India

What does the map enable, and what does it threaten?

The subcontinent is a strong base. India sits astride the Indian Ocean's main sea lanes, with a large internal market and broad plains of farmland, and no outside power can easily reach it. Its weaknesses are its neighbours and its fuel. It faces two hostile, nuclear-armed neighbours on its land borders, and the 2025 clash with Pakistan showed how quickly that front can turn hot¹⁷. It depends heavily on imported oil, so the Gulf war hit directly: when Brent crude touched US$110 in September 2026 the rupee slid to about 95.75 to the dollar¹⁹. A strong position, held back by energy dependence and contested borders.

Is the population growing, skilled and staying?

India has the numbers: about 1.48 billion people, with a median age near 29^1,2. The question LKY would ask is how many of them are skilled and working. The answer is not enough. Unemployment for those aged 15 and over was 5% in September 2026, but labour force participation was only 55.5%, and just 25.9% of urban women were working or looking for work⁴. Data is also thin: there has been no census count since 2011, and the next one is not due until February 2027²¹. A large dividend is available; India is collecting it slowly.

What habits does the society reward?

The habits are mixed. Violent crime is moderate for a poor country: the homicide rate was about 2.8 per 100,000 people in 2022⁹. Families invest hard in education and enterprise, and the private sector is energetic. Against that, perceived public-sector corruption is entrenched, with a score of 39 on Transparency International's index⁷, and social norms keep most women out of paid work, which wastes a large share of the talent the country has⁴. Comparable data on trust and rule-following is patchy, hence low confidence. This score is about institutions and social habits, not about any group.

Who rules, how are they chosen, and are they competent?

On deeds, the Modi government has delivered more than its predecessors. Growth reached 7.8% in April to June 2026, beating the central bank's 7% forecast¹⁰. It raised defence spending by about 15% to a record Rs 7.85 lakh crore, with capital spending up sharply¹¹. Under US tariff pressure it struck a deal in February 2026 that cut the US tariff on Indian goods to 18% and lifted the extra 25% penalty over Russian oil, in return for India's commitment, as stated in the US order, to stop importing Russian oil^12,13. Its BJP made a historic breakthrough in West Bengal in May 2026¹⁴. Pragmatic and effective, though state capacity still lags its ambitions.

Is there rule of law, low corruption and predictability?

The state keeps the peace across a vast and varied country, but the rule of law is slow and uneven. India scored 39 on Transparency International's 2025 index, up one point, ranking 91st of 182⁷. On the World Justice Project's 2025 index it ranked 86th with a score of 0.49, down 1.7%⁸. Violent crime is moderate, at about 2.8 homicides per 100,000 people⁹. Courts are independent but overloaded, and petty corruption shapes much of daily contact with the state. Elections are run at enormous scale, and upsets are part of the result¹⁴. Middling order, better than its corruption scores suggest at the national level, weaker locally.

Where are the fault lines, and how stable are they?

India holds together a country of many languages, regions and faiths through federalism and elections, and power changes hands peacefully: the 2026 state elections delivered major upsets and brought new parties to power¹⁴. The fault lines are real. Kashmir remains disputed with Pakistan, and the Indus Waters Treaty has become a new flashpoint: India says suspending it is a decisive step against a country that harbours terrorism, while Pakistan's prime minister calls every drop of water its red line¹⁷. Census 2027 will include caste enumeration, which could sharpen competition over quotas²¹. Strained, but the democratic system absorbs the pressure.

Why does the world need this country?

India matters more every year. The IMF puts its 2026 GDP at about US$4.1 trillion and expects growth of 7%³. Exports of goods and services reached about US$860 billion in 2025-26²². Its market and its labour pool make it the main alternative to China for companies spreading their supply chains, and both Washington and Beijing court it^13,20. It remains a smaller trading power than its size suggests, running a record US$112 billion deficit with China¹⁵, and its income per head is still only about US$2,750³. Rising weight, not yet top rank.

What does it need, want and fear?

Need: cheap, secure energy, since oil shocks feed straight into prices; wholesale inflation hit 11.39% in September 2026¹⁸. It also needs jobs for a vast young workforce, and open markets for its goods and services^4,22. Want: a seat at the top table, strategic autonomy between the great powers, and a stable border with China. Fear: a two-front crisis with China and Pakistan, cross-border terrorism¹⁷, dependence on Chinese inputs as the trade deficit with China grows¹⁵, and US tariffs if the trade deal falters¹³.

Who are its patrons, rivals and hedges?

India practises the balance LKY would recognise: it deals with everyone and binds itself to no one. It settled with Washington in February 2026, accepting an 18% tariff and committing, as the US order put it, to stop buying Russian oil^12,13. It has eased tensions with Beijing: direct flights resumed in October 2025 after a five-year freeze²⁰, and China overtook the US as its largest trading partner in 2025-26, with trade of about US$151 billion¹⁵. Pakistan remains hostile; the Indus Waters Treaty is still in abeyance¹⁷. Room to manoeuvre is wide, though it bought calm with Washington by giving ground.

Can it deter, or does it depend on others?

India fields one of the world's largest armed forces and a nuclear deterrent, and it is spending more. The 2026-27 defence budget rose about 15% to a record Rs 7.85 lakh crore, with Rs 2.19 lakh crore under the capital head and capital acquisition up 24%¹¹. In May 2025 it fought a brief military confrontation with Pakistan after the Pahalgam terror attack, which killed 26 people¹⁷. The force is still heavy on manpower and pensions and reliant on imported equipment, which the higher capital budget is meant to change¹¹. Capable of deterring Pakistan, and of defending against China on land, but not yet of matching it.

Rising, stagnant or declining, and how fast?

Rising, on results already visible. Real GDP grew 7.8% in April to June 2026¹⁰, and the IMF expects 7% for the year³. Trade with its largest partners is growing: bilateral trade with China rose 29% in April to September 2026¹⁶. The risks are external and fiscal. Oil at US$110 and a weaker rupee have pushed wholesale inflation to a series high of 11.39%^19,18, and rating agencies still place India at or near the lowest investment grade⁶. The direction is clearly up; the pace depends on energy prices and reform.