Dilemmas of India's Delay

1. Internationalism
2. No. 82, December 2025
3. Page 4

On September 26^th, The Hindu wrote: The global chessboard has shifted. Supply chains are in motion. China is repositioning capital. Southeast Asia is building alternative corridors. India is claiming a role in the Indo-Pacific equation, but its export architecture still rests on a few coastal enclaves. The newspaper, based in Chennai (Tamil Nadu), outlines Asian capital movements that show that India is lagging behind in the internationalisation of its key sectors.

The four States of Gujarat, Maharashtra, Tamil Nadu, and Karnataka alone account for over 70% of all Indian goods exports, while the most populous States — Uttar Pradesh, Bihar, and Madhya Pradesh — remain on the sidelines, responsible for only 5% of foreign trade combined. In the Indian debate, the export of goods is treated as an index of the international competitiveness of States. This is tied to the difficulty of attracting foreign capital investment in order to exploit the huge labour pool which exists along the banks of the Ganges, and to sell Indian industries' products on global markets, as well as on the domestic market.

One-fifth of Indian imports come from China and one-tenth from Southeast Asia. While Chinese groups export capital to Asia and, from there as well as directly from China, export goods to India, New Delhi fears competition from its neighbours.

B.V.R. Subrahmanyam is the head of NITI Aayog, a development agency created in 2015 to replace the Planning Commission, founded in 1950. NITI had declared itself in favour of India joining the RCEP Asian trade agreement and cautiously opening up to Chinese capital. On October 7^th, in Business Standard, Subrahmanyam explains how India has missed the bus compared to rivals such as Vietnam, when Chinese restructuring shifted factories and jobs to the rest of Asia. Due to the high tariffs imposed on inputs in an attempt to protect large Indian companies, New Delhi has damaged the competitiveness of labour-intensive sectors, which are forced to purchase expensive intermediate goods from protected domestic industries. Instead, Subrahmanyam argues, you should be able to sell as you import. If you try to protect by cutting out imports, you will not export either and then you will become more and more backward. The world’s largest exporter, China, is also the world’s second largest importer.

The Indian debate refers to a comparative analysis of key areas in China and India, the two Asian giants, as Trotsky called them in 1908. Consider the Greater Bay Area of Guangdong and the Yangtze Delta in China, its most internationalised areas. With imports worth $500 billion, Guangdong is the leading importing province, as well as the leading exporter. The Yangtze exported $1,187 billion in 2023, and imported $876 billion. The Greater Bay Area exported $1,083 billion and imported $897 billion. These two major drivers of world trade are adopting positions of imperialist liberalism towards their Asian neighbours: on the one hand, importing manufactured goods, semi-finished products, and raw materials that reduce production costs in China; and on the other, providing credit to countries on the Silk Road to export their plants, machinery, and capital goods there. In short, the import of goods and the export of capital are part of an Asian restructuring that, according to New Delhi, could leave India on the sidelines.

The debate within the government over which direction Indian liberalism and protectionism should take is the flip side of the same coin. For Foreign Minister Subrahmanyam Jaishankar, the majority of free trade agreements have been signed with ASEAN countries, which compete with India and whose supply chains provide a route for Chinese goods. New Delhi should instead enter into agreements with economies that are not competitive, such as the United Kingdom, the EU, and the United States.

This is a vicious circle, according to Business Standard, a Mumbai-based daily newspaper that publishes extensive excerpts from the government debate and calls for a review of India's membership of the RCEP: The basic reason behind India's reluctance to open up the economy is a lack of competitiveness, which is partly a result of its trade policy [October 8^th]. Again, according to Business Standard, Jaishankar is sidestepping the issue: even not very competitive countries will always be able to purchase goods from the most competitive sources that India is denying itself because of the presence of China in Asia.

Beijing has broken down all tariff barriers with one Asian country after another, including Bangladesh. Chinese imports from Indonesia have tripled in the last ten years, and similar trends can be seen for Malaysia and Vietnam. Indonesian nickel and Malaysian oil exported to China are significant factors. Much attention has been given to the link between Silk Road capital and raw materials, in the form of accusations that Beijing is hoarding resources. There is certainly some truth to this: resources account for a third of Chinese imports and are growing faster than average after the pandemic. However, little attention has been paid to Chinese imports of manufactured goods, components, and equipment, which account for almost half of total imports; this group of goods also represents 36% of total imports in Malaysia, 70% in Vietnam, and 40% in Thailand. Even less has been said about the capitalist development of these countries, which makes their trade with China possible and justifies the international inflow of capital, which has expanded their domestic markets rather than their exports.

Given the importance of the integration of Asian supply chains around Beijing, the missed bus in New Delhi has inevitable political consequences in the accelerated times of inter-imperialist struggle.

A commentary by Raja Mohan in The Indian Express [October 8^th] begins by examining the role Europe plays in New Delhi’s strategic calculations in order to ultimately raise the alarm about India’s delays. Mohan writes that, after the collapse of the USSR, many middle powers, including India, had called for a multipolar world to temper American unipolar pretensions. But as China's ambitions grew, Delhi began to speak also of a multipolar Asia. Today, a new layer has emerged: the recognition of the deepening divisions within the West, between America and Europe. Engaging this 'multipolar West' has now become an important strand in India's external strategy.

On the one hand, Europe is seeking to protect itself from the unpredictability of the United States by building an independent defence capacity and greater strategic autonomy within a plural West. On the other hand, India is also cultivating its relationship with the EU as part of its multi-alignment, which coincides with New Delhi’s growing role in Europe’s own efforts to diversify its strategic partnerships.

Mohan's assessment of India’s approach is therefore positive, but it leaves certain questions unanswered about the subcontinent’s internal limitations in realising its full foreign-policy potential. New Delhi’s patient management of the turbulence of the Trump era, its renewed engagement with Europe and the UK, its search for a pragmatic balance between its ties with Russia and the West, and its recent efforts to re-establish ties with China would all seem to show that India is capable of staying the course in the stormy seas of the global contention. Yet, whether India’s internal structures — still slow to reform and modernise — can match the speed of external transformation remains unclear. Without domestic industrial agility and economic modernisation, India risks under-leveraging the new openings that Western pluralism creates.

Mohan’s uncertainty underscores how the discussion — also in various other forms — is centred on India’s delays in opening up, protectionist limits, and the economic race in Asia. In some ways, the debate itself is part of a modernising drive that seeks to shine a spotlight on delays in order to remedy them; consider, for example, the editorial line of Business Standard. The Indian Elephant still ranks fourth or fifth in global manufacturing rankings; it is the world’s largest demographic power and fifth largest military power; the eighth largest exporter and sixth largest importer. If anything, the difficulties lie in the transition from educational protectionism, historically characteristic of young emerging powers — starting with Friedrich List’s 19^th-century Germany — to a sort of educational liberalism. That is to say, the use of the Asian and global market as a disciplining external constraint to promote modernisation, based on the model of China’s reforms and opening up in 1978, as well as India’s attempted liberalisation reforms in 1991, which were, according to its own protagonists, partially unsuccessful.

Like China’s Deng, the Indian leadership knows the US is the most valuable external partner in accelerating national transformation, writes Mohan in The Indian Express [October 29^th], opposing the camps that give priority to Chinese capital. Opening up to the US would be less destabilising.

However, the problem of protecting agriculture would remain. Without this protection, coming into contact with the extremely high productivity of American agribusiness would mean the disintegration of the Indian countryside. India has long been grappling with significant dilemmas: its rise is the latest phase of imperialist development in Asia, but it is playing out in the shadow of the Chinese giant and in the heat of the crisis in the world order.

Arvind Subramanian, adviser to the Tamil Nadu government, former chief economic adviser to the Modi government, and member of the Peterson Institute in Washington, argues in Business Standard [October 23^rd] that the real victims of the new Chinese trade shock are the developing countries of the global South. Opening up to China therefore requires the utmost caution: like the US, Europe, and Japan, Beijing exports capital to Asia, but unlike them it has not yet abandoned the market sectors most exposed to direct competition with emerging countries.

The Indian economist challenges the Chinese narrative, accepted by the Anglo-Saxon media, that the Dragon is now focusing on high-tech sectors, once dominated by the old metropolises. For Subramanian, it is true that industrial restructuring is pushing Beijing into advanced sectors, but much of China's trade surplus continues to affect low-skill sectors, including electronics. Excluding advanced countries, the gap between China's share of global exports in these sectors (53%) and its share of the global labour force (25%) suggests that the Dragon continues to occupy 'excess export space' that could otherwise support tens of millions of manufacturing jobs in poorer economies.

For Arvind Subramanian, China should instead be willing to absorb imports and allow others to grow, as the United States did after World War II, because true hegemons accommodate rather than crowd out others. China's hegemonic legitimacy in Asia is the political stake — and India's real dilemma.

Lotta Comunista, November 2025