GOVERNING India is a complex endeavor. It is South Asia’s largest nation, immensely populous and divided by religion, ethnicity, caste and 23 official languages. It also favors federalism, like the United States, and the resulting balancing act between the state and national levels can be complex, creating inefficiencies in governance and hindering the legislative process. This helps explain why the ruling Bharatiya Janata Party has failed to pass its land, labor and tax reforms, despite enjoying a sizable majority in the Lower House of India’s Parliament. Stymied by domestic politics, Narendra Modi, now in his third year as India’s Prime Minister, has pursued an ambitious foreign policy. He embarked June 4 on a five-day, five-nation tour that will take him through Afghanistan, Qatar, Switzerland, Mexico and the US—which reflect different facets of Modi’s foreign policy.
Afghanistan, the first stop on his tour, symbolizes trade and security. India wants to expand trade ties with Central Asia while bypassing its rival, Pakistan. To do so, India will have to stabilize Afghanistan, through which any trade route would cross. Modi has cultivated a close relationship with Afghan President Ashraf Ghani. The two leaders, along with Iranian President Hassan Rouhani, met on May 23 to sign the Chabahar port agreement, designed to increase trilateral trade. Then on June 4, Modi and Ghani met again in Afghanistan to inaugurate the Salma Dam, a $290-million project intended to bring electricity to 250,000 homes and irrigate 640 villages in Herat province, on Afghanistan’s border with Iran. India’s plans for the dam began in 2002 and have continued despite years of war in Afghanistan, underscoring the country’s importance to New Delhi.
The countries’ ties are so strong that on June 4, Ghani even awarded Modi the Amir Amanullah Khan Award, Afghanistan’s highest civilian honor. And in a shrewd political move, Modi delivered a live televised address to Afghanistan, conveying India’s concern for the Afghans as the Taliban insurgency gains momentum under a new leader, Mullah Haibatullah Akhundzada. At the same time, India’s role in Afghanistan has raised Pakistan’s suspicions, undermining the trust between Kabul and Islamabad necessary to advance a sustainable peace negotiation with the Taliban.
Qatar represents energy. India is now the world’s fourth-largest energy consumer, and its demand is growing such that the country will import 90 percent of its crude oil by 2040. As a result, Modi must cultivate relationships abroad to secure the vast and uninterrupted supply of energy necessary to fuel India’s economic growth. Last year, Qatar, the world’s largest exporter of liquefied natural gas (LNG), became India’s biggest supplier of LNG.
During a meeting on June 6 with Qatari Emir Sheikh Tamim bin Hamad al-Thani, Modi signed seven memoranda of understanding on a range of subjects, including Qatar’s promise to invest in India’s National Infrastructure and Investment Fund (the Qatar Investment Authority already owns a $1-billion stake in Indian telecommunications firm Bharati Airtel). In addition to fulfilling India’s energy needs, Qatar fits into India’s broader strategy to deepen its engagement with the Middle East—Modi visited Saudi Arabia in April and Iran in May—to counter Pakistan’s influence in the region.
Switzerland and Mexico embody India’s nuclear interests. India wants to join the Nuclear Suppliers Group, a 48-country organization that includes Switzerland and Mexico. The group’s members exchange nuclear technology and combat the spread of nuclear arms as signatories of the Nuclear Non-Proliferation Treaty. That New Delhi has not signed the treaty concerns existing members of the Nuclear Suppliers Group. India and Pakistan each have large stockpiles of nuclear weapons and have come close to launching them in the past; in fact, the Nuclear Suppliers Group was founded in response to India’s 1974 nuclear test. Member countries will decide whether to admit India into the group—the decision must be unanimous—during a June 9 meeting in Washington. During his visit to Switzerland, Modi met with President Johann Schneider-Ammann and secured support for India’s admission to the Nuclear Suppliers Group in exchange for backing the Swiss bid for a non-permanent seat on the UN Security Council.
Finally, the US represents India’s ambition. Modi, who was barred from entering the US more than a decade ago (the ban was lifted in 2014) for his alleged complicity in the 2002 Gujarat riots that left more than 1,000 people dead, has been invited to address a joint session of Congress on June 8. In addition, Modi has met with US President Barack Obama seven times since taking office and, in 2015, Obama was the guest of honor at India’s Republic Day parade. And although trade between the two nations has swelled from $25 billion in 2006 to more than $100 billion today, both see the potential for deeper ties. US companies want to further capitalize on India’s vast consumer market, a prospect Modi hopes to address while speaking to the US-India Business Council, whose members include the CEOs of PepsiCo, Microsoft, Goldman Sachs and Apple. Meanwhile, Washington, which sees New Delhi as a counterweight to Beijing, wants to enhance military cooperation by advancing three longstanding military agreements: the Logistics Support Agreement, the Communication Interoperability and Security Memorandum of Agreement, and the Basic Exchange Cooperative Agreement.
Even abroad, however, Modi’s domestic political troubles will catch up with him. He can generate only so much foreign investment interest in India before reforming the country’s rigid labor laws and convoluted tax system—a feat that would require greater representation for the Bharatiya Janata Party in the Upper House of Parliament. Until then, India’s business environment will continue to keep foreign companies at bay. In the end, Modi’s tour reasserts India’s potential as a rising power, a nuclear power and a vast consumer market. But for now, India’s domestic challenges will prevent it from realizing this potential.
© 2016 STRATFOR GLOBAL INTELLIGENCE