Indonesia Becomes Central To India’s Resource Diplomacy

By Author: CGI
Total Articles: 8
Comment this article

PM Modi’s recent visit to Jakarta demonstrates that economic security and critical minerals are becoming as important as maritime security in the India–Indonesia strategic partnership

Prime Minister Narendra Modi’s visit to Indonesia in July 2026 was an outstanding diplomatic success. The palpable warmth with which President Prabowo Subianto, his government and the people of Indonesia welcomed Prime Minister Modi reflected the growing political comfort between the two large Asian democracies. More importantly, the visit marked a significant evolution in the India Indonesia Comprehensive Strategic Partnership. While civilisational ties, democratic values, maritime cooperation and trade continue to underpin bilateral relations, the visit demonstrated that economic security, critical minerals and resilient supply chains have now emerged as equally important pillars of the relationship.

The strategic environment in the Indo-Pacific has changed dramatically over the past few years. The pandemic exposed the vulnerability of global supply chains. The conflict in Ukraine, the crisis in Gaza and, more recently, tensions ...
... involving Iran have further disrupted energy markets and international trade. Simultaneously, strategic competition between the United States and China has intensified the search for trusted suppliers of critical minerals, advanced manufacturing capabilities and resilient industrial ecosystems. Consequently, economic policy has increasingly become strategic policy. India’s diplomacy is therefore moving beyond market access and trade towards securing the resources, technologies and partnerships that will underpin its long-term economic and national security. Indonesia has emerged as one of India’s most important partners in this endeavour.

Geography has always favoured close India Indonesia cooperation. Together, the two countries anchor the eastern Indian Ocean and overlook the approaches to the Malacca Strait, through which a substantial proportion of global trade and energy supplies pass. Maritime security, coordinated naval patrols, coast guard cooperation and support for a free, open and inclusive Indo Pacific have naturally formed the backbone of bilateral engagement.

When Prime Minister Modi visited Indonesia in 2018 and the relationship was elevated to a Comprehensive Strategic Partnership, considerable emphasis was placed on maritime cooperation. Alongside coordinated patrols, naval exercises and maritime connectivity, the development of Sabang Port in Aceh Province, close to India’s Andaman and Nicobar Islands, was projected as a flagship initiative. Although Sabang generated considerable strategic interest, progress has remained slow over the past eight years.

Focus on Critical Minerals
The 2026 visit reflects a notable shift in emphasis. Maritime cooperation remains important, but the partnership is now increasingly driven by economic security, industrial collaboration, defence production and critical mineral diplomacy. Secure supply chains have become as strategically significant as secure sea lanes.

Among the most consequential outcomes of the visit was the elevation of critical minerals to the centre of bilateral cooperation. Indonesia possesses almost 60 percent of the world’s known nickel reserves and has become a major producer of nickel derivatives essential for electric vehicle batteries, renewable energy technologies, stainless steel and advanced manufacturing. Recognising the need to capture greater value from its natural resources, Indonesia prohibited exports of raw nickel ore in 2020 and encouraged investment in domestic refining, processing and downstream industries. This policy has significantly accelerated Indonesia’s industrialisation.

Chinese companies have understandably been among the largest investors in Indonesia’s downstream nickel industry, particularly in Sulawesi. While these investments have contributed substantially to Indonesia’s economic growth, Jakarta also recognises the risks associated with excessive dependence on any single external partner. Diversifying investment sources and strengthening technological partnerships have therefore become important policy objectives.

Prime Minister Modi’s visit came at an opportune moment. India, while seeking assured access to critical minerals, has proposed a much broader industrial partnership encompassing investment, technology transfer, manufacturing and downstream processing. Two agreements signed during the visit, covering the steel and nickel sectors, represent India’s first major attempt to integrate critical mineral diplomacy with its own industrial transformation. Rather than remaining a purchaser of raw materials, India is positioning itself as a partner in establishing integrated value chains. This represents a significant evolution in India’s economic diplomacy.

Economic Security
Economic security has now become one of the principal foundations of national security. Without reliable access to critical minerals, semiconductors, energy resources and trusted technologies, India’s ambitions in defence production, clean energy, electric mobility and advanced manufacturing would remain vulnerable. Indonesia faces similar challenges as it seeks to transform itself from a commodity exporter into an industrial economy. The convergence of these interests explains why both countries have chosen to deepen cooperation in these strategic sectors.

Indo-Pacific Connect
The Indo Pacific dimension of the visit also deserves careful attention. Despite expanding strategic cooperation, neither country sought unnecessarily provocative messaging. Indonesia continues to balance its important economic relationship with China while simultaneously diversifying its strategic partnerships. This careful balancing is reflected in the 2026 Joint Statement’s omission of some references to the South China Sea that had appeared in the January 2025 Joint Statement issued during President Prabowo’s visit to India.

Prime Minister Modi’s visit therefore marks an important milestone in India’s evolving foreign policy. Indonesia is no longer simply an important ASEAN partner; it is becoming central to India’s resource diplomacy and economic security strategy. Critical minerals, industrial cooperation, defence production, digital technologies, education and resilient supply chains are now joining maritime security as defining pillars of the bilateral relationship.

If the agreements concluded during the visit are implemented with the same political commitment that characterised the visit itself, the India Indonesia partnership could emerge as one of the Indo Pacific’s most consequential middle-power relationships. It would demonstrate how strategic autonomy, resource diplomacy and economic resilience can reinforce one another to build a more balanced, secure and prosperous regional order.

For more details visit to our website.
https://cgiiglobal.org/

Indonesia, India-Indonesia Relations, Resource Diplomacy, Critical Minerals, Natural Resources, Energy Security, Resource Security, India Foreign Policy, Indonesia Foreign Policy, Indo-Pacific, Southeast Asia, ASEAN, Strategic Partnership, Economic Cooperation, Trade Relations, Mineral Resources, Critical Minerals Supply Chain, Energy Cooperation, Geopolitics, Regional Security