The Market As Weapon

Context: India should utilize its market size which is waiting to be used to tackle China while emphasizing on self-reliance.

Market Power of India

• Reasons:
• Huge Purchasing Base: This power of the purchaser has rarely been used in the past by India because its middle-class market wasn’t quite so big earlier.

• India has now become the world’s second-largest market for mobile phones, the third-largest currently for solar power equipment and the second-largest importer of arms
• The largest consumer base for such companies as Facebook and (until recently) TikTok.
• The fifth-largest economy in the world.

• The decline of rule-based multilateralism: has opened up space for tactical bilateral moves to utilize market power.
• Consequences of Market Power:
• Building Partnerships: India’s case

• Support from the Middle East: For E.g. The UAE and Saudi Arabia have ignored Pakistan’s support call for Kashmir because Gulf politics is no longer what it was.
• The oil-exporting countries have conferred their highest national honours on India’s prime minister.
•  This is because India is the world’s third-largest consumer of oil. In a surplus market, such consumers are to be humoured and not offended as Malaysia discovered recently.
• Support from the US: India’s continued buying of defence equipment from Boeing has earned US’s support. 

• Strategic Domination over other nations: China has long exploited access to its market as a lever to bring other countries to heel.

• It has also systematically discouraged imports from India, making it difficult for India’s tech services companies to function in that country.
• India’s recent call for self-reliance is hitting China and hunting exports due to increased costs; it has recently put an anti-dumping duty on Indian optical-fibre exports.

• Vulnerabilities of India:
• China could hit back: in sensitive areas like pharmaceutical ingredients and strategic materials.
• Developing Russia-Pakistan Axis: Russia, even now India’s largest arms supplier, lifted in 2014 its long-standing ban on defence supplies to Pakistan.

Way Forward:

• Self-reliance:  The more India succeeds in manufacturing at home, the less it will need from Russia or China.

• With Indo-Russian trade mostly confined to the defence sector, broader ties with Moscow need careful nurturing.

• Opening up India’s market: to neighbouring countries can be as strategic as access denial to others.

• Geo-political decisions not to be swayed by business lobbies: 

• The game should be played both ways, even if it upsets domestic business lobbies that today are thrilled with the government’s market-denial measures and yesterday were upset by the free trade agreement with Sri Lanka.