Western governments have long acknowledged India's indispensable role in shaping the 21st-century global order, yet they have failed to back that recognition with commensurate capital investment — a gap that has instead funnelled decades of Western money into China, creating a strategic adversary, according to an analysis published by the Lowy Institute, an Australian think tank. The article, authored by Stephanie Campbell, argues that correcting this compounded strategic error now requires far more than incremental corporate decisions.

India's Scale — and Its Limits

The Lowy Institute analysis is unambiguous on one point: India is not yet the anchor of an industrial alternative capable of balancing China. However, it is described as the only country with the continental scale to become one. While nations such as Vietnam, Mexico, and Indonesia can absorb specific industries and create valuable supply-chain redundancy, none can replicate the breadth of industrial capacity that India, at its potential, could offer.

The piece notes that Prime Minister Narendra Modi has spent more than a decade attempting to convert India's demographic and geopolitical heft into industrial power, with results described as 'promising but uneven.' Crucially, the article argues that domestic reform alone cannot propel India into a second centre of industrial gravity — external structural support is equally necessary.

The 'China Plus One' Trap

The analysis is sharply critical of the West's current approach, which relies on nudging companies to adopt a 'China plus one' sourcing strategy. The problem, Campbell argues, is that the underlying incentives still favour China, which possesses superior infrastructure — power grids, ports, logistics networks — that rising industrial powers are still in the process of building.

'The policy failure is to mistake the accumulation of fragmented corporate decisions for strategic rebalancing. Governments now ask firms to bear the cost of reversing a concentration created by decades of collective investment and reinforced by Western policy,' the article states. Building a genuine alternative, it contends, requires governments to alter the conditions under which private investment becomes commercially rational at scale — not merely to direct individual investments.

A Strategic Double Standard

One of the article's sharpest observations concerns the asymmetry in what the West has demanded from its partners versus its adversaries. 'The relevant choice is between a strategically autonomous India and continued industrial dependence on a strategic competitor. The West is demanding greater alignment from the country it needs to strengthen than it demanded from the adversary it allowed itself to depend upon,' Campbell writes.

This framing positions Western capitals' frustration with India's strategic autonomy as a misreading of priorities — one that risks perpetuating the very dependence it seeks to escape.

Australia's Role and the Path Forward

The article specifically examines what Australia can contribute, acknowledging the limits of its financial capacity while identifying concrete levers. Canberra, it argues, can integrate critical minerals, energy cooperation, and defence ties into a broader industrial strategy with New Delhi. The analysis concedes that India will remain strategically autonomous and, from the perspective of Western capitals, an 'imperfect partner' — but concludes that this imperfection is considerably less dangerous than continued industrial dependence on China.

As geopolitical competition between the West and China intensifies, the pressure on governments to move beyond corporate nudges toward structural investment commitments is likely to grow sharper.