Wednesday, February 23 2005 11:52 Hrs (IST) - World Time -

Washington: India will emerge as an "unrivalled" regional power with large military capabilities in the next 15 years but its "rising ambition" would further strain its relations with China besides complicating ties with Russia and Japan, America's National Intelligence Council (NIC) has said in a report.

"India will be the unrivalled regional power with a large military-including Naval and nuclear capabilities-and a dynamic and growing economy," the NIC, which represents 15 spy agencies of the US including the CIA has said in its global trends forecast for 15 years.

"The size of its population-1.2 billion by 2015-and its technologically driven economic growth virtually dictate that India will be a rising regional power," it said.

However, the report said that the unevenness of its internal economic growth, with a growing gap between rich and poor, and serious questions about the fractious nature of its politics, all cast doubt on how powerful India will be by 2015.

"Whatever its degree of power, India's rising ambition will further strain its relations with China, as well as complicate its ties with Russia, Japan and the West-and continue its nuclear standoff with Pakistan," it said.

Moreover, other South Asian States-Bangladesh, Sri Lanka and Nepal-will be drawn closer to and more dependent on India and its economy.

Afghanistan will likely remain a weak and destabilizing force in the region and the world.

Wary of China, India will look increasingly to the West, but its need for oil and desire to balance Arab ties to Pakistan will lead to strengthened ties to Persian Gulf States as well.

The NIC also forecast that India, China and Russia could form a de facto geo-strategic alliance in an attempt to counter-balance US and Western influence.

Noting that the interests of Russia, China and India, as well as Iran and Turkey will intersect in Central Asia, it said the States of that region would attempt to balance those powers as well as keep the US and the West engaged to prevent their domination by an outside power.

On other fronts, it said Indian democracy would remain strong, albeit more factionalised by the secular-Hindu nationalist debate, growing differentials among regions and the increase in competitive party politics.

On the economic front it said, India's economy, long repressed by the heavy hand of regulation, is likely to achieve sustained growth to the degree reforms are implemented.

High-technology companies will be the most dynamic agents and will lead the thriving service sector in four key urban centres-Mumbai, New Delhi, Bangalore and Chennai.

Computer software services and customized applications will continue to expand as India strengthens economic ties to key international markets. Industries such as pharmaceuticals and agro-processing will also compete globally.

It said numerous factors provide India a competitive advantage in the global economy including the largest English-speaking population in the developing world; its education system which produces millions of scientific and technical personnel.