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Jakarta Post

Time to shift India-Indonesia ties into the next gear

Despite existing links, there remains substantial untapped potential for future collaboration between India and Indonesia.

Nandini Bhatnagar (The Jakarta Post)
New Delhi
Wed, January 22, 2025

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Time to shift India-Indonesia ties into the next gear Strengthening connections: (Left to right, front) United States President Joe Biden, India's Prime Minister Narendra Modi, Brazil's President Luiz Inacio Lula da Silva, along with President Prabowo Subianto (center, back), and France's President Emmanuel Macron (right, back) are pictured in a group photo after attending the meeting on Sustainable Development and Energy Transition at the G20 Leaders' Meeting in Rio de Janeiro, Brazil, on Nov. 19, 2024. (AFP/Mauro Pimentel)

T

he upcoming visit of President Prabowo Subianto as the Chief Guest at India’s 76th Republic Day celebrations marks a significant moment in the evolving relationship between India and Indonesia. This visit is not only ceremonial, but also a strategic opportunity to strengthen ties between two of the largest democracies in Asia. The last state visit by an Indonesian president to India took place in 2016, when then-president Joko “Jokowi” Widodo visited New Delhi. Nine years later, this forthcoming visit is particularly noteworthy, as it is President Prabowo’s first official trip to India since taking office. Indian Prime Minister Narendra Modi had met with the newly elected president on the sidelines of the G20 Summit in Rio de Janeiro, Brazil, in November, where they reaffirmed their commitment to strengthening bilateral ties in the Comprehensive Strategic Partnership framework.

Indonesia holds a vital position for India due to its geographical proximity and shared interests in various sectors. Our civilizational ties date back over 2,000 years and are shaped by the exchange of culture, religion and trade, among others. The Indian diaspora in Indonesia, though relatively small, plays a significant role in the local business community, particularly in sectors like textiles, trade and retail. The two countries have historically enjoyed strong economic and strategic ties since signing the Treaty of Friendship in March 1951, and since then, Indonesia has emerged as one of India’s top trading partners in the ASEAN region, with the total bilateral trade reaching US$26.69 billion in 2023-24. Our political ties strengthened when the two countries elevated their strategic partnership to a “New Comprehensive Strategic Partnership” and welcomed the “Shared Vision on Maritime Cooperation in the Indo-Pacific” during PM Modi’s visit to Jakarta in 2018.

Despite these existing links, there remains substantial untapped potential for future collaboration between India and Indonesia. Under President Prabowo, Indonesia’s foreign policy is expected to pivot toward military power and security partnerships. This marks a departure from the more economic-focused approach of his predecessor Jokowi. This shift creates a significant opportunity for India to further strengthen its existing defense ties with Indonesia. Periodic military cooperation exercises, like the 9th edition of the Garuda Shakti exercise in November, highlight the interoperability between the two countries. Indonesia has also expressed interest in acquiring India’s BrahMos missile system, which reflects trust in Indian defense technologies. Given the shifting dynamics in the Indo-Pacific, driven by Chinese expansionism, collaboration between countries like India and Indonesia becomes all the more important to secure critical routes and freedom of navigation in the waters.

Another area ripe for exploration is the renewable energy sector. Indonesia has set an ambitious target to achieve 17.6 gigawatts (GW) of installed solar energy capacity by 2035, presenting an opportunity for India to invest and collaborate in this sector. Additionally, with Indonesia’s vast coastline and favorable wind patterns, wind energy also presents a promising avenue for joint ventures which have not been developed fully. Indian firms like the Adani Group, TATA Power and GAIL can leverage their expertise in renewable technologies to support Indonesia’s transition toward sustainable energy sources.

A sustainable energy future relies on access to critical minerals such as nickel, a critical mineral for industries like stainless steel, EV batteries and renewable energy storage. Indonesia is the world’s largest producer of nickel, with 1.5 billion tonnes of reserves. India, however, is 100 percent import-dependent for nickel, with China as one of its primary suppliers. This heavy reliance creates supply chain vulnerabilities for critical Indian industries. In 2020, Indonesia imposed a complete ban on raw nickel exports to drive investments in its downstream industries, such as refining and battery manufacturing. China successfully navigated Indonesia’s regulatory environment and established nickel processing industrial parks to secure its position in the value chain. India, by establishing a similar partnership with Indonesia, can diversify its supply sources and reduce its reliance on China to secure critical mineral needs for key industries.  

Lastly, Indonesia’s infrastructure push, which includes the development of the future capital city Nusantara and the Smart Cities Initiatives, offers a good opportunity for bilateral cooperation. This partnership can involve joint investments in infrastructure projects and capacity building programs through Indian Technical and Economic Cooperation (ITEC), establishing public-private partnerships (PPP) across borders.

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Despite the clear potential for collaboration, both nations face several challenges in unlocking their full bilateral potential. One of the most pressing issues lies in the trade imbalance that currently favors Indonesia. India’s heavy imports of palm oil and coal have contributed to a growing trade deficit and concentrated trade portfolios. Another very important issue is China’s secure foothold in Indonesia. Beijing’s heavy presence in the Indonesian economy, as well as the infrastructure sector, gives it a comfortable leverage to influence domestic policies, which raises concerns for India. Last but not the least, despite the geographic proximity, the two countries face significant connectivity challenges. Direct routes between the two nations are limited, which increases trade costs and efficiency. On the maritime front, while efforts are underway to develop the Sabang Port under India’s SAGAR (Security and Growth for All in the Region) initiative, infrastructure and logistical integration between the two countries remain underdeveloped.

India and Indonesia are not just geographical neighbors, but partners with a shared culture and history that have common strategic interests. Yet, partnerships do not thrive on goodwill alone; they require consistency and mutual commitment to progress. Both India and Indonesia stand to gain significantly from this relationship, where the time for incremental progress has passed and it is time to step into a higher gear to realize our full potential.

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The writer is a research assistant at Chintan Research Foundation.

 

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