Why in the News?

On October 20, Indonesia saw a big change in leadership. Nationalist Prabowo Subianto became president.

What are the implications of Indonesia’s new leadership for India-Indonesia relations?

• Increased Competition with China: Prabowo’s administration may lead to a more assertive Indonesian foreign policy that seeks to leverage its strategic position between China and India. However, the extent of this assertiveness will depend on how Indonesia navigates its growing economic reliance on China while maintaining its sovereignty.
• Potential for Enhanced Cooperation: Despite the challenges posed by China’s influence, India has an opportunity to deepen its engagement with Indonesia. This could involve collaborative efforts in sectors such as defence, maritime security, and trade, particularly given Indonesia’s strategic location and resource-rich economy.

How does Indonesia’s relationship with China impact its foreign policy choices?

• Strategic Balance: Prabowo’s decision to make China his first visit signals Indonesia’s pragmatic balancing between major powers. Despite concerns about China’s assertiveness in the Natuna Sea, Indonesia engages China for its economic clout and investments, especially in sectors like infrastructure and technology.
• Wariness Over Chinese Influence: Indonesia’s hesitance toward China’s extensive control over economic assets provides India an opportunity to position itself as a complementary partner that respects Indonesia’s sovereignty, especially given mutual interests in upholding maritime security in the Indo-Pacific.
• US-Indonesian Relations: Prabowo’s tenuous ties with the U.S. due to historical human rights allegations might encourage him to seek alternative partnerships, where India can play a constructive role in regional stability.

What opportunities exist for India to enhance its economic engagement with Indonesia?

• Energy and Mineral Resources: Indonesia’s rich reserves of coal, palm oil, nickel, and tin offer significant opportunities for India to secure its mineral and energy requirements, which aligns with India’s growing manufacturing and EV industries.
• Infrastructure and Maritime Cooperation: India’s existing partnerships in infrastructure, such as developing the Sabang port, can be expanded to reinforce connectivity and enhance trade routes between the Nicobar Islands and Indonesia.
• Services Sector Collaboration: India’s strength in IT and financial services can support Indonesia in reducing business costs and improving economic efficiency, particularly as it seeks to modernize and diversify its economy.
• Tourism and Cultural Exchange: Given Indonesia’s growing middle class and India’s appeal as a tourist destination, there is potential to expand tourism and cultural exchanges that celebrate shared heritage, including Hindu-Buddhist traditions.

Way forward: 

• Strengthen Strategic and Economic Partnerships: India should actively engage Indonesia in joint initiatives across defense, maritime security, and infrastructure, leveraging Indonesia’s strategic location and resources to build a resilient Indo-Pacific framework that counters China’s regional influence.
• Deepen Cultural and Economic Ties: Expanding collaborations in sectors like IT, energy, and tourism, and celebrating shared heritage, will foster goodwill and position India as a trusted and complementary partner to Indonesia, reinforcing mutual growth and stability in the region.

Mains PYQ:

Q Indian Diaspora has an important role to play in South-East Asian countries’ economy and society. Appraise the role of Indian Diaspora in South- East Asia in this context. (UPSC IAS/2017)

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