Takshashila Strategic Assessment - The Kra Canal: What Does It Mean For India?

Executive Summary

A canal along the Isthmus of Kra could alter the strategic calculus for states across Southeast Asia, with China expected to benefit the most. In light of recent discussions around building the canal with the help of Chinese investors, this study examines the potential impact and pitfalls of this project from an Indian interests perspective. The following are the key conclusions of this assessment: 

• The Kra Canal is not going to materialise immediately and has several challenges: Thailand has many misgivings about the project, with divided elite and public opinions. It is a diplomatically, politically and economically risky undertaking. In addition, China is working on less controversial alternatives to address the Malacca Dilemma.

• The Kra Canal is not necessarily “aimed” at India, and can serve Indian interests: The Kra Canal is not an economic risk to India and will likely boost trade with East Asia. The potential security threats it poses can be managed through contingency planning.

• For India to benefit from the canal, it needs to take action immediately: India must avoid direct involvement in the project. But if it materialises, India should deepen bilateral ties with key ASEAN members, pursue a “sea denial” strategy to address security concerns and invest in port and transshipment capacity.

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