India’s Role in the Neighborhood and Beyond
Over the past two decades, India has emerged as the fastest growing economy and a more confident geopolitical force. According to the International Monetary Fund, India is poised to become the world’s fourth-largest economy in 2025 and the third-largest in 2027. Its capabilities in crafting transformative digital solutions hold many lessons for the world. In today’s multipolar, competitive, and geopolitically complex landscape, India both seeks and is sought out for stability, resilience, and global leadership. There is great anticipation that this will be India’s decade, if not century.
This compendium of essays by younger scholars at Carnegie India explores emerging themes that deal with the opportunities, challenges, and preoccupations that face India as it carves a greater role for itself.
The first two essays look at India’s developing challenges and opportunities with respect to China.
Adyasha A. Das calls for bolstering Indo-Japanese security relations to both harness mutual benefits and counter potential Chinese aggression in the Indo-Pacific. Her essay “Reimagining the Indo-Japanese Security Relationship” argues that long-standing and stable diplomatic relations, complementary economic engagement, and growing defense cooperation between the two nations provide the necessary basis for the same. Moreover, a shared experience of tension with China amid deep economic ties and Japan’s paradigmatic shift from its self-defense-only principle provide the trigger to reimagine the Indo-Japanese security partnership.
Saheb Singh Chadha’s essay brings the lens closer to home—to China’s border villages at the contentious India-China border. In “China’s Border Villages: Points of Concern,” he highlights China’s intensifying strategy over the past few years to infuse the border villages with military capabilities. He then examines the challenges this raises for India from a tactical, strategic, and security perspective. These range from implications for India’s border management and human intelligence capabilities to potentially complicating the country’s options in future border negotiations or conflicts with China. He argues that these developments and India’s recently unveiled border village program to counter the Chinese strategy require careful consideration going forward.
Akarsh Bhutani focuses on the potential for expanding India’s economic footprint in the Global South. In his essay “India’s Domestic Infrastructure Capabilities Can Power Project Exports,” he argues that there is an opportunity for Indian companies to expand their project exports to Asia, Africa, and Latin America. The deficit of quality infrastructure continues to be a major impediment for economic growth and prosperity in many parts of the world. Compared to China, South Korea, and Turkey, India’s project exports are limited from a quantum, geographical, and sectoral point of view. He opines that this unmet potential in the Global South and India’s growing infrastructural capabilities should drive the country to compete in bridging the infrastructure deficit and deepen its economic engagement with other regions while benefiting the domestic economy.
In “Tackling Light Interferences From Satellite Constellations,” Tejas Bharadwaj shifts the focus from terra firma. He homes in on the perennial issue of balancing technology’s benefits with its untoward consequences—this time, in space. Though constellations of satellites vastly improve connectivity, light interferences from these constellations affect a country’s astronomical capabilities and the success of its space science and missions, which can have significant financial implications. The essay suggests that the borderless nature of the issue calls for international norms and argues that the implications of light interferences are a significant concern for India as the country seeks to expand its space capabilities. He accordingly advocates a robust role for India in developing international norms.
This compendium features young voices at Carnegie India who are cutting their teeth on research on issues of contemporary and emerging salience for India. Their insights will hopefully inform both scholarship and policymaking concerning India’s economy, its security, and its future as an emerging leader in the world.
- Reimagining the Indo-Japanese Security Relationship
- China’s Border Villages: Points of Concern
- India’s Domestic Infrastructure Capabilities Can Power Project Exports
- Tackling Light Interferences From Satellite Constellations
1. Reimagining the Indo-Japanese Security Relationship
In December 2022, the Japanese government released its new National Security Strategy (NSS), National Defense Strategy, and Defense Buildup Program. Under these documents, Japan has set forth a plan to increase its defense expenditure to the NATO standard of 2 percent of GDP from the current level of roughly 1 percent and, most notably, adopt counterstrike capability. Significantly, the move is regarded as a departure from Japan’s post-war self-defense-only principle. Furthermore, Japan’s Defense White Paper 2023, which was presented to the cabinet in late July, outlines a blueprint for increasing the country’s defense expenditure over the next five years.
Japan is engaged in a territorial conflict with China over the Senkaku Islands in the East China Sea. Moreover, the possibility of a conflict erupting in the Taiwan Strait in the event of Chinese aggression worries Tokyo. Beijing’s rapidly growing military capability creates an atmosphere of security threat in the Indo-Pacific region. Tokyo has, time and again, expressed its intention to bolster its defensive posture in response.
The ongoing conflict in Ukraine has also compounded Japan’s worries and compelled its political establishment to lay out a defense plan. Speaking at the Shangri-La Dialogue last year, Prime Minister Kishida Fumio said, “Ukraine today may be East Asia tomorrow.” Since then, Kishida has reiterated his fears about the country’s security environment. Reflecting this urgency, the NSS states, “China’s current external stance, military activities, and other activities have become a matter of serious concern for Japan.” While largely borrowing its language from the NSS, the Defense White Paper adds that China is the “greatest strategic challenge.”
India, too, finds itself locked in a border dispute with China along the Line of Actual Control. While India’s borders with China have been contentious since the 1950s, the situation reached a new low in 2020, when the border clash in the Galwan Valley resulted in the death of soldiers on both sides for the first time since the 1962 war. During the Shanghai Cooperation Organisation meeting in early May 2023, India’s external affairs minister, S. Jaishankar, admitted India’s “abnormal position” with China in the boundary areas. He further said that India’s relations with China are not normal and cannot be so if peace along the border areas is disturbed. Besides, China’s growing presence in the Indian Ocean Region (IOR) also presents vulnerabilities to India in the maritime domain.
India and Japan are dependent on maritime trade routes in the IOR for sourcing their energy supplies. Any disruption in the Indo-Pacific region due to Chinese military activities could negatively affect both countries. Given New Delhi’s and Tokyo’s steadily rising anxieties about Beijing and the recent developments in Japan’s NSS, this is a favorable time to reimagine the Indo-Japanese security partnership. By leveraging the strengths of their relationship, both countries can deepen their security cooperation in a way that would not only render mutual benefits but also make them resilient to potential Chinese aggression.
Tapping the potential of Indo-Japanese relations
There are three reasons India and Japan could form a formidable partnership by strengthening the security pillar of their relationship. First, the Indo-Japanese relationship is characterized by stability, owing to decades of good diplomatic relations. After former Japanese prime minister Mori Yoshiro’s landmark visit to India in 2000, both countries have actively invested in their relationship. The importance of the relationship was reaffirmed in 2007 when former prime minister Abe Shinzo delivered his speech “Confluence of the Two Seas” in the Indian Parliament. His address was widely viewed as a way of bringing India into the ambit of the Indo-Pacific region. During his visit to India in March 2023, Kishida released Japan’s new plan for a “free and open Indo-Pacific” (first introduced in 2016), wherein he referred to India as an “indispensable partner.”
Second, Japan, a leading Indo-Pacific power with a deepening role in the region, will likely understand India’s forebodings in dealing with China. India and Japan are acutely conscious that their economic dependence on China could reduce their bargaining power in negotiations. However, they also acknowledge the necessity of such economic engagement. This convergence in view could help New Delhi and Tokyo find effective avenues to address their shared issues with Beijing. For instance, both countries have been constructive in strengthening global supply chains. They are part of the relatively new India-Japan-Australia Supply Chain Resilience Initiative, designed to prevent possible supply chain disruptions in case of Chinese coercion in the Indo-Pacific. They are also part of the Quadrilateral Security Dialogue and the Indo-Pacific Economic Framework, both of which focus on boosting supply chain resiliency in the region.
Third, a productive economic Indo-Japanese relationship makes imagining a robust security partnership possible. Japan’s bilateral aid and low-cost loans have been of immense value to India, particularly in infrastructure development in power and communications. In recent years, New Delhi has become one of the foremost recipients of Japanese Overseas Development Assistance (ODA). The Delhi Metro is a good example of the countries’ productive economic engagement. About two decades of cooperation between the Japan International Cooperation Agency and the Delhi Metro Rail Corporation have been instrumental in transforming public transport in the national capital region. Additionally, ODA has been critical in building infrastructure in India’s long-neglected North Eastern Region. Improving regional infrastructure could have strategic consequences—India could indirectly counter Chinese presence in the region by building better trade routes and connections with its neighbors, such as Myanmar and Bangladesh.
The existing economic integration between the two nations provides the necessary gravity and basis to deepen and expand Indo-Japanese relations through further collaboration. Japan’s commercial motivations in extending aid and India’s need for infrastructure have become an apt fit. Similarly, the convergences in New Delhi’s and Tokyo’s concerns about Beijing could also open up space for deeper security cooperation in the Indo-Pacific region.
Room for stronger security cooperation
The NSS states, “Japan will build a multilayered network among its ally and like-minded countries, expand it, and strengthen deterrence.” Thus, Japan’s willingness to enhance its security posture collaboratively with other countries presents an opportunity for New Delhi and Tokyo to step up their security cooperation.
Over the years, India and Japan have increased their bilateral military exercises. By holding their first joint air force exercise, Veer Guardian, in January 2023, the two countries achieved a full spectrum of cooperation, covering the army, navy, and air force. India and Japan also operationalized the Acquisition and Cross-Servicing Agreement in 2022 to facilitate the exchange of supplies and services on a reciprocal basis between the Self-Defense Forces of Japan and the Indian Armed Forces.
Since the nature of the threat from China differs for India and Japan—land-based and sea-based, respectively—the two countries have different military priorities. India’s predominant concern regarding China is continental at the moment; therefore, more resources are devoted to the Indian Army. Similarly, Japan’s primarily maritime concerns mean that the Maritime Self-Defense Force is prioritized. New Delhi and Tokyo should ensure that the divergences in their immediate priorities do not limit the effectiveness of their military engagement. Both countries should find common ground in the bilateral exercises and logistical support arrangement to improve their military preparedness.
The countries have also signed agreements to bolster defense ties since their declaration of security cooperation in 2008. India and Japan were quick to establish a joint working group on Defense Equipment and Technology Cooperation (JWG-DETC) after Abe lifted the self-imposed ban on weapon exports in 2014. The 2015 agreement on the transfer of defense equipment and technology intended to improve the prospects of the co-development of defense equipment and sourcing of Japanese defense technology. Recently, Japan has been considering widening its laws further to allow for the export of lethal equipment, such as fighter jets and missiles, to India (among other countries) as Tokyo seeks to secure a market for its growing defense industry. The move would also help enhance collective deterrence against China in the Indo-Pacific region in the long run.
However, the defense-related agreements and six rounds of JWG-DETC talks have not translated into a purchase or joint development of defense equipment. A deal for hardware cooperation on US-2 amphibious aircraft could not go through for multiple reasons. Similarly, Japan’s reservations about technology transfer hindered a project focused on building six Soryu-class submarines.
A defense partnership based on joint research, codevelopment of defense equipment, and technology transfer would benefit both countries. Besides, understanding the strengths and weaknesses of each other’s defense sectors would facilitate the discovery of plausible areas of collaboration. Stronger Indo-Japanese security ties would mean that the two countries could potentially help each other in case of Chinese aggression. Furthermore, they would be better equipped to substantially partake in securing the sea lines of communication in the Indo-Pacific region in case of any contingency.
The way ahead
Since China will likely remain an enduring threat, renewing the thrust in Indo-Japanese security relations has become imperative. Further, the recent “free and open Indo-Pacific” plan considers India’s role in the region indispensable. New Delhi and Tokyo’s long-standing and stable diplomatic relations, their economic partnership, and Japan’s recent reconfiguration of its defensive posture provide the basis and opportunity to strengthen the Indo-Japanese security partnership.
As a next step, India and Japan could minimize the bottlenecks that restrict the scope of their security relations. This would enable both countries to be resilient in the face of rising Chinese threat in the Indo-Pacific region.
2. China’s Border Villages: Points of Concern
Since January 2019, and more frequently since January 2021, reports have surfaced about the People’s Republic of China (PRC) building villages along the border with India. The border between the two nations has been a source of contention since the 1950s, including a war in 1962. Over the past decade, China has increasingly asserted itself at the border. Coupling this with a low in relations that has continued since the summer of 2020, it is worth digging deeper into these border villages. This piece lays out five points of concern regarding them. Broadly, the concerns center around the dual-use capabilities of these villages and the implications for border management, boundary negotiations, and choices for India in a military scenario.
Since 2016–2017, these villages have been planned and built on multiple sectors of the India-China border—Demchok in Ladakh in the western sector, Churup near Uttarakhand in the middle sector, and near Upper Subansiri in Arunachal Pradesh in the eastern sector. The construction of new villages has been reported as recently as May 2023. This is not a localized, tactical issue but a broader development across time and space. A careful examination reveals that the villages are an attempt by Beijing to strengthen its hand at the border, with negative implications for India’s border security.
What are these border villages?
In July 2017, the government of the Tibetan Autonomous Region (TAR) of the PRC issued its “Plan for the Construction of Well-off Villages in the Border Areas of the Tibet Autonomous Region (2017-2020).” The plan involved building 628 border villages in the TAR along the border with India, which runs along northern and northeastern India—adjacent to the states of Ladakh, Himachal Pradesh, Uttarakhand, Sikkim, and Arunachal Pradesh. These xiaokang (“moderately prosperous”) villages were to have housing and public service facilities, industrial construction, ecology, and human settlements. Between 2018 and 2022, 624 villages were built in the border areas of the TAR.
Concerns for India’s border security
The first concern for New Delhi is that these villages could have military utility for Chinese troops rather than being entirely civilian. They have been labeled “extensions of cantonments near the Line of Actual Control” by Indian government officials, and their potential dual use was acknowledged in October 2021 by now Indian Army Chief General Manoj Pande, who was then general officer commanding-in-chief of the Eastern Command, which looks after Arunachal Pradesh. A pattern of “a military complex adjacent to the village consisting of multi-storey buildings secured by a perimeter wall with CCTVs and watch towers” has also been reported.
There is a possibility of offensive action across the border by China in the eastern sector of the India-China border, where China claims India-controlled Arunachal Pradesh as South Tibet (Zangnan). There, these villages could serve as a proximate staging base from which Chinese troops could undertake offensives. It has been speculated that this was the case in the Yangtse clash between the People’s Liberation Army and the Indian Army in December 2022. In the western sector too, where China is in a ground position that mostly corresponds to its claim lines, there is a possibility of these villages being used for holding ground and defensive military operations.
The second matter of concern is that these villages reduce India’s human intelligence capabilities. Beijing is settling people by the thousands in these villages, both from other parts of the border regions and from the rest of China. President Xi Jinping has, on multiple occasions—including in his report to the Nineteenth Party Congress in 2017—encouraged Tibetans and people from non-border areas to settle in border areas and safeguard them. Former Indian foreign secretary Shyam Saran opined that “a more recent [Chinese] policy involves the setting up of mixed Tibetan and Han settlements on its southern borders.” It appears that this policy was likely enacted with the purpose of reducing the ratio of Tibetans to Han Chinese in the population in order to reduce the potential for activities that threaten China’s interests. Moreover, Beijing is tasking these civilians with protecting the border. China’s 2022 border law mandates that citizens and organizations maintain the security and stability of land borders and border defense infrastructure and assist in work to this end. The 2022 law further rewards civilians who make significant contributions in this regard. The channeling of these border populations in the interest of national security is seen as another example of China’s military-civil fusion strategy in land border defense. Further, by codifying the consequences for violating the border law and threatening China’s national security, the law also disincentivizes potential dissenters, such as Tibetans, from acting against Chinese interests. This reduces the scope for India to utilize these communities for human intelligence.
Given this civil-military fusion and the building of these villages right up to the India-China border (such as a village in Demchok), the third concern is that China is eroding the basis of border management. This is because the villages undermine the spirit of two key agreements that form the basis of border management between India and China—the 1993 Border Peace and Tranquility Agreement and the 1996 Confidence-Building Measures Agreement. In Point 2 of the 1993 agreement and Article III(1) of the 1996 agreement, the two sides agreed to reduce or limit their respective military forces along the border. By settling civilians in these villages close to the border and then tasking them with national security duties, it seems that China is undertaking actions that contradict the two agreements, thereby undermining the basis of border management. This is concerning especially at a time when skirmishes are more frequent and the border is prone to risks of escalation.
The fourth concern is that settling people in villages and changing the status quo on the ground could aid China’s attempt to secure more territory in a future negotiation on the boundary. This is possibly being undertaken with a view to strengthen its claims in eastern Ladakh—the western sector of the border—where China controls territory that is claimed by India. As per Article VII of the Political Parameters Agreement signed between India and China in 2005, “In reaching a boundary settlement, the two sides shall safeguard due interests of their settled populations in the border areas.” China is aware of the significance of having civilian populations in border areas and sought to negate this for India—in 2007, then Chinese state councilor Yang Jiechi told erstwhile Indian external affairs minister Pranab Mukherjee that Article VII would not apply to Arunachal Pradesh. Regardless of how the Political Parameters Agreement sees this practice of settling villagers after the fact and how the issue plays out, China could argue that these actions help its claims. This is worth noting and should be preempted by Indian policymakers.
Lastly, in a border conflict, these villages would complicate India’s choices on kinetic action, because of an ethical, legal, and tactical quandary due to the presence of civilians. International humanitarian law, most notably Additional Protocol I to the Geneva Conventions of 1949, states that civilians shall not be the object of attack and that there must be a distinction between civilian objects and military objectives. While India has neither signed nor ratified this protocol, harming civilians accidentally or otherwise may not only invite reprimand from the international community, but it may also be used by China as a justification for escalation. Thus, this would be a consideration and possible deterrent for Indian policymakers. However, there is also the risk of civilians and civilian facilities being used for offense or in defense of national security, violating India’s territorial integrity along the 3,488 km India-China border. In such a scenario, it would be hard for policymakers to ignore the value of neutralizing these villages. Irrespective of the conclusions policymakers arrive at, resources including time, attention, and equipment would need to be devoted to addressing this quandary. For example, India may need to utilize precision-strike capabilities for responding to this threat instead of resorting to more indiscriminate aerial bombing. Resources such as these would certainly be in high demand during wartime.
India’s response
India, for its part, has announced the Vibrant Villages Programme in its 2023 budget. Inaugurated by India’s home minister in Arunachal Pradesh in April 2023, the program aims to “initiate the transformation of India’s border villages” and disincentivize migration from them, which is necessary to “secure the country’s sovereignty and further safeguard them from any possible friction with the neighbours.” The program also aims to “enhance infrastructure in villages along India’s border with China.” Under this scheme, the government has earmarked INR 4,800 crore between FY 2022–2026 for 2,967 villages in the states of Arunachal Pradesh, Sikkim, Uttarakhand, Himachal Pradesh, and the Union Territory of Ladakh, with 662 villages identified for priority coverage.
Though its objectives are clear, the Indian program is relatively new and there are marked differences in the budget between the Indian and Chinese programs. While this gap is ultimately a question of differing priorities, capabilities, and constraints, a comparison between the two countries’ programs is useful. The average annual outlay for India’s Vibrant Villages Programme—498.77 million in 2022 Purchasing Power Parity (PPP) dollars—pales in comparison to the annual Chinese investment of 1.31 billion PPP dollars. While the figures for China are planned and may not represent actual expenditure, this also holds true for the Indian program. This gap is exacerbated if one considers that the Chinese program covers 624 villages, while the Indian program covers 2,967 villages. This brings the estimated per-village per-year amount to 168,107 PPP dollars for India and 2,113,177 PPP dollars for China, making China’s per-village expenditure 12.5 times what India is spending per village on its border village initiative. However, these figures do not account for India’s Border Area Development Programme and other schemes that aim to develop remote areas in tandem with the Vibrant Villages Programme. The same may be true for China as well. Thus, the extent to which India’s Vibrant Villages Programme will help respond to the challenges posed by the xiaokang villages and help shore up India’s capabilities on the border with China should be carefully observed.
Conclusion
China’s border villages are in tune with its increasingly assertive foreign and security policy since Xi’s rise to power. A similar policy approach appears to be playing out on the border with India. With their dual-use implications, these villages could bolster China’s military capabilities on the border, becoming another factor in India’s security considerations. They raise questions around the current state of border management, and they are also an attempt to strengthen Beijing’s hand in a potential future negotiation on the boundary. Lastly, they may complicate choices for Indian policymakers and military planners in the event of a conflict.
3. India’s Domestic Infrastructure Capabilities Can Power Project Exports
Physical infrastructure is a crucial enabler of the economic development of a nation as well as a catalyst for allied sectors in the economy. It also serves as a prerequisite for building far-reaching social and digital infrastructure. India has demonstrated its potential for building world-class infrastructure in roads, railways, telecommunications, power, airports, and ports in the recent times. India’s infrastructure journey has been arduous but successful and reflects the joint efforts of the government at the center, state, and local levels, as well as those of private sector companies.
The value of infrastructure demands for Asia amounted to $1.7 trillion per year in 2017, according to a report by Asian Development Bank, and $130–170 billion per year for Africa in 2018, according to the African Development Bank. This suggests a prevailing infrastructure deficit and a huge demand for infrastructure projects across countries on these continents. These circumstances provide India an opportunity to bridge such deficits by sharing its expert capabilities through project exports by leading Indian infrastructure companies.
India’s focus on infrastructure
The priorities of New Delhi in building a robust nationwide physical infrastructure have been evident from the Union Budget over the past few years. Driven by key infrastructure and strategic ministries, the Government of India’s capital expenditure as a percentage of GDP increased from 1.7 percent in 2014 to 2.9 percent in 2022–2023. As per the 2023–2024 budget, INR 10 lakh crore were allocated for infrastructure, a threefold increase from 2019. The Ministry of Railways received INR 2.4 lakh crore, approximately nine times the allocation in 2013–2014, while the Ministry of Road Transport and Highways witnessed a 36 percent increase with an allocation of INR 2.7 lakh crore.
In addition to the allocation of funds, an analysis of finance ministers’ budget speeches through the lens of key topics and phrases used since the reforms of 1991 indicates the evolution of economic policy toward building more infrastructure among other key areas.
Project exports from India
Project exports are “export[s] of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad.” The Project Exports Promotion Council of India (PEPC) reports that project exports from India amounted to $8.2 billion in 2017 and moderated to $2.7 billion in 2022. The actual value may, however, be higher given the lack of uniform global and India-level data on project exports and the voluntary nature of the provision by PEPC members of data pertaining to the value of project exports.
Most project exports from India are focused on the Middle East, with Saudi Arabia as the top destination, accounting for 20.6 percent of the total value of contracts between 2016–2017 and 2021–2022. A study undertaken by the PEPC on contract awards in Multilateral Development Bank–funded projects across major sectors and regions of operation suggests that India’s top competitors in project exports are China, South Korea, and Türkiye. Moreover, in terms of value, project exports from India have remained largely concentrated in the power sector. Therefore, there is scope for Indian companies to diversify and leverage their capabilities in other infrastructure sectors and expand their presence in less-explored geographies like East Asia, Central Asia, and Latin America.
Construction services are a major component for the project exporters in terms of value. India’s share in global construction services has increased substantially from 0.8 percent in 2011 to 3.3 percent in 2020. The exports of construction and related engineering services from India for 2021 out of the total project exports of $1.8 billion amounted to $1.19 billion. Still, there is room for improvement. For comparison, exports of construction services from China and Japan in 2021 amounted to $28.89 billion and $8.22 billion, respectively. With a major domestic infrastructure boom in recent years, India can play a more active role in meeting the infrastructure deficit abroad and contribute more extensively toward building infrastructure in other parts of the world.
Why focus on project exports?
While India aims to enter a new growth trajectory to become an upper middle–income country by 2047, it will need to implement deep structural and economic reforms in the areas of labor, education, health, research and development, and building manufacturing capabilities to simultaneously provide for domestic markets and compete in global markets. However, India should not only bank on endogenous sources of growth but “restructure [its] international economic engagements and double down on . . . emerging regional cooperation initiatives.” Thus, the country should look to deepen its economic integration in its neighborhood and beyond, in Africa and Latin America. One way to achieve this is to leverage India’s prowess in infrastructure development through project exports, especially from Indian infrastructure companies like Larsen and Toubro, Shapoorji Pallonji (SP) & Company, and Gammon India that have demonstrated capabilities to expand in infrastructure projects overseas.
Further, project exports are a key enabler in enhancing the strategic presence of companies across different regions while boosting the domestic economy through enhanced exports of high-value goods and services, cross-country transfer of new technology, and generation of project revenues. Therefore, project exports require a renewed focus from the government. However, the Export-Import (Exim) Bank of India, in a report in 2019, highlighted several prevailing challenges for project exports from India. These include low bid-conversion rates in select regions, political and business risk in project countries, limited and concentrated presence of project exporters from India, and large gaps in infrastructure financing.
Boosting India’s share of project exports
There are several measures by which the gap between challenges and opportunities can be bridged to increase project exports from India—for instance, expanding the scope of concessional lending from the government, encouraging a consortium approach by the private sector companies, and enhancing diplomatic support for projects from Indian missions abroad. Some of these were suggested in the 2003 Report of Task Force on Project Exports, but are yet to be implemented, and others are recommended in the aforementioned Exim Bank report.
The suggested measures to boost India’s share of project exports can be achieved in the following ways:
- Widening the scope of concessional lending: The Concessional Financing Scheme (CFS) provides concessional finance for Indian companies to bid for strategically important infrastructure projects abroad. Prior to the CFS, bidding for overseas infrastructure projects was not feasible for Indian companies, as they had to compete with bidders from the likes of China, Japan, Europe, and the United States, which provided credit at superior terms. Currently, the Government of India provides lines of credit (LOC) through the Exim Bank to least developed countries (LDCs) and heavily indebted poor countries (HIPCs) under the Indian Development and Economic Assistance Scheme, with a minimum grant element mandated by the World Bank and the International Monetary Fund (IMF), providing lower interest rates and greater moratorium. While the LOC meets the set concessional requirements, other lending schemes to support project exports, like the CFS and the Buyer’s Credit under National Export Insurance Account, are linked to floating interest rates and do not satisfy the minimum grant requirements set by the World Bank or the IMF. Thus, widening the scope of concessional lending via the CFS scheme among LDCs and HIPCs could improve the price competitiveness of project exporters and encourage them to access and bid for projects in these markets.
- Considering joint ventures and a consortium approach: As per a survey analyzed by the Exim Bank, Indian companies are open to collaborating by partnering with local companies in the potential project country. Having local presence can be beneficial, as it allows companies to access information about the markets, bid strategically, secure contracts, and implement projects successfully. Thus, the government should extend support to and encourage Indian companies in forming joint ventures in markets with emerging opportunities. Since Indian project exports are concentrated in the power sector and limited geographies, Indian companies could consider a consortium approach to the bidding and execution of multiregional and multisectoral projects, whereby several players with expertise in different sectors come together to bid. This strategy has been effective for Chinese companies.
- Increasing procurement opportunities and risk assessment via Indian missions: Indian missions abroad could play a proactive role in sharing knowledge about the emerging opportunities in various markets for the purpose of project exports. A separate project exports facilitation cell could be set up in the Indian missions that can serve as a direct link between industry bodies and associations in India. Similarly, the missions can work jointly with the project exporters to understand any institutional challenges related to land acquisition, tax norms, planning and approval procedures, and any other industry regulations. Political and business risk assessments can also be supported by the missions to alert project exporters of possible bottlenecks that could make projects economically unviable.
- Setting up a high-level standing committee or a multisector council: A high-level standing committee, also suggested in the 2003 report on project exports, could be set up to support project exports that are strategically important or require special attention. It might consist of members from the Ministry of Commerce and Industry, the Ministry of Finance, the Ministry of External Affairs, the Exim Bank, PEPC, the Reserve Bank of India, and the Export Credit Guarantee Corporation of India. Similarly, a multisector council could be set up that would bring together stakeholders from the government, industry bodies, and companies and serve as a platform to discuss emerging opportunities, address challenges, and offer recommendations to navigate and capitalize on project exports.
The way ahead
Through leading Indian infrastructure companies, India has demonstrated its potential in building world-class roads, railways, telecommunications, power, airports, and ports. As India aims to enter a new growth trajectory, expansion of India’s economic footprint in the Global South could serve as an important driver of this growth. Thus, given the infrastructure demand prevailing in Asia, Africa, and Latin America, India could leverage its infrastructure capabilities and build for the neighborhood and beyond, which could further bolster economic growth at home.
4. Tackling Light Interferences From Satellite Constellations
Satellite constellations are a group of similar satellites performing similar functions, operating in similar or complementary orbits under the shared control of a satellite operator. Since 2019, space companies have launched a large number of satellite constellations offering enhanced internet services to the world, such as SpaceX’s Starlink. They operate in low Earth orbit (LEO)—less than 1,000 kilometers from Earth—because their close proximity to Earth enables faster internet services. While it facilitates better internet connectivity, their operation in LEO also causes light interferences to astronomical observatories, affecting their functioning.
Astronomical observatories are important for the purposes of space situational awareness (SSA) and planetary defense, which involve tracking space objects and the trajectories of potentially hazardous asteroids, respectively. India must address concerns arising out of light interferences to protect astronomical observatories and their critical support for space science and missions.
The impact of satellite constellations on astronomy
Astronomical observatories are built in reserved dark spots to allow them to view the universe without light interferences. However, orbiting satellite constellations, visible around the Earth, interfere with the ability of observatories to make observations, regardless of where the observatories are situated. This makes such interference an international issue. Since the launch of the first satellite constellations, major observatories such as the European Southern Observatory and the Zwicky Transient Facility have been affected by these light interferences.
This may require observatories to increase their observation or exposure time to mitigate the interferences, in turn increasing their costs. For example, a study indicated that the Vera C. Rubin Telescope in Chile would incur additional expenses of nearly $22 million in mitigation measures. This would mean that in the long term, it is possible that only well-funded or large observatories will be able to operate, and only in a limited fashion.
How does this affect India?
India operates various observatories, such as the Indian Astronomical Observatory, the Kodaikanal Solar Observatory, and Vainu Bappu Observatory. It is also currently establishing telescopes under the NETRA project to indigenize its space situational awareness capabilities and will soon have its first commercially operated observatory. These help India to study the universe as well as to strategically monitor space objects for SSA. Such monitoring requires specific lighting conditions and dark skies, which may be affected by light interferences. Thus, the proliferation of constellations and the ensuing light interferences could impact India’s SSA capabilities, as well as its policy to encourage commercial SSA capabilities.
In addition, light interferences may impact India’s space observatories, increasing their program costs. In its statement to the United Nations Committee on Peaceful Uses of Outer Space Scientific and Technical Subcommittee (UNCOPUOS STSC) in 2023, India noted that its space observatory AstroSat had to be reset because of light interferences caused by the satellite constellations. Thus, the impact on India’s ground- and space-based observatories necessitates certain policy and mitigation measures to address this issue.
The importance of satellite constellations for India
Though certain astronomical groups from Italy, Spain, and Portugal have called for a complete ban, satellite constellations have been transformative in facilitating global broadband access and last-mile connectivity. Their utility has been observed during the Russia-Ukraine conflict, where they have offered internet services. The Indian government has acknowledged the strategic benefits of satellite constellations and prioritized their development in its Space Policy 2023. Further, satellite constellations are expected to contribute to India’s satellite communication services and could potentially help drive India’s space economy and its quest to narrow the digital divide. For instance, 36 percent of India’s space revenue in 2025 is expected to be from satellite applications and services that include satellite communications. So it is important for India to balance benefits deriving from technology that aids social and economic development and the safety of its astronomical activities.
The need for international norms
Currently, there are no comprehensive national laws or rules regulating light interferences caused by satellite constellations on observatories in any country. In the absence of regulations, SpaceX has signed a voluntary agreement with the United States’ National Science Foundation (which funds several observatories) to reduce these impacts. However, the United States may pass a national regulation soon following the Government Accountability Office’s reports, which recommend updating a decades-old exemption of satellite systems from environmental impact review in addition to instituting regulatory actions against light interferences. A national regulation from the United States may ensure responsible operation of satellite constellations, prevent untoward incidents caused by light interference, and keep other stakeholders from considering restrictive international norms that could affect the commercial success of satellite constellations.
However, in the future, regulation in the United States alone will not be enough. Countries such as the United Kingdom and China are also launching satellite constellations. Regulation will be needed, especially because interferences may be caused by satellite constellations outside their countries’ sovereign jurisdiction. Creating international norms may ensure a basic level of uniform practices, coordination, and mitigation throughout the globe.
Currently, concerted efforts from certain countries have caused this issue to be introduced as an agenda—Dark and Quiet Skies—at the UNCOPUOS STSC in 2022, which is an important step to raise international awareness on the issue as well as to bring countries together to develop acceptable international norms to mitigate light interferences caused by satellite constellations in the dark sky.
This agenda has been the subject of statements from many countries—the United States, Australia, Brazil, France, Pakistan, Iran, Chile, and the United Kingdom have supported the establishment of an expert working group to discuss mitigation measures. Some, like the United Kingdom, which acknowledges the benefits offered by satellite constellations, have called for a tradeoff between satellite constellation operators and astronomers. However, Russia noted this separate agenda as inappropriate, citing that it will increase the workload of the UNCOPUOS STSC. Further, at the UNCOPUOS plenary, Russia suggested a reformatting of Dark and Quiet Skies under the broader issue of satellite constellations. The different stances taken by countries toward this agenda may affect the consensus-driven mechanism required to develop international norms at the UNCOPUOS.
The way ahead
While India supports both the agenda and the establishment of an UNCOPUOS expert group, it needs to consider its domestic circumstances in order to actively participate in international efforts.
Currently, some multinational companies are proposing to offer satellite constellation communication services to India. Indian startups are also working to launch satellite constellations in the future. India must, therefore, be careful in regulating satellite constellations when the market is still emerging, and international norms are yet to be developed. The country has been clear in subjecting satellite constellation services to national telecom licenses, leading to a delay in the commencement of services by certain operators. While such conditions are important, any additional rules could affect companies’ entry into the country. But at the same time, the absence of mitigation measures for light interferences caused by satellite constellations would continue to affect India’s astronomy.
An effective way for India to address this issue is to continue active engagement at the UNCOPUOS. However, considering that adoptions at UNCOPUOS usually take time, since it is a consensus-driven committee, and that previous instances of adopting rules (like the LTS Guidelines 2019) have taken up to ten years, India must simultaneously pursue other initiatives mentioned below.
A consultation or workshop involving the Indian Institute of Astrophysics, other astronomical bodies, commercial observatories, satellite constellation operators, and experts would be helpful to kickstart a dialogue. It would allow India to understand the position of and challenges faced by its stakeholders. This could also lead to a Track 1.5 discussion with the involvement of government representatives from relevant countries, which could snowball into the inclusion of this agenda into India’s multilateral engagements, like the Quad’s Space Working Group, considering that other Quad countries are showing interest toward this agenda at UNCOPUOS.
Given the differences in stances taken by countries on the “Dark and Quiet Skies” agenda, India can look to engage with stakeholders outside of the United Nations through consultations, workshops, and multilateral forums to develop a common stance on the issue. For example, the existing BRICS Astronomy Working Group may be useful for India to engage with countries like Russia that differ on the agenda. These joint cooperations may help the countries in understanding the issues better sans the geopolitical lens, thereby facilitating consensus on an international norm at UNCOPUOS in the future.