Edward Luce - In Spite of the Gods: India's Rise to a Viksit Bharat

ELI5/TLDR

Edward Luce, the FT’s national editor and author of In Spite of the Gods, sits down at a GW conference and gives a frank report on where India sits in 2026. The big shock: Trump 2.0 has broken the twenty-year bipartisan Washington consensus that treated India as the natural counterweight to China. Trump now flatters Beijing and bullies everyone smaller, India included. India can still hit Viksit Bharat targets without the US, but only if Modi finally moves from grand-project mode to actual deregulation, fixes courts and human capital, and stops being a foot-dragger on trade.

The Full Story

The book and why “In Spite of”

Luce wrote In Spite of the Gods roughly twenty years ago, after a long stint as the FT’s South Asia bureau chief. The title was meant as a jab at Western Orientalism, the snake-charmer-and-Beatles fantasy of India as a purely spiritual culture. It was not a swipe at Hinduism. The “gods” stand for arbitrary throws of dice, the bad luck India has been dealt, including by Luce’s own British compatriots. The American publisher wanted to drop the word “strange” from the subtitle. Someone half-jokingly suggested Because of God: The Rise of Modern India. Luce held the line.

The CIA framing, then and now

The original book closed with a chapter built around the acronym CIA: China, India, America. That was not Luce’s prescience, he says. The actual CIA, via the National Intelligence Council, had already been calling India “the global swing state of the 21st century”. Bob Blackwill, Bush’s ambassador, was building the strategic logic that produced the 123 nuclear agreement. The conviction across Bush, Obama, Trump 1, and Biden was identical: India will never be a treaty ally because India does not want that, but it will be a natural partner, and the US should do everything to help it become one.

That consensus, Luce says flatly, held until April 2025. Then it broke.

What broke it

The break has two pieces. First, Trump’s belligerence everywhere except toward China. Trump has insulted friends, flipped on Russia, even briefly threatened Pakistan, but has not said one negative word about Beijing. Second, the trade war collapse. Trump tariffed China up to 145% on Liberation Day, the bond market revolted, mortgage rates moved, the full faith and credit of the United States got questioned, and Trump folded. Luce’s FT colleague Robert Armstrong coined the acronym TACO, “Trump Always Chickens Out”, and Luce argues China understood it faster than anyone.

The pivotal event of 2025, he says, was not the India-Pakistan conflict or the 12-day bombing of Iran. It was the late-October G20 in South Korea, where Trump effectively surrendered to Xi after China weaponized its rare earth chokehold. Since then Trump has been openly solicitous toward Beijing, treating the upcoming summit as the most important event of 2026. The bully picks on the weak. Trump no longer treats China as weak. India should read that body language carefully.

The Washington bureaucracy versus Trump’s instincts

A questioner pushed back: surely the State Department, NSC, Treasury, Commerce, the think tank world, all still treat China as the great-power rival. Can Trump’s whims really overcome that? Luce’s answer is uncomfortable. The infrastructure exists, the people are willing, but they have no idea what Trump wants from the China summit and cannot draft communiques in a vacuum. Trump is not interested in selling Taiwan for a semiconductor breakthrough, and not interested in cooperating on AI guardrails, because both require long-term thinking. What he actually wants out of his China meetings, Luce suspects, is soybeans and Boeing jets. “He’s firmly lodged in the 20th century, and you just can’t get his head out of it.”

Modi the builder versus Modi the deregulator

In 2014 Western reformers wanted Modi to be a Reaganite-Thatcherite deregulator. Instead they got a Chinese-style grand-project leader, and on infrastructure that has worked reasonably well. The next phase has to be different. The trade war should be the spur to extract growth from internal frictions, the babu raj that still clogs daily economic life.

Luce singles out the GST. It was being debated when he lived in Delhi. It took a decade after he left for it to pass, and a decade later it remains incomplete, riddled with offsets, exemptions, and loopholes. The clean, paperwork-abolishing version it could have been still does not exist. Internal growth, he stresses, is underexploited regardless of what Trump or the USTR does. Modi has the political power to push it through. Why he has not shown more alacrity puzzles Luce.

Foreign direct investment is the related miss. There should be far more of it than there is, and the explanation runs through the same regulatory thicket plus the legal system. The average duration of an Indian court case is around thirteen years, a Jarndyce-versus-Jarndyce situation. China, by contrast, can credibly tell a foreign investor: priority status, one-stop shop, what we agreed will hold. No Indian government can promise that. Adding judges, building administrative courts, simplifying contract law would help, slowly.

Pluralism, secularism, and the Hungary lesson

On India’s drift toward illiberal democracy, Luce is careful but clear. Indian corruption from the top is much less personal than what happens in Hungary or Washington, so he resists sweeping comparisons. But he believes India’s pluralism, its comfort with diversity of language and faith, the ability to navigate chaos without breaking, is its most attractive long-term strength. A society that plural cannot hold together long term, he argues, unless it is at least secular in spirit.

He is not predicting an economic penalty for backsliding. “Economics is not a morality play.” Markets will not prod India back to a Nehruvian center. This is purely a political question India must answer for itself.

On Modi succession, Luce notes Modi is 75 or 76, considerably fitter than other recent septuagenarian leaders, will likely win the next election, but at some point this regime will start rotting. The BJP risks internal strife and splits. The Hungary lesson, freshly relevant after last Sunday’s election, has two parts. One, corruption is what actually beats incumbents because corruption is concrete in a way that abstract rule-of-law arguments are not, especially when growth slows. Two, nothing is written in the stars. The “church of liberal teleology” was wrong to think history’s arc bent automatically toward justice, and equally wrong now to think the populist right’s march is unstoppable. Everything is up for grabs, and outcomes depend on how much work people put in.

Viksit Bharat without America

Asked whether India can hit its 2047 development goal without US cooperation, Luce says yes. About a fifth of Indian exports go to the US, important but not Canada-level dependency (three quarters). Globalization, he says quoting an aphorism he half-remembers, doesn’t stop until Eurasia says it stops. India already signed a UK trade deal weeks into Trump 2.0, the EU is talking, ASEAN, Mercosur, all moving. The post-Liberation Day shock is accelerating non-American globalization, and India is participating more enthusiastically than usual after a long history of foot-dragging on trade.

The middle-power moment

Anirudh Suri from Carnegie asked about middle powers banding together. Luce points to Mark Carney’s framing, which he reads not as a NATO of middle powers but as a la carte plurilateralism, ad hoc cooperation between countries that have been infantilized by America for decades and lost the habit of initiative. Carney was forced into the role by Trump’s predatory behavior toward Canada. India, the largest possible middle power, should be taking similar initiatives but is held back by the inertia of non-aligned, post-colonial defensiveness. Even in the Gulf, where India should be a giant, it punches below weight. The mindset has to shift toward confidence and entrepreneurialism.

Manufacturing, AI, and the Vietnam point

On industrial strategy, Luce is blunt: a mass South-China-style manufacturing surge for India is largely a chimera. There are pockets, mostly south and west, that hit Vietnam or Malaysia levels of supply-chain integration and Six Sigma quality. None of that solves the Hindi belt’s employment problem. He suggests studying Vietnam, which is winning the China-plus-one race more decisively than India.

AI is the more interesting frontier. India should be an AI power. The talent and the scale are there. India could be a genuine swing state offering third-way approaches in the US-China AI standoff. But AI will not fix the jobs problem either, and the answer to Indian employment is going to be a hundred-item list, not one lever.

Tourism, education, and the unfixed basics

Two stray observations stuck. India should be the world’s largest tourist destination and currently gets fewer annual visitors than Belgium. And on Milton Friedman’s old criticism that India underinvests in human capital, Luce concedes the gap is closing, mass illiteracy is fading, but functional illiteracy persists, the state is poor at mass education even though it builds excellent elite institutions that mostly export their graduates, and human capital is still the single biggest unlock for long-term growth. Tapping unused potential, particularly the gender gap and rural India, matters more than any other lever.

Key Takeaways

The 20-year bipartisan Washington consensus treating India as the natural counterweight to China broke around April 2025, and Luce believes this is a permanent shift, not a Trump quirk.
The October 2025 G20 in South Korea, where Trump folded in the trade war after China’s rare earth squeeze, was the geopolitical event of the year, more important than India-Pakistan or Iran.
India can hit Viksit Bharat without the US (only ~20% of exports go to America) but needs to step up as an active middle power instead of waiting for Washington.
The next Modi era has to be Reaganite-Thatcherite deregulation, not more grand projects. GST is half-finished, FDI is underweight, and the babu raj still bites.
The Indian legal system, with its 13-year average case length, is the single biggest reason FDI cannot match China’s. Adding judges and simplifying contract law would move the needle, slowly.
Pluralism is India’s most underrated strategic asset; secular spirit (not necessarily letter) is required to keep it intact long term.
Hungary’s lesson is double: corruption beats incumbents (not abstract rule-of-law arguments), and populist dominance is not preordained, everything depends on opposition discipline and effort.
Mass manufacturing employment is a fantasy for India; study Vietnam. AI is the realistic frontier where India could play a genuine third-way role.
Human capital, particularly closing the gender gap and lifting rural literacy quality, is the single largest unlocked source of long-term growth.

Claude’s Take

Luce is the unusual combination of a Western India-watcher who actually knows the country at street level, has been honest about being out of date, and resists both bullishness-as-flattery and the standard Western pessimism cosplay. The talk is loose, conversational, no slides, but it’s full of specific, falsifiable claims, which is what you want from someone in his position. The TACO framing of Trump-China relations is the kind of thing that sounds like a joke until you watch it predict the next six months.

The most useful idea here for an Indian reader is not the geopolitics, which is well-rehearsed, but the diagnosis that the bipartisan Washington consensus has actually broken. Most Indian commentary still treats Trump as an aberration to be waited out. Luce is saying: don’t wait. Plan accordingly. The corollary, that India should stop being a foot-dragger on trade and start acting like the largest middle power in a multipolar world, is sound and uncomfortable in equal measure.

The weakest section is on AI, where Luce admits he’s flying blind and the “third-way swing state” framing is more aspirational than analytical. The strongest section is the Hungary detour, which lands two ideas worth stealing: corruption is concrete in a way rule-of-law arguments are not, and “the arc of history bends toward justice” was always a story we told ourselves, not a law of physics.

Score: 8. Substantive, candid, well-informed, occasionally lazy on the AI question.