Forging a New Strategic Path

Thailand and India are building a closer strategic relationship, driven by evolving global dynamics rather than simple opportunism. As Bangkok manages its existing alliances, it's looking for partners that offer stability and reduce risk. India's independent foreign policy and historical links offer Bangkok a significant alternative, fostering mutual growth through technology and shared objectives, moving beyond typical trade deals.

Geopolitical Shifts Drive New Partnerships

Bangkok's shift comes as uncertainties grow around its established partnerships. The U.S. is seen as increasingly unpredictable in Bangkok, partly due to past trade policies and responses to Thai political changes. While China's economic presence has grown, concerns remain over its assertive actions. This complex situation pushes Bangkok to broaden its strategic choices. India is seen as a favorable partner because of its independent stance and lack of perceived 'strategic baggage'.

This aligns directly with India's 'Act East' policy, aiming to bolster ties with Southeast Asia as a counterweight to China's regional influence. The formal upgrade of bilateral ties to a strategic partnership in April 2025 reinforces this alignment. For India, these relationships are key to its 'Viksit Bharat' (Developed India) goal, which aims for a $30 trillion economy by 2047, largely dependent on technological progress and global cooperation.

Key Sectors: Chips and AI Cooperation

Semiconductors are a key focus. Thailand has strong capabilities in assembling, testing, and packaging (ATP) chips and aims to advance into higher-value areas like complex packaging and power electronics. India, meanwhile, leads in chip design and intellectual property, supported by a large pool of engineers—estimated at about 20% of the global integrated circuit design workforce. This offers a path for joint development, linking design with manufacturing without the massive cost of building fabrication plants, a goal shared by ASEAN. Thailand has seen recent foreign investment in semiconductor manufacturing and plans for backend facilities.

For artificial intelligence (AI), Thailand is looking for reliable partners to develop its own AI capabilities. India's growing AI talent pool, expected to surpass 1.25 million professionals by 2027, is well-suited to help. India's AI market is poised for significant growth, projected to reach over $17 billion by 2027 and potentially $13.2 billion by 2034, fueled by digital upgrades and government backing. Joint efforts could include shared centers of excellence and developing AI models specifically for Thai requirements, drawing on India's own 'National AI Mission' experience.

Automotive Sector and Small Business Links

The automotive industry offers another opportunity, with a proposed India-Thailand-Japan joint framework to combine strengths. Thailand is a major global manufacturing center, while India has many automotive Global Capability Centres focused on advanced vehicle technologies. Thailand's push toward electric vehicles (EVs) could benefit from India's expertise in battery systems and charging. The Thai auto sector has faced difficulties, with share prices down in 2025, though a modest recovery is expected for 2026 given low P/E ratios.

For small and medium-sized enterprises (MSMEs), joining global supply chains is vital. Indian companies offer strengths in design and tooling, while Thai firms are skilled in precise assembly and testing. Working together across supply chains could create opportunities, supporting Thailand's 'Thailand 4.0' strategy to lessen dependence on the China-Japan manufacturing network. India's 'Viksit Bharat' vision also emphasizes MSME growth and global trade integration.

Boosting Tourism and Addressing Gaps

The report notes the strong historical and cultural bonds between India and Thailand, but tourism is an area with untapped potential. Despite spiritual links for Thais visiting Buddhist sites in India, only about 1.4 lakh Thai tourists traveled to India in 2025. To increase this, India needs to enhance its Buddhist tourism infrastructure, air links, and service quality.

Navigating the Risks and Challenges

Despite the potential benefits, significant risks remain. Thailand's strategic shift could draw it deeper into the U.S.-China competition. Relying on India as a 'third axis' might not fully shield Bangkok from these global pressures; it could even become a channel for indirect rivalry, potentially leading to sanctions or pressure from major powers. Moreover, Thailand's goal of moving beyond chip assembly and testing faces hurdles, including competition from other Southeast Asian nations and difficulty accessing cutting-edge chip technologies due to its position in the global semiconductor industry.

Over-dependence on any single partner, including India, presents a structural concern. While India provides strategic independence, its own manufacturing capacity for key components is still growing, and it faces challenges with R&D investment and retaining talent. The proposed India-Thailand-Japan automotive collaboration, while promising, brings coordination complexities and could be affected by broader geopolitical shifts impacting Japan. For MSMEs, the gaps in technology and market access could be substantial, and integration might not be smooth without strong policy support and infrastructure. Thailand's history of balancing major powers suggests this 'third axis' could be a temporary strategy rather than a lasting realignment, subject to changing regional and global balances.

Looking Ahead

The outlook suggests India and Thailand could both benefit from combined scale and strategic independence. For India, this partnership supports its 'Viksit Bharat' goals and strengthens its 'Act East' policy, boosting its role in Southeast Asia. For Thailand, it's a chance to diversify economic and strategic reliance and reinforce its 'Thailand 4.0' model. Success will depend on executing joint projects effectively, strong policy backing, and navigating complex regional geopolitics.