Asia Power Index 2025: India surges to No. 3, yet struggles to convert capability into influence
A major shift in the 2025 Index is India overtaking China as the second most attractive destination for inward investment, trailing only the United States. This surge is driven by global supply chain diversification and India’s expanding manufacturing ecosystem.
- Nov 28, 2025,
- Updated Nov 28, 2025 3:04 PM IST
India has secured the third position in the Asia Power Index 2025, released by the Australia-based Lowy Institute, marking a major milestone in its ascent as a regional power. The United States and China retained their first and second positions, respectively, in the annual index that evaluates the ability of nations across Asia to shape their external environments.
The seventh edition of the index assesses 27 countries and territories across 131 indicators spanning eight thematic measures — from Military Capability and Defence Networks to Economic Relationships, Diplomatic and Cultural Influence, Resilience, and Future Resources.
Solidifies status as major Asian power
For the first time, India has officially crossed the threshold to be recognised as a “major power” in Asia, with its comprehensive power score exceeding 40 points. This achievement places India firmly in third place, behind only the US and China, and ahead of Japan by a widening margin.
Yet, the report highlights a long-observed paradox in India’s rise: the country’s influence remains significantly below the potential of its vast resource base. This persistent “Power Gap,” as defined by the Index, points to India’s continued struggle to convert its growing economic and military capabilities into measurable regional influence.
Gains in military & economic capability
India recorded steady advances across both economic and military dimensions. Its economy, buoyed by strong post-pandemic growth, improved connectivity, and higher geopolitical relevance, remains a key driver of its rising standing.
On the defence front, India’s military capability made notable gains, partly due to strengthened expert assessments after Operation Sindoor in May 2025, which enhanced perceptions of combat readiness and operational experience.
According to the Lowy Institute, “India’s economic and military capability have both increased in the 2025 edition of the Asia Power Index. Its economy has continued to grow strongly and made small gains in terms of its geopolitical relevance… India’s military capability has also improved steadily.”
Second-most attractive investment hub
A major shift in the 2025 Index is India overtaking China as the second most attractive destination for inward investment, trailing only the United States. This surge is driven by global supply chain diversification and India’s expanding manufacturing ecosystem.
However, the report notes that India continues to lag in trade relationships across Asia — a long-standing vulnerability. The country’s investment magnetism, while impressive, has yet to translate into meaningful regional trade outreach or deeper economic partnerships.
Diplomatic progress, leadership impact muted
India’s diplomatic influence saw modest growth, supported by more active bilateral engagements and a strengthened reputation of its foreign service. Nevertheless, the report suggests that Prime Minister Narendra Modi’s leadership has not boosted India’s diplomatic ranking significantly.
India’s multi-alignment approach and focus on Global South solidarity, while strategically pragmatic, may also be slowing its ability to exert broader regional leadership.
India’s cultural influence grew over the past year, helped by increased tourism flows, new air routes, and deeper people-to-people exchanges. The country’s cultural footprint — long one of its strongest soft-power assets — continues to expand across Asia.
China narrows gap with US
China retained the second spot with a score of 73.7, rising by one percentage point. While both India and China improved in various metrics, the report underscores the continued “wide gap” between the two, especially in economic scale, technological resources, and defence capacity.
The United States remains the undisputed leader at 81.7, though China has narrowed the distance slightly.
Russia rebounds, Japan steady, Southeast Asia edges up
Russia recorded an improvement in overall power for the first time since 2019, supported by strengthened defence and economic ties with North Korea and China. Japan’s power remained generally stable despite declines in several components, while Southeast Asian nations posted small but consistent gains.
Australia, meanwhile, faces long-term challenges in maintaining relative influence amid intensifying strategic competition.
The Asia Power Index 2025 portrays a region in flux, with India’s ascent standing out as one of the most consequential strategic shifts. Yet the report also emphasises the challenge ahead: converting India’s growing economic strength, military capability, and demographic advantage into real and consistent regional influence.
India has secured the third position in the Asia Power Index 2025, released by the Australia-based Lowy Institute, marking a major milestone in its ascent as a regional power. The United States and China retained their first and second positions, respectively, in the annual index that evaluates the ability of nations across Asia to shape their external environments.
The seventh edition of the index assesses 27 countries and territories across 131 indicators spanning eight thematic measures — from Military Capability and Defence Networks to Economic Relationships, Diplomatic and Cultural Influence, Resilience, and Future Resources.
Solidifies status as major Asian power
For the first time, India has officially crossed the threshold to be recognised as a “major power” in Asia, with its comprehensive power score exceeding 40 points. This achievement places India firmly in third place, behind only the US and China, and ahead of Japan by a widening margin.
Yet, the report highlights a long-observed paradox in India’s rise: the country’s influence remains significantly below the potential of its vast resource base. This persistent “Power Gap,” as defined by the Index, points to India’s continued struggle to convert its growing economic and military capabilities into measurable regional influence.
Gains in military & economic capability
India recorded steady advances across both economic and military dimensions. Its economy, buoyed by strong post-pandemic growth, improved connectivity, and higher geopolitical relevance, remains a key driver of its rising standing.
On the defence front, India’s military capability made notable gains, partly due to strengthened expert assessments after Operation Sindoor in May 2025, which enhanced perceptions of combat readiness and operational experience.
According to the Lowy Institute, “India’s economic and military capability have both increased in the 2025 edition of the Asia Power Index. Its economy has continued to grow strongly and made small gains in terms of its geopolitical relevance… India’s military capability has also improved steadily.”
Second-most attractive investment hub
A major shift in the 2025 Index is India overtaking China as the second most attractive destination for inward investment, trailing only the United States. This surge is driven by global supply chain diversification and India’s expanding manufacturing ecosystem.
However, the report notes that India continues to lag in trade relationships across Asia — a long-standing vulnerability. The country’s investment magnetism, while impressive, has yet to translate into meaningful regional trade outreach or deeper economic partnerships.
Diplomatic progress, leadership impact muted
India’s diplomatic influence saw modest growth, supported by more active bilateral engagements and a strengthened reputation of its foreign service. Nevertheless, the report suggests that Prime Minister Narendra Modi’s leadership has not boosted India’s diplomatic ranking significantly.
India’s multi-alignment approach and focus on Global South solidarity, while strategically pragmatic, may also be slowing its ability to exert broader regional leadership.
India’s cultural influence grew over the past year, helped by increased tourism flows, new air routes, and deeper people-to-people exchanges. The country’s cultural footprint — long one of its strongest soft-power assets — continues to expand across Asia.
China narrows gap with US
China retained the second spot with a score of 73.7, rising by one percentage point. While both India and China improved in various metrics, the report underscores the continued “wide gap” between the two, especially in economic scale, technological resources, and defence capacity.
The United States remains the undisputed leader at 81.7, though China has narrowed the distance slightly.
Russia rebounds, Japan steady, Southeast Asia edges up
Russia recorded an improvement in overall power for the first time since 2019, supported by strengthened defence and economic ties with North Korea and China. Japan’s power remained generally stable despite declines in several components, while Southeast Asian nations posted small but consistent gains.
Australia, meanwhile, faces long-term challenges in maintaining relative influence amid intensifying strategic competition.
The Asia Power Index 2025 portrays a region in flux, with India’s ascent standing out as one of the most consequential strategic shifts. Yet the report also emphasises the challenge ahead: converting India’s growing economic strength, military capability, and demographic advantage into real and consistent regional influence.