India and the West at Sea: Countering China through Maritime Cooperation

In August, at the Shanghai Cooperation Organisation (SCO) summit in Tianjin, China, Prime Minister Narendra Modi of India met Chinese President Xi Jinping, marking the first visit of an Indian head of state to China in seven years. The seemingly cordial meeting between Modi and Xi bodes well for the fraught relationship between both countries. For decades, Sino-Indian relations have been marked by border tensions and disagreement on geopolitical issues, like China’s close relationship with India’s nemesis Pakistan, China’s annexation of Tibet, and regional spheres of influence. The relationship reached a low point in 2020, when border clashes between Indian and Chinese armed forces in the historically disputed Galwan Valley led to fatalities on both sides, and only cautiously recovered since.

Now, as the U.S. has imposed tariffs on both China and India, and urges the EU to do the same, Sino-Indian rapprochement appears to gain momentum. Meanwhile, observers in Europe and the US are looking on warily. Many Western powers consider India an important ally in countering China’s bid for global dominance and maintaining stability in the Indo-Pacific. Running counter to this view, the prospect of closer Sino-Indian ties jeopardises Western efforts towards more cooperation with India, like the Quadrilateral Security Dialogue between the US, India, Japan, and Australia, and the EU’s recent launch of a comprehensive strategy for EU-India cooperation.

However, while the meeting between Xi and Modi has symbolic value, one should not overstate its importance. Even as aggressive US foreign economic policy provides India and China with a common adversary, the Sino-Indian relationship remains antagonistic. Beyond longstanding geopolitical disagreements, economic differences stand in the way of further strategic cooperation between India and China. This is especially clear in the maritime domain, where India’s objectives align more closely with EU and US interests than with the Chinese maritime agenda.

Dependence versus dominance in a strategically important sector

The maritime domain holds special economic and strategic importance for both India and China, given their extensive coastlines. For both countries, maritime transportation is central to engaging in global trade, and therefore to national prosperity. At the same time, in case of war in the Indo-Pacific, possessing a capable fleet of both naval and merchant vessels and the shipbuilding capacity to maintain or expand said fleet, are crucial for military success.

Despite their common maritime character, however, India and China espouse fundamentally different views on maritime order. While China has been instrumentalising its growing maritime power to unilaterally reshape the maritime order in the Indo-Pacific, India has sided with actors like the US, Japan, and the EU in supporting a ‘Free and Open Indo-Pacific’. This idea, first formulated in 2007 by late Japanese Prime-Minister Shinzo Abe during an address to the Indian Parliament, proposes a maritime order based on multilateralism and respect for international maritime law.

These different perspectives are closely related to India and China’s respective position in the maritime economy. At present, India does not possess a sizeable national merchant fleet, and therefore depends on shipping services provided by third countries to sustain its exports. Shipping in turn depends on the accessibility of maritime trade routes and sea ports across the world. Hence, India’s support for a liberal, rules-based maritime order can be understood as an attempt to safeguard access to maritime transportation for its exports. In addition, if India were to aspire to a fleet of its own, it currently lacks substantial domestic shipbuilding capacity, and would thus be forced to purchase ships produced elsewhere.

China, conversely, is a major maritime power, with the world’s second highest share of merchant fleet ownership measured by capacity, a shipbuilding sector representing over half of global production, and major investments in ports worldwide. China leverages its maritime economy to amass hard power, for example by exploiting its prominence in global shipbuilding to fuel the growth of its navy. In addition, it has demonstrated contempt for international maritime law in advancing its economic interests at sea. Through grey zone activities by its maritime militia, for instance, China asserts control over food and energy resources in areas of the South China Sea outside the Chinese Exclusive Economic Zone. Off the coasts of West Africa, meanwhile, Chinese vessels have been identified as key perpetrators of  IUU fishing offences.

The common maritime predicament of India, the EU, and the US

The discrepancy in maritime power between India and China puts India at risk of strategic dependence on China. However, India is not the only country facing this issue. A lack of merchant fleet ownership and/or shipbuilding capacity also plagues the EU and the US, albeit to varying degrees. The EU, although its share of global merchant fleet ownership is safeguarded by Greece leading the global charts, represented less than 2% of global shipbuilding capacity in 2024. Meanwhile, the US ranks 13th in merchant fleet ownership and has seen its share of global shipbuilding capacity dwindle to 0.04% last year. In addition, while Chinese port operators have not yet made inroads in India, they have in Europe and the US, where Chinese state-owned companies are involved in the ownership and operation of various major ports.

Based on the above, India has important shared interests with the EU and US in a sector of major strategic importance. As engaging in international trade is increasingly difficult without using Chinese-built ships, relying on Chinese shipping services, or moving cargo through a terminal operated by a Chinese company, there is incentive for India, the EU, and the US alike to mitigate strategic dependence by developing their maritime economies.

In fact, all three actors are currently doing just that. In May, 20 EU Member States adopted the Szczecin declaration, reiterating the strategic importance of shipbuilding and shipping, and calling for measures to support the competitiveness of these sectors. Similarly, in the US the SHIPS for America Act laments the strategic implications of Chinese maritime dominance, while aiming for reducing the reliance of US trade on foreign vessels and boosting domestic shipbuilding capacity. Meanwhile, in February India announced plans to build an Indian-flagged fleet accounting for 20% of global cargo volume by 2047, also citing a desire to reduce dependence on foreign ships. To this end, the Indian government has introduced a maritime development fund worth 3 billion USD, and 2.2 billion USD worth of support for domestic shipbuilding.

Strategic alignment through economic cooperation

This shared resolve to reduce strategic dependence in the maritime economy presents an opportunity for simultaneous strategic alignment and economic cooperation between India and Western powers. India’s economic potential, including a labour force of well over 600 million people and a growing role as a global manufacturing hub, could be instrumentalised to offset Chinese maritime economic dominance. To realise this potential, the EU and US can offer India technological expertise to support the upgrading of its economy from low-tech to high-tech manufacturing, and capital to boost the growth of its maritime sector. Such initiatives could be embedded within the Indo-Pacific strategies of both the EU and US, and financed through existent frameworks like the Global Gateway initiative or PGII.

Supporting the development of India’s maritime economy would not solve the EU and US’ own shipping and shipbuilding woes, and investing in domestic capacity would remain necessary. However, India maintains a pragmatic foreign policy of strategic non-alignment, and is known for economic protectionism. Balancing relations with actors ranging from the US to Russia, India’s approach to international relations combines a strong focus on fulfilling its material interests with diplomatic flexibility. Therefore, in an international ‘battle of offers’ for India’s partnership, offering a clear economic benefit in the maritime sector, the development of which the Indian government itself has indicated as a priority, is a way for Western powers to accommodate India’s pragmatism. For the EU and US, meanwhile, supporting India’s maritime economy, and thus reinforcing the relationship, serves two strategic objectives: diversifying global shipping and shipbuilding markets away from China, and providing a counterweight to the threat of Sino-Indian rapprochement. Moreover, beyond these strategic benefits, in return for their support the EU and US may seek preferential access to the Indian market for their firms, or double down on their calls on India to stop purchasing Russian oil.

In conclusion, at a time when India and China appear to be moving closer together politically, it is important to remember that they have conflicting strategic interests, including in the maritime economy. It is up to other global players like the EU and the US to determine how to play into this dynamic amid a changing global balance of power. Aggressive foreign economic policy, such as tariffs, may drive Sino-Indian alignment. Conversely, policies geared towards cooperation, for instance on industrial and technological development in the maritime domain, may contribute to a more aligned relationship that better serves the economic and strategic interests of Western powers and India alike.