By Udam Wickremasinghe

Figure 1: Snapshot of the Indian Ocean

Image Source – The Importance of the Indian Ocean: Trade, Security and Norms – The Lakshman Kadirgamar Institute (

The Indian Ocean plays a crucial role in international trade, security, and geopolitics. It connects the Middle East, Africa, Asia and Europe and is home to 2.7 billion people. It is a significant source of energy and is abundant with minerals and fishery resources. The region’s geo-political and economic significance is explained through its size and diversity. However, the Indian Ocean is also dealing with several difficulties and ambiguities [SM1] including terrorism, piracy, climate change, maritime disputes, and great power rivalry.  The stability of the Indian Ocean is essential to the world economy since it has an impact on other economies including South Asia, which hosts labor markets and manufacturing sectors, to the resource-rich Africa and Middle East.

Importance of the Indian Ocean for International Trade

There are 28 states in the Indian Ocean region[SM2]  which spans across three continents and accounts for 17.5 percent of the world’s land area. It is the location for 35 percent of the world’s population and is rich in natural resources such as, oil, gas, and iron. Additionally, the area serves as a key maritime commercial route spanning across the Middle East, Africa, East Asia, Europe and America. The Indian Ocean is the passageway for more than half of the world’s seaborne oil, and 23 of the top 100 container ports are situated here.

The Journal of the Indian Ocean Region reports that 40 percent of the world’s seaborne trade in oil transits through the Strait of Hormuz, 35 percent through the Strait of Malacca, and 8 percent through the Bab-el-Mandab Strait, with the Indian Ocean’s sea lanes being among the most strategically significant in the world.

The Current Geo-political context

The growth of China and its Belt and Road Initiative (BRI), which seek to connect Asia, Africa, and Europe through a network of infrastructural projects, are two major factors driving geopolitical change in the Indian Ocean. In nations bordering the Indian Ocean, including Pakistan, Sri Lanka, Bangladesh, Myanmar, Kenya, Djibouti, and Tanzania, China has made significant investments in ports, trains, roads, pipelines, and industrial zones. China’s BRI aims to diversify energy sources, increase market size, gain access to resources, and project strength and influence in the region.

Other regional and extra regional actors, particularly India and the United States, are concerned about China’s expanding presence and operations in the Indian Ocean. India sees China’s BRI as a danger to its security and interests since it sees the Indian Ocean as its natural region of influence. China is allegedly attempting to encircle India with a ‘string of pearls’ strategy that involves constructing naval infrastructure and bases around India’s border. India has also been apprehensive of China’s meddling in the domestic affairs of its neighbors and efforts to undercut India’s position as a regional power. To counter China’s influence, India has responded by bolstering its own naval capabilities and its relationships to neighboring nations in the Indian Ocean and the United States.

In addition, the United States views the Indian Ocean as a crucial region for both its leadership in the world and its national interests. In order to trade with Asia and Europe and maintain its energy security, the United States depends on the Indian Ocean. Additionally, the preservation of peace and security in the region—particularly in the Persian Gulf and the Horn of Africa—serves the strategic interests of the United States. China’s increasing territorial expansion and aggression in the Indo-Pacific area, which spans both in the Indian and Pacific Oceans, has alarmed the United States. A “free and open Indo-Pacific” strategy has been developed by the United States with the purpose of fostering collaboration among allies and partners in the region as well as a rules-based order, freedom of navigation, democracy, and respect for human rights.

Challenges and Opportunities

The ability of nations to manage shared problems and risks that threaten their shared ocean will also determine the future of international trade within the Indian Ocean. These include factors such as, environmental degradation, effects of climate change including sea level rise and extreme weather, illicit fishing, piracy, terrorism, human trafficking, drug trafficking, proliferation of weapons, cyberattacks, maritime accidents, etc. All nations in the region must work together to address these concerns through collective action.

According to many reports and analyses on the Indian Ocean region, by 2025, the Indian Ocean region is anticipated to contribute to about 5% of world GDP, playing a larger role in the global economy. However, there are a number of urgent issues that must be resolved to enable further regional integration, such as enhancing port quality and logistics, lowering trade and investment obstacles, closing development gaps, and bolstering regional economic governance. The challenges to increase regional integration are, in one way, outlined by the developing importance of the Indian Ocean region in the global economy. This[SM3] [SV4]  signifies that during the past 20 years, the Indian Ocean region has both grown more integrated and important within the global economy.

The Indian Ocean provides numerous opportunities for regional nations to work together and flourish. Enhancing regional integration, boosting the blue economy, supporting sustainable development objectives, improving disaster management, developing human capital, advancing scientific research, protecting cultural heritage, etc. being a few.

According to the Lakshman Kadirgamar Institute highlighted in the working Paper, Is the Indian Ocean Economy a New Global Growth Pole?, the authors state some of the key improvements that the states in the Indian Ocean should follow in order to gain prosperity and growth through international trade. Some such recommendations are through making investments in ports and customs modernization through national and mega-regional initiatives, gradually lowering trade and investment barriers, establishing an ‘Indian Ocean Development Fund’ to Support the participation of least-developed countries and to facilitate knowledge transfers to middle-income countries, strengthening regional economic governance and linking sub-regional and bilateral free trade agreements to regional comprehensive economic partnerships.

In conclusion, the Indian Ocean region has both great potential and great challenges. It is a region that has the power to influence both the future of global trade and its security. It is a zone where major nations can cooperate as well as compete. The attention of the countries surrounding the Indian Ocean and other international entities attention is needed for greater development in the region and it is indeed a region which can provide greater good to the global economy.

The views and opinions expressed in articles submitted to the Comparative Advantage Blog are those of the author and do not necessarily reflect the views of The Moot Court Bench.



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