India and US Pivot against China
The recent election of Mr. Modi in India has sped up strategic relations with the US. In short, India sees benefits in the form of economic cooperation and geopolitical considerations.
The geopolitics is not new. India has faced the threat of Chinese encroachment in the Indian Ocean as well as tension with the Chinese over their support for Pakistan.
This is also a two way street. The US sees India as an important counterweight to China. India is the world’s largest democracy and the official language is English. Thus, India and the US seem to be a good partners for strategic, cultural and historical reasons.
It is no secret that the US is in relative decline versus rising nations such as China and India.
As the US becomes relatively weaker over time, expect India to gain in relative geostrategic importance. In the future, I see a passing of the baton similar to what happened between the UK (declining world power) and the US (rising world power). However, the US will still be a premier power.
Therefore, I expect the relationship between the two countries to one of power sharing. India will not accept a subordinate role in the future. I see it similar to the current US and European relationship in some ways.
The Indian navy will require a strong presence from the US navy to prevent Chinese encroachment.
Investment Thesis: This is for the short, medium and long run. Go long India as the US will support it heavily, especially in the high-tech, pharmaceutical and most likely auto sectors.