China’s economic slowdown is worrying officials in Beijing, and putting global CEOs on edge — but for India it’s a huge opportunity. Prime Minister Narendra Modi has been on a diplomatic charm offensive since he won a third term but lost his parliamentary majority: Moscow, Kyiv and this week, Brunei and Singapore. The trip comes as the world’s fastest growing major economy is trying to position itself as a worthy alternative to China, its rival in the Global South. But it’s a chance India isn’t capitalizing on, held back by insular trade policies and a “me-first” approach to foreign and security affairs.

Modi is popular with the diaspora in Singapore and received a rousing welcome. He met with Prime Minister Lawrence Wong, as well as business leaders and representatives of the semiconductor sector — an attempt to boost his own country’s chip capacity.

But China’s influence in Singapore, as is the case in most Southeast Asian countries, is much greater. Beijing views the region as its historical backyard, and is positioning itself as a viable option to the US-led liberal international order that has been in place since World War II. It has invested heavily in developing countries, building infrastructure through its Belt and Road Initiative. China’s one-party system has meant that it can act as a unified force, with a top-down approach to strategic investments. Through port and railway projects around the world, Beijing has been able to buy political influence in nations from Australia to Africa.

Despite a long tradition of cultural and religious synergies with Southeast Asia, India has trailed behind. The two nations have competed for influence in the Global South for decades, dating as far back as 1955 at the Asia-Africa Conference, which laid the framework for the Non-Aligned Movement. India was just emerging from British rule, and the People’s Republic of China was newly formed.

At the time, if you were to have placed a wager on which country would rise as a global economic leader, the smart money would have been on India. Its strong civil service, railways and the English language made it a safer bet compared to an unstable China, dealing with the failed experiment and subsequent famine of the Great Leap Forward.

Today, it’s a different story. India’s $3.5 trillion economy is dwarfed by the $17.8 trillion Chinese giant. Per capita income started out roughly the same in the 1960s, but now India’s is at around $2,500, versus China’s $12,600.

India Can’t Keep Up

Despite strong growth, India’s per capita GDP is far off China’s

But it is catching up. Bloomberg Economics analysis found that India’s economy will accelerate to 9% by the end of the decade, while China will slow to 3.5%. That puts India on the path to surpass China as the world’s biggest growth driver by 2028.

Money talks in geopolitics, and New Delhi has all the right ingredients to match Beijing’s clout, so why is it losing ground? The government’s “Act East Policy” has been in place for the last decade, but domestic politics are the priority, which curbs investments and vital regional trade agreements. Joining mega trade blocs such as the Regional Comprehensive Economic Partnership is a sensible move, and something the World Bank is urging New Delhi to reconsider.

Faith holds India back, too. Right-wing Hindu ideology is successful domestically, but it doesn’t play well overseas. For many Muslim majority nations like Indonesia, Malaysia and Brunei, Modi’s public condemnation of minorities is hard to stomach, not withstanding Beijing’s treatment of Uyghur Muslims.

Another reason for New Delhi’s lukewarm economic engagement with Asean — the 10-member Association of Southeast Asian Nations — is that these efforts haven’t gone down so well in its own backyard. India has been accused of meddling in the political affairs of its closest neighbors, Nepal, Bangladesh and Sri Lanka, who are now telling it to back off. Modi’s decision to offer shelter to Sheikh Hasina, recently ousted from power after decades of increasingly authoritarian rule, is prompting a backlash in Dhaka.

Still, the ambition to combat Beijing’s role in regional statecraft is understandable. Modi’s government is deeply suspicious of President Xi Jinping, and the nuclear-armed neighbors have a decades-old border dispute high in the Himalayas that remains unresolved. These tensions pushed New Delhi to team up with the US, Australia and Japan in the Quad — a grouping of like-minded democracies, whose ostensible aim is checking Chinese domination.

But India will have to do more than that to win the battle for influence. Investing in Southeast Asia, where China has a head start, is a good move.
Singapore is the largest foreign direct investor in India, even as it continues to focus on Chinese growth — but was also the top investment destination for Indian companies last year.

New Delhi could also mend ties with Southeast Asian nations disillusioned with the US over its perceived hypocrisy on Israel’s war against Hamas in Gaza. In a widely cited poll, the majority of Asean respondents picked Beijing over Washington when asked which side they’d align with if forced to choose.

Modi can point to centuries of constructive Indian influence across Asia, from Thailand to Indonesia and Sri Lanka, to rival China’s rise. The India of the past was not an outwardly muscular right-wing Hindu nation, despite housing a deeply misogynistic society, and discrimination in the now outlawed but still widely practiced caste-system. Modi would be wise to take that lesson from ancient history, as he fashions a modern narrative about the world’s largest democracy.