance in rare-earth processing and its position as India’s second-largest and Japan’s largest trading partner means that any successful India-Japan diversification effort will, as a side effect, reduce Chinese leverage — but a side effect is not the same as a primary objective. India’s own public framing of the summit centred overwhelmingly on domestic priorities: energy security, EV and battery manufacturing capacity, AI governance standards, and defence self-reliance, with the two countries also marking 75 years of diplomatic relations and reaffirming a “Special Strategic and Global Partnership” that predates the current phase of China-Japan and China-India friction by well over a decade.

The Real Limits on the Partnership — and Why They Don’t Undermine the Logic

Chinese analysts are not wrong to point out real constraints on how far India-Japan ties can go. The scale of India-Japan trade remains modest relative to each country’s trade with China: Japan’s bilateral trade with India totalled roughly $27.5 billion in FY2025-26, accounting for under 2 percent of Japan’s total trade, while China accounted for around a fifth of it; Japan in turn ranks well behind China and the United States in India’s own trade portfolio. Flagship connectivity projects such as the Mumbai-Ahmedabad high-speed rail have also moved slower than either government would prefer, illustrating the gap between summit-level ambition and on-the-ground execution capacity.

But these limits argue for patience rather than skepticism about the partnership’s direction. Critical-minerals cooperation, semiconductor supply-chain coordination, and defence co-development are precisely the kinds of initiatives that take years to move from memorandum to functioning infrastructure — the Toyota Tsusho rare-earths venture took over a decade to become the meaningful supply-chain node it is today. The relevant question for assessing India’s strategic calculus is not whether trade volumes with Japan will overtake trade with China in the near term — they will not — but whether India is building the redundant capacity and diversified sourcing that reduces its exposure to supply shocks from any single relationship, China included. On that narrower and more accurate test, the summit’s outcomes represent genuine, if incremental, progress.

Conclusion

The India-Japan relationship is best understood not as a China containment strategy dressed up in economic language, but as India using a willing, technologically advanced, and politically compatible partner to address supply-chain and capability gaps that predate — and will outlast — the current period of China-Japan and China-India tension. That the relationship also has the effect of constraining Chinese leverage in specific sectors is real and worth acknowledging, but treating it as the primary driver misreads India’s own stated priorities and risks making a strategic assessment of the partnership hostage to the far more volatile question of where Sino-Indian relations happen to stand at any given moment. For India, the more durable and analytically useful frame is one of diversification and capacity-building in its own right — a frame in which Japan is one of several important partners, China’s reaction is a data point rather than the point, and the test of success is measured in functioning mineral-processing plants, co-developed defence systems, and semiconductor fabrication capacity rather than in how sharply Beijing’s commentary reacts to each summit.

By : Jaiwant Singh Jhala, Research Analyst, GSDN

The global political and economic landscape is undergoing a profound transformation. Traditional multilateral institutions are increasingly being complemented by smaller, issue-based partnerships known as minilateral groupings. These partnerships bring together a limited number of countries with shared strategic interests to address specific global and regional challenges more efficiently than larger organizations. One of the most significant examples of this trend is the I2U2 grouping. I2 stands for India and Israel, whereas U2 stands for the United States and the United Arab Emirates. I2U2 was launched at the leaders’ summit in July 2022 and has been described as a new model of international cooperation focused on practical economic outcomes rather than military alliances or ideological partnerships. The grouping seeks to combine the technological innovation of Israel, the investment capabilities of the UAE, the market size and human capital of India, and the financial and technological leadership of the United States to promote cooperation in areas such as food security, renewable energy, infrastructure, technology, transportation, healthcare, and supply chain resilience. The origins of I2U2 can be traced to the changing geopolitical environment in West Asia. For decades, political divisions prevented close cooperation between Israel and several Arab states. However, the signing of the Abraham Accords in 2020 marked a turning point by normalizing relations between Israel and the UAE. This historic development created new opportunities for regional economic integration and diplomatic engagement.  

Achievements 

One of I2U2’s greatest achievements has been its ability to create a new strategic architecture in West Asia. Historically, the region’s political landscape was shaped by ideological divisions and security rivalries. I2U2 represents a departure from this pattern by emphasizing economic cooperation over geopolitical confrontation. It has brought together countries from South Asia, the Gulf, the Middle East, and North America in a partnership based on shared economic interests and technological collaboration rather than traditional security concerns. For India, the grouping has significantly strengthened its diplomatic and strategic presence in West Asia. India has long pursued a policy of maintaining balanced relations with Israel, the Gulf states, Iran, and the broader Arab world. I2U2 enhances India’s role as a trusted economic and technological partner without forcing it to abandon its policy of strategic autonomy. It complements India’s ‘Link West’ policy by expanding opportunities for trade, investment, and innovation while reinforcing its position as an emerging global power. The most concrete outcome of I2U2 has been its focus on food security. One of the flagship initiatives announced during the inaugural summit involved a UAE commitment to invest approximately US$2 billion in integrated food parks across India. These food parks aim to modernize agricultural infrastructure by improving storage facilities, reducing post-harvest losses, increasing food processing capacity, and strengthening supply chains. Israeli expertise in precision agriculture and water-efficient farming, combined with American technological support and Emirati investment, creates a comprehensive model for enhancing food security. Beyond benefiting India, these projects are also expected to improve food availability for Gulf countries, which remain heavily dependent on food imports. Another major initiative has been cooperation in renewable energy. The grouping announced plans to support the development of a 300-megawatt hybrid renewable energy project in Gujarat, combining solar and wind power with advanced battery storage technology. This project aligns with India’s ambitious renewable energy targets while contributing to global efforts to reduce carbon emissions. It also demonstrates how I2U2 seeks to address global challenges such as climate change through practical investments rather than merely issuing political declarations. Technology has emerged as another important pillar of cooperation. The four countries possess complementary strengths in fields such as artificial intelligence, semiconductors, biotechnology, cybersecurity, space technology, and digital innovation. Although many collaborative projects remain in the early stages, the framework established by I2U2 has significantly expanded opportunities for research partnerships, private-sector investment, and technological exchanges. Grouping has also contributed to strengthening global supply chain resilience. The COVID-19 pandemic exposed the vulnerabilities of overly concentrated supply chains, prompting countries worldwide to diversify production and logistics networks. I2U2 supports this objective by encouraging greater cooperation in pharmaceuticals, food processing, clean energy technologies, and critical infrastructure. By reducing dependence on single suppliers and promoting trusted economic partnerships, grouping contributes to greater resilience in the global economy.  

Challenges 

Despite its promising start, I2U2 has encountered several obstacles that have slowed its progress. Many of the projects unveiled during the inaugural summit remain under development, and relatively few have reached full operational status. The outbreak of the Israel-Hamas conflict in October 2023 created another major challenge. The conflict shifted political attention toward immediate security concerns and complicated regional diplomacy. Although none of the member countries abandoned the partnership, progress on several economic initiatives slowed considerably as governments focused on managing the evolving crisis. The conflict also highlighted the broader geopolitical uncertainties that can affect long-term regional cooperation. Another limitation is the absence of a permanent institutional structure. Unlike organizations such as the European Union (EU) or Association of South-East Asian Nations (ASEAN), I2U2 has no permanent secretariat, dedicated budget, or legally binding treaty. Its flexible structure allows for rapid decision-making, but it also makes continuity dependent on the political commitment of successive governments. Changes in domestic political priorities, particularly within the United States, could influence the level of future engagement and financial support. India’s own foreign policy presents both opportunities and challenges for I2U2. India maintains strong relations not only with Israel, the UAE, and the United States but also with countries such as Iran and Saudi Arabia. Preserving this delicate diplomatic balance requires careful management. India has consistently emphasized that I2U2 is an inclusive economic initiative rather than an exclusive geopolitical bloc directed against any country.  

Future of I2U2 

The long-term success of I2U2 will depend largely on its ability to convert political vision into measurable outcomes. Completing flagship projects in food security and renewable energy will be essential for maintaining credibility and demonstrating the practical value of the partnership. Greater institutionalization through regular ministerial meetings, dedicated working groups, and more robust coordination mechanisms could also strengthen continuity and implementation. Emerging technologies present significant opportunities for future collaboration. Artificial intelligence, quantum computing, semiconductors, biotechnology, digital infrastructure, green hydrogen, and climate-resilient agriculture are all areas where the combined strengths of the four members could generate substantial economic and technological benefits. The announcement of the India-Middle East-Europe Economic Corridor (IMEC) has further increased the strategic relevance of I2U2. By improving connectivity between India, the Gulf, Israel, and Europe through integrated transport, energy, and digital infrastructure, IMEC complements many of I2U2’s objectives. If both initiatives progress simultaneously, they could reshape regional trade routes and establish a new corridor of economic growth linking to Asia, the Middle East, and Europe.  

Judging I2U2 solely by the number of completed projects would underestimate its broader significance. As a relatively young partnership, it has already succeeded in creating a new model of minilateral cooperation based on investment, innovation, and practical problem-solving. It has strengthened India’s strategic engagement in West Asia, encouraged collaboration among four economically complementary nations, and identified concrete areas where joint investments can address pressing global challenges such as food security, renewable energy, and resilient supply chains. At the same time, the partnership has yet to fully realize its ambitious vision. Slow implementation, regional conflicts, institutional limitations, and evolving geopolitical priorities continue to constrain its progress. The true measure of I2U2’s success will depend on whether it can consistently translate diplomatic commitments into visible economic outcomes over the coming decade. Overall, it has succeeded in establishing an innovative strategic platform and generating significant political momentum, even though many of its flagship initiatives remain working in progress. In an era increasingly characterized by flexible, issue-based partnerships rather than rigid alliances, I2U2 represents an important experiment in international cooperation. If its member countries sustain their political commitment, accelerate project implementation, and expand cooperation into emerging sectors such as artificial intelligence, clean energy, and digital infrastructure, I2U2 has the potential to become one of the most influential economic partnerships connecting South Asia, West Asia, and the wider global economy. 

By : Bhavika Bhartiya, Research Analyst, GSDN

Introduction 

The Teesta, a transboundary river that originates in the Indian state of Sikkim and flows through the northern districts of West Bengal before entering Bangladesh, has for decades been at the centre of one of South Asia’s most stubborn water disputes. Bangladesh depends on the river’s flow during the dry season to irrigate roughly 55,000 hectares of farmland spread across six districts, while northern West Bengal similarly depends on it for irrigation and drinking water. Successive Indian and Bangladeshi governments have tried and failed to conclude a formal water-sharing arrangement, most notably a draft agreement that was due to be signed during then Indian Prime Minister Manmohan Singh’s visit to Dhaka in September 2011, but which collapsed at the last moment.  

Into that vacuum has stepped the People’s Republic of China, whose state-owned engineering conglomerate, the Power Construction Corporation of China, commonly known as Power China, first proposed an alternative, comprehensive river management plan for the Teesta in 2016. That Chinese proposal has resurfaced repeatedly over the following decade, gaining considerable momentum since the fall of the Sheikh Hasina government on August 5, 2024, and advancing further still after Bangladesh Prime Minister Tarique Rahman’s visit to Beijing in June 2026. This article traces how the China-Bangladesh understanding on the Teesta has evolved, assesses precisely what has and has not been agreed so far, and examines why the project, despite still being at a preparatory stage, has become a matter of considerable strategic concern for India. 

The Unresolved Bilateral Question 

The Teesta dispute has a long and largely unsuccessful negotiating history. An interim, ad hoc arrangement reached in 1983 allocated 36 per cent of the river’s dry-season flow to Bangladesh and 39 per cent to India, leaving the remaining 25 per cent undetermined; this arrangement was never formally ratified nor consistently implemented. A more ambitious agreement, offering Bangladesh 37.5 per cent of the river’s flow against India’s 42.5 per cent, was negotiated during Manmohan Singh’s tenure and scheduled to be signed on September 6, 2011. It was called off at the last moment after West Bengal Chief Minister Mamata Banerjee objected, arguing that reduced flow would damage agriculture and drinking-water availability in north Bengal districts such as Jalpaiguri and Cooch Behar. In the years since, New Delhi has repeatedly had to reconcile the Centre’s foreign-policy interest in a settlement with West Bengal’s domestic political and agricultural concerns, but no consensus has emerged. Bangladesh, meanwhile, has continued to experience the river’s two extremes: destructive monsoon flooding and riverbank erosion on one hand, and an almost dry riverbed for extended stretches during winter and early summer on the other. Frustrated by the prolonged impasse, Dhaka signed a non-binding memorandum of understanding, commonly abbreviated as MoU, with Power China in 2016 to jointly explore a Chinese-financed and Chinese-engineered river restoration plan, an initiative that eventually acquired the formal title of the Teesta River Comprehensive Management and Restoration Project, commonly abbreviated as TRCMRP. 

A Reordering of Priorities in Dhaka 

For much of the following period, the TRCMRP remained largely dormant, in part because the Sheikh Hasina government, seen as closer to India, chose in June 2024 to formally hand India’s technical team responsibility for assessing the project rather than China’s. That balance shifted dramatically after Hasina’s government fell on August 5, 2024, amid a mass uprising, and she went into exile in India. An interim administration led by Nobel laureate Muhammad Yunus took charge and moved quickly to widen Dhaka’s foreign-policy options beyond India. Yunus undertook his first major bilateral visit as chief adviser to China from March 26, 2025, to March 29, 2025, attending the Boao Forum for Asia in Hainan before holding bilateral talks with Chinese President Xi Jinping in Beijing on March 28, 2025. 

 The two sides signed nine agreements covering economic and technical cooperation, and, notably, Bangladesh formally welcomed Chinese company participation in the TRCMRP, alongside discussion of Chinese involvement in the modernization of Mongla Port and the Chattogram China Economic and Industrial Park. Bangladesh held its first general election since the 2024 uprising on February 12, 2026, in which the Bangladesh Nationalist Party, commonly abbreviated as BNP, led by Tarique Rahman, won a landslide majority. Rahman was sworn in as prime minister on February 17, 2026, ending an interim period of roughly eighteen months. Rather than reversing Dhaka’s China outreach, the new BNP government has continued and, in some respects, accelerated it, suggesting that Bangladesh’s tilt towards Beijing on infrastructure and water issues reflects a broader, cross-party recalibration rather than the preference of any single administration. 

What Has Actually Been Agreed 

Two related but distinct tracks have advanced since early 2025. On January 29, 2026, the Bangladesh Water Development Board and Power China signed an extension of their earlier memorandum of understanding, under which Power China committed to preparing a concept paper by December 2026 and conducting a feasibility study for the TRCMRP during the same year, with the project itself expected to be finalized only once that study is complete. Bangladeshi officials have indicated that the first phase of the project is estimated to cost approximately US$750 million, of which Dhaka has formally requested US$550 million as a loan from China, with the remainder to be met from the national exchequer; work is expected to begin in 2026 and conclude by 2029. 

The second track advanced further during Prime Minister Tarique Rahman’s four-day visit to China, which began with stops in Malaysia before he arrived in Dalian on the night of June 22, 2026. Rahman held bilateral talks with Chinese President Xi Jinping at the Great Hall of the People in Beijing on June 26, 2026, and separately met Chinese Premier Li Qiang. The visit produced two agreements and thirteen MoUs, spanning the Teesta Master Plan, the China-Bangladesh Mongla Port Economic Zone, the Chinese Economic and Industrial Zone at Anwara in Chattogram, electric vehicles, renewable energy, and a US$220 million garment factory investment, along with reported discussion of the purchase of Chinese J-10CE multirole combat aircraft and a proposed China-Myanmar-Bangladesh economic corridor. It is worth being precise about what this amount to no financing agreement for the Teesta project has yet been finalised, no construction has begun, and China’s own foreign ministry has stated publicly that its cooperation with Bangladesh is not directed at any third country. What exists, as of mid-2026, is a feasibility and planning framework, backed by clear political intent on both sides, rather than a completed infrastructure project. 

Proximity to the Siliguri Corridor 

India’s concern with the TRCMRP has comparatively little to do with the water-sharing percentages that have dominated the bilateral dispute for decades, and a great deal to do with geography. The project’s proposed works are located in Bangladesh’s Nilphamari and Rangpur districts, directly across the border from India’s Jalpaiguri district and immediately adjacent to the Siliguri Corridor, a narrow strip of Indian territory, at points barely 20 to 22 kilometres wide, that forms the sole land connection between the Indian mainland and its seven northeastern states of Assam, Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland and Tripura, often referred to informally as the Chicken’s Neck. A sustained Chinese engineering and technical presence so close to this corridor, even one presented purely as a civilian river-restoration exercise, revives a concern familiar from Chinese infrastructure financing elsewhere in South Asia and beyond, namely that large-scale economic engagement can, over time, translate into a durable presence of personnel, equipment and institutional relationships in strategically sensitive terrain. 

Two additional factors sharpen this concern for Indian planners. First, PowerChina is a state-owned enterprise whose wider operations are commonly associated with Beijing’s military-civil fusion approach, under which nominally civilian infrastructure projects can also serve broader strategic purposes. Second, the Teesta project does not stand in isolation. It forms one point of a wider pattern of Chinese engagement in Bangladesh that also includes the expansion of Mongla Port in the Sundarbans region and the Chattogram economic zone, leading some Indian security analysts to describe an emerging pincer-like configuration around the Siliguri Corridor, comparable to China’s broader pattern of port investments across the Indian Ocean rim, including Gwadar in Pakistan and Hambantota in Sri Lanka, often described as a String of Pearls. Reports of Bangladesh’s interest in Chinese J-10CE fighter aircraft and a proposed China-Myanmar-Bangladesh economic corridor, discussed during Rahman’s June 2026 visit, add a further layer to these concerns, even though none of these initiatives has yet moved beyond preliminary discussion. 

It would nonetheless be inaccurate to characterize the present situation as a fait accompli. No Chinese personnel are yet deployed on the ground in any significant capacity, the TRCMRP remains at the concept and feasibility stage, and India’s own conduct complicates a purely one-sided reading of events. New Delhi itself offered to finance the same project in June 2024 and dispatched a technical team for further studies, and it was the subsequent political transition in Dhaka, rather than any Bangladeshi rejection of India, that left the opening for Beijing. 

A Calibrated Response from New Delhi 

India’s public response has so far been measured. Ministry of External Affairs spokesperson Randhir Jaiswal, addressing the weekly media briefing in New Delhi on July 3, 2026, stated that India’s development assistance to Bangladesh operates on a mutually agreed roadmap that is regularly reviewed, that India’s views on the Teesta project have already been conveyed to Dhaka, and that New Delhi will factor all related developments into its overall approach to the Teesta issue. When asked separately about reports of Bangladesh’s interest in Chinese J-10CE fighter jets and the proposed China-Myanmar-Bangladesh economic corridor, Jaiswal said only that India closely follows all such developments in its neighborhood and takes appropriate measures as required. This calibrated public posture is consistent with the existing structured bilateral mechanisms through which India and Bangladesh already discuss all fifty-four rivers that the two countries share, and it reflects an evident preference in New Delhi for continued, quiet diplomatic engagement over public confrontation, even as India’s security establishment reportedly monitors the pace of any Chinese personnel deployment near the corridor with greater attention than public statements suggest. 

An Unfinished Project with Long-Term Stakes 

The Teesta understanding between China and Bangladesh, as it stands in mid-2026, remains a feasibility-stage engineering and diplomatic arrangement rather than a completed strategic fait accompli. Its final shape, financing and timeline are still to be determined, and both Dhaka and Beijing have stressed the project’s civilian, livelihood-oriented character. Nonetheless, its precise location beside the Siliguri Corridor ensures that it will remain a closely watched issue for India regardless of how the feasibility study eventually concludes. 
The episode also illustrates a recurring pattern in India’s immediate neighborhood: wherever domestic political friction, in this case between the Centre and the West Bengal government, has delayed New Delhi’s own initiatives, China has generally proven willing and able to step into the resulting gap with financing, technical expertise and sustained diplomatic attention. For India, a durable response is unlikely to rest on carefully worded statements alone. It will depend on reconciling central and state positions on Teesta water-sharing, offering Dhaka a timely and credible financing alternative, and continuing to strengthen monitoring, connectivity and border infrastructure around the Siliguri Corridor, so that a river management project in northern Bangladesh does not, over time, become the point at which a long-standing water dispute is transformed into an enduring strategic vulnerability. 

By : Simar Kaur, Research Analyst, GSDN

Introduction 

As the second-largest economy and leading industrial nation in the world, the issue of energy security is not only of economic importance but also one of the pillars of sovereignty for China. As a result of the tremendous energy needs required to power its industry, data centres, electric car fleet, and cities, China has become the biggest consumer of imported crude oil and liquefied natural gas (LNG), getting about 70 per cent of its oil supplies and 40 per cent of its gas supplies from foreign sources. The tremendous dependence on foreign energy supplies, especially from such unstable regions as the Middle East, has long been regarded as one of the key weaknesses of China by military strategists in Beijing and Washington. However, a deeper analysis of the Chinese energy situation in June 2026 shows a completely different picture. Using decades of experience, China has managed to transform this weakness into a kind of calculated vulnerability. 

The Nature and Scale of Dependency 

Understanding the energy problem of China requires that one first appreciate the scale of the problem. Although China is the top producer of coal in the world and an important producer of oil, with a production capacity of about 200 million tonnes per year, China consumes more than what it produces. The fossil fuel dilemma that faces China is quite pronounced in that about 75 per cent of China’s total energy consumption comes from fossil fuels, while coal accounts for over 55 per cent of that total. The major weakness comes in the form of oil. China’s crude oil imports are largely dependent on the single maritime strait that serves as the Strait of Hormuz. By 2025, about half of China’s crude oil import sources will be from the Middle East. The single point of failure represented by the strait through which an estimated 80 per cent of Asia’s crude oil and LNG flows has been a source of Chinese anxiety for decades now. The war in the region, resulting in a closure of the strait at the start of 2026, seems to have justified these anxieties, as evidenced by the occurrence of what the International Energy Agency described as “the most serious global interruption in energy supplies” and a spike in international oil prices to over US$110 per barrel. This dependency provides a direct link through which geopolitical risks can affect the domestic economy. High oil prices are included in producer and consumer prices, functioning as a tax upon the industrial system. But in contrast to Japan and South Korea, which are much more vulnerable to Strait of Hormuz problems, China has worked for many years to avoid becoming a hostage to its dependency. 

The Strategy of Supply Source Diversification  

A major strategy that has been put in place in an attempt to defend itself from any external threat is diversification of import sources. The rationale behind Beijing’s strategy has been that it does not want its “energy bowl” to be kept in one basket. It has been trying to change the geography of its energy import. Crude oil imports have shifted from the Middle East in a very clear example. The Middle East has seen its proportion of total oil imports decline from about 70% in 2016 to about 55% by 2025. Russia is now the biggest supplier of crude oil to China, as the proportion of Russian oil to China’s total oil imports has risen to nearly 20% in the first five months of 2026. This is due to increasing trade between the two nations despite Western sanctions. In addition to Russia, China has developed oil supply links to other regions, including Central Asia (through overland pipelines), Africa (mainly Angola) and South America (Brazil). By 2025, China had developed oil import connections to about 50 countries. The same trends can be observed in the case of coal. Traditionally, China has been heavily dependent on Indonesia; coal imports from the archipelago accounted for almost 43 per cent of the total imports in 2025 . But when Indonesia introduced long-term cuts in their export quotas in 2026 in order to meet its own domestic needs for nickel smelting, China managed to cope with the situation quite well. In the absence of the supply problem, it found new resources for importing from other nations, including Russia (an increase of 33 per cent), Mongolia (an increase of 42 per cent), and Australia. 

The Logistics of Resilience: Pipelines and Stockpiles 

In addition to importing from other countries, China has also made major investments in infrastructure that would guarantee the security of its supply chains. Route diversification is as crucial as source diversification. The construction of overland pipelines provides a clear alternative to the risky sea routes of the Indian Ocean and Strait of Hormuz. The crude oil pipeline network between China and Russia (Eastern and Western routes) currently has an annual capacity greater than 100 million tons of crude oil passing through an infrastructure that is totally safe from any disruptions by sea attacks. This is enhanced by a pipeline network of over 200,000 km for oil and gas in the whole of China. Another vital element of defence is the formation of a huge strategic petroleum reserve. Although China is not a member of the International Energy Agency (IEA) and does not make public figures about its reserves, experts estimate that both strategic and commercial reserves in the country are within the range of 12 billion to 14 billion barrels. This is an enormous amount of petroleum reserves, and according to some calculations, they could meet China’s consumption for more than 110 days without any imports at all. Such reserves have been accumulated gradually through years of buying inexpensive crude in times of economic depression. In response to the 2026 Hormuz crisis, the Chinese government exercised self-control in its resource releases, indicating that the problem was serious but not critical.  

Domestic Structural Transformation: The “Energy Powerhouse” Goal  

The fundamental change in China’s energy strategy is not how it handles its imports; rather, it is decreasing its economic dependence on them. The objective of China being an “energy powerhouse” is now officially incorporated in China’s 15th Five-Year Plan (2026-2030). The idea of an “energy powerhouse” implies much more than abundant energy supplies. It entails system resilience, technological independence, and green energy dominance. The key component of this new approach is the rapid expansion of non-fossil energy capacity. China is already the clear global leader in renewable energy production, as its renewable energy capacity totals 2.4 billion kilowatts by March 2026, representing more than 60 per cent of its total installed capacity. Its renewable energy production has totalled 37 per cent of the total power production in the first quarter of 2026. The goal of the government is to raise the proportion of non-fossil fuels in total energy consumption to 25 per cent by 2030. This is not only a policy on the environment but a matter of national security as well, to “secure the energy bowl in your hands”. Electrification in transport is probably the most striking part of this structural change. According to recent reports, about 45 per cent of new vehicles registered in China in 2025 were New Energy Vehicles (NEVs). These figures translate into a noticeable decline in oil consumption. Thus, electric trucks operating in China have displaced around 1 million barrels per day of oil demand in 2025, and the amount is expected to rise to 2.7 million barrels per day in 2030. Such an effort helped to reduce the risk from oil price increases. Moreover, China is using its industrial capacity to build buffers for itself in terms of technology. The establishment of efficient coal-to-chemicals industries allowed for creating domestic substitutes for imported petrochemical feedstocks in the case of a lack of naphtha and LPG. The use of coal is quite contradictory in terms of greenhouse gases, but it helps as an additional source in case of supply disruptions.  

Systemic Integration: Moving from Capacity to Capability  

The most crucial turning point in the process of the transformation of China’s energy mix involves a change from an emphasis on increasing the capacity of energy production to the process of incorporating the capacity of energy production into an intelligent “new energy system”. The development of renewable energy sources, including solar and wind energy, has created new problems connected with intermittency and grid congestion. This problem is resolved through the 15th Five-Year Plan, which puts special attention to energy storage, smart grids, and UHV transmission lines. As of April 2026, it was clear how the structural dilemma facing China was evident through the data presented. Despite record-breaking renewable energy installations, solar and wind power production was constrained by unfavourable weather conditions as well as grid management challenges. As such, there was an upturn in the production of power using coal, marking the fourth consecutive month. This shows the strategic function played by coal in China’s energy policy. Although the ultimate vision is to make coal a supplementary source of energy to ensure grid reliability, the current role of coal as a steady domestic source of base-load power creates a strategic buffer to the uncertainties that would arise from oil and gas imports. Nonetheless, no timeframe has been indicated for the changeover from coal, and the expectation is that the consumption will “peak.”  

Geopolitical Implications and Global Power 

It means that China’s increased energy resilience poses important consequences for its foreign policy. Western expectations that the government would be forced to act as a mediator and security provider in the Middle East just because of its energy dependence on this region turned out to be overly simple. Thanks to diversified sources, reserves, and the increase in domestic capacity, Beijing has significantly decreased the ability of the Middle East to impose its demands on China. On the contrary, China is acting in a rather flexible way now. If Beijing’s interests coincide with those of other states, for example, preventing the destruction of international energy flows, then it will cooperate with them. However, if it comes to Western coercion that may endanger China’s ability to get cheap oil from sanctions-hit countries like Iran, then it will resist. In addition, China has plans to leverage its energy revolution to increase its soft power. Being the biggest producer of solar panels, batteries, and other clean energy equipment, China commands over 80% of the world’s solar value chain. With the conflict in the Middle East, there now exists a chance for China to offer its clean energy equipment to countries of the Global South in order to use them for energy security and cut down on dependency on oil imports. In this way, China gets to export its technology, set international standards, and create infrastructure dependence – essentially making it into a “powerhouse of energy”.  

Conclusion 

The evaluation of China’s energy dependency is an example of a state caught up in a deep strategic shift. Indeed, “vulnerability” caused by being the greatest energy importer in the world is being carefully disassembled via a multi-layered strategy, which has turned China into an extremely resilient state amid the energy shocks faced at the global level. It cannot overcome its dependency on energy imports; however, China has managed to make peace with the risk, thus turning what once was the vulnerability into an effectively managed issue. The 2026 Strait of Hormuz incident serves as proof of the effectiveness of China’s strategy and shows that the diversification of supply, stockpiling, and restructuring of its energy consumption have formed a resilient system capable of absorbing significant shocks. China’s energy path has become aimed at achieving its “energy powerhouse” status through electrification of its economy and the possession of key energy technologies rather than reducing its size. As for global rivals of China, its energy policy is becoming a strength instead of a liability. 

By : Andey Vivaan, Research Analyst, GSDN

Introduction 

When India, the United States, the European Union and key Gulf countries announced the India–Middle East–Europe Economic Corridor (IMEC) during the G20 Summit in New Delhi on September 09, 2023, it immediately attracted global attention. Many observers viewed it as more than another infrastructure project; it represented an attempt to reshape trade routes linking Asia, the Middle East and Europe. Bringing together India, the United States, the European Union, Saudi Arabia, the United Arab Emirates, France, Germany and Italy the project seeks to establish a multimodal corridor connecting South Asia, West Asia and Europe through ports, railways, energy infrastructure and digital connectivity. At the time of its launch, many analysts argued that IMEC had the potential to reshape global trade and reduce dependence on traditional maritime routes. Whether it can achieve these ambitions, however, remains uncertain.  

The timing of the initiative was significant. The COVID-19 pandemic had exposed the fragility of global supply chains, while disruptions such as the March 2021 blockage of the Suez Canal and later security challenges in the Red Sea demonstrated how vulnerable international commerce had become. Governments and businesses increasingly recognized the need for diversified trade corridors capable of reducing logistical risks and ensuring uninterrupted movement of goods. Against this backdrop, IMEC emerged not merely as another infrastructure project but as a strategic effort to build resilient supply chains linking three economically dynamic regions. 

From India’s perspective, IMEC represents an opportunity to strengthen its position within global value chains while expanding connectivity with Europe through the Gulf. For the Gulf countries, particularly Saudi Arabia and the United Arab Emirates, the corridor complements their broader economic diversification strategies aimed at reducing dependence on hydrocarbons and transforming themselves into global logistics and technology hubs. European countries view IMEC as a means of strengthening supply chain resilience while deepening economic engagement with both India and the Gulf. 

Nearly three years later, however, important questions remain regarding its implementation. Regional conflicts, political uncertainty in West Asia, financing challenges, infrastructure gaps, and shifting geopolitical priorities have slowed the project’s momentum. The conflict in Gaza, instability in the Red Sea, and wider geopolitical tensions have complicated the environment in which the corridor must operate. These developments have prompted policymakers and analysts to ask an important question: Will IMEC ever fructify, or will it remain an ambitious geopolitical vision that struggles to become reality? 

This article examines the origins of IMEC, its strategic and economic importance, the opportunities it presents, the challenges it faces, and whether it possesses the political and economic foundations necessary to become one of the defining connectivity projects of the twenty-first century. 

Understanding IMEC 

IMEC aims to connect India with Europe through the Middle East using a combination of sea routes, railways and modern logistics infrastructure. Officially announced during the G20 Summit on September 09, 2023, the project aims to connect India with Europe through the Middle East using a combination of sea and land routes. 

The corridor consists of two interconnected segments. The Eastern Corridor Links Indian ports with the United Arab Emirates through maritime transport across the Arabian Sea. The Northern Corridor extends from the Gulf through Saudi Arabia and Jordan to Israel’s Mediterranean port of Haifa, from where goods would continue to European destinations. 

Unlike traditional shipping routes that rely almost entirely on maritime transportation, IMEC combines ports, railways and logistics hubs into a multimodal network. This design is intended to reduce transit times, improve efficiency, and create more resilient supply chains capable of responding to disruptions. 

More importantly, IMEC is not limited to transportation alone. It also includes several complementary components. These include electricity transmission networks, green hydrogen pipelines, digital connectivity through submarine communication cables, and modern logistics infrastructure. Such integration reflects a broader vision that extends beyond moving cargo and seeks to create an interconnected economic ecosystem across three continents. 

The participating countries signed a Memorandum of Understanding (MoU) to promote cooperation in planning, financing, and implementing the corridor. Although construction responsibilities remain distributed among individual countries, its success will depend on how effectively governments, private investors, and international financial institutions work together. 

Why IMEC Matters 

At first glance, IMEC may appear to be another transport corridor, but its significance goes much further than reducing shipping time. It represents a strategic response to changing patterns in global trade, growing geopolitical uncertainty, and increasing concerns regarding supply chain security. 

One of the strongest arguments in favor of IMEC is the growing need to diversify global trade routes. Recent years have repeatedly demonstrated the vulnerability of existing maritime corridors. The blockage of the Suez Canal in March 2021 disrupted approximately 12 percent of global trade, while attacks on commercial shipping in the Red Sea during 2023 and 2024 forced vessels to take much longer routes around the Cape of Good Hope. These disruptions increased transportation costs, delayed deliveries, and highlighted the risks of relying excessively on a limited number of maritime chokepoints. 

For India, the corridor offers an opportunity to strengthen connectivity with Europe, reduce logistical dependence on vulnerable maritime routes and support its long-term manufacturing ambitions.  

For Europe, the corridor supports efforts to diversify supply chains at a time when geopolitical tensions increasingly influence international commerce. Strengthening economic links with India and the Gulf also aligns with Europe’s broader objective of reducing overdependence on single production centers. 

The Gulf countries also stand to benefit significantly. Saudi Arabia and the United Arab Emirates have invested heavily in transforming themselves into global logistics, manufacturing and technology centers. IMEC complements national programmes such as Saudi Vision 2030 and the United Arab Emirates’ Operation 300bn, both of which seek to diversify economic activity beyond oil exports. 

Rather than serving merely as transit countries, Gulf states aim to create industrial ecosystems around logistics hubs, manufacturing clusters, renewable energy projects and digital infrastructure. IMEC therefore supports their transition from hydrocarbon-dependent economies towards diversified economic models. 

IMEC and China’s Belt and Road Initiative 

Since its announcement, IMEC has frequently been compared with China’s Belt and Road Initiative (BRI). Although many observers initially described IMEC as a direct response to the BRI, such comparisons oversimplify the nature of both initiatives. 

China launched the Belt and Road Initiative in 2013 with the objective of improving connectivity across Asia, Europe and Africa through large-scale infrastructure investment. Over the past decade, China has invested more than US$1.3 trillion across numerous transport, energy and infrastructure projects. 

IMEC differs significantly in both structure and philosophy. While the Belt and Road Initiative has primarily relied upon bilateral financing led by Chinese state institutions, IMEC is designed as a multilateral partnership involving democratic economies, regional powers and international institutions. 

The emphasis also differs. Rather than focusing solely on infrastructure construction, IMEC seeks to integrate sustainable development, transparent financing, digital connectivity, and clean energy cooperation into its overall framework. Supporters argue that these principles may make the corridor more financially sustainable and politically acceptable over the long term. 

At the same time, many participating countries reject the idea that IMEC should be viewed purely as an anti-China initiative. Instead, they present it as an additional connectivity option that complements rather than replaces existing trade routes. 

Yet, geopolitical competition cannot be ignored. As connectivity increasingly becomes a tool of international influence, both IMEC and the Belt and Road Initiative reflect broader efforts by major powers to shape the future architecture of global commerce. 

Economic Opportunities Offered by IMEC 

If implemented as planned, IMEC has the potential to reshape trade flows across Asia, the Middle East, and Europe. According to several feasibility assessments, the corridor could reduce cargo transit time between India and Europe by as much as 40 percent, while significantly lowering logistics costs. Faster transportation would improve supply chain efficiency, reduce inventory costs, and enhance the competitiveness of exporters across participating countries. 

For India, the corridor supports the government’s ambition of becoming a major global manufacturing hub. As global companies diversify production away from concentrated supply chains, efficient connectivity with Europe and West Asia could make Indian manufacturing more attractive for foreign investment. The corridor also complements initiatives such as Make in India and the National Logistics Policy, both of which seek to improve India’s export competitiveness. 

The Gulf countries also expect substantial economic gains. Saudi Arabia and the United Arab Emirates no longer view themselves solely as oil exporters. Through programmes such as Saudi Vision 2030 and the United Arab Emirates’ Operation 300bn, both countries aim to develop advanced manufacturing, logistics, renewable energy and digital industries. IMEC supports these ambitions by positioning the Gulf as a global logistics hub connecting three continents. 

Europe could also benefit from greater supply chain resilience. The European Union has increasingly recognised the importance of reducing excessive dependence on limited transport corridors and single production centres. By improving connectivity with India, Europe gains access to one of the world’s fastest-growing major economies while strengthening trade links with the Gulf region. 

Beyond trade, IMEC also includes digital infrastructure, electricity transmission, and green hydrogen pipelines. These additional components transform the corridor from a transport project into a broader economic partnership capable of supporting future technological and energy cooperation. 

Challenges That Could Delay IMEC 

Despite its enormous potential, IMEC faces multiple obstacles that raise questions regarding its long-term feasibility. 

Perhaps the greatest challenge facing IMEC today is the political instability across West Asia. Much of the corridor passes through one of the world’s most politically sensitive regions. The conflict in Gaza significantly slowed discussions surrounding IMEC, while continuing tensions involving Israel have complicated planning for the Northern Corridor. 

Security concerns in the Red Sea have further highlighted the vulnerability of trade routes passing through West Asia. Attacks on commercial shipping increased transportation costs and demonstrated that geopolitical tensions can directly affect international commerce. 

Another major concern involves infrastructure gaps. Although several participating countries already possess advanced ports, some important railway links remain incomplete. The proposed overland network connecting the Gulf to the Mediterranean still requires substantial investment before cargo can move seamlessly across the corridor. 

Port capacity also presents challenges. While facilities such as Jebel Ali can handle extremely large cargo volumes, Mediterranean infrastructure particularly around Haifa requires further expansion if IMEC is to operate at scale. 

Political coordination represents another obstacle. Unlike purely national infrastructure projects, IMEC requires sustained cooperation among numerous governments with differing political priorities, economic interests,and security concerns. Any deterioration in bilateral relations could slow down implementation. 

Financing and Institutional Challenges 

Large-scale infrastructure projects require not only political commitment but also long-term financial support. Financing remains one of IMEC’s biggest challenges. 

Unlike China’s Belt and Road Initiative, which has largely relied upon financing from Chinese state-owned banks, IMEC seeks to attract investment from governments, sovereign wealth funds, multilateral institutions and private investors. While this diversified model may improve transparency and reduce debt concerns, it also makes decision-making more complex. 

Private investors are unlikely to commit billions of dollars unless the region remains politically stable. Ongoing conflicts in West Asia increase investment risks and may discourage private participation, particularly for projects located near politically sensitive areas. 

Several analysts have argued that IMEC’s success will depend upon innovative financing mechanisms combining public and private investment. Sovereign wealth funds such as Saudi Arabia’s Public Investment Fund (PIF), Mubadala Investment Company, and Abu Dhabi Developmental Holding Company (ADQ) could play an important role in supporting corridor development alongside international financial institutions. 

Strong governance mechanisms will also be essential. Standardized customs procedures, digital documentation systems, and regulatory coordination across participating countries will determine whether the corridor operates efficiently once completed. 

India’s Strategic Role 

India occupies a central position within IMEC. As the eastern gateway of the corridor, India’s ports, manufacturing sector and logistics infrastructure will determine much of the project’s commercial success. 

Since the corridor announcement, New Delhi has actively pursued diplomatic engagement with both Gulf and European partners. India signed an Intergovernmental Framework Agreement with the United Arab Emirates in February 2024, establishing mechanisms for customs cooperation, digital documentation and logistics coordination. 

India has also strengthened cooperation with European partners. Discussions with France, Italy, Greece and Cyprus have focused on improving maritime connectivity and integrating European ports into the future corridor. These diplomatic efforts demonstrate that IMEC is viewed not merely as an infrastructure initiative but as a long-term geopolitical partnership. 

Even so, India continues to emphasize that IMEC should not be interpreted as a confrontational project directed against any country. Instead, Indian policymakers present the corridor as an initiative designed to strengthen global connectivity while promoting resilient and diversified supply chains. 

For India, IMEC is not only an economic project but also an opportunity to strengthen its strategic influence across West Asia and Europe. This suggests that the corridor has become an important part of India’s broader foreign policy and regional engagement.  

Will IMEC Ever Fructify? 

Whether IMEC succeeds will ultimately depend on political commitment, financing and regional stability rather than announcements alone. The economic rationale behind IMEC remains compelling. Global supply chains require diversification; businesses seek more reliable logistics networks, and participating countries share strong commercial incentives. These structural factors continue to support the corridor despite recent setbacks. 

However, economic logic alone cannot guarantee success. Regional conflicts, changing political priorities and financing constraints have already demonstrated how vulnerable large connectivity projects can become. IMEC will require continuous diplomatic engagement, coordinated infrastructure development, and long-term financial commitment from all participating countries. 

One encouraging development is the growing leadership shown by the Gulf countries. Sustained political stability will matter just as much as infrastructure investment if the corridor is to move beyond planning  

Saudi Arabia and the United Arab Emirates have continued investing in logistics infrastructure, industrial development and digital connectivity even as broader geopolitical tensions persist. Their economic transformation strategies align naturally with IMEC’s objectives and could help sustain momentum during periods of political uncertainty. 

Rather than expecting immediate completion, IMEC is likely to develop gradually through phased implementation. Initial progress may occur along politically stable segments before more complex components become operational. Such an incremental approach may prove more realistic than attempting simultaneous implementation across the entire corridor. 

In many ways, IMEC’s future will depend upon whether participating countries continue viewing connectivity as a shared economic opportunity rather than a geopolitical competition. 

Conclusion 

The India–Middle East–Europe Economic Corridor (IMEC) has emerged as one of the most ambitious connectivity projects in recent years. By combining maritime transport, railways, digital infrastructure and energy networks, IMEC has the potential to reshape trade between Asia, the Middle East and Europe while improving supply chain resilience.  

Its importance extends beyond economics. IMEC reflects changing geopolitical realities in which connectivity has become an instrument of strategic influence, economic security, and international cooperation. For India, the corridor strengthens its position within global value chains. For the Gulf countries, it supports long-term economic diversification. For Europe, it provides greater resilience against future supply chain disruptions. 

Despite its potential, several challenges remain. Political instability, regional conflicts, infrastructure deficiencies, financing requirements, and regulatory coordination continue to slow implementation. The project’s success will ultimately depend upon sustained political commitment rather than initial enthusiasm. 

In my view, IMEC is unlikely to become fully operational in the immediate future but describing it as a failed initiative would also be premature. Large international infrastructure projects typically evolve over many years, adapting to changing political and economic circumstances. Although progress has been slower than many had expected, the diplomatic engagement and infrastructure planning seen so far indicate that participating countries still view IMEC as a long-term strategic project.  

In my opinion, IMEC’s future will depend less on ambitious announcements and more on whether participating countries can maintain political cooperation and deliver on their infrastructure commitments over the coming years.  

By: Khushbu Ahlawat, Consulting Editor, GSDN

Introduction

For much of the past three years, China’s approach to global artificial intelligence governance has unfolded through declarations, action plans and capacity-building pledges — a steady accumulation of soft-power gestures rather than hard institutional commitments. That changed in July 2026, when Beijing used the World AI Conference and the accompanying High-Level Meeting on Global AI Governance in Shanghai to unveil something considerably more durable: the World Artificial Intelligence Cooperation Organization (WAICO), a standing intergovernmental body headquartered in Shanghai, backed by a formal Council and Secretariat, and launched alongside a package of action plans, a Chair’s Statement, and a new initiative on AI-agent interoperability. The shift is significant not because any single document reshapes global AI governance overnight, but because it marks China’s transition from AI diplomacy — persuasion, outreach, goodwill — to AI institution-building, with all the durability and agenda-setting power that implies.

This article examines what China unveiled in Shanghai, how it fits into Beijing’s broader strategy of “selective shaping” in global technology governance, how it differs from Washington’s more security-driven approach, and what the resulting contest is likely to mean for the shape of the global AI order over the coming years.

Xi’s Vision and the Logic of Selective Shaping

President Xi Jinping’s opening address at the conference set out four organising priorities for China’s AI diplomacy: openness and cooperation, equitable access to AI technologies, keeping AI systems secure and under human control, and channelling global coordination through United Nations-centred processes rather than parallel, exclusive groupings. Xi paired this framing with pointed criticism of what he characterised as the “overstretching” of national-security justifications in technology policy — an implicit but unmistakable rebuke of Washington’s export-control regime — while also announcing concrete deliverables: 5,000 AI training opportunities for partner countries, a network of international AI application cooperation centres, and the rollout of China’s MAZU meteorological early-warning system across 30 countries.

These commitments build directly on foundations Beijing laid earlier in the decade — its 2023 Global AI Governance Initiative and its 2024 AI Capacity-Building Action Plan — but the Shanghai package goes further by tying that earlier rhetoric to infrastructure, skills training, data resources, security cooperation and practical deployment. The underlying strategy is best described as selective shaping: rather than attempting to rewrite the entirety of global AI governance, China is concentrating its diplomatic and technical resources on the specific domains where fragmented existing rules leave room for a new entrant to set the terms — technical standards, capacity-building programmes, and governance forums where no dominant framework has yet taken hold. Combined with the continued global diffusion of Chinese open-source AI models, this gives Beijing’s strategy a reach that extends well beyond the diplomatic set-pieces of any single summit.

From Rhetoric to Architecture

The documents released alongside Xi’s address — the Chair’s Statement, the Action Plan on AI Cooperation and Development, the Action Plan on International AI Ethics and Governance, and the Global Cooperation Initiative on Agent Mutual Trust, Interconnection and Interoperability — together sketch a policy architecture organised around four linked pillars: access, capacity, safety and interoperability. The underlying logic treats these pillars as mutually reinforcing rather than competing priorities. Wider diffusion of AI technology to developing countries, in this framing, is meant to be accompanied by the training and infrastructure needed to use it responsibly, while a parallel layer of standards, traceability mechanisms and human-oversight requirements is meant to provide the governance guardrails.

It is worth noting, however, that the package remains considerably stronger on stated principles than on operational detail. Funding commitments, implementation timelines, reporting mechanisms and clear lines of institutional responsibility are all largely unspecified. What the Shanghai outcomes provide is not a fully operational governance regime but a map of the terrain China intends to contest — precisely the domains where its existing technical capabilities, its development-partnership relationships, and its institutional design choices can reinforce one another most effectively. This is selective shaping translated into policy architecture: a deliberate concentration of effort in areas where Beijing already holds real advantages, rather than a diffuse attempt to compete across every front of AI governance simultaneously.

WAICO: A Permanent Vehicle for Influence

The most consequential single outcome of the Shanghai summit is WAICO itself. Where previous Chinese AI initiatives functioned largely as summit-cycle declarations, WAICO is structured as a permanent intergovernmental organisation, complete with a governing Council, a standing Secretariat, and a mandate covering capacity-building, the development of governance rules and technical standards, interoperability frameworks, support for open-source ecosystems, and coordination with United Nations processes — though its remit is explicitly confined to civilian applications of AI.

Structurally, WAICO has been designed to project multilateral legitimacy. Membership is formally open to all states, voting rights are equal across members, and decisions are meant to be reached by consensus wherever possible, falling back to a two-thirds majority only where consensus cannot be achieved. Representatives of 29 countries signed the organisation’s founding agreement in Shanghai, giving it an initial membership base broader than many comparable initiatives manage to secure at launch. Whether this formal openness translates into genuine multilateral governance, however, remains an open question. The organisation’s long-term significance will hinge on issues that founding agreements rarely settle in advance: whether member states beyond China are willing to fund substantive programming, whether they gain real influence over the institution’s agenda-setting, and whether the organisation comes to be seen internationally as a genuinely shared platform rather than a Chinese-led body wearing multilateral packaging.

Two Models of AI Diplomacy

China’s institutional turn stands in deliberate contrast to the approach Washington has taken. The United States’ strategy, most clearly articulated through its own AI Action Plan, combines heavy domestic investment in innovation and compute infrastructure with an international diffusion strategy built around exporting the American AI technology stack to trusted partners. That external offer is bundled together with a parallel architecture of restriction: controls on the access of strategic rivals to advanced hardware, tighter investment screening, supply-chain security partnerships, and initiatives such as Pax Silica, the State Department’s flagship programme on AI and supply-chain security. In effect, Washington’s model ties access to trust, security clearance and strategic alignment.

The restrictive dimension of this approach has been expanding steadily. Since 2022, the United States has progressively tightened controls on Chinese access to advanced semiconductors and the equipment used to manufacture them. That logic briefly extended to frontier AI models themselves in June 2026, when the Commerce Department restricted foreign-national access to Anthropic’s Fable 5 and Mythos 5 systems under export-control authority — a measure later lifted once additional safeguards were put in place, but one that illustrated, even in its brief duration, how access to the most capable AI systems may increasingly be gated by nationality, institutional trust, intended end use and formal security review rather than by price or technical readiness alone.

Beijing’s model is organised on different premises. Rather than structuring access through tiers of vetted trust, China presents broad participation, capacity-building support and formally open institutional membership as the foundational pillars of its governance offer. It would be a mistake, though, to read this contrast simply as an open China facing a closed United States — both powers are, at bottom, working to expand the international footprint of their own technology stacks. Washington pursues that goal through selective, trust-gated partnership; Beijing pursues it through wider formal access that is nonetheless designed to draw partner countries toward Chinese models, infrastructure, standards and institutions. China’s own criticism of security “overstretching” abroad, moreover, coexists comfortably with an extensive domestic apparatus of content controls, algorithmic regulation, security reviews and a deliberate national push toward technological self-reliance — meaning Chinese “openness” is best understood as openness to the outward diffusion of Chinese capability, not as unrestricted access to information or markets within China itself.

This distinction comes into sharpest focus when WAICO is set alongside Pax Silica. The two are not functional equivalents competing for the same role, but rather embodiments of two different organising principles for international technology cooperation: WAICO seeks legitimacy through broad formal membership, capacity-building outreach and multilateral process, while Pax Silica prioritises trusted-partner networks, supply-chain resilience and coordinated strategic alignment among a narrower set of allies. As of July 2026, participation in the two frameworks remains almost entirely distinct, with Kazakhstan the sole country to appear on both membership lists — a small but telling sign that the two ecosystems are not designed as mutually exclusive blocs, even as most states so far are gravitating toward one or the other rather than both.

The Narrowing Technology Gap

China’s institutional offer is also being reinforced by genuine technical progress, which lends its diplomatic push a credibility it might otherwise lack. The performance gap between the leading American and Chinese frontier AI models has narrowed considerably: as of March 2026, the top-performing US model held only a 2.7 percent lead over its closest Chinese counterpart on major benchmark measures. Recent releases such as Moonshot AI’s Kimi K3, together with China’s increasingly influential open-weight model ecosystem, give Beijing the ability to pair its diplomatic and institutional outreach with technology that is both capable and comparatively inexpensive to deploy. This does not erase the advantages the United States retains in advanced chip design, large-scale compute infrastructure and certain frontier capabilities — but it does mean China’s governance and capacity-building offer now comes attached to genuinely competitive technology, rather than functioning as a purely diplomatic overture.

Toward Overlapping Ecosystems, Not Rival Blocs

Looking ahead, the credibility of China’s institutional strategy will depend far less on the ambition of what was announced in Shanghai than on whether Beijing can convert its commitments — on capacity-building, standards development, infrastructure support and technology access — into programmes that partner countries find genuinely useful, affordably priced and responsive to their own development priorities, rather than instruments primarily designed to serve Chinese interests. The United States, for its part, faces a distinct challenge: widening the circle of countries with access to its most advanced AI capabilities while preserving partner confidence that such access will remain predictable, rather than subject to shifting export-control decisions and open-ended security screening each time strategic circumstances change.

The deeper contest between these two models, in other words, is not really about openness versus restriction — it is about the terms on which dependence is created. China’s approach may lower the practical barriers to adopting AI technology while gradually deepening reliance on Chinese platforms, technical standards and supply chains. The American approach may offer access to more advanced underlying capability, but on increasingly conditional terms tied to strategic alignment. Most governments are unlikely to resolve this tension by choosing one camp outright. Instead, they will need to weigh AI partnerships not only on cost and immediate technical performance, but on their longer-term consequences for technical standards, infrastructure dependence, data governance and national policy autonomy.

Conclusion

China’s launch of WAICO marks a genuine inflection point in the global contest over AI governance — not because it settles that contest, but because it gives Beijing, for the first time, a standing institutional platform rather than a rotating cycle of summit pledges through which to pursue it. Set against Washington’s trust-gated, security-conscious model of diffusion, the result is unlikely to produce two cleanly separated technological blocs. It is more likely to produce exactly what current participation patterns already suggest: a global AI order defined by overlapping ecosystems, differentiated levels of access, and selective alignment by countries seeking to capture the benefits of both systems while safeguarding their own technological and policy autonomy. How that balancing act plays out — and which institution proves more durable once the initial diplomatic momentum fades — will be one of the defining questions of technology geopolitics over the remainder of this decade.

By : Hridbina Chatterjee, Research Analyst, GSDN

For nearly eight decades, Japan’s geopolitical identity was anchored by a singular, legally binding philosophy: absolute pacifism. Enshrined in Article 9 of its 1947 constitution, the nation famously renounced war as a sovereign right and pledged never to maintain land, sea, or air forces for offensive purposes. For generations, the Japan Self-Defense Forces worked under strict constitutional constraints, maintaining a defense budget informally capped at one percent of gross domestic product and focusing strictly on the immediate protection of the home islands. This defensive posture, known as exclusively defense-oriented policy, relied heavily on the security umbrella provided by the United States of America under the bilateral security treaty. Under this arrangement, Japan acted as the shield while the United States provided the spear. This system provided unprecedented stability during the Cold War and the immediate post-Cold War eras, allowing Japan to focus its resources on national economic reconstruction and technological development. 

However, the security landscape of East Asia has fundamentally shifted over the past decade. Confronted by what Tokyo officially describes as the most severe and complex security environment since World War II, Japan has embarked on its most radical military transformation in the postwar era. This historic pivot is marked by a massive surge in national defense spending, the acquisition of long-range counterstrike capabilities, and a major reinterpretation of its traditional defensive doctrine. Japan is rapidly transforming from a highly restrained island nation into a proactive, heavily armed pillar of Indo-Pacific security. The shift is driven by a realistic assessment of regional threats, including the rapid military expansion of the People’s Republic of China, the unpredictable nuclear provocations from North Korea, and a newly hostile relationship with the Russian Federation following global geopolitical shifts. 

The Shifting Regional Matrix: The China Challenge 

Tokyo’s increased military buildup is largely due to the fast expansion and aggressive behavior of the People’s Republic of China. Japan had long viewed China primarily as an economic partner, developing extensive interdependencies through trade, investment, and manufacturing networks. However, the large investment by Beijing to modernize its military and its willingness to use its military for hard-power purposes have caused Japan to re-evaluate its entire approach toward China. Japan’s strategic documents now clearly identify the military activities of the People’s Republic of China as the most significant strategic threat to regional peace and stability. The rapid modernization of the People’s Liberation Army, including its naval expansion, advanced ballistic missile capabilities, and sophisticated cyber warfare divisions, has altered the balance of power in the Western Pacific. 

This issue is not likely to remain theoretical, because every day Japanese territory is under dispute with the People’s Republic of China in the waters and airspace around Japan. The two nations are involved in a continuous territorial dispute over the Senkaku Islands, which are referred to as the Diaoyu Islands by China, located in the East China Sea. Ships of the Chinese Coast Guard and Navy are continuously violating Japan’s territorial waters to assert China’s claims to the Senkaku Islands. These incursions have become highly systematized, with Chinese vessels staying for extended periods within the contiguous zone and territorial seas, actively challenging the administrative control that Japan has maintained for decades. In response, the Japan Coast Guard and the Maritime Self-Defense Force have been forced to deploy substantial assets continuously, straining operational readiness and creating dangerous friction points that could trigger an accidental military escalation. 

In addition to these localized confrontations, Japanese strategists are deeply concerned about the risk of conflict in relation to Taiwan. Taiwan lies not more than 100 kilometers away from Japan’s furthest inhabited island of Yonaguni and has a key geostrategic link to Japan’s existence. Japan understands that an armed conflict in Taiwan would inevitably involve the United States, a long-term ally of Japan, and an entity directly endangering Japan’s territory. The maritime supply lines passing through the Taiwan Strait and the Bashi Channel are the economic lifeblood of Japan, carrying most of its energy imports and trade goods. A blockade or invasion of Taiwan would effectively allow the military forces of the People’s Republic of China to project power directly into Japan’s southern flank, jeopardizing the security of the entire southwestern island chain. 

Chinese military operations, including carrier operations and large-scale missile firing exercises that landed within Japan’s Exclusive Economic Zone on August 4, 2022, have resulted in forming a common opinion among Japanese leaders that Taiwan’s defense is closely related to the defense of Japan. During those exercises, five ballistic missiles fired by the People’s Liberation Army landed inside Japan’s designated waters, demonstratingclearly that any cross-strait conflict would immediately spill over into Japanese sovereign territory. This realization has galvanized public opinion and unified political factions in Tokyo around the necessity of preparing the nation for a high-intensity regional conflict. 

The Proximate Threats: North Korea and Russia 

While China is a long-term structural problem, North Korea is a short-term and highly unpredictable military menace. Pyongyang has sped up the pace of ballistic missile tests and fired missiles that either fly directly over the Japanese archipelago or fall into the Sea of Japan. These are no longer just simple tests, as North Korea has developed advanced solid-fuel missiles, hypersonic glide vehicles, and underwater missiles made for circumventing regional defenses against missiles. The transition to solid-fuel technology means that missiles can be fueled in secret and launched with minimal warning, severely reducing the reaction time for defensive systems. 

Furthermore, North Korea’s advanced nuclear program made Japan acknowledge that it has an aggressive neighbor that can strike Japanese cities with nuclear weapons in a matter of minutes. The changes in the quality and quantity of Pyongyang’s strike capabilities have made Japan realize the limitations of its purely defensive missile interception systems. Seeing the threat of saturation attacks, where dozens of missiles are launched simultaneously to overwhelm defense networks, Japan recognized that it could not rely solely on anti-missile defense. The existing two-tier defense system, consisting of Aegis-equipped destroyers with Standard Missile-3 interceptors and land-based Patriot Advanced Capability-3 batteries, requires expansion to address these advanced threats. 

Among the factors contributing to this complex threat matrix is a newly unfriendly Russia. Up until recently, Japan maintained a prudent diplomatic engagement with Moscow, hoping to solve a historic territorial issue regarding the Northern Territories, known as the Kurile Islands in Russia. Russia’s invasion of Ukraine on February 24, 2022, however, ruined these diplomatic efforts. Japan coordinated its moves with the Group of Seven in this context, imposing strict sanctions against Russia. In response, Russia labeled Japan as an unfriendly state, suspended peace treaty negotiations, and increased the frequency of its military exercises together with China in the Sea of Japan and the Sea of Okhotsk. The strategic alignment between Moscow and Beijing has resulted in joint naval circumnavigations of the Japanese main islands and combined long-range bomber patrols, forcing Japan to defend multiple strategic vectors simultaneously. 

Redefining Strategy: Counterstrike and Constitutional Evolution 

To address these complex threats, Japan has started to loosen its old military inhibitions. This fundamental change began on December 16, 2022, when Japan amended its National Security Strategy, the National Defense Strategy, and the Defense Buildup Program. Under these revised frameworks, Japan set a transformative target to increase its national defense spending to two percent of its gross domestic product by the year 2027. This budget trajectory represents a massive financial shift, moving the defense allocation from approximately US$ 40 billion annually to over US$ 80 billion per year, making Japan’s defense budget the third largest in the world. The enormous influx of funds has crushed the long-lasting one percent barrier, demonstrating a clear departure from postwar fiscal policy. 

What distinguishes this military buildup is Japan’s acquisition of the so-called combat power of counterstrikes, also known as standoff defense capabilities. For the first time since World War II, Japan deliberately acquiresand develops weapons that can reach targets in deep enemy territory to deter incoming attacks. To quickly find a solution to this lack of combat power, Japan signed a major procurement contract with the United States on January 18, 2024, to purchase up to 400 Tomahawk land-attack cruise missiles with a value of approximately US$ 1.7 billion. These long-range cruise missiles will be deployed on Maritime Self-Defense Force Aegis destroyers, providing an immediate operational deterrent. 

Simultaneously, Japan is accelerating the development and deployment of its own domestic weapon systems. This includes the upgraded Type-12 surface-to-ship missile, which is being modified to extend its striking distance from 200 kilometers to over 1,000 kilometers, allowing it to be launched from land, naval vessels, and aircraft. Japanese authorities firmly assert that such long-range systems do not go against the constitution, describing them as vital elements of passive deterrence. The reasoning behind this assertion is simple, as by providing proof of its capacity to target enemy military infrastructure instead of waiting to intercept missiles, Japan effectively increases the cost of an assault and makes the enemy think twice before attacking. 

Innovation in the Face of Demographics: Drones and Artificial Intelligence 

In its quest to strengthen its military force, Japan is hindered by a significant problem: its population is aging fast and shrinking. The Japan Self-Defense Forces have continually fallen short of recruitment plans, unable to find enough enlistees due to intense competition in the domestic job market and a shrinking youth demographic. This demographic situation has led to a change in Japan’s military modernization, which relies more on technology as a substitute for human personnel. Automation, remote operations, and artificial intelligence have moved from experimental concepts to central pillars of procurement policy. 

Tokyo is acting by investing heavily in unmanned and autonomous systems across all operational domains. As part of its revised littoral defense strategy, Japan organizes the use of many unmanned aerial, surface, and underwater drones to perform continuous surveillance and maritime activities. These systems operate as force multipliers, monitoring the large and vulnerable southwestern island chain without sending thousands of personnel into dangerous operational areas. The incorporation of large, unmanned surface vessels and long-endurance aerial drones allows the military to maintain situational awareness at a fraction of human cost. 

Japan is making significant investments in its space intelligence capabilities as well as artificial intelligence technology at the same time. The Ministry of Defense is developing a satellite constellation network to achieve real-time situational awareness and effective targeting data for its new long-range standoff missiles. In addition, Japan has joined the Global Combat Air Programme in cooperation with Italy and the United Kingdom, formalized through an international treaty signed on December 14, 2023. This joint venture aims to develop a next-generation stealth fighter jet by the year 2035. The project provides the use of advanced aircraft alongside intelligent autonomously operated drones, integrating sophisticated software and artificial intelligence in the international defense network to maximize combat efficiency. 

Recalibrating the Alliance and Expanding Partnerships 

In the past, Japan and the United States had an imbalanced relation: the United States oversaw offensive actions and nuclear deterrence while Japan focused primarily on its defensive tasks. However, the transformation of Japan into a modern military actor has started changing this asymmetry. Now Japan is increasingly improving its intelligence capabilities, cyber defense infrastructure, and logistics operations to become an active participant in the provision of regional security. Washington actively encourages this evolution, believing that a stronger Japan will become a key player in maintaining stability in the Indo-Pacific region. The alliance undergoes important structural changes, including improvements in their mutual command and control systems to maintain seamless coordination during a multi-domain military conflict. 

Despite the overwhelming importance of the United States partnership, Japan is working on establishing new strategic alliances in view of potential political changes across the globe. Japan has created an intricate network of small-scale security cooperation across the Indo-Pacific region. It reached a Reciprocal Access Agreement with Australia, which entered into force on August 13, 2023, and signed a similar agreement with the United Kingdom on January 11, 2023. These legal frameworks allow Japan to engage in fluid, large-scale military training and joint operations with key security partners. 

Significant strides have also been made towards improving defense cooperation with South Korea, putting aside historical grievances to address immediate common challenges. This reconciliation saw the formation of a trilateral hub for defense with the United States to properly address threats posed by North Korea, including the real-time sharing of missile warning data established on December 19, 2023. Apart from that, Japan has actively been providing defense equipment, patrol vessels, and coastal radar systems to countries in Southeast Asia, particularly the Philippines and Vietnam, under its new Official Security Assistance program launched in April 2023 to bolster the maritime security capabilities of partner nations. 

Conclusion: A New Era of Proactive Deterrence 

The swift military rise of Japan symbolizes the beginning of the end of the postwar years in which the country refrained from engaging in military matters. It has become obvious to Japan that the international rule-based order cannot be secured only through economic diplomacy or verbal warnings. The presence of assertive neighbors, evolving global alliances, and the emergence of gray-zone tactics has left Japan no other option but to adapt its national strategy. This shift reflects a transition toward a realistic approach to statecraft, where military readiness is viewed as an essential prerequisite for sustainable peace. 

Despite these extensive changes, Japan has not lost its fundamental commitment to its image as a peace-loving nation or its rejection of aggressive militarism. Instead, the current transformation marks a thoughtful transition towards the doctrine of proactive involvement in the creation of peace employing robust deterrence. Japan does so by strengthening its southwestern islands, developing long-range strike capabilities, adopting autonomous technologies, and deepening the interconnectedness of its military systems with other allies in the region. By doing so, Japan aims to ensure its survival while contributing to a stable and balance-of-power framework in the Indo-Pacific. 

By: Khushbu Ahlawat, Consulting Editor, GSDN

Introduction

Electric vehicles have quietly become one of the most consequential instruments of Chinese influence in South Asia. What began as a commercial export opportunity — cheap, well-engineered vehicles for price-sensitive markets — has evolved into something far more structural: a bundled export of vehicles, batteries, charging networks and digital ecosystems that is steadily resetting the region’s technological standards and deepening its dependence on Beijing. Asia became the largest destination for Chinese EV exports in April 2026, with shipments surging by nearly 40 percent, and within that wider Asian wave, the six smaller economies of South Asia — Nepal, Bangladesh, Sri Lanka, Pakistan, Bhutan and the Maldives — have emerged as an increasingly important theatre for Chinese industrial strategy. For India, long the region’s dominant supplier of automobiles and petroleum, this is not merely a commercial challenge. It is a test of whether traditional advantages of geography and market familiarity can withstand a competitor that is exporting entire mobility systems rather than individual products.

This article traces the roots of China’s EV dominance, examines how that dominance is being projected into South Asian markets, and considers the strategic, security and economic implications for India as the region’s clean-transport future takes shape.

The Foundations of China’s EV Dominance

China’s position at the centre of the global EV industry did not emerge organically; it is the product of three decades of deliberate, state-directed industrial policy. Between 2009 and 2023, Chinese authorities poured more than US$230 billion into building out the EV sector, with government spending accounting for roughly 60 percent of all global EV-related expenditure as recently as 2025. A dense architecture of purchase-tax exemptions, performance-linked subsidies and vehicle scrappage incentives accelerated domestic adoption, while parallel investment in charging infrastructure gave China control of around 80 percent of the world’s installed charging capacity. The scale of output that resulted is striking: China sold some 13 million electric vehicles in 2025 alone, accounting for roughly two-thirds of global EV sales, with 2026 sales projected to climb even higher.

This dominance rests on more than assembly-line output. China has built a vertically integrated industrial base spanning the mining and refining of critical minerals, battery-cell manufacturing, and the software and connectivity layers that increasingly define a modern vehicle. It controls close to 70 percent of global rare-earth mining, roughly 90 percent of rare-earth separation and processing, and more than 80 percent of lithium-ion battery manufacturing capacity worldwide — figures that leave little room for competitors to challenge Chinese firms on cost. A single company, Contemporary Amperex Technology (CATL), controls close to 40 percent of the global lithium-ion battery supply, illustrating just how concentrated this vertical integration has become. Automakers such as BYD, SAIC, Geely, Changan, NIO and Xpeng have translated this manufacturing base into global market presence, often undercutting established Western and Japanese rivals on price alone.

Beijing’s motivations extend well beyond commercial opportunity. Electric vehicles represent a rare arena in which China can set the technological rules of the game rather than follow standards established elsewhere — a chance to break the historical pattern of Western and Japanese dominance in conventional automobiles. The sector also serves China’s energy-security interests by reducing exposure to oil-import shocks, while advancing its stated goal of carbon neutrality by 2060. Domestically, however, slowing demand and intense price competition have left Chinese manufacturers with significant overcapacity, giving firms a powerful commercial incentive to look outward — and South Asia, with its underdeveloped domestic auto industries and rising climate commitments, has proven a particularly receptive destination.

A Receptive Market on India’s Doorstep

South Asia’s appeal to Chinese EV exporters rests on a convergence of factors. Western markets have erected high tariffs and other barriers against Chinese vehicles, pushing exporters to seek volume elsewhere. South Asian governments, meanwhile, have adopted ambitious green-transition targets that create ready-made policy demand: Nepal aims for carbon neutrality by 2045, Sri Lanka has set a net-zero target for 2050, Bhutan has folded sustainability into its Gross National Happiness framework, and Bangladesh is targeting 30 percent EV deployment by 2030. Layered on top of these commitments is the economic logic of fuel-import substitution — several regional economies have faced repeated balance-of-payments strain since the pandemic, and shifting away from imported petroleum has become as much a fiscal imperative as an environmental one.

Chinese vehicles compete aggressively on price in these markets, a function of mature domestic supply chains, lower input costs and financing terms that are difficult for rivals to match. In Nepal, Chinese manufacturers already account for the majority of new EV sales, helped by higher dealer margins on Chinese models than on competing brands. Beyond price, Beijing has deployed government-to-government gestures to build market familiarity and goodwill: in January 2026, China donated a fleet of 100 electric buses to Sri Lanka for deployment on its Colombo-Kandy and Colombo-Galle routes, with comparable gestures extended to Nepal. Such donations do more than generate goodwill — they lock recipient countries into dependence on Chinese spare parts, maintenance expertise and after-sales service, a dependence that recurs each time a vehicle needs a replacement part. Sri Lanka has since gone further, formally requesting Chinese assistance to build out a nationwide charging network.

Chinese firms have also begun establishing a limited manufacturing footprint within the region, though not the kind that builds genuine domestic capacity. In Pakistan, BYD has set up an assembly facility linked to the China-Pakistan Economic Corridor, but operations remain confined to assembly, with no local research and development or component manufacturing taking root. Bangladesh shows a similar pattern: since its 2021 National Electric Mobility Action Plan, Chinese firms have expanded distributor networks and explored battery assembly within export processing zones, though committed investment has been slower to materialise. Bangladesh’s broader financial dependence on Chinese capital across multiple sectors gives Chinese EV firms a structural head start over Asian and European competitors, who lack equivalent existing relationships and supply-chain access.

The resulting trade data tell a clear story. Chinese EV imports into South Asia have risen sharply in both volume and value since 2019 — a year that marked a discernible inflection point in Chinese EV export strategy. In Nepal and Bhutan, roughly 90 percent and 60 percent respectively of all vehicles imported from China are now electric. Imports have grown especially fast in Sri Lanka and more moderately in Pakistan, the Maldives and Bangladesh, with the demand for EVs pulling up overall Chinese vehicle imports across most of the region — Bangladesh being a partial exception. Chinese EVs now dominate the electric-vehicle segment in most South Asian markets, with the Maldives (where Japanese vehicles and two-wheelers still hold sway) and, to some extent, Bangladesh (where EV policy and public appetite are only now taking shape) standing as the main outliers.

From Commerce to Leverage: The Strategic Dimension

The deeper significance of this expansion lies in what analysts have begun calling “dependency diplomacy” — a pattern in which technological and industrial reliance quietly converts into durable economic and political leverage. The mechanics of this dependency are structural rather than coercive. Sri Lanka, for instance, holds meaningful reserves of critical minerals but lacks the processing capacity to convert them into battery-grade materials, meaning it remains a price-taker even in a sector built partly on its own resource endowments. Across the region, countries depend on Chinese suppliers for critical minerals, advanced components and semiconductors, and lack the recycling infrastructure to manage batteries once they degrade — leaving governments and consumers facing either costly imported replacements or the premature retirement of vehicles. Because Chinese firms have shown little appetite for meaningful technology transfer, the assembly operations that do take root in the region tend to generate logistics and retail employment rather than the engineering and manufacturing jobs that would allow host countries to build genuine domestic industrial capacity.

A parallel set of concerns centres on data and security. Contemporary Chinese EVs are highly connected vehicles, generating continuous streams of location data, driving-pattern telemetry and camera feeds that are stored on cloud servers, often equipped with facial recognition, onboard AI and the ability to receive software updates remotely. China’s National Intelligence Law obliges domestic companies and citizens to cooperate with state intelligence requests, raising the possibility that data generated by these vehicles could become accessible to Chinese authorities. In sensitive settings, this raises the theoretical prospect of vehicle movements being tracked near ports, diplomatic facilities or military installations, or of vehicle fleets being subject to remote interference — concerns serious enough to have already been raised by governments in Norway and Denmark regarding Chinese-made vehicles and infrastructure elsewhere.

These vehicle-level concerns sit within a broader financing architecture. China’s Belt and Road Initiative has directed close to US$12 billion into renewable-energy infrastructure globally, and its EV push in South Asia increasingly draws on this same financing logic. Pakistan’s BYD facility, tied directly to the China-Pakistan Economic Corridor, illustrates how EV investment is being woven into wider geopolitical infrastructure projects rather than treated as a standalone commercial venture. Future Belt and Road transport corridors in the region are likely to be designed with Chinese EV integration in mind from the outset — meaning the entangling of transport, energy and data infrastructure across South Asia is likely to deepen rather than plateau.

What This Means for India

For India, the stakes are directly commercial as well as strategic. India has historically been South Asia’s principal supplier of automobiles and petroleum products, a position built over decades through the market presence of firms such as Tata, Mahindra, Ashok Leyland, Maruti Suzuki and TVS, whose dealer networks, joint ventures and established service ecosystems have long given Indian vehicles a natural advantage across the region. The growing regional preference for Chinese EVs threatens to erode this position meaningfully: estimates suggest India’s combined automobile and petroleum trade with most South Asian neighbours could decline by roughly 14 to 33 percent as Chinese EV adoption accelerates, with Pakistan and the Maldives the principal exceptions to this trend.

India is not standing still in response. It is accelerating its own EV transition, expanding domestic manufacturing capacity, and increasingly treating electric mobility as an instrument of foreign policy in its own right. Yet the scale of this response remains modest set against China’s. Between 2020 and 2025, India’s EV sector attracted around US$25 billion in investment — a substantial sum in absolute terms, but well short of the country’s own stated targets, and a fraction of the capital China has directed into the sector over a longer period. This gap matters most in exactly the markets where India has the greatest geographic and historical advantage: its immediate neighbourhood.

The risks extend beyond trade figures. India is simultaneously investing heavily in energy connectivity and easing transit arrangements with its neighbours, several of which run through strategically sensitive regions, including India’s Northeast. The prospect of a growing volume of internet-connected Chinese vehicles moving through or operating near these corridors adds a security dimension to what might otherwise be viewed as a purely commercial competition, compounding the economic risk with a layer of infrastructure and data vulnerability that will be harder to reverse the longer it goes unaddressed.

Conclusion

China’s EV expansion into South Asia is best understood not as a story about vehicles, but about systems. By exporting an integrated package of vehicles, batteries, charging infrastructure, financing and digital connectivity, Beijing is building leverage over its smaller neighbours without needing to rely on overt coercion — leverage that compounds with every subsidised bus donation, every assembly plant tied to Belt and Road financing, and every charging network built to Chinese specifications. For South Asian governments, the appeal is straightforward: affordable vehicles, faster progress toward climate commitments, and reduced exposure to volatile fuel-import bills. For India, the challenge is more complex. Geography, historical trade ties and established service networks remain real advantages, but they are unlikely to be sufficient on their own if China continues to out-invest, out-subsidise and out-bundle Indian offerings across the region. The contest over South Asia’s clean-transport future, in other words, is unfolding as much in the realm of geopolitics and industrial strategy as in showrooms and charging stations — and how India responds over the next few years will shape not just its trade position, but its broader strategic standing in its own neighbourhood.

By: Khushbu Ahlawat, Consulting Editor, GSDN

Introduction

Agriculture sits at the heart of the India-Africa relationship, yet for decades it has been treated as a secondary theme within a broader story about trade, energy and infrastructure. That is beginning to change. As food insecurity, climate volatility and rural unemployment intensify across the Global South, India and Africa are increasingly recognising agriculture not merely as a sector to be developed, but as the connective tissue of a genuinely strategic partnership — one capable of delivering food security, nutrition security and livelihood security simultaneously. The India-Africa relationship, in this sense, has reached an important inflexion point: political commitment to South-South cooperation is well established, but the real test now is whether that commitment can be institutionalised and translated into outcomes that farmers can actually feel.

This article examines the foundations of that emerging partnership — the complementarities that make it logical, the mechanisms through which it currently operates, the institutional momentum created by BRICS expansion, and the structural challenges that must be addressed if the relationship is to move convincingly beyond trade and aid into durable, co-owned agrifood systems.

Why India and Africa Need Each Other

The rationale for deeper cooperation begins with a shared paradox. Agriculture employs a large share of the workforce in both regions yet contributes disproportionately little to national income, leaving millions of farming households trapped in low productivity and precarious livelihoods. In Sub-Saharan Africa, agriculture employs close to two-thirds of the workforce but generates only around 15 percent of GDP — a gap that reflects low mechanisation, weak infrastructure, limited access to credit and insurance, and chronic vulnerability to erratic rainfall. Since 2000, food imports into the region have risen sharply relative to domestic production; the continent’s annual food import bill, once estimated at around US$50 billion, has been projected to climb toward US$90–110 billion amid successive global shocks — from the pandemic-era disruption of supply chains to the Russia-Ukraine war’s impact on global wheat and fertiliser exports, which pushed food prices in Sub-Saharan Africa up by close to a quarter between 2020 and 2022.

India, meanwhile, has spent seven decades building precisely the kind of institutional and technical capacity that addresses these constraints: a Green Revolution that transformed grain self-sufficiency, one of the world’s largest dairy cooperative movements, an expanding digital public infrastructure for agriculture, and hard-won experience managing food security at a scale and level of resource constraint that mirrors African realities far more closely than the experience of wealthier industrial economies. Africa, in turn, offers what India increasingly needs: vast underutilised arable land, a young and growing labour force, and an agribusiness market projected to be worth close to US$1 trillion by 2030 as food demand across the continent is expected to roughly double by mid-century.

This complementarity is not simply resource-based; it is also methodological. Indian agricultural innovation has often prized what might be called the “3A” principle — technologies and institutions that are affordable, appropriate and adaptable to resource-constrained environments — rather than capital-intensive solutions transplanted from industrialised agriculture. That orientation matters enormously for African smallholders, most of whom farm plots too small and too undercapitalised to absorb expensive, import-dependent technology.

How the Partnership Currently Works

India’s agricultural engagement with Africa operates through several parallel channels, each with a distinct rationale and reach.

Government-to-government cooperation remains the backbone of the relationship. India’s Export-Import Bank has extended concessional Lines of Credit for agricultural mechanisation and infrastructure across the continent — Angola, for instance, received a US$23 million credit line to purchase tractors and farm machinery alongside support for a food-processing business incubation centre, while Lesotho secured a smaller credit facility for agricultural equipment and Malawi received support to establish a business incubation centre offering short-term training in crop processing and composting. Zimbabwe has benefited from Indian-supported rural technology parks, food testing laboratories and vocational training centres. These interventions are modest individually but cumulatively significant, reflecting a development-financing model built around capacity-building rather than large, debt-heavy infrastructure projects.

Private-sector investment has grown into an equally important pillar. Indian agribusiness conglomerates such as the Export Trading Group now operate integrated agricultural value chains across Tanzania, Kenya, Malawi, Mozambique, Nigeria and South Africa, while beverage and food-processing firms have committed hundreds of millions of dollars to bottling, edible-oil and processing facilities in markets like Zimbabwe. One joint venture near Harare grew into Southern Africa’s largest cooking-oil manufacturer from an initial investment of under US$2 million — an illustration of how comparatively modest Indian capital, paired with local partnership, can scale quickly in underserved African food-processing markets. Development finance institutions have also begun backing inclusion-focused private initiatives, including grant support for women-led agribusiness ventures across several East and Southern African markets.

Humanitarian and capacity-building assistance forms a third channel, less visible but consequential during periods of acute stress. India has periodically supplied emergency food aid — rice shipments to Zimbabwe during drought years, agricultural equipment and grain to Malawi following crop failures, tractors to the Democratic Republic of Congo — while training programmes under India’s technical cooperation schemes have brought thousands of African agricultural officials, extension workers and scientists through Indian institutions. Grassroots organisations such as India’s Self-Employed Women’s Association have also exported women-centred rural empowerment models directly to African communities, outside formal government channels altogether.

Institutional and cooperative knowledge exchange may ultimately prove the most transformative channel, precisely because it moves beyond aid and investment into genuine two-way learning. The clearest example lies in dairy. When Kenya’s Dairy Farmer Foundation approached India’s National Dairy Development Board roughly a decade ago to explore replicating India’s cooperative “Anand model,” the resulting East African dairy hubs went on to reach more than 200,000 smallholder farmers and generate well over US$100 million in additional farmer revenue. Tellingly, the learning has not flowed in only one direction: milk-quality certification practices developed within Kenya’s informal dairy sector were later adapted for use in Assam, generating millions of dollars in estimated benefits for Indian producers. This reciprocity — rather than a one-way transfer of Indian expertise to African beneficiaries — is precisely the model that a mature partnership should aspire to replicate across other value chains, from digital agriculture platforms to agricultural risk insurance.

The BRICS Opening

If bilateral cooperation has historically defined the India-Africa agrifood relationship, a new institutional layer is now emerging through BRICS, and it arrives at a genuinely useful moment. With Egypt and Ethiopia now full BRICS members, and South Africa a founding member, African voices carry more direct weight within the bloc’s agenda-setting than at any point previously. India’s chairship of BRICS through 2026 has been used to push agriculture higher up the grouping’s priorities, most visibly through the Indore Declaration, which centres farmer welfare, food security, climate resilience and technology cooperation, and through new mechanisms including a BRICS agricultural research network, a digital agriculture initiative, and a proposed centre of excellence on agroecology and regenerative farming. The BRICS Action Plan for Agricultural Cooperation running through 2028 similarly foregrounds family farming, food security and agricultural trade as shared priorities across the expanded bloc.

The significance of this shift lies less in any single new institution and more in what it enables structurally: a platform through which India and multiple African economies can pursue joint research, pooled financing and shared standards, rather than negotiating each relationship bilaterally from scratch. Paired with the African Continental Free Trade Area, which is gradually reducing the tariff and regulatory fragmentation that has long constrained intra-African and India-Africa agricultural trade, BRICS offers a genuine opportunity to convert scattered bilateral goodwill into a more coherent regional architecture.

What Still Needs to Change

For all this momentum, the partnership carries structural weaknesses that cannot be wished away by new declarations or summit communiqués.

The first is a persistent gender gap that undercuts productivity gains on both sides. Women make up a substantial share of the agricultural workforce in India and across Africa alike, yet in India women operate only a small fraction of landholdings despite comprising close to three-quarters of the rural agricultural workforce, while African women farmers own, on average, roughly one-eighth of agricultural land despite comparable workforce participation. Without secure land tenure, women in both regions continue to face restricted access to formal credit, crop insurance and extension services — meaning that cooperation focused narrowly on technology transfer, without addressing land rights and financial inclusion, will continue to bypass the demographic that does much of the actual farming.

The second weakness is a bias toward announcement over implementation. Political summits have produced no shortage of memoranda of understanding and framework agreements over the past two decades, but many initiatives lose momentum once they move from ministerial signing ceremonies to district-level execution. India’s own domestic experience offers a partial template here: its network of Krishi Vigyan Kendras — district-level centres that integrate agricultural research, extension services and farmer outreach — demonstrates how national policy can be translated into local practice. Replicating an equivalent subnational layer through partnerships between Indian districts and comparable African agroecological regions could create exactly the kind of implementation architecture that has so far been missing, enabling farmer exchanges, joint field demonstrations and locally adapted innovation rather than one-off pilot projects that quietly wind down once initial funding lapses.

The third weakness concerns which innovations actually reach smallholders. Cooperation should be judged by relevance to resource-constrained farmers rather than by technological sophistication — affordable irrigation, climate-resilient seed varieties, village-level storage and processing, and accessible micro-insurance are far more likely to move the needle on rural incomes than capital-intensive technologies poorly suited to local conditions or difficult to maintain once donor support ends.

A Path Forward

Bringing these threads together suggests a fairly clear set of priorities for the next phase of India-Africa agrifood cooperation. Value chains need to be strengthened in ways that retain more processing and value-addition within African rural economies, rather than exporting raw commodities for processing elsewhere — an area where India’s own experience in food processing and agro-industry offers directly transferable lessons. Climate resilience needs sustained joint investment given that both regions remain heavily dependent on rain-fed agriculture and face intensifying weather volatility. Cooperation needs to be localised through subnational partnerships that connect institutions rather than only governments. And existing institutional innovations — cooperative dairy models, digital agriculture platforms, crop insurance systems — need to be scaled through joint pilots and co-financing rather than reinvented in each new bilateral relationship.

Conclusion

India and Africa already possess most of the ingredients required for a transformative agrifood partnership: complementary resource endowments, decades of accumulated institutional experience, an expanding private-sector appetite for investment, and now a strengthened multilateral platform through BRICS to coordinate at scale. What has been missing is not political will but sustained follow-through — the unglamorous work of building implementation layers between national commitments and farm-level practice. The measure of success for this partnership will not be the number of agreements signed at summits, but whether smallholder farmers, and particularly the women who form the backbone of both regions’ agricultural workforces, see tangible improvements in productivity, income and resilience. If India and Africa can convert their shared ambition into that kind of localised, institutionally grounded cooperation, the agrifood partnership has the potential to become one of the more consequential — if least discussed — pillars of Global South solidarity in the years ahead.