How India And Australia Are Navigating A Securitized Asia-Pacific

The Asia-Pacific region is entering a new phase of security as middle powers like India and Australia respond to heightened regional threat perceptions set off by renewed worries of China’s expanding military capabilities and reach. The long-range ballistic missile launched into the South Pacific last week by China acted as more than an isolated demonstration; it illustrated a broader regional trend. As China’s military capabilities expand, Asia-Pacific states are strengthening defense cooperation, investing in indigenous defense industries and diversifying security partnerships. India and Australia provide two examples of how middle powers are contributing to this trend through expanded arms exports and regional security partnerships. These developments point toward a more networked Asia-Pacific security architecture with important implications for defense markets and businesses.

Escalating Regional Threat Perceptions 

On July 6, China fired a long-range ballistic missile from a nuclear-powered submarine. This marked the first time China has publicly displayed its nuclear strike capabilities from a nuclear-powered submarine in the region. While several governments were given advanced warning of the launch, it set off alarms across the region. Shortly after the launch, Australia, Japan, New Zealand and Taiwan issued statements strongly condemning the test as “provocative” and a destabilizing event that could undermine peace and stability.

Chinese officials described the launch as a routine component of annual military training that should not be “over-interpreted”—language Beijing has frequently used to portray its military operations and modernization as peaceful. However, to many regional governments, the launch came across as part of a broader pattern of China’s expanding military power and reach. The test coincided with several recent public military demonstrations by China, including joint military activities with Russia and expanded coast guard patrols in waters east of Taiwan. These activities signal China’s desire to operate seamlessly across multiple theaters and normalize sustained operations beyond the First Island Chain. 

Criticism from Pacific Island governments was particularly notable given Beijing’s years-long effort to expand its influence across the region through economic, security and diplomatic engagement. For Beijing, Pacific Island states present significant geostrategic value in terms of diplomatic support and economic and naval cooperation. Although several Pacific Island states have shifted diplomatic recognition from Taiwan to China, a dozen governments protested last week’s missile launch, reflecting the region’s longstanding sensitivities to nuclear activity. The Treaty of Rarotonga, which established the South Pacific as a nuclear-free zone and to which China is a signatory, remains a cornerstone of regional security. The response suggests Beijing’s influence has not displaced enduring concerns over militarization, nuclear issues and Pacific sovereignty. 

Middle Powers Expanding Security Options

While perceptions of China’s military challenge vary considerably across the Asia-Pacific, regional governments are reassessing their security strategies. Governments are adapting their security posture to the emerging geopolitical uncertainty, growing concerns about US security commitments and domestic calls to accelerate defense preparedness. Rather than converge around a single, shared approach, regional governments are developing strategies that reflect their own priorities, geographic circumstances and defense capabilities. India and Australia illustrate two different approaches: while India increasingly positions itself as an alternative defense supplier, Australia is strengthening regional security through defense diplomacy. 

India’s Defense Exports 

New Delhi has leveraged its growing defense industry to depict itself as an alternative provider of military capability across the Asia-Pacific. Central to this effort has been the government’s push to transform India from an arms importer into a defense manufacturing hub. New Delhi has used initiatives like “Made in India” to expand indigenous defense production and research. As a result,defense exports reached a record $4 billion in FY2026, up nearly 63% year over year. India has also doubled defense research funding over the past decade. 

India’s growing industrial capacity increasingly provides regional partners with alternative procurement options. The Philippines, Vietnam and Indonesia—countries with differing political and economic relationships with China—have made deals to acquire India’s BrahMos missile. The diversity of India’s defense customers underscores broader efforts to manage regional power shifts as well as growing military modernization priorities. 

Defense exports represent only one aspect of India’s regional strategy. New Delhi’s defense diplomacy has expanded through strategic partnerships, logistics agreements and groupings like the Quad security dialogue. The recent elevation of India-New Zealand relations to a strategic partnership reflects India’s continued efforts to strengthen security relationships while maintaining strategic autonomy. For regional governments, defense cooperation with New Delhi offers an attractive partnership with a formidable military power beyond the US-China binary.

Australia’s Defense Diplomacy 

Australia’s response has placed greater emphasis on defense diplomacy as an instrument of deterrence. Australia’s 2026 National Defense Strategy’s (NDS) “strategy of denial” prioritizes stronger regional partnerships, interoperability and maritime security as key elements of deterrence. Rather than relying solely on its own military capabilities, Australia increasingly views a denser network of regional security relationships as an important component of deterrence. 

The Australia-Fiji Ocean of Peace Alliance represents Australia’s most recent effort to institutionalize this approach. The agreement marks Fiji’s first mutual defense treaty and Australia’s fourth. The treaty remains open to other Pacific nations—an offer Wellington announced it is considering. In the past two years, Australia has expanded security cooperation with China’s allies in the region, including Papua New Guinea (now Canberra’s third mutual defense ally) and Vanuatu. Australia and Vanuatu signed sweeping agreements which would limit foreign military infrastructure from being built on the island and recognizes Australia as Vanuatu’s longstanding primary policing partner, in exchange for Australia committing $345 million. 

Australia’s diplomatic engagement has also extended to the Solomon Islands, with which China signed a security pact in 2022. Prime Minister Anthony Albanese and Solomon Islands Prime Minister Matthew Wale meeting last week coincided with China’s missile launch. During the meeting, Wale described the test as “further evidence” for a new regional security pact. As of now, Canberra has signaled interest in security alliances with countries that maintain standing militaries, leaving only Tonga as a candidate. Expansion of the Ocean Peace Alliance into a broader regional pact may require Canberra to develop more flexible security arrangements. 

Canberra has likewise strengthened cooperation with India, with both governments on Thursday committing to expanding security and industrial cooperation. These agreements illustrate Canberra’s strategy to strengthen Asia-Pacific security through institutionalized partnerships. It is worth noting Canberra’s expanding defense industrial footprint. Australia signed its largest defense export deal—a $2.5 billion agreement for Canada to purchase its Jindalee Operational Radar Network—and is pursuing collaborative exports of its Ghost Bat aircraft with Germany. 

Future Outlook and Business Implications 

The growing role of middle powers in the Asia-Pacific security order reflects a broader shift toward a layered and networked security architecture, where states rely on overlapping partnerships rather than single geopolitical blocs. For many Asia-Pacific states, maintaining strategic autonomy is paramount, especially as many preserve economic ties with China while simultaneously expanding defense relations with Western-aligned partners. While China’s recent missile launch underscored these evolving dynamics, it largely reinforced longer-term trends already reshaping the region’s strategic environment. 

Middle powers are poised to become more influential in regional security as governments diversify defense procurement. Established defense exporters such as South Korea and emerging players like Japan and Pakistan are likely to follow the trend, leveraging their increasingly sophisticated indigenous defense capabilities. Recent policy commitments reinforce this trajectory. South Korean President Lee Jae Myung has pledged to elevate South Korea into a top four defense exporter by 2030. Japan recently made a landmark decision to relax restrictions on arms exports. Such political commitment behind building out indigenous defense industries is likely to support sustained investment, expanded defense industrial cooperation and create opportunities for co-production and long-term supply chain partnerships in the region.

At the same time, a more active network of regional middle powers is likely to create a more complex operating environment, with rising commercial opportunities growing alongside heightened geopolitical and regulatory risks. Expanded defense cooperation and military modernization could heighten tensions with China, which has repeatedly criticized Japan’s recent military reforms and Australia’s growing engagement with Pacific Island states. Pacific Island governments may benefit from greater investment and security cooperation while also facing pressure to balance competing regional relationships. Overlapping and fragmented partnerships run the risk of complicating coordination and responses to regional issues, undermining the benefits of building multiple, issue-specific arrangements.