A few days ago, when the Pakistan unit of the Hyundai Motor Company made a social media post on the so-called Kashmir Solidarity Day, it would never have suspected what it was bargaining for. Soon afterwards, New Delhi summoned the South Korean ambassador to register a protest.
The South Korean Foreign Minister, who understood the interests involved, called up his Indian counterpart and promptly regretted what had happened. A somewhat similar situation had developed in late 2019, when the Malaysian government was seen as critical of India’s decision to scrap Article 370. It just so happened that Malaysia’s economy is heavily dependent on palm oil exports, and India was the largest buyer. The message from New Delhi was clear. If you go against Indian interests, you will have to pay a price. Despite all the claims by liberal institutionalists that interdependency is increasing in the world, power still remains the most significant currency in realpolitik.
Within the tangible aspects of power, economic power is the most important component. It is a country’s economic weight that lifts up its political stature and helps it decide its fate in geopolitical contests. It was the economic rise of Britain that powered its geopolitical ascendance during the heyday of the British empire. It was the economic progress of the United States that helped it secure a position as the global hegemon. And it was indeed a lack of economic growth that brought the USSR to the verge of disintegration and ended the cold war in the most unusual way.
Economic power, which is calculated in terms of total GDP of a country, is significant because it decides how much funds a country can allocate to its military security. For all the claims about morals, ideals, peace agreement etc., sovereignty and territorial integrity of a state is underwritten by huge expenditure on its military security. Due to the anarchic nature of the international system, countries are always chasing more power and within that economic power more specifically to make themselves safe and secure.
Closer home, the recent events with regard to social media handles of top multinational companies celebrating so-called “Kashmir Solidarity Day” in Pakistan illustrate the importance of economic weight. The backlash against Pakistani handles of these MNCs began slowly but it caught fire in no time. Indian social media users started trending #Boycott trends for brands such as Hyundai, Pizza Hut, Kia Motors and KFC. This led these brands to immediately issue apologies via their Indian handles and reaffirm their commitment to India’s sovereignty and territorial integrity. So, was it because of the power of social media alone that these big brands took a swift action or there is more?
To put things in perspective, India’s economic growth and the resultant increase in the size of its market has made it an attractive destination for all big brands. Since its entry in India in 1996, Hyundai has become the second largest auto player with a 16 per cent market share and a sale of 6.35 lakh units in 2021. In comparison, Pakistan buys just 8,000 odd units of Hyundai cars due to its precarious economic situation. Similarly, Pizza Hut has massive expansion plans in India riding the wave of a young demography across tier-2 and tier-3 cities of India. While it has 500 stores across India, in Pakistan it just has under 100 stores.
Brands taking political positions is always bad economics but with India’s consistent economic rise, taking any political position against India is going to harm the brands even more. Western markets are protectionist, China’s growth story is fading, hope for the global capital is now India and they can’t afford to lose the opportunity over such cheap tricks. It is with this confidence that the Indian diplomatic dispensation swung into action and summoned Hyundai’s parent country South Korea’s envoy to register protest.
Going forward, India’s economic growth would lead to more such confident moves and hopefully India will settle its geopolitical contests favourably. It is through this lens that the government’s push towards an Atmanirbhar Bharat must be seen. Unlike in the old days, it does not mean India withdrawing from the world economy. Nor does it mean Indians resigning themselves to technological backwardness, chronic shortages, and goods of inferior quality.
The Production Linked Initiative (PLI) scheme now covers everything from smartphones to air conditioners and semiconductor chips. The idea is to raise Indian domestic manufacturing to the level where it becomes integral to global supply chains. Unless we learn to dominate these supply-chains and make them work for us, we are not really in control of our borders, our sovereignty, or our destiny. The pandemic has taught us exactly that.
As India resumes its journey towards becoming a 5 trillion-dollar economy, we must understand the evolving nature of power. It is now multidimensional, and conventional military power is just one component. There is economic power, which is determined by market size and our position in the global supply chain. It allows us to influence the behavior of governments in distant foreign lands.
There are also threats. How is it that foreign lobbying groups are able to incubate protests on Indian streets? This is done through the civil society network, handing out awards, junkets, fellowships, and other forms of patronage. We do not need to be defensive. Instead, we must learn how to use each of these levers of power to push Indian interests worldwide.
(The writers are, respectively, an expert in International Relations who tweets @TrulyMonica, and an author and columnist who tweets @AbhishBanerj.)