India in the Evolving Geopolitics of Asia: Four Scenarios and Strategic Options

This scenario envisions a future where global supply chains have shifted significantly away from China due to a prolonged US-led trade war. India emerges as a major beneficiary, having undertaken substantial domestic reforms that boost economic growth to between 7.5 and 8 percent and increase the manufacturing sector’s share of growth domestic product (GDP) from 12 percent in 2025 to 20 percent by 2032. These reforms, alongside increased investment in defence procurement and a higher defence budget (raised from 1.9 to 2.5 percent of GDP), have allowed India to convert its economic momentum into growing military capabilities. However, this rise has also made India a target. China, facing economic stagnation and internal adjustment from an investment-led to a consumer-driven model, views India’s gains with growing resentment.

By 2032, China adopts a more aggressive posture towards India, perceiving a narrowing window to assert itself. Although India has reduced some economic dependence on China, it remains reliant on key Chinese exports like critical minerals and active pharmaceutical ingredients (APIs). In 2033, a skirmish breaks out in the Tawang border region, resulting in dozens of casualties. Simultaneously, China increases pressure on India over its infrastructure projects in Arunachal Pradesh. Amidst these tensions, China blockades Taiwan, and the US pushes India to align more closely with Western security frameworks. India hesitates, wary of overstretching given its vulnerable position at the Line of Actual Control (LAC).

Strategic options for India

1. Economic reform for resilience and growth

To fully leverage favourable geo-economic conditions, India must deepen structural reforms. This includes simplifying and harmonizing tax systems (including goods and services tax), improving land and labour regulations, and depoliticizing administrative processes to enhance policy certainty. Alongside these, investment in health, nutrition, and skills training will be key to boosting human capital. Reforms to the administrative architecture can improve efficiency, reduce turf wars, and limit bureaucratic interference in the market.

2. Defence modernization and preparedness

India must rationalize its defence industry by clarifying procurement expectations and supporting private sector innovation through mechanisms such as insurance for sunk costs. Simultaneously, it should strengthen logistics and build resilient war reserves. Recognising the dual challenge of grey zone conflict and conventional warfare, India must invest in a more diversified and survivable arsenal, including drones, fighter jets, and hardened missile systems.

3. Foreign policy: Strategic balance and economic diplomacy

India should maintain strategic autonomy while signalling clear red lines to regional actors like Pakistan and Bangladesh. It must lower trade barriers within South Asia to build economic interdependence and disincentivize alignment with China. Cooperation with the US should deepen in economic and technological domains, but India must resist pressures to commit militarily to conflicts beyond its core interests, such as Taiwan. Engagement with Russia should be sustained to avoid supply chain disruptions without expanding commitments.

4. Managing the China relationship

India should pursue consistent and layered dialogue with China, including over Tibet, border disputes, and doctrines of non-alignment. While avoiding unnecessary provocation, India must remain firm in deterring further Chinese adventurism. A gradual build-up of infrastructure and presence along the LAC will demonstrate resolve without triggering escalation. The goal is to shift the burden of miscalculation onto Beijing while safeguarding India’s long-term growth trajectory.

Summary of scenario by Dr Sidharth Raimedhi, Fellow, Council for Strategic and Defense Research.

This scenario imagines a world where India finds a strategic balance amid persistent geopolitical uncertainty and accelerating geo-economic opportunity. In this future, China continues its grey zone operations across the Indo-Pacific but makes limited strategic gains. The United States shifts its focus fully to the China challenge, abandoning dual containment and reinforcing its Indo-Pacific presence. In response, India, Japan, and South Korea step up their defence preparedness and deepen coordination with the US. The Quad remains non-militarized but expands real-time intelligence sharing and maritime domain awareness.

In West Asia, geopolitical tensions de-escalate slightly. Saudi Arabia and Israel formalize relations under the Abraham Accords, while ceasefires largely hold in Gaza and Lebanon. In parallel, the transatlantic alliance endures, with increased burden-sharing by European partners. The broader international context is defined by the continuing breakdown of the old US-led order, creating both risk and opportunity for India to shape a more multipolar future.

On the economic front, India capitalizes on the stagnation of multilateralism by signing trade agreements with the US, European Union, and United Kingdom. It also reviews and deepens free trade agreements with Japan, South Korea, and the Association of Southeast Asian Nation (ASEAN). These moves, combined with ambitious domestic reforms, allow India to emerge as a critical manufacturing hub and a key node in restructured global value chains. India also joins The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) following next-generation economic reforms. Technological fragmentation pushes India closer to the US and like-minded countries. Labour mobility agreements are signed with Japan, Korea, and Taiwan, leveraging India’s demographic advantage.

Strategic options for India

1. Reform for resilience: Institutional and economic transformation

India must seize this moment to implement long-overdue structural reforms. This includes reducing tariffs to ASEAN levels within two years and simplifying the goods and services tax (GST) structure to two slabs within three years. Labour and land reforms, opening doors to higher education and services, promoting female labour force participation, and encouraging competitive federalism will be key. The government must reduce administrative discretion to curb crony capitalism and improve policy certainty. India should also invest in green energy, research and development, and sustainable infrastructure to de-risk the economy and boost inclusive growth.

2. External economic engagement and trade diplomacy

Given the erosion of multilateralism, India should continue expanding its network of bilateral and plurilateral trade agreements. It should finalize a bilateral trade agreement with the US and free trade agreements with the EU and UK, while deepening comprehensive economic partnership or collaboration agreements arrangements with Japan, South Korea, and ASEAN. With next-generation reforms in place, India can play a pivotal role in restructured global value chains. Engagement with the Global South, particularly Africa and Latin America, should be leveraged through digital public goods and targeted partnerships. India must also work with like-minded countries to develop resilient and inclusive technology ecosystems.

3. Regional leadership and connectivity

India should revive the South Asian Association for Regional Cooperation (SAARC) and update the South Asian Free Trade Area (SAFTA) within three years. The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) should be fast-tracked, with India taking the lead in concluding a regional free trade agreement. Non-reciprocal trade concessions can be offered to all regional partners except Pakistan to enhance goodwill and regional economic interdependence. India should also scale up regional connectivity projects, including through initiatives like India Middle East Economic Corridor (IMEC), to enhance its leadership in South and Middle East.

4. Smart deterrence and strategic sovereignty

China remains India’s primary strategic challenge. India should pursue a strategy of asymmetric deterrence, coupled with calibrated engagement. While de-risking economically from China, India must also be cautious not to develop excessive dependence on the US. Strategic autonomy should remain central, especially given a potential shift in US policy under a second Trump administration. Defence production must be ramped up, private sector participation expanded, and the Agniveer military recruitment scheme reviewed. Defence spending should increase from 13 percent to 17 percent of total government expenditure and from 1.9 percent to 2.5 percent of gross domestic product within three years. Differentiated strategies should be developed for the US and EU, with deeper defence cooperation and tech partnerships forming the backbone of these relationships.

Summary of scenario by Bashir Ali Abbas, Senior Research Associate, Council for Strategic and Defense Research.

This scenario presents a mixed strategic environment for India. While competition between the great powers remains below the threshold of open conflict, worsening global economic conditions place mounting pressure on India’s long-term development and security.

On the military front, India faces sustained pressure on two critical fronts: China’s People's Liberation Army continues to strengthen its infrastructure and high-altitude capabilities along the Line of Actual Control, necessitating heavy investments on India’s northern and north-eastern borders. Meanwhile, Pakistan maintains low-intensity conflict in Jammu and Kashmir, requiring India to preserve robust conventional forces while accelerating investments in new technologies such as unmanned systems, cyber capabilities, and space-based assets.

The real challenge, however, lies in the deteriorating global economic landscape. Despite hopes of benefiting from "China+1" diversification, India fails to capture significant manufacturing shifts. Western protectionism, combined with structural domestic barriers, limits India's integration into global value chains. Competitors in Southeast Asia outpace India in seizing trade and investment opportunities. India’s energy security is increasingly vulnerable as supply chain fragmentation raises costs and green financing dries up, delaying the renewable energy transition.

Paradoxically, the lack of imminent war constrains India’s ability to modernize its military. Economic stagnation means fewer resources for defence at a time when security pressures continue to mount. India risks falling into a security trap: rising defence demands amid shrinking fiscal space. To avoid this, India must recalibrate by doubling down on domestic resilience, regional partnerships, and selective international engagement.

Strategic options for India

1. Strategic economic resilience and data governance

India should position itself as an indispensable link in future global value chains by investing in sectors where it enjoys competitive advantage. Research and development spending must rise to 2.5 percent of growth domestic product (GDP) over the next decade, focused on pharmaceuticals, electronics, and advanced materials. Investment reforms should prioritize single-window clearances (where all paperwork for import, export and transit is done via one point of contact to improve efficiency and ease of use), greater centre-state coordination, and guaranteed policy continuity. Energy security should be enhanced through expanded petroleum reserves and critical mineral partnerships with countries such as Australia and Chile.

A key priority is the adoption of internationally compatible data protection rules. These should safeguard national interests while enabling India to participate in emerging digital trade agreements. Digital regulation is fast becoming a decisive factor in India’s ability to secure technology transfer and attract global partnerships.

2. Human capital and regional integration

India must urgently align skill development with the industries of the future. Preventive healthcare and universal coverage will be vital to reduce economic shocks from medical expenditures. In parallel, deeper integration with regional groupings like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)  and South Asian Association for Regional Cooperation (SAARC) can buffer India from global slowdowns. India should prioritize economic alignment with neighbours by offering tangible development benefits and extending digital public infrastructure tools across borders.

To strengthen regional stability, India should deepen engagement with the other Quad countries and expand digital literacy across smaller cities and towns to build a tech-ready, decentralized workforce.

3. Defence modernization and maritime capability development

India should re-orient its defence capital spending toward asymmetric technologies and force multipliers. Joint ventures with trusted partners for technology transfer should be prioritized, supported by simplified procurement policies that encourage indigenous innovation. India should also strengthen its maritime footprint by becoming a regional shipbuilding and MRO (maintenance, repair, and overhaul) hub. Logistics agreements with like-minded navies will boost India’s operational reach and ensure credible presence in the Indian Ocean region.

Summary of scenario by Dr Gaurav Saini, Co-Founder, Council for Strategic and Defense Research.

This scenario imagines a world where the dominant megatrends of the previous decade have led to dramatically negative outcomes for India. A hot war breaks out between China and the United States over Taiwan. In parallel, China mobilizes troops along the Line of Actual Control with India, deploying a strategy designed to assert territorial control and claim a moral military victory. China also strengthens partnerships with Pakistan and Bangladesh to pressure India from multiple fronts, turning its immediate neighbourhood into a zone of heightened conflict. Meanwhile, the Russia-Ukraine war ends in a frozen stalemate, with Russia moving fully into China's strategic camp. Nuclear brinkmanship becomes the new normal in global diplomacy.

Economically, the world faces prolonged disruption. Supply chains are fragmented, global trade is in retreat, and protectionist policies are widespread. While countries ramp up defence budgets, they also contend with high unemployment, rising sovereign debt, and domestic consumer stress. India finds itself in a resource-constrained environment with weakened demand and rising import costs. To maintain strategic relevance and avoid systemic vulnerability, India must rethink core assumptions around autonomy, resilience, and alliance-building.

Strategic options for India

1. Recalibrate strategic autonomy and deepen alliances

India must reassess its policy of strategic autonomy in favour of a more explicit alignment with like-minded powers. This includes offering logistical and diplomatic support to the US in the Taiwan conflict and leveraging that relationship to mitigate the China challenge. India must also reduce its overdependence on Russian arms by forming long-term military partnerships with the US, France, and Israel.

2. Expand defence investment and capabilities

India should raise its defence expenditure to 2.5-5 percent of growth domestic product (GDP), or 17-20 percent of total government spending (depending on different projections of growth, revenue and spending), to enable long-term military modernization. This includes increased capital outlay for advanced systems, joint research and development, and force restructuring to meet multidomain threats. Symbolically militarizing the Quad and reviewing India’s "No First Use" nuclear policy could serve as signals of credible deterrence.

3. Secure energy and resource sovereignty

India must diversify its energy and critical mineral supply chains through partnerships with West Asian and African countries. Investments should focus on domestic processing and off-grid generation, including small modular reactors, to ensure resilience amid global disruptions.

4. Strengthen economic sovereignty and industrial capacity

To reduce vulnerability to weaponized trade, India should pursue targeted indigenization of key sectors such as shipbuilding, electronics, machinery, and chemicals. Enhancing the role of manufacturing in GDP will create jobs and shield India from external shocks. A sustained economic partnership with the European Union can provide additional economic space amid transatlantic uncertainty.

5. Diplomatic outreach and regional hedging

India must launch a sustained diplomatic initiative to engage the Association of Southeast Asian Nations (ASEAN) swing states and its immediate neighbours Sri Lanka, Maldives, Nepal, and Bhutan. Offering political goodwill, economic collaboration, and inclusive regional leadership will help prevent Chinese encroachment and bolster India’s strategic depth.

Summary of scenario by Anushka Saxena, Staff Research Analyst, Indo-Pacific Studies Programme, the Takshashila Institution.