India’s Pivot in Southeast Asia: Myanmar to Indonesia

This piece discusses that as Myanmar’s reliability as India’s strategic anchor erodes, Indonesia has emerged as a more promising new pivot for India to strengthen its influence in Southeast Asia and balance China’s dominance through deepening maritime, defense, and investment cooperation.

Two Decades of Institutional and Maritime Engagement in Southeast Asia

Since 2000, India has designed the Mekong-Ganga Cooperation (MGC), involving Vietnam, Myanmar, Laos, Cambodia, and Thailand. This initiative developed into a multilateral framework to reform education, water transport, inter-societal connectivity, and tourism around the Ganga-Mekong region. Beyond these functional aspects, the cooperation was also intended to curb the spread of cross-border crime in the Golden Triangle area (Laos, Cambodia, and North Thailand).

Alongside this sub-regional framework, since 2005 India has been actively conducting joint patrols with ASEAN countries (Malaysia, Indonesia, and Singapore) and the US to counter piracy and terrorism in the Malacca Strait — a route also of strategic importance to China as a supply line for its energy imports from Southeast Asia. India’s maritime exercises with Vietnam, the Philippines, and Thailand have likewise intensified. Vietnam even granted port access at Nha Trang to Indian vessels to secure them from piracy, smuggling, and China’s maritime activities in the South China Sea.

With the Philippines, India pioneered cooperation in satellite communications, aircraft design, and ship maintenance (Supriyanto, 2015), which indirectly enhanced the Philippines’ readiness to face any escalation of the South China Sea dispute or other transnational threats. Meanwhile, India provided counterterrorism and counter-insurgency support to Thailand through the 2003 Joint Working Group on Security Cooperation and a 2007 MoU with the Royal Thai Navy on coordinating communication channels and patrol procedures in the Andaman Sea.

Myanmar’s position within this broader engagement, however, has always been distinct, owing to its long-standing alignment with China. To address this, in 2008 India granted observer status in the South Asian Association for Regional Cooperation (SAARC) to Myanmar, a move that opened space for dialogue on border issues and Myanmar’s military modernization (Wu, 2015).

Myanmar: A Deepening Governance and Strategic Risk

This calculus is now under serious strain due to a far more troubling development: Myanmar has become the epicenter of Southeast Asia’s largest online scam industry. The UN estimates that around 120,000 people remain forced to work in cyber-fraud compounds along the Myanmar-Thailand border, with complexes such as KK Park and Shwe Kokko controlled by ethnic armed groups aligned with the military junta, working alongside Chinese-linked criminal syndicates (IISS, 2025; OHCHR, 2023).

This phenomenon reveals a paradox in Myanmar’s post-2021 coup governance: the junta has tended to tolerate — and even profit from — this illicit economy. At the same time, China’s economic influence over Myanmar has not weakened; on the contrary, Beijing has deepened its grip through major investments in Myanmar’s gas, oil, and strategic infrastructure sectors supporting its Belt and Road Initiative, even as it simultaneously pressures the junta diplomatically to address the country’s domestic conflicts (Martin and Hogan, 2025; Sin, 2024; China Global Newsletter, 2023).

For India, this situation narrows its room to maneuver. Myanmar has become increasingly difficult to rely on as an anchor of the Act East policy, as internal instability, weak state control, the Rohingya refugee influx, and structural dependence on China make it hard for New Delhi to treat Naypyidaw as a stable strategic foothold in the Bay of Bengal-Andaman corridor and as a reliable gas supplier.

Indonesia as India’s Emerging Strategic Pivot

Against this backdrop, Indonesia has emerged as a far more promising alternative partner for India in balancing China’s influence in Asia. The India-Indonesia Comprehensive Strategic Partnership, in place since 2018, has seen significant acceleration over the past year. PM Narendra Modi’s state visit to Jakarta on 6–8 July 2026 produced 14 agreements covering critical minerals, maritime security, and defense, including the sale of BrahMos and Astra missiles worth approximately US$630 million to Indonesia (Bloomberg, 2026), bolstering Jakarta’s defense posture amid China’s growing assertiveness in the region.

The maritime dimension of this partnership has become increasingly prominent through plans to develop Sabang Port in Aceh, located close to India’s Andaman and Nicobar Islands (Ganapathy, 2026) — a geographic proximity that has made maritime cooperation a core pillar of the two countries’ strategic partnership while also reinforcing India’s strategic presence near the Malacca Strait. Beyond its strategic value, such cooperation would also strengthen Indonesia’s operational capacity to safeguard maritime stability along its extensive sea borders, particularly in disaster response and the interdiction of transnational crime.

Closing the Investment Gap: Economic Opportunities for India in Indonesia

Despite this strategic momentum, India’s current standing as an FDI source for ASEAN still trails well behind several European economies such as the Netherlands, let alone the United States, Japan, or China — underscoring a significant gap that New Delhi has yet to close in the region, particularly in Indonesia. This gap is notable given the timing: Indonesia is actively diversifying its trade and investment partnerships as a hedge against the potential escalation of great-power bipolar rivalry between China and the United States in the Indo-Pacific. This dimension of economic cooperation is particularly timely for India, as its waning influence in Myanmar — increasingly ceded to China — has heightened the urgency for New Delhi to diversify and secure alternative supply chains for natural resources and industrial raw materials.

Notably, India and Indonesia have already demonstrated the capacity for substantial bilateral investment flows once before, during a historic spike in 2010 (see figure below) — a precedent that raises expectations for whether the renewed momentum since 2026 can translate into comparably significant, and this time more sustained, investment figures between the two countries.

One concrete avenue to close this gap lies in shipbuilding. Indian investment in the procurement of specialized commodity-transport vessels for Indonesia — potentially developed domestically through a joint research and development program — would carry mutual benefit: Indonesia gains shipbuilding capacity and technology transfer, while India secures a growing export destination for its shipbuilding sector and, in parallel, a reliable source of semi-processed natural commodities and micro-industrial products from Indonesia.

References

Bloomberg. (2026) ‘India, Indonesia sign BrahMos, Astra missile deals during Modi visit’. https://www.bloomberg.com/news/articles/2026-07-07/modi-prabowo-to-sign-india-indonesia-defense-pact-deepen-ties  (Accessed: 10 July 2026).

Ganapathy, N. (2026) ‘India, Indonesia revitalise Sabang Port plans amid the growing influence of China’, ETV Bharat, 9 July. https://www.etvbharat.com/en/international/india-indonesia-revitalise-sabang-port-plans-enn26070901522  (Accessed: 10 July 2026).

International Institute for Strategic Studies (IISS). (2025) ‘Regional Spotlight: Asia’, in Armed Conflict Survey 2025. London: IISS. https://www.iiss.org/publications/armed-conflict-survey/2025/armed-conflict-survey-2025/regional-spotlight-asia/  (Accessed: 8 June 2026).

Martin, P. and Hogan, L. (2025) ‘China brokers ceasefire deal between Myanmar junta and rebel group’, ABC News, 21 January. https://www.abc.net.au/news/2025-01-21/china-brokers-ceasefire-deal-myanmar-junta-rebel-group/104840300  (Accessed: 15 May 2026).

Office of the United Nations High Commissioner for Human Rights (OHCHR). (2023) ‘Hundreds of thousands trafficked to work as online scammers in SE Asia, says UN report’ [Press release]. https://www.ohchr.org/en/press-releases/2023/08/hundreds-thousands-trafficked-work-online-scammers-se-asia-says-un-report  (Accessed: 11 July 2026).

Sin, K. (2024) ‘Securing the China-Myanmar Economic Corridor: Navigating Conflicts and Public Scepticism’, ISEAS Perspective, No. 79, 4 October. Singapore: ISEAS – Yusof Ishak Institute. https://www.iseas.edu.sg/wp-content/uploads/2024/09/ISEAS_Perspective_2024_79.pdf   (Accessed: 11 May 2026).

Supriyanto, R.A. (2015) ‘A Sea of Opportunities: Southeast Asia’s growing naval cooperation with India’, in Anit Mukherjee and C. Raja Mohan (eds.) India’s Naval Strategy and Asian Security. New York and London: Routledge.

Wu, Z. (2015) ‘India-Myanmar Bilateral Relations in 2013: Develop Steadily and Challenges Existed’, in Rong Wang and Cuiping Zhu (eds.) Annual Report on the Development of International Relations in the Indian Ocean Region. Heidelberg: Springer.