India’s missed opportunity

Modi’s supporters insist that, unlike his predecessors, he is getting things done. In a country of 1.4 billion people where considerable power is devolved to its 28 states, where there are 22 official languages and hundreds of unofficial ones, tough control from the centre is the only way. He has cut constitutional corners and presented a Hindu ethnocentric vision for a country that had previously seen itself as multicultural. 

His approach is applauded and criticised with equal passion. Despite the fears of growing authoritarianism, India remains a functioning democracy of sorts; at the last elections, Modi’s BJP suffered a series of reverses and was forced into allying itself with smaller parties for a majority in parliament. 

Yet what struck me on a recent visit to Delhi and Bangalore was how Indian business leaders and opinion formers, and foreign diplomats, believe that, for all Modi’s performative politics, on the global stage and economically, his country still punches below its weight. 

With Donald Trump causing chaos across the globe, with Europe a diminishing and divided voice, with Xi Jinping ever more threatening, India could and should be presenting itself as an alternative for the world to admire. Where, they wonder, is the Indian Model to rival that of China and America? 

It is within this context of under-confidence, rather than over-confidence that the most recent clashes with arch-enemy Pakistan should be seen. At one point, the fighting threatened to spiral out of control. 

On April 22, three days after I left India, gunmen opened fire on tourists in the resort town of Pahalgam in Jammu and Kashmir. Twenty-six people were killed in the deadliest attack in the Muslim-majority region, which is ruled in part by India and Pakistan but claimed by both. Although Pakistan denied involvement, India accused it of masterminding the assault.

What followed before a fragile ceasefire was a combination of retaliation, the risk of escalation but also paralysis. In what seemed to presage the biggest outbreak of hostilities since the two countries went to war in 1971, India responded with airstrikes targeting what it called nine terrorist sites. Pakistan said civilian targets were hit, including a mosque, and many women and children were killed. It hit back with heavy shelling and shot down several military jets. 

India also cut off all imports from Islamabad, closed the countries’ only land border (direct flights ceased long ago), suspended the Indus Waters Treaty, which delivers water, and downgraded what is left of diplomatic relations.

Failing to act would have been politically costly for Modi, who prides himself on his tough-on-terror position. On repeated election campaign trails, he has marketed himself as India’s chowkidar, its guard or watchman. It is no surprise that he is said to get on well with Israel’s prime minister, Benjamin Netanyahu. 

Yet for all the outrage in both countries, there is a sense that they may be going through the motions. Whether due to the deterrent effect of the two countries’ nuclear arsenals or simply due to other priorities, there has been a degree of strategic restraint in the India-Pakistan relationship in recent years. The Line of Control, the de facto border established in 1948 after the first war, has held. As ever, the Brits have much to answer for, with the partition of India in 1947 ranking alongside Israel-Palestine and other botched post-colonial arrangements. 

Longer term, Pakistan is the lesser of India’s problems, as it faces what is called in Delhi the “two-front threat”. Since India and China went to war in 1963, large sections of the 2,100-mile north-east border remain disputed. Frontier clashes in the northern Ladakh region in 2020 marked the deadliest outbreak of hostilities for a decade. 

China’s economy remains five times larger. Its military modernisation proceeds at a pace India cannot match. 

As it is doing across the region, China is building infrastructure along its border with India, reinforcing its defences. Even in India’s backyard, in countries such as Sri Lanka and Bangladesh, not to mention Pakistan, China is increasing its influence as Xi Jinping seeks to woo Asian states that are wary of Trump into his fold. 

India has chosen a path best described as multi-aligned. It chooses its allies where it needs them. By far its biggest military partner is Russia, which provides it with two thirds of its weaponry. 

Modi has refused to condemn Vladimir Putin’s invasion of Ukraine, profiting from cheaper energy and allowing India to become an intermediary in shipments of Russian oil and gas. Just as India was close to the Soviet Union during the cold war, criticism of Putin in present-day political circles is muted, as I found out for myself, when my denunciations of him during a speaking event in Delhi were met with bristling from various political figures.  

Modi is keeping his options open. He has worked hard, before Trump I, in between Trump and since Trump’s return, in developing closer relations with the US. The Quad – a security alliance involving India, Japan, Australia and the US – is proving an increasingly important counterweight to China’s influence in the Indo-Pacific. 

As soon as Trump was inaugurated for the second time, Modi made a beeline for the White House. They have much in common – two “strong men” who find political opposition tiresome. Modi took on the chin the 26% tariffs that were announced, but the issue is America’s reliability. 

A visit by JD Vance last month was designed to smooth out relations (not that Vance is the kind of guy who can do that kind of thing). The fact that the Veep and his Indian-born wife spent time visiting cultural sites went down well. 

Europe is also raising its profile and influence. A recent visit by Ursula von der Leyen with 22 European Commissioners in tow was seen as highly successful. 

As for Britain, it is still a double-edged relationship, with many shared cultural and familial ties, but also deep resentment remaining from colonial times. That is why the two governments are seeking to focus on the future rather than the past, on practicalities. The recently announced trade deal was hailed on both sides as marking a potential turning point. 

Yet Britain and Europe remain small players. Among entrepreneurs and much of Indian business and society, the American Dream is alive and well. The US is very much the destination of choice for young ambitious Indians, particularly in the tech sector. Some come back after gaining experience and making money; others stay. Indian corporate bosses, engineers and entrepreneurs are disproportionately influential in Silicon Valley.

What is most remarkable about India is the digital transformation that has taken place over the past decade and continues to accelerate.  

Arriving from Germany – where cash is still king, reliable mobile internet coverage is sporadic, and innovation is looked upon by some with suspicion – India is a beacon of modernity. A middle class of more than 100 million has disposable money to spend, with thousands moving up the financial scale all the time amid a young and highly educated workforce. An entire service industry has built up to serve the needs of people who are not remotely super-rich (notwithstanding the odd Ambani and Mittal) but are increasingly comfortable.

Poverty remains a perennial issue, the more so if it is judged in relative terms. The streets are still chaotic, and begging abounds. The gap between what are known as the Tier 1 cities (Delhi, Mumbai, Bangalore, Hyderabad, Chennai and Kolkata) and the smaller towns and rural areas is growing. 

Yet as one entrepreneur, Mithun Srivatsa, said to me: “There’s a swagger about India.” Srivatsa is a typical entrepreneur of his generation. The son of a tuk-tuk driver and teacher, he remembers collecting subsidised food for his family. After getting an MBA at Cambridge, he partnered with a friend to start a truck logistics company called Blowhorn, an Uber-style app-based service for industrial deliveries. 

He is now doing very well for himself, saying more generally: “We are on the cusp of huge progress.” I encountered several people like him, optimistic, but not blind to the problems the country faces.

There’s no shortage of the flashy stuff – the AI programmers, the massive back offices for global banks, the unicorns, the start-ups, the venture capitalists. 

Bangalore airport’s new second terminal is a marvel, a self-styled green oasis of foliage, engineered bamboo and thousands of overhanging LED lights, on a site covering the area of 50 football pitches. It has the same “look at me” infrastructure ambition of China and the UAE, but with more architectural taste. 

Air travel has been transformed and is among the most efficient in the world. The railways are taking their time, though a new high-speed train from Mumbai to Ahmedabad (Modi’s power base) is scheduled to open in 2028.

The centrepiece of the tech revolution is the convenience economy. You can order anything online, someone to drive your car, clean your home, do your laundry. You can order a mobile phone, a private ambulance or a toilet brush from any of many e-commerce companies, guaranteed to arrive on a motorbike within 10 minutes despite the honking traffic that barely moves in the major cities. 

India has leapfrogged over the analogue era. The tech revolution encompasses everyone. It is based on four planks: a universal ID system called Aadhaar, to which more than 99% of the population are subscribed. Next comes UPI, the United Payments Interface, an instant money transfer system.

Alongside them is an internet reach that is almost universal in the cities and not unimpressive in rural areas, given the size of the country. Finally comes what is among the cheapest data in the world. Smartphones are readily available; reconditioned ones – from China – can be picked up for anything from £20. 

Pretty much everyone can afford to be online. And they are. As a small case study, I spent a few hours in Chandni Chowk, a labyrinthine market area near the Red Fort in Old Delhi. Here you can buy jewellery, saris, spices, fragrances and books (I spotted a Hindi version of Mein Kampf). Not once was I required to pay in cash. Even bare-footed rickshaw drivers accept contactless payment.

The technology benefits the state – making tax dodging, duplicate welfare claims and other misbehaviour easier to spot. It naturally benefits the consumer. 

But it is also having a discernible effect on the livelihoods of ordinary producers, as I discovered during trips to villages outside Delhi and Bangalore. Apps provide real-time information for farmers on weather patterns, and the latest prices for their produce at the local market, ensuring they don’t get ripped off by the middleman. They can book instant transportation for their crops. They can also access credit from banks – because their credit rating will be on display – instead of having to rely on loan sharks. 

This entire structure is called Digital Public Infrastructure, and yet outside India almost nobody has heard of it. The government is giving advice to others in the Global South, from Fiji to Sierra Leone to Kenya, on how to modernise their tech. Yet compare it to China’s Belt and Road, and there is no sense of India seeking to leverage its assets to project the country more forcefully. 

That is a huge missed opportunity, as several western diplomats told me. Tech for economic and social development is India’s unique selling point. 

The economy is growing fast. A new generation of innovators is creating technologies that are leading the world. Yet for all Modi’s bluster, India remains curiously insecure. 

Its diplomacy is undercooked. Much of its potential remains untapped. It could be a major player on the world stage, but is struggling to know how. 

John Kampfner’s most recent book is In Search of Berlin, The Story of a Reinvented City