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Indian Prime Minister Narendra Modi is garlanded by senior Bharatiya Janata Party leaders. Photo: AP

Economy Global Economy

Global impact | Challenges remain for Narendra Modi despite securing third term as India’s prime minister

In this week’s issue, we look at what Narendra Modi’s victory in the Indian elections means for India, but also its tense relationship with China

India

Maria Siow

Published: 2:00pm, 17 Jun 2024

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Global Impact is a weekly curated newsletter featuring a news topic originating in China with a significant macro impact for our newsreaders around the world. Sign up now!

Indian Prime Minister Narendra Modi’s ruling party may have secured a third term this month, but the Bharatiya Janata Party failed to achieve an outright parliamentary majority, forcing it to rely on coalition partners to remain in power.

This prompted analysts to suggest that the outcome represented “a setback to the massive expectations tied to his indomitable popularity on the ground and abroad”.

Both in its foreign policy and security challenges, India under Modi 3.0 continues to face ongoing challenges.

Relations with Canada continue to be strained, particularly after Prime Minister Justin Trudeau attended a rally in Toronto to support a separatist Sikh movement, aggravating ties that have already been worsened by earlier accusations that Indian intelligence agents were involved in the murder of a Canadian citizen.

03:14

Modi’s BJP claims ‘historic’ victory in Indian election despite smaller majority

While the American ambassador in India affirmed trust in India, Delhi faces potential sanctions from Washington over its deal with Iran to develop the strategically important Chabahar deep water port aimed at boosting trade with Central Asia and countering Chinese influence in the region.

On its prickly relations with China, Modi was warned by Beijing against “political conspiracy” after thanking Taiwan’s leader, William Lai Ching-te, who had earlier congratulated Modi for securing a third term.

After China launched its new Fujian aircraft carrier equipped with electromagnetic catapults that can deploy fighters more frequently, Defence Minister Rajnath Singh said that India would soon start building its third aircraft carrier, adding that New Delhi would not stop at three but would consider having at least five to six such vessels.

Concerned about Beijing’s creeping influence in its backyard, India tried to mend ties with the Maldives after its troop withdrawal from the island country, and in March unveiled a billion-dollar aid package for Bhutan.

India even dispatched warships to the South China Sea last month, in what was widely seen as a reminder to Beijing about the importance of upholding international law in the disputed waterway, and earlier delivered its first batch of BrahMos supersonic cruise missiles to the Philippines, which has been embroiled in several maritime skirmishes with China.

03:08

India’s Modi claims Indian elections victory, but his party needs coalition to retain power

Delhi also watched with concern the acquisition by arch-rival Pakistan of Chinese stealth submarines equipped with technology that surpasses that of India’s current Scorpène-class, a move expected to spur India to upgrade its naval fleet.

But external economic opportunities are also making their presence felt.

As China grapples with economic challenges, a growing number of Hong Kong family offices – privately held firms that manage money for wealthy families – are following a global trend of diversifying their investments by turning their attention to India.

Speaking on the sidelines of the Computex Taipei 2024 tech show in early June, chief operating officer Jerry Kao of the Taiwan-based Acer, also the world’s No 5 PC vendor by market size, said it expanded its influence in India last year by licencing its name to a local start-up.

60-Second Catch-up

Modi claims victory but his BJP needs coalition to stay in power, as opposition makes gains.

Video: Modi’s BJP claims ‘historic’ victory in Indian election despite smaller majority.

Opinion: India’s Modi forgot as he beat the religious drum – Hindu pride cannot be eaten.

Modi secures coalition support, handing him third term in power.

Video: India’s Modi claims Indian elections victory, but his party needs coalition to retain power.

China’s new India envoy urges neighbours to ‘get along well’ amid talk of Xi-Modi meeting and border military build-up.

Opinion: India’s shock election result shows democracy is still thriving.

China helps Nepal look for oil, vying with India for influence in Himalayan nation.

Video: From India to China, how deepfakes are reshaping Asia politics.

Opinion: There may be ‘positive signals’ but Xi’s snub of Modi suggests China-India ties are still a worry.

Deep dives

India’s Modi unveils BJP-dominated cabinet. Will his allies demand more roles?

PM Narendra Modi will be able to ensure policy continuity as his core ministers are from the ruling Bharatiya Janata Party, analysts say

India’s Prime Minister Narendra Modi has assembled his core ministers for his third term, as analysts say he has overcome a major hurdle of forming a coalition government by balancing meeting his allies’ expectations and maintaining policy continuity.

Modi has kept his team of Home Minister Amit Shah, Defence Minister Rajnath Singh, Finance Minister Nirmala Sitharaman and Foreign Minister S Jaishankar – all four ministers from the ruling Bharatiya Janata Party (BJP) will be part of the powerful Cabinet Committee on Security headed by the prime minister.

‘Congress has revived’: India election gains spur hope for renewal, growth

Congress has regained lost ground in northern states in this election, but there is still much work to do before it can return to power, analysts say

After Prime Minister Narendra Modi led the Bharatiya Janata Party (BJP) to emphatic wins in the last two national elections, a chant started growing louder among its workers – that of a Congress party-free India. But a setback for the BJP in its Hindi-speaking stronghold in this year’s polls has signalled a possible revival of the opposition, analysts say.

Congress trailed far behind the BJP with 99 seats compared to its rival’s 240 this year, but its unexpected victories together with allies in the region mean India’s grand old party may not yet be completely marginalised, they say.

Can Modi press ahead with crucial economic reforms after India’s election?

While PM Narendra Modi may not have won a parliamentary majority, he could still succeed in implementing reforms if history is a guide

India’s markets may have been volatile in recent days after Prime Minister Narendra Modi delivered a subpar showing at the general election but the country’s economic growth trajectory and Modi’s commitment to reforms remain on course despite new challenges under a coalition government, according to analysts.

Modi’s Bharatiya Janata Party (BJP), which emerged the winner but fell well short of its target of an overwhelming parliamentary majority, is expected to be sworn into office this weekend with the support of allies under the National Democratic Alliance (NDA).

Where are India’s ties with the US, China headed in third Modi term?

Poorer-than-expected performance by prime minister’s ruling party unlikely to alter joint initiatives between Washington and New Delhi, analysts say
But unresolved border dispute and concerns over China’s risen profile define ‘more complicated’ Sino-Indian relationship

India’s general election results on Tuesday delivered an unexpected twist in the ongoing tale of the country’s popular yet polarising Hindu nationalist leader, Narendra Modi, unveiling a reality quite distant from a widely anticipated landslide victory.

With his Bharatiya Janata Party-led coalition projected to narrowly secure the required majority to form a government, Modi, the twice-elected leader of the world’s largest democracy, appears poised to return as the country’s top elected official.

Modi 3.0: India’s China focus, Pakistan pressure, regional sway to persist

India’s PM had to rely on coalition partners to cling on for a third term. But analysts don’t expect it to alter his foreign policy priorities

Narendra Modi’s swearing-in ceremony offered a preview of India’s foreign policy priorities during his third term as prime minister, with analysts citing the attendance of several South Asian leaders and Pakistan’s absence as signals that New Delhi will focus on bolstering regional ties.

The snub of Pakistan at Sunday’s event, which followed Modi’s narrow victory in this year’s general election, is likely tied to Delhi’s long-standing anger over Islamabad allowing militants to launch attacks from its territory against Indian-administered Kashmir.

India wants ‘5 or 6’ more aircraft carriers – but high costs loom large

New Delhi’s defence minister is ‘stargazed without a concrete plan in place’ in the face of tight budgetary constraints, analysts say

India’s aspiration of owning five to six aircraft carriers might take “decades” and could be complicated by obstacles such as budget constraints and changing priorities, though having at least three to four such vessels would be ideal, according to observers.

India’s Defence Minister Rajnath Singh said last month that his country would soon start building its third aircraft carrier, the proposed INS Vishal, adding that New Delhi “will not stop at that [three carriers]. We will make five, six more”.

Why India’s worried about China, Myanmar as conflict flares up in northeast

Trouble has returned to India’s remote northeast bordering Myanmar, a region with historically testy ties with New Delhi
India fears Myanmar could offer a safe haven for insurgents to regroup, as it also harbours suspicions rival China could be backing separatist groups

Trouble has returned to India’s remote northeast, a region that has long had a testy relationship with New Delhi. The area spans seven states, including four that share a border with Myanmar and one with China.

More than 200 ethnic groups and tribes live across the resource-rich region, where several insurgents and separatist movements operate.

Bangladesh’s China-backed naval dock heightens power play in India’s backyard

New Delhi isn’t ‘overly concerned’ by the development, analysts say, given the strong security and defence ties India has with Bangladesh•
But that could change if China’s navy is granted access to the new facility in the strategic Bay of Bengal to service its warships and submarines

A naval dock designed to host submarines and warships being built in Bangladesh with China’s help has cast a spotlight on the South Asian nation’s efforts to boost its maritime capabilities, as well as Beijing’s deepening military influence in a region long regarded as India’s backyard.

In March, a satellite image of the dry dock was released on social media platform X by Damien Symon, a researcher with global intelligence research network The Intel Lab.

Global Impact is a weekly curated newsletter featuring a news topic originating in China with a significant macro impact for our newsreaders around the world.