An Australian Indian Ocean agenda to 2035

Executive summary

Over the next ten years, developments in the Indian Ocean will become more central to the driving economic, diplomatic and competitive dynamics shaping Australia’s regional security environment. The Australian Government has long recognised the Indian Ocean’s connectedness to affairs in East Asia and the Pacific, advancing an integrated strategic concept as early as 2013. However, to date, the stark realities of resource scarcity and a bias towards Australia’s Pacific coastline have constrained Australia’s agenda for the Indian Ocean region. The expansive, complex and under-institutionalised nature of the region has meant that Australian officials have depended on costly bilateral diplomacy, with mixed results.Today, the limitations of Australian partners’ capacities for Indian Ocean engagement are becoming plainer. The Australian Government stands at an inflection point where it must reconceive its approach to its so-called ‘second sea’. A new toolkit must be developed to dispel strategic risks and embrace burgeoning economic and diplomatic opportunities.

By assuming the lens of integrated statecraft, this report argues that the Australian Government must advance a cohesive strategy across multiple lines of effort to shape strategic dynamics across the Indian Ocean. Accepting that Australia cannot dramatically increase the resources available to underwrite this approach, an effective regional strategy will depend on both cooperation and deconfliction with like-minded partners. The report recommends a number of principles to drive diplomatic, economic and security engagement in the theatre independently and collectively over the next decade:

Introduction

Australian strategists, from their vantage point in Canberra near Australia’s eastern coastline, have long concentrated on the partnerships and prospective challenges of the Pacific Ocean. As a result, the Indian Ocean extending from Australia’s western coastline has inspired fewer resources and less strategic concern. Indian commentators have long bemoaned the global attention deficit in the Indian Ocean — despite many countries’ adoption of an ‘Indo-Pacific’ concept.¹ This is not to say that the Indian Ocean has not been an unerring area of concern for Australian naval operations. With little fanfare, the Albanese government has released strategic documents that make plain its interest in renewing Australia’s focus on Indian Ocean waters and positioning Australia as a capable and consistent partner to the littoral and island countries of the Indian Ocean region.²

Few could argue against the significance of a stable and economically dynamic Indian Ocean to Australia’s interests. The region encompasses more than 70 million square kilometres and three billion people. Over half of the world’s container shipping and over 80% of global maritime oil trade pass through its waters.³ On its coastline, 40% of global offshore oil production occurs — with 65% of global oil reserves vested in ten Indian Ocean states. The Malacca Strait and Strait of Hormuz are among the most significant trade routes in the world, and the difficulties of ensuring secure passage through these choke points increasingly preoccupy Australia and its partners.⁴

Network of major sea routes around the world

Still, despite the best efforts of successive foreign ministers⁵ and defence ministers⁶ hailing from Western Australia, the nation lacks a strategic outlook for its so-called “second sea” commensurate with its current and future importance to Australian policy objectives.⁷ Former Foreign Minister Julie Bishop recently wrote that “the Indian Ocean part of our foreign policy remains a work in progress.”⁸ This assessment is reflective of the fact that Australia’s strategic approach to the Indian Ocean remains iterative and ad hoc, even as diplomatic initiatives for the region have unfurled with greater urgency in recent years. The refrain that an increasingly multipolar regional order and intensifying strategic competition are challenging strategic objectives across the Indo-Pacific may be familiar. However, the increasingly capable People’s Liberation Army Navy (PLAN), the continuation of the People’s Republic of China’s (PRC) Belt and Road projects and a fraught China-India relationship have increasingly underscored that Australia’s strategy in the Indian Ocean region requires dedicated reform. The Australian Government’s answer to such challenges off its western coastline is complicated by the reality that, of all parts of the Indo-Pacific, the Indian Ocean is the area where Australia’s defence partnership with the United States offers the weakest security convergence. Today, Australia must reconcile the simultaneous priorities of maintaining its status as partner of choice in the Pacific with the demands of India’s growing appetite for engagement, changing US expectations of Australia’s role in the Indo-Pacific region and increasing demands on Australian national interests in the Indian Ocean region. In short, Australia requires a new Indian Ocean agenda for the next decade.

Expanding Australia’s Indian Ocean engagement is a complex undertaking; the diversity of Indian Ocean countries, the size of the region, its economic and diplomatic organisation into largely continental-driven groupings in South Asia and the Middle East (despite the defining feature of the Indian ocean),⁹ and the pace of change in the regional balance of power continue to complicate Australia’s long-term policy thinking. The scarcity of effective and inclusive regional institutions, especially in contrast to a highly institutionalised Southeast, means that Australia’s familiar toolkit for multilateral engagement must often be traded for taxing bilateral efforts. The challenge then for right-sizing Australia’s Indian Ocean strategy is considering available resources; anticipating the current and future demands of Australia’s partners; and presiding over a division of labour amongst other aligned major and middle powers in the region.

This report undertakes to examine the key features of Australia’s prevailing Indian Ocean strategy and to set out objectives for the next decade. It reflects insights gained in Track 1.5 and Track 2 workshops held in three countries, more than 20 meetings with regional experts and officials, and seven commissioned research publications from Australian, Indian and American authors. This report is focused on providing an assessment on Australia’s engagement on the region through an ‘integrated statecraft’ approach. It begins by baselining Australia’s Indian Ocean identity and its contemporary strategic context. It then proceeds in three chapters, covering the diplomatic, economic and security dimensions of Australian strategy in the coming years to provide an agenda for future action.

Australia’s Indian Ocean identity

An Indian Ocean focus has long been absent from Australian strategic policy. While Soviet naval task forces in the region kept the Australian Defence Force (ADF) focused on discrete missions during the Cold War, the post-Cold War era of US global hegemony saw a relatively benign Indian Ocean region drift from Australia’s list of priorities. During the Global War on Terrorism, Middle East operations were at the fore for Australia and its partners, while Humanitarian Assistance and Disaster Relief missions and peacekeeping operations closer to home were focused on the South Pacific. Southeast Asia loomed large as a key region for partnerships, engagement exercises and presence operations, but US regional dominance and ASEAN centrality meant that the Indian Ocean aspects of Southeast Asian engagement were seldom pronounced.

During this period, the Indian Ocean was treated as Australia’s ‘second sea’. Wrapped in a reassuring cloak of US maritime dominance and growing Indian power, the Indian Ocean region was dwarfed in Australian strategic circles by an overwhelming focus on the Pacific. This was enabled by a long-held perception of Australia’s strategic identity being firmly anchored in an Asia-Pacific understanding of its geography. This was understandable. Australia is part of the Southwest Pacific family; its roles and responsibilities in this region - culturally, economically and politically - are well known. As a result, Australia’s engagement in the Indian Ocean is far less pervasive in the national consciousness. Except for Western Australians, the bulk of the population resides over 3,500km distant from the Indian Ocean, leaving it far from their consciousness.

The last time the Indian Ocean loomed large in Australia’s strategic consciousness was in the period of the British Empire and the early Cold War, when the sea lines of communication, supply and reinforcement from the United Kingdom arched across this ocean and through the Middle East, making their preservation an essential part of British, and thus Australian, maritime power. Australia’s first major naval action, the sinking of the German cruiser the Emden, was fought in the Indian Ocean, HMAS Sydney (II) disappeared in November 1941 off the Western Australian coast in the nation’s greatest naval tragedy while the first, and later second, Australian Imperial Force sailed across the vast expanses of the Indian Ocean to the battlefronts in the Middle East, the Western Front and the Mediterranean. However, the war in the Pacific, the fall of Singapore, and the shift from a UK to a US alliance partnership in the Second World War and the post-Cold War era dragged Australia’s strategic gaze northward and eastward.

In Australia’s strategic debates, many commentators have also noted Australia’s long history of ‘sea blindness’.¹⁰ Such blindness could easily be said to be an overriding limitation of Australia’s strategic imagination regarding the Indian Ocean. West coast amnesia has clouded Australia’s strategic imagination.

This amnesia has been driven by a combination of geostrategy and the balance of international risk that Australia faced across the Asia-Pacific during the Cold War and post-Cold War eras. The emergence of the Indo-Pacific concept in Australia’s strategic lexicon since 2013, in which Canberra formally recognised, at least in its strategic documents, the interconnectedness of strategic dynamics in the Indian and Pacific oceans, and the rapid expansion of Chinese power across this region, has required that the balance of risk and threat be assessed anew. In the contemporary strategic environment, the perception of the Indian Ocean as a “second sea” must come to an end. The logic that heralded the adoption of the ‘Indo-Pacific’ concept by Australia in 2013 must be embraced across every policy dimension.

Australia’s changing views on the Indian Ocean

Australian national interests in the Indian Ocean derive from geography. Australia has the longest Indian Ocean coastline in the world and the largest maritime jurisdiction of any Indian Ocean country. Australia has the largest zone of maritime search-and-rescue responsibility in the Ocean, and its exclusive economic zone encompasses 3.88 million square kilometres of Indian Ocean waters.¹¹ The 2023 Defence Strategic Review designated the area from the northeastern Indian Ocean through maritime Southeast Asia as Australia’s primary area of military interest.¹² As a result of the maritime character of these areas, “credible naval power” is viewed Australian defence chiefs as an essential enabler Australia’s defence effort.¹³

Christmas Island and the Cocos (Keeling) Islands — Australia’s Indian Ocean territories — are tangible demonstrations of Australia’s status as an Indian Ocean power. These two islands are located 1,500 kilometres and 2,000 kilometres respectively from Australia’s northwestern coastline, adjacent to vital Indian Ocean sea lanes.¹⁴ Successive rounds of investment by recent governments in expanding infrastructure in these territories will see their operational significance to Australia grow into the future. Enhancements to the airfield at Cocos to enable P-8 maritime surveillance operations are expected to be completed in 2028.¹⁵ Financial commitments by the Albanese government in 2023 brought the total investment effort into these territories to A$7 billion.¹⁶ With these upgrades, Australia’s operational capability in the Indian Ocean is increasing.

The second key trend animating Australia’s Indian Ocean strategy is the near existential significance of Indian Ocean sealines for Australia’s international trade. As an export dependent free trade state, commentators have been at pains over decades to emphasise Australia’s reliance on the chokepoints and channels of the Indian Ocean for its supply of critical goods, including 90% of its fuel.¹⁷ This vulnerability applies to both imports and exports, with 50% of Australian sea freight exports departing from Australia’s western coastline.¹⁸ It is estimated that A$130 billion worth of goods move from Australia through the Malacca Strait annually.¹⁹ Iron ore shipments from Port Hedland alone are valued at 4% of Australian GDP.²⁰ A recognition of Australia’s trade exposure has long animated Australia’s strategic plans and capability investments. Increasingly, policymakers are alert to the added complexity of Australia’s partners’ dependence on these routes; the four largest liquefied natural gas (LNG) importing countries — Japan, China, South Korea and India — depend upon the passage of Australian LNG exports through Indian Ocean sea lines of communication (SLOC).²¹

Lastly and crucially, Australia’s security and identity as a responsible regional middle power lies in positive relationships with its neighbours in the Indian Ocean region. Australia’s senior officials consistently assess that a rules-based and stable balance of power in the Indo-Pacific is paramount to Australian interests.²² These recognitions inspire Australian commitment to being a “principled” and “reliable Indian Ocean partner” to countries across the region.²³ Australia is a founding member of the Indian Ocean Rim Association — the most (and arguably only) influential multilateral grouping in the region. The 2024 National Defence Strategy (NDS) committed to deepening defence relationships with countries in the Indian Ocean and deemed India a “top-tier” security partner for Australia.²⁴ These commitments extend beyond defence, with Australia’s 2023 International Development Policy also built upon the recognition that the Indian Ocean connects Australia to its closest neighbours and demands ambitious education, climate and environmental protection agendas from Australia.²⁵ Since the release of the NDS, strengthening Australia’s relationships with Sri Lanka, the Maldives and Bangladesh is considered a priority for Canberra.

Today, formerly assured realities in the Indian Ocean are subject to new threats. In particular, five trends have emerged in Canberra’s strategic thinking over the past decade that will significantly reshape Australian strategic policy in the region: increasing multipolarity; intensifying India-China strategic competition; the growing risk of simultaneous conflicts across the Indo-Pacific; enduring constraints on India’s leadership; and more obvious US expectations about Australia’s current and future role in the region.

A new reality

Increasing multipolarity

Indian Ocean security expert David Brewster has, for several years, observed growing ‘congestion’ of global and regional powers in the Indian Ocean.²⁶ Declining US relative power, expanded Chinese operations and surging interest from extra-regional partners in engagement in Asia have coalesced in a multipolar order. Resident middle powers in the Indian Ocean are only becoming more relevant; the average age of people in Indian Ocean countries is under 30, compared to 46 in Japan as one example, foreshadowing future economic dynamism that will make states across the region increasingly capable.²⁷ Within the next decade, Indonesia will join India among the world’s five largest economies.²⁸ In many respects, this gives Australia more foreign policy options; India and Japan are increasingly engaged partners in the region, and UK and French interests in the ocean endure. At the same time, China’s economic and defence outreach has, to some extent, displaced US and even Indian pre-eminence in parts of the ocean, introducing new questions for Australia and its partners in how it maintains a favourable strategic balance. A more multipolar region simultaneously increases both the need for and complexity of working with both long-standing and emerging partners.

Intensifying strategic competition

Across the Indo-Pacific, the overwhelming expansion of China’s naval capability has reset the risk calculus of the United States, Australia and their partners. Over the last decade, China has eschewed its habitual continental strategy, emerged decisively as a maritime power and directed its planning towards “fighting (and winning) local wars at distances away from the mainland.”²⁹

From the outset, with the PLAN focused on East Asia and the first, second and third island chains,³⁰ it must be acknowledged that the PRC’s varied military, diplomatic and economic efforts in the Indian Ocean are, by comparison, focused on competing for influence, rather than preparing for looming conflict.

Experts tend to agree that China seeks equality of presence rather than exclusive use of the Indian Ocean.³¹ Accordingly, China’s strategy for the region is largely development-led, with Belt and Road Initiative (BRI) investments as its key (though to an extent retrenching) lever.³² At present, permanent PLAN forces in the Indian Ocean remain limited to eighteen ships. Though this force is larger than the Royal Australian Navy’s major surface combatants, it remains a small ongoing presence relative to the PLAN’s concentrated naval assets in East Asia. Still, instances of grey-zone coercion are intensifying across the Indo-Pacific and are encroaching into the Indian Ocean, where they are focused on intelligence gathering, power projection and the protection of trade routes.³³ This includes the circumnavigation of a PLAN taskforce around Australia’s coastline between February and March 2025.³⁴ Recognising these trends, Australia’s defence assets in the Indian Ocean region must be focused on regional engagement and presence operations. Preparing for major power conflict in the Indo-Pacific, driven by the end of Australia’s longstanding strategic warning time of ten years,³⁵ is the planning principle for Australian defence policy. The investment should be focused on increased regional engagement and investments in AUKUS, force posture, infrastructure and the ability of the ADF to operate from the network of bases in the northwest of Australia and its Indian Ocean territories, along with the expansion of the US-Australian enhanced force posture initiatives.

Investment should be focused on increased regional engagement and investments in AUKUS, force posture, infrastructure and the ability of the ADF to operate from the network of bases in the northwest of Australia.

In contrast to other sub-regions of the Indo-Pacific that are centrally confronted with US-China competition, it is the increasingly strained dynamic between India and China that is shaping the Indian Ocean strategic environment. India-China relations deteriorated following the 2020 Ladakh crisis and the subsequent 2022 clashes along the Line of Actual Control. These altercations have intensified underlying India-PRC rivalry across the Indian Ocean region. In the past, Indian officials were somewhat acquiescent, if not hospitable, to Chinese regional policies, including the 2017 establishment of a PRC military base in Djibouti, China’s heavy investment in regional port infrastructure and growing diplomatic footholds. However, a step change in India’s approach to China is now apparent, embodied in Foreign Minister Subrahmanyam Jaishankar’s recent remarks that “at least in the foreseeable future, there will be issues” in China and India’s relationship. This, in turn, creates a new driving dynamic in India and Australia’s relationship.³⁶ Perhaps most significantly, despite enduring reticence in some corners of Delhi about external players’ involvement in Indian Ocean affairs, it has reset India’s comfort level with other, aligned powers, operating in what it views as its maritime backyard.³⁷

China’s first island chain maritime chokepoints

Source: US Department of Defense, RAND Corp. (data from 2013)

Mounting secondary risks in a regional contingency

Though the Indian Ocean does not garner that same level of immediate strategic concern from Australian policymakers as either Southeast Asia or the South Pacific, Australian Foreign Minister Penny Wong has been frank that Indian Ocean countries must confront the potential scenario of strategic competition escalating into conflict in their waters.³⁸ This is largely because, in any security contingency in East Asia, the maintenance of the sea lines of supply for Australia and other Asian countries will be existential. There also remains an essential need for the Indian Ocean to serve as a major force flow corridor for US military forces moving from the Middle East (operated by US CENTCOM) to US forward-deployed bases and logistical staging areas in East Asia (operated by US INDOPACOM). Maintaining a regional strategic balance in the Indian Ocean region, and especially the northeast Indian Ocean, is thus central to Australia’s homeland defence, resilience and economic security in the form of national and indeed global energy supply chains.

Equally, PRC strategies and vulnerabilities in the Indian Ocean will be a key consideration for future policymakers seeking diplomatic and economic levers of engagement. Military planners view the Indian Ocean as a region where the PRC would have exploitable vulnerabilities, given the extent of China’s dependence on seaborne trade.³⁹ In recent years, US experts have remarked that strategists’ operational understanding of how the PRC may operate in the Indian Ocean ahead of a conflict is weaker than their analysis of other regions.⁴⁰ For instance, the potential for simultaneity — wherein a country looks to apply pressure in various forms on multiple sub-regions in the Indo-Pacific to divert an adversary’s resources and attention — has not been comprehensively understood and prepared for in light of recent tensions.⁴¹ US experts agree that it would be logical for the PRC to increase pressure on India’s land border to fracture US partnerships during an East Asian security crisis.⁴² In anticipation of potential strategic futures in the Indian Ocean, Australian policymakers must reckon with an evolving threat environment.⁴³

The complexity of the changing Indian Ocean dynamics is further magnified by the compounding challenges of non-traditional security threats, emanating primarily from climate change.⁴⁴ The intensity of climate-related challenges for littoral and island states in the Indian Ocean means that such threats eclipse hard security concerns for many policymakers in the region. They also provide vectors for exploitation for nefarious actors and challenges to traditional security partnerships if they do not evolve to meet them. For Australian policymakers, this both increases the likelihood of simultaneous security challenges and provides a new starting point for security-based engagement with partners across the Indian Ocean region.

Clarifying US expectations

A final reality that will shape Australian policymakers’ calculus is the clear limitations of both US interests and capacity in Indian Ocean waters. This is especially prescient under the second Trump administration. It is clear that the Indo-Pacific remains this administration’s priority region of operations and that the Biden administration’s designation of the PRC as the United States’ ‘pacing’ threat holds constant.⁴⁵ However, the disaggregation of US strategy under Trump and the rejection of the Biden era policy of integrated deterrence leave partners in the region questioning the extent of US willingness to further substantiate the Indo-Pacific focus that has been developing over the past decade. Questions over US capacity and resolve over the Indo-Pacific have fomented in the first eight months of the second Trump administration with its immediate focus on issues in the Middle East and Europe. The Indian Ocean, where the United States has few material interests at stake, is likely to remain overlooked in favour of higher priority Indo-Pacific subregions such as northeast Asia and the South China Sea.

In some respects, the United States may prove less capable of advancing Australian interests in the Indo-Pacific than Australian policymakers had anticipated. Albanese government officials have been consistent in their view that “the whole [Indo-Pacific] region benefits from US engagement, from their contribution to the region’s strategic balance.”⁴⁶ The depletion of US soft power is changing the dynamics of strategic competition in the Indo-Pacific (and globally). The dismantling of the United States Agency for International Development (USAID) by the Department of Government Efficiency, the imposition of global tariffs, and the over-reliance on hard power, with a strong focus in the northeast Asian subregion of the Indo-Pacific, are limiting the United States’ capacity to contribute to a favourable Indian Ocean balance of power short of conflict. For the remainder of the Trump presidency, Australian policymakers must reckon with the impact of reductions in US investment and reduced appetite for sustained diplomatic overtures in the region.

Increased PRC presence and apparent limitations on India’s capacity have increased strategic challenges for Australia in the Indian Ocean without a corresponding increase in US interests or engagement. Trump’s America First foreign policy may well require a reappraisal of Australian diplomatic and military commitments in the northeast Indian Ocean. In addition, a balance of military operational responsibilities for the northeast Indian Ocean must be, where possible, agreed between the Pentagon, INDOPACOM and the Australian Government. This discussion must be framed in a practical understanding of the limits of Indian maritime power both politically and in terms of military capability, as well as bilateral and minilateral engagement with Indian. In all these discussions, the Australian Government must have practical implications of increased burden sharing by Australia front and centre in order to ensure the appropriate management of Australia’s sovereign interests as well as alliance equities. Recent demands from the current US administration for Australia to increase its defence spending from 2% to 3.5% of GDP increase the importance of these discussions.⁴⁷ With US policymakers increasingly unified in their push for allies to take greater responsibility for their defence, Australia is expected to make a more concerted, independent contribution to the strategic balance.

Most commentators concur that the Indian Ocean is at present, has long been, and will remain into the future, an economy of force where Washington will allocate a minimum level of defence resources.⁴⁸ This basic fact requires Australia to pay serious attention to this region as strategic competition intensifies. The concentration of US forces elsewhere in the Indo-Pacific, principally in East Asia and the central Pacific, long predates the second Trump administration. The conception that the Indian Ocean is beyond core US interests is a view that is held by many in the United States on both sides of politics. Unlike Australia and India, the United States does not have an Indian Ocean coastline nor any territorial interests at stake in the region to drive greater diplomatic and military commitments. Despite the renaming of ‘Pacific Command’ in 2018 to ‘Indo-Pacific Command’ and the best intentions of successive US administrations, there remains little basis for the United States to grow its permanent presence in the region beyond the Naval Support Facility at Diego Garcia, even as they have adopted the broader Indo-Pacific as its defining regional strategic concept. This is the consequence of a range of factors, including the immediacy of threats, distance from the mainland United States and the shortage of immediate US interests (including its few trade dependencies in the ocean). As a result, the key strategic imperative for US policymakers is to ensure that the Indian Ocean remains comfortably tertiary relative to demands of higher warfighting priority regions in Asia, the Middle East and the Atlantic.⁴⁹

The United States will rely on its partners to fulfil key responsibilities, including providing a comprehensive operating picture, protecting SLOCs and disrupting Chinese access.

Consequently, the United States will rely on its partners to fulfil key responsibilities, including providing a comprehensive operating picture, protecting SLOCs and disrupting Chinese access. The recourse for US demands on its regional partners under the Trump administration, with its focus on increased burden sharing, foreshadows more sweeping future expectations. Understanding the current and likely US ask of Australia in both the competition phase and especially in any time of conflict is essential for Australian policymakers to make informed, sovereign decisions about its defence planning and posture now and in the future. Even more importantly, these discussions must be focused around Australia’s strategic interests and ensuring the United States has a comprehensive understanding of these interests and Australia’s sovereign focus of its diplomatic, economic and military power both for immediate effect and the long-term strategic balance.

India’s military spending relative to GDP has declined for several years in the face of pressure on budget top-lines.Source: Getty

Ongoing constraints on India’s capacity

Considering the above strategic realities, Australian policymakers must hold realistic expectations about Indian policy options and preferences and explore associated opportunities for partnership. Both Australia and the United States — notwithstanding recent US trade tensions with India over the latter’s purchase of Russian arms and oil and ongoing tariff negotiations — have resoundingly embraced Indian leadership in Indian Ocean affairs.⁵⁰ India has long presented itself as the primary security provider for the region, embodied in its Neighbourhood First Policy and Security and Growth for All in the Region (SAGAR) initiative.⁵¹ However, ongoing constraints on India’s capacity are accentuating the demand for Australian engagement and presence in the maritime domain.

India’s military spending relative to GDP has declined for several years in the face of pressure on budget top-lines.⁵² In addition, pressure on India’s land borders has limited the resources devoted to the development of its maritime capabilities. This trend became apparent after the recent line of control issues with the PRC, which encouraged a reprioritisation of Indian defence spending and seemingly exacerbated shortfalls in India’s naval force projection capabilities in favour of land defence.⁵³ The pressure to continue such actions has only increased with the recent India-Pakistan conflict in May 2025. The Indian Navy gets the smallest budget allocation (17%) of any Indian service.⁵⁴

Complicated histories with smaller Indian Ocean states have also frustrated Indian engagement; opinion polling shows that India is distrusted by people in Southeast Asia and is criticised for an apparent reticence to assume broader global leadership roles.⁵⁵ Certainly, playing a supportive or parallel role to India remains imperative to Australian operations in the ocean, but there are increasing opportunities and demands for Australia to leverage its status as an honest broker to ensure the success of India’s maritime defence efforts in the region.

Australian objectives to 2035

Over the next decade, Australia stands to make a key contribution to regional stability, diplomacy and development efforts in the Indian Ocean region. Still, Australia’s Indian Ocean strategy cannot be everything, everywhere, all at once. Defence and diplomatic resources, aid and investment available to the region are limited and finite. Even if the Australian Government decided to significantly increase funding to strengthen its integrated statecraft, the gravitational pull to the South Pacific, as well as Australian interests in both Southeast Asia and Northeast Asia, would likely continue to monopolise attention and available resources. Accordingly, Australian officials must be both ruthless in their prioritisation and focused if they hope to empower partnerships and operations in the Indian Ocean region.

The Australian Government’s pursuit of national objectives begins from the recognition that Australian regional diplomacy must be closely coordinated with both in-region and extra-regional partners, including the United States, Japan, France and the United Kingdom, to maximise its impact. The very foundation of Australia’s approach to strategy across regions is working collaboratively with allies and partners to maintain a regional strategic balance to enable collective deterrence and to help preserve the peace. Recent Australian strategic documents rightly prioritise the northeast Indian Ocean and a western Indian Ocean strategy with a focus on diplomacy and a military strategy based on collective deterrence and denial.⁵⁶

Australian policymakers must develop a policy approach to the Indian Ocean region through the lens of ‘integrated statecraft’ — that is, to achieve its strategic objectives by coordinating and applying a number of instruments of national power, such as defence, diplomatic and economic assets.⁵⁷ Consistent with that approach, the remainder of this report is delineated by lines of effort within a nationally integrated Indian Ocean strategy adhering to the following overarching objectives, synthesised from recent Australian strategic documents:

1. Contribute to a favourable regional strategic balance alongside allies and partners through continuous diplomatic and military capability, engagement and presence.
2. Promote the economic dynamism of Australia’s Indian Ocean partners and unlock the benefits of both sustainable growth and, where possible, greater regional economic integration.
3. Positively contribute to the regional strategy balance and respond to instances of grey-zone coercion or aggression against Australia or its partners when they occur and deter the outbreak of conflict in the Indian Ocean.

Objective 1: Diplomatic partnerships and the regional balance of power

The state of play

“Maintaining regional stability” in the Indian Ocean is a matter of national importance for Australia.⁵⁸ As in all subregions in the Indo-Pacific, Australia aims to contribute to a regional balance alongside its allies and partners. This is obvious in the readouts of Australian officials’ engagements with extra-regional partners — including at the 2024 Australia-US Ministerial, where US and Australian foreign policy and defence principals “reaffirmed their commitment to support Indian Ocean countries and regional architecture to address increasing challenges and advance resilience and prosperity.”⁵⁹ But it is most apparent in the energetic efforts of Australian diplomats in their bilateral partnerships in the Indian Ocean.

“Maintaining regional stability” in the Indian Ocean is a matter of national importance for Australia.

Over the past 20 years, Australian ties with almost every country in the region have strengthened. As discussed, a centrepiece of Australia’s Indian Ocean strategy is bilateral cooperation with India, which Australia has deemed a “top-tier security partner,” formalised in a Comprehensive Strategic Partnership.⁶⁰ A concerted focus on expanding ties with India has led some commentators to argue that this has caused a relative neglect of other Indian Ocean states.⁶¹ Nevertheless, since the release of the 2023 Defence Strategic Review, strengthening bilateral relationships with India, Sri Lanka, the Maldives and Bangladesh has been treated as a priority by the various departments of the Australian Government. The establishment of an embassy in the Maldives, a defence attaché in Bangladesh and the strengthening of the Australian diplomatic mission in India are all significant enhancements of Australia’s regional engagement. The Australian mission in India now rivals the size of Australia’s mission to China. In addition, the Australian Government has in recent years worked to strengthen its trilateral and minilateral configurations relevant to its interests in the Indian Ocean, including advancing a focus on the Indian Ocean in the Quad’s Indo-Pacific Partnership for Maritime Domain Awareness, and humanitarian assistance and disaster relief efforts.⁶²

Figure 1. Number of ministerial visits to Indian Ocean states under the Albanese government, 2022-2025

Development assistance is an essential element of Australia’s bilateral outreach and efforts to ensure a stable and prosperous Indian Ocean order. In 2024-5, the Australian Government invested A$130.9 million in bilateral official development assistance in South and Central Asia, discounting global programs.⁶³ It invested an additional A$312.1 million in Indonesia alone.⁶⁴ Investment in the Indian Ocean region has increased incrementally, but pales in comparison with the A$1.55 billion bilateral development assistance allocated to Pacific countries.⁶⁵ However, this investment remains a cornerstone of Australia’s engagements in the region. When taking broader programs into account, Australia provides over A$330 million in development assistance and over A$100 million in humanitarian support to South Asia.⁶⁶

Such offerings provide options to regional partners, whose other choices are often China’s BRI or development partnerships with India, where engagements have struggled under the weight of history and a patchy delivery record on major projects.⁶⁷ The United States has in the past played a key role in the regional development landscape through its contributions to regional institutionsm, including the Indian Ocean Rim Association and the Bay of Bengal Initiative, as well as several bespoke funding efforts. However, Trump administration policies such as cuts to USAID severely hamper US soft power capabilities and create a lack of clarity on how Washington perceives infrastructure and investment into the region as part of its broader regional strategy. This has meant the collapse of any type of ‘integrated’ approach from the Trump administration to regional balancing and deterrence. Recent funding freezes have left the future of long-standing initiatives in limbo.⁶⁸ USAID cuts have already had significant effects on regional health infrastructure; one example is the freezing of Stawisha Pwani, a US$47 million program for reproductive health, maternal and child care and HIV/AIDS treatment to four Indian Ocean communities in Kenya, which had collectively been treating 12,000 HIV patients.⁶⁹

Australian strategists’ concentrated efforts on the eastern Indian Ocean have meant that little has been invested in diplomatic outreach to the west. For example, Australia only has two foreign service officers posted to Mauritius. As a result, Australia relies upon the efforts of extra-regional partners like France and the United Kingdom, who hold a greater stake in that subregion to underwrite development and security outcomes. This approach comes with its hazards, given these extra-regional players’ complicated colonial histories with Indian Ocean communities — the UK-Chagos Islands sovereignty dispute remains a striking example, even as tensions ease.⁷⁰ Australian experts continue to disagree as to how to right-size Australian commitments beyond the northeastern area of responsibility. Advocates of a stronger Australian focus emphasise Australia’s reliance on tanker transit through sea lanes that stretch across the region, and the significance placed on the west of the ocean by both Delhi and Washington.⁷¹

Figure 2a. Number of diplomatic posts in the Indian Ocean by country, 2024

An Indian Ocean post is defined as any Embassy, Consulate or Mission to a country or multilateral institution based in any city in an Indian Ocean country. For this analysis, US and Chinese posts in Australia and India are counted.

Source: Lowy Institute Global Diplomacy Index, 2024⁷²

Australia’s efforts should be put in the context of growing global interest in the Indian Ocean region. Though in recent years the US and Chinese Governments have been particularly focused on competing for influence in the South Pacific, the Indian Ocean has been in no way immune from such efforts. Secretary of State Michael Pompeo made the first cabinet-level visit to the Maldives in 2020, and the Biden administration subsequently appointed Hugo Yue-Ho as the United States’ first Resident Ambassador to the Republic of the Maldives in September 2023.⁷³ While important, these efforts have failed to keep pace with China’s growing diplomatic outreach, as China now has more embassies and overseas missions in the region than any other power and undertakes frequent high-level “neighbourhood diplomacy” at both the leader and senior official levels.⁷⁴

Among the greatest impediments to Australia’s Indian Ocean outreach is the lack of Indian Ocean regionalism. Commentators concur that Indian Ocean multilateral groupings are ubiquitously weak when compared with counterparts in Europe and Southeast Asia. Australian officials have not been successful in transposing their effective order-building efforts elsewhere in the region, as the Indian Ocean is often described as “complex”, “diverse,” and “fragmented.”⁷⁵ This century, Australia’s security multilateralism has been limited to its partnerships with India, Japan and the United States.⁷⁶ Still, Albanese government officials have consistently expressed an interest in “deepening our historical commitment to multilateralism” and “building the institutions of engagement” in the northeast Indian Ocean.⁷⁷ In the absence of such institutions, diplomats must re-dedicate themselves to resource-intensive bilateral outreach.

Figure 3. Membership in the major multilateral institutions of the Indian Ocean region

Red indicates membership and blue indicates observer or dialogue partner status as of March 2025.

For all its shortcomings, the Indian Ocean Rim Association (IORA) remains the most useful inclusive grouping for Australia to collectively engage Indian Ocean partners. The IORA is the only grouping in the region commanding ministerial-level representation, and benefits from the Indian and Bangladeshi Governments’ ongoing support for South Asian regionalism.⁷⁸ IORA’s impact is constrained by the combination of its expansive membership and consensus-driven model, meaning issues often languish in the face of the diverse perspectives of its members. The South Asian Association for Regional Cooperation (SAARC), the only regional organisation in South Asia, increasingly has a maritime focus, but it will continually prove ineffectual in the absence of more peaceable relations between India and Pakistan.⁷⁹

Minilateral groupings increasingly organise and propel Australia’s Indian Ocean efforts. The Quad is the most conspicuous example, though the quadrilateral grouping’s period of dormancy between 2008-2017, its current emphasis on non-hard-security oriented issues and broader geographic focus beyond the Indian Ocean have meant it has not developed as a robust and sustained deterrence to China’s increasing military presence in the region over the last decade. Indeed, India and Australia have played a significant role in channelling the group’s efforts towards regional maritime domain awareness, climate response and HADR efforts in the region. The most tangible example is the expansion of the existing Information Fusion Centre – Indian Ocean Region (IFC-IOR) in Gurugram, India, to monitor vessel activities across the ocean and train officers from neighbouring countries.⁸⁰ Beyond the Quad, periodic efforts continue in other trilateral and minilateral configurations in helping to build what one expert called a “regional consciousness.”⁸¹ The Australia-India-Indonesia trilateral is proceeding with senior officials’ meetings,⁸² and for years, commentators have made the case for more complex cooperation.⁸³ The Australia-India-France trilateral has been similarly elevated. Activities in recent years, including foreign ministerial-level coordination on maritime security and development on the sidelines of the United Nations in 2022 and French contributions to Indian Ocean naval exercises, form the basis for more robust maritime security cooperation on shared Indian Ocean objectives.⁸⁴ It will be critical that emerging and ongoing minilateral groupings remain clear-eyed in the next decade on the importance of pursuing inclusive groupings that recognise the importance of a variety and integrated approach, including hard-power capabilities, to ensure a favourable strategic balance in the Indian Ocean.

The next ten years

Climate change effects: Presently, littoral and island countries in the Indian Ocean have little resilience against the increasingly acute effects of climate change that they experience. Many Indian Ocean states view this as their single most severe security threat. More than 80% of all global fatalities from tropical cyclones occur in the northern Indian Ocean, despite the region accounting for only 6% of all global cyclone occurrences.⁸⁵ The impacts of extreme weather events are poised to become more severe, producing major regional human security challenges. Sea level rise of one metre (anticipated by the end of the century) could result in 80% of the Maldives being submerged.⁸⁶ Consequently, near-term demand will soar for development assistance that improves the resilience of Indian Ocean communities. In South Asia and the Bay of Bengal, there is a reported requirement for approximately US$6.3 trillion (more than A$10 trillion) in climate-adjusted infrastructure investments by 2030.⁸⁷ Though useful adaptation mechanisms have emerged in recent years, the likely absence of relevant near-term investment under a Trump administration that has disavowed US development efforts related to climate change will frustrate mitigation efforts, as well as parallel efforts in development and economic areas held at risk by the effects of climate change.

Elite capture and democratic backsliding: The tactics that have defined China’s approach to competing for influence in the Pacific Islands are being replicated in the Indian Ocean region. PRC officials have proven capable of exploiting weak democratic governance in Sri Lanka and Bangladesh through elite capture.⁸⁸ Pakistan’s debt-to-GDP ratio exceeds 70% and the World Bank has deemed the country in a “human capital crisis” as wealth has further concentrated in the hands of ruling elites.⁸⁹ Commentators write that the so-called global democratic recession, wherein over half of the 60 countries that convened elections in 2024 suffered democratic decline or showed increasingly autocratic qualities, is particularly plain in South Asia.⁹⁰ Though the 2024 Indian election was celebrated by some as ‘holding the line’ for the largest democracy in the region, the regime was downgraded in recent years to a hybrid “electoral autocracy.”⁹¹ Elite capture and broader democratic decline across Indian Ocean states make it more challenging for Australian officials to engage on the basis of shared values or in the ways that they would prefer, though of course there is much for Australia to learn from India’s recent ongoing influence to cultivate strategic ties in places such as the Maldives. Such political complexity will intensify both development challenges and geopolitical risk in the coming years.

Collective action problems: The absence of effective regional mechanisms, particularly for security diplomacy, will increasingly pose a challenge for policy coordination in the face of collective action problems. Australia will have to reconcile its ambitions for more sophisticated engagements with regional partners with the limited resourcing and coverage of issues within the prevailing multilateral institutions outlined above. Intensifying strategic competition between India and China, or China and the United States, will increase other Indian Ocean countries’ wariness about multilateral behaviour perceived as alignment. Non-traditional security will remain the best viable avenue for greater coordination in the maritime domain among a set of partners with diverse interests and varied capacities.

Mounting Australian interests in the western Indian Ocean: In light of prevailing resource constraints, Australian officials are right to prioritise diplomatic and security efforts in the Indian Ocean’s northeast in the near term. However, over the next decade, Australian and partners’ interests further ashore are likely to become more pronounced. The surge in the African continent’s population (and in particular, its working age population), protracted conflicts in the Middle East, ongoing dependence on the transit of energy through the ocean, and increased Chinese presence in the region, buoyed by the PRC’s deepening engagement with Mauritius, Seychelles, Comoros and Madagascar, will increase the onus on Australia to expand its investment and attention beyond its near region.

Indian diaspora: The Australian Bureau of Statistics projected that Australia’s Indian-born population would grow to 1.07 million by 2035.⁹² Discounting the pandemic period, India has been Australia’s largest source of net overseas migration since 2018,⁹³ and Indian-born migrants have been, for many years, the biggest pool of those seeking Australian citizenship.⁹⁴ This growing Indian diaspora community in Australia is seen as a ‘force multiplier’ for Australia’s strategic efforts in the region.⁹⁵ This increasingly powerful voting bloc will exercise significant influence over Australian policy going forward and underline perceptions of shared values in Australia’s bilateral relationship with India. This may drive both greater trust in India and more comprehensive interest in the Indian Ocean region. Taken together, the Australian Government should pursue its objective of achieving a favourable strategic balance in the Indian Ocean by considering the following:

Recommendations

1. Post election, the most recent (2025-) Albanese government has appointed Assistant Foreign Minister Tim Watts as Australia’s first Indian Ocean Envoy, in an indication of the growing importance of the region to the Australian Government. The next stage of ministerial engagement should entail the Prime Minister appointing an Assistant Minister for the Indian Ocean as a counterpart to the Minister for the Pacific. This role would underwrite continued interest in the region at the official level, demonstrate prioritisation to the region and provide a clear pathway for senior-level engagement to official counterparts across the region; by encompassing the Indian Ocean, this minister will also have a focus on key Southeast Asia maritime states such as Indonesia, Malaysia and Thailand.
2. Along with broadening bilateral engagement with key Indian Ocean states, Australia’s diplomats should prioritise substantiating limited minilateral configurations in the Indian Ocean — namely, the Australia-India-United States trilateral, the India-Australia-Indonesia trilateral and the India-Australia-France trilateral. Minilateral groupings hold greater prospect for collective action on maritime security issues than the existing multilateral institutions in the region and spare the resources of endeavouring to configure ambitious new configurations that may be ineffectual. Importantly, minilaterals that do not include the United States provide options to Australia and non-aligned regional partners. Though minilateral cooperation has tended to proceed ad hoc or with a strict focus on blue economy or marine pollution issues, as an example, they are worthy efforts in growing the connectivity of Indian Ocean states and may develop a greater security focus in the future. Though Australian policymakers must set reasonable expectations around the impact of larger multilateralism, officials should not arbitrarily close off future opportunities for groupings that could empower sub-regional security in the northern Indian Ocean.
3. The Department of Foreign Affairs and Trade should continually re-evaluate its development priorities to ensure they can fill gaps left by the disabling of USAID and reductions in UK development funding over the decade in the Indian Ocean. India continues to play a leading role in delivering high-impact community development projects, but larger, strategic investments by Australia make a fundamental input and take advantage of Australia’s reputation as a benign, honest broker in the region.
4. The Australian Government should further invest in fully equipped posts across the Indian Ocean region, noting that its relations with small Indian Ocean states are primarily Ambassador-led. The scale of activities that emerge from the US post in India provides an instructive example of the impact of post-level outreach. While Australia’s foreign policy is more interagency focused, enhancing post capabilities and autonomy provides for opportunities to exponentially expand relations based on Canberra’s mission strategy and intent. Expanded Australian diplomatic posts should both inform and accommodate more regular senior official travel from Australian ministers.

The Australian Government should further invest in fully equipped posts across the Indian Ocean region.

1. Even in the absence of major reallocations of Australian investment or military assets, Australia should seek greater planning connections with extra-regional partners on both diplomatic and non-traditional security objectives in the western Indian Ocean. Transparent coordination should occur with France and the United Kingdom on the division of labour in the western Indian Ocean to avoid unnecessary duplication of efforts when respective national resources are strained. Australian officials must increasingly consider limited contributions to partners’ non-traditional maritime security and development programs where Australian inputs could maximise impact.

Objective 2: Promoting sustainable development and economic integration

The state of play

Australia is a significant trade presence in the Indian Ocean. A 2024 ASPI study estimated that approximately 65% of Australia’s maritime exports and 40% of its imports travel through Indonesia’s archipelagic sea lanes. Australia’s bulk commodity exports transiting these routes account for 29% of global bulk shipping.⁹⁶ Indian Ocean trade routes remain of particular national and global significance, as previously discussed, for the transit of liquid energy in particular.⁹⁷

India, Singapore, Indonesia and Malaysia are among the ten countries trading the highest value through sea freight with Australia. Though typically conceptualised as strictly Southeast Asian powers, the passage of trade through Indian Ocean routes underscores the connected nature of these Indo-Pacific sub-regions. In terms of the routes of greatest interest to Australia, the Lombok Strait is critical to export iron ore from the Australian coast to North Asia, where the Malacca Strait is used by most container and vehicle ships coming to Australia from Europe. It should be acknowledged that, when it comes to economic connectivity, Australia’s ties in the Indian Ocean pale in comparison to those in Southeast Asia. Australia’s free trade agreements with countries in the Ocean’s rim are almost exclusively with Southeast Asian partners (including Indonesia, Singapore and Malaysia).

Figure 4. Australian two-way trade partners (A$ millions)

In contrast, since 2005, China has been the most significant import market for most Indian Ocean states. China has the highest cumulative trade volume with countries in the region (US$900 billion), followed by the United States (US$361 billion).⁹⁸ Traditional regional partners, such as Australia and France, rank much lower. China has significantly outperformed other major trading partners in the Indian Ocean since 2005. Equally, as previously mentioned, China’s Indian Ocean routes represent a considerable vulnerability. Of the ten countries that supply 75% of China’s energy, nine rely upon Indian Ocean transit routes.⁹⁹

The Indian Ocean is remarkable for its low intra-regional trade. Intra-regional trade represents 5% of total trade in South Asia, compared with 25% in ASEAN.¹⁰⁰ In previous years, the World Bank has aggregated this economic activity at just US$23 billion (A$36.5 billion), far below its estimated value of US$67 billion (more than A$106 billion).¹⁰¹ Experts attribute the region’s relatively languid trade ecosystem to poor multilateralisation, insufficient port infrastructure (though positive moves have been made in this direction in recent years), limited natural resources, and intensifying climate change-related threats. At present, no port in the northeast Indian Ocean is among the top ten in the world for container handling volume, despite the tremendous volume of shipping traffic passing through these ports (up to 30% of global traffic).¹⁰²

Figure 5. Australian merchandise exports to Indian Ocean rim countries (2021-2023)

Across the region, significant development disparities endure, in part due to this absence of trade-led growth. Foreign direct investment and population growth are propelling sustainable growth for island states.¹⁰³ The western Indian Ocean is experiencing rapid growth in large-scale development, though questions endure about its sustainability.¹⁰⁴

Despite the aforementioned challenges impacting Indian Ocean economic integration, Canberra is increasingly seeking to deepen its understanding of South Asian markets and explore greater economic engagement.¹⁰⁵ Economic trends across the broader Indian Ocean will inevitably shape Australian interests — directly and indirectly — and will have an impact on Australia and those of its partners in Southeast Asia and the wider Indo-Pacific. As such, much like their strategic dimensions, economic developments in the Indian Ocean cannot be viewed in isolation from those in Asia and the Pacific. These are interconnected arenas in which Australian engagement is essential to sustaining both economic vitality and broader stability across the Indo-Pacific, and which the Australian Government should remain clear-eyed about the importance of addressing over the coming decade.

The next ten years

Blue economy — sustainable use of the ocean for economic growth, environmental protection and improved livelihoods: Maintaining the upward trajectory of Indian Ocean states’ growth will rely upon small states’ abilities to extract maximum benefits from the blue economy. Sustainable growth has long been a collective priority for Indian Ocean states, institutionalised in the IORA Jakarta Declaration on the Blue Economy in 2017.¹⁰⁶ Littoral and island states rely extensively on marine resources for their food security and key industries. In the western Indian Ocean, fishing provides food security and employment for almost 60 million people.¹⁰⁷ Australian officials are alert that the Indian Ocean partners’ capacity to take advantage of their natural environment is threatened by both illegal and unregulated fishing, as well as the encroaching impacts of climate change.¹⁰⁸ Indian Ocean economies stand to be especially exposed to the threats of manmade climate change; the ocean has accounted for more than 30% of temperature increases in the world’s oceans in the last 20 years.¹⁰⁹

Collisions and congestion: Due to the volume of ships transiting Indian Ocean routes, key sea lanes have long been prone to congestion and collision. The frequency of these disruptions is expected to increase exponentially as shipping traffic grows over the next decade, leading the Malacca Strait, for example, to exceed its capacity by then.¹¹⁰ Indeed, this trend is witnessing a 2% increase in traffic in the Malacca Strait each year.¹¹¹ Experts warn that blockages or traffic jams of narrow Indian Ocean chokepoints will require ships carrying critical cargo to take long detours, which larger ships and tankers may find impossible to navigate.¹¹² Consequently, multilateral efforts to improve the safety of vehicle traffic and a national effort to improve supply chain resilience to adapt to future disruptions must be simultaneously prioritised by the Australian Government.

Piracy: Following a long period of abatement enabled by effective international counter-piracy efforts from 2011 onwards, piracy has again begun to increase across the Indian Ocean. Somali pirates have reportedly exploited the vacuum left by a reallocation of US, UK and partner forces from the Indian Ocean to adjacent waters in the Red Sea in light of the recent eruption of conflicts in the Middle East.¹¹³ Five confirmed hijackings by pirates have occurred since late 2023, including a Maltese-flagged bulk carrier MV Ruen.¹¹⁴ Where currently Australia has a lesser interest in western Indian Ocean piracy than other Quad partners, it will increasingly represent a point of concern into the future.¹¹⁵ As conflicts in the Middle East persist, encouraging non-state actors to exploit resulting vulnerabilities, Australian counter-piracy efforts must be redoubled and extended beyond regions of immediate concern.

Recommendations

1. The Australian Department of Foreign Affairs and Trade should supplement its 2018 “India Economic Strategy to 2035”¹¹⁶ with an Economic Strategy for the Indian Ocean to 2035. This larger document, similar in form and style to the Economic Strategy for Southeast Asia, should set out a region-encompassing agenda of trade and investment priorities that considers the future economic potential of smaller Indian Ocean states. Such a strategy would reduce the India-centrality typical of Australian policy for the region.
2. The Australian Government should coordinate with the private sector to facilitate investments in regional port infrastructure that would advance small states’ economic growth and encourage intra-regional trade.¹¹⁷ Priority areas may include decarbonisation (where Australia is already a global leader), digitalisation and capacity building of operators.
3. Australia should expand its work with local governments and organisations to grow their capacities to counter threats in the Blue Economy, including illegal, unreported and unregulated fishing and piracy. This would involve increasing information sharing to improve island countries’ visibility over their maritime environment.
4. Australian senior officials should advance the economic integration of Indian Ocean states by encouraging greater regional multilateralism where possible, including through the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), the Indian Ocean Rim Association (IORA) and the Coalition for Disaster Resilient Infrastructure (CDRI).

Objective 3: Deterring conflict and responding to coercion in the Indian Ocean region

State of play

The drivers for geostrategic change in the Indian Ocean are beyond Australia’s control. They are a measure of geoeconomics, geopolitics and Australia’s continued maritime dependencies. It is, however, firmly in Australian policymakers’ grasp as to how they shape and engage with the region in response to new challenges. Intensifying geostrategic challenges demand that Australia embrace a more holistic approach to its strategic geography. Canberra must unite its defence policy ambitions, merging its Pacific Ocean interests with a renewed focus on the changing balance of power in the Indian Ocean. Australia’s defence policy must respond to mounting Indian Ocean interests, informed by the changing strategic balance in the ocean, the balance of risk to Australia’s trade and energy dependencies, the growing expansion of Chinese military presence in the Indian Ocean, and northwestern Australia’s proximity to Chinese military power.

Intensifying geostrategic challenges demand that Australia embrace a more holistic approach to its strategic geography.

The 2023 Defence Strategic Review (DSR) reframed the Australian Government’s understanding of its strategic geography. The DSR formally shifted Australia’s defence policy away from a posture focused on managing escalated low-level threats to a focus on strategic competition in the Indo-Pacific and the risk of major war in the region. It reaffirmed the end of ten years of ‘strategic warning time’ outlined in the 2020 Defence Strategic Update (DSU).¹¹⁸ That is, from the mid-1970s to 2020, Australian defence policies were based on an understanding that the threat of a high-intensity conflict would become credible over a longer term, after the strategic environment had evidently undergone an extended period of deterioration.¹¹⁹ Another important feature of the DSR for Australia’s strategic policy was, as scholar Stephan Frühling noted, the need for ADF to be “much more focused force structure based on net assessment, a strategy of denial, the risks inherent in the different levels of conflict, and realistic scenarios agreed to by the Government.”¹²⁰

The net assessment and the rejection of the ADF as a ‘balanced force’ are central to the DSR. As Frühling goes on, “net assessment as an analytical method has many applications, but the context makes clear that the review wants the ADF to be designed to meet one, extant, actual, clear and present threat — from China.”¹²¹ Net assessment is another way of saying threat-based planning, but where there is a singular, overriding, and known threat.¹²² This was also underlined to the Australian public in 2025 when the Chief of Defence Force, Admiral David Johnston, noted that “the nation needs to be prepared for the possibility of launching combat operations from its own soil, which he calls a ‘very different’ way of thinking to Australia’s approach since WWII.”¹²³

Australia-India-Land Bridge Map

Source: Australian Department of Defence

Such an approach demands a reimagination of Australia’s defence policy based on the proximity to the threat and the country’s dependencies and vulnerabilities. The DSR’s defining geographical reference point is the Australia-India-Landbridge map.¹²⁴ This map represents the alignment of northwest Western Australia and the offshore territories of the Cocos (Keeling) Islands and Christmas Island to the northwest Indian Ocean. This area is where Australia’s geography is closest to the intersection of the Indian and Pacific Oceans.

The unique orientation of this map provides the geography of Australia in the Indo-Pacific relative to the risk emanating from China. It clearly articulates the importance of Australia’s northwest and its Indian Ocean territories relative to the geographical distance to China, the South China Sea, and maritime Southeast Asia. Most significantly, it highlights the long sea line of supply that extends across the Indian Ocean for energy security and into the key maritime choke points in Southeast Asia.

This map reorients Australia’s strategic thinking and elevates the northeast Indian Ocean as an area of paramount concern, highlighting the opportunities and vulnerabilities of Australia’s strategic geography on its Indian Ocean coastline. It also reminds strategists that the distances in the Indo-Pacific, even within its subregions, are vast.¹²⁵

Reconceiving Australia’s geography is central to understanding the drivers and interests of Australian defence policy and its role in contributing to a regional strategic balance. If Australia cannot conceive its geography appropriately, policymakers in Canberra will not be able to effectively allocate resources as required to maintain a favourable regional strategic balance. Such posturing is central to enacting Australia’s denial strategy, both as part of a regional collective deterrence effort and the ADF’s military strategy of denial.¹²⁶

The other defining trend of Australia’s Indian Ocean operations is the shifting strategic balance and growing risks for Australia. This was highlighted in a recent Lowy Institute report outlining the PRC’s growing military capabilities in the South China Sea. The report included a map that represents the effective reach of PRC military power.¹²⁷ This map (see below) serves to highlight the risks that Australia may face and the change in regional strategic balance not just in Asia but in the eastern Indian Ocean as well. As the report noted, “China’s recent military development constitutes the greatest expansion of maritime and aerospace power in generations and is most obviously seen in its expanding long-range missile force, bomber force, and modernising blue-water navy.”¹²⁸

The increasing reach of China’s strike capabilities

DF-21 and DF-26 mainland ranges measured from open-source estimates of associated PLA Rocket Force bases. All ranges are approximate given source limitations.Map provided courtesy of the Lowy Institute. Version reproduced for USSC.

The map highlights the geographical proximity of northwestern Australia and Australia’s Indian Ocean territories to the maritime choke points at the hinge of the Pacific and Indian Oceans, the South China Sea, the Philippine Sea, and onwards to Taiwan and East Asia. It also highlights not just the criticality of this region but also the importance of the ADF’s network of northern bases for the defence of the area (and for force projection into the region), as well as the genuine risk of cruise and ballistic missile attacks to northwestern Australia in the event of a major regional contingency.

The risks outlined in the DSR were incorporated into formal government strategy with the release of the 2024 NDS. The NDS sharpens the official language vis-à-vis China used in the DSR. The NDS notes that the “risk of a crisis or conflict in the Taiwan Strait is increasing, as well as at other flashpoints…[including] increasing competition for access and influence across the Indian Ocean, including efforts to secure dominance over sea lanes and strategic ports.”¹²⁹

In addition to the focus on collective deterrence to achieve a regional strategic balance, the 2024 NDS commits the ADF to a strategy of denial focused on a primary area of military interest, including the northeast Indian Ocean. As part of this strategic blueprint, the Australian Department of Defence (hereafter, the Department of Defence) is committed to:

regularising the ADF’s presence, including increasing deployments, training and exercises with Sri Lanka, the Maldives and Bangladesh; and strengthening Australia’s defence cooperation with Indian Ocean region countries through regional maritime domain awareness, growing defence industry engagement and increasing education and training cooperation.¹³⁰

The strategic risks being driven by expanded PRC capabilities in the broader Indo-Pacific mean Australia’s strategic policy community must develop a deeper understanding of the integrated relationship between the role of the Indian Ocean in the defence of Australia, not just in terms of geographic proximity to the Australian continent but also relative to East Asia’s flashpoints and potential contingencies, to the sea lines of communication, to energy security, to the regional strategic balance in the India Ocean and the PRC’s ambitions in the region.

Rising PRC presence in the Indian Ocean

As China’s power grows, it will want to expand its presence into the Indian Ocean. A key driver of the PRC’s growth and economic stability is energy, with two-thirds of global energy shipments travelling through the Indian Ocean, and 80% of China’s stores being provided through these shipments.¹³¹ In addition, the Indian Ocean matters to China because of Beijing’s substantial investment in and energy dependence on Africa and the Middle East.¹³² On current trajectories, surges in PRC presence will shift the regional strategic balance.¹³³

A search for new markets and the expansion of its global power into China’s second-nearest ocean has seen the creation of a network of PRC commercial and military hubs in the region, or what some analysts have referred to as the ‘string of pearls’.¹³⁴ From 2015, the PRC has invested A$1 billion in Madagascar for the construction of its Tamatave Deepwater Port Project. It provided Tanzania A$10 billion in investment — the largest recipient of Chinese investment into its port infrastructure — in return for access to 900 kilometres of its coastline and attempted to establish port facilities across the region.¹³⁵ The dual use of these facilities, including their military dimensions, is clear.¹³⁶ As an Asia Society report has noted:

Chinese laws mandate that even overseas infrastructure be designed to meet military standards. These laws authorize the military to commandeer ships, facilities, and other assets of Chinese-owned companies. China’s push for civil-military integration builds-in dual-use commercial and military functionality in BRI infrastructure and associated technologies.¹³⁷

Chinese energy dependency on the Indian Ocean has created what is known as its “Malacca dilemma” — “the risk that its adversaries could close off the Strait of Malacca and thereby cut off its [China’s] vital energy supplies.”¹³⁸ This is being offset by BRI projects to direct overland pipelines, to connect the Kra Canal through Thailand to the Gulf of Thailand and onto the Andaman Sea. The other component of this strategy, as previously acknowledged, is to build commercial and military infrastructure across Myanmar, Pakistan, Bangladesh, Sri Lanka and the Maldives.¹³⁹ These ‘strategic strongpoints’ close to maritime chokepoints and critical sea lanes can support the Chinese military’s logistics network and improve its ability to operate further from home.¹⁴⁰ Indeed, China’s first overseas military base was established in Djibouti in 2017, and it signed a 99-year lease for the Hambantota Port in Sri Lanka beginning in 2017. In 2016, China commenced construction of a deep-sea port project in Myanmar.

Port access is critical to China’s ambitions. The PRC is a leader in the global transportation industry and owns or operates 96 ports in 53 countries.¹⁴¹ These commercial ports have direct strategic importance, with many already providing “dual-use capabilities to the People’s Liberation Army during peacetime, establishing logistics and intelligence networks that materially enable China to project power into critical regions worldwide.”¹⁴² PLAN presence operations through port calls and refuelling stops, and diplomatic engagements have occurred in one-third of PRC companies’ overseas ports. PLAN warships have used nine of these ports for “significant repairs or maintenance.”¹⁴³ These port calls and maintenance work have all occurred since 2017 and are focused so far “only on the route from China across the Indian Ocean.”¹⁴⁴

Yet, the PRC nevertheless faces obstacles to expanding its power, presence and military basing options in the Indian Ocean. The Indian Ocean is an area of extended operations for the People’s Liberation Army Navy (PLAN) and its air force. The PLAN must manoeuvre through the archipelagos of Southeast Asia and clear the region’s maritime choke points to operate in the ocean. Despite this difficulty, increased Chinese port access demonstrates the PLAN’s growing capabilities. These efforts are also reflected in the PRC’s defence policy shift from a more limited “offshore waters defence” to an expansive “open seas protection” in 2015, and its calls for a two-ocean approach, including the establishment of a presence in the northern Indian Ocean.¹⁵⁰

Since December 2008, the PLAN has deployed 46 task forces to the Indian Ocean. These have included a combination of destroyers, frigates, amphibious transport docks, and supply ships.¹⁵¹ In addition, the search for the downed airliner MH370 saw China maintain a naval presence in the eastern Indian Ocean for over two months.¹⁵² China’s growing military presence in the Indian Ocean must also be considered in the context of the larger shift in the military balance across the Indo-Pacific. The PLAN is now the largest navy in the world by ship count, with an overall battle force of over 370 ships and submarines, including more than 140 major surface combatants.’¹⁵³ The data on the PRC’s engagement in Asia shows a steep rise from 2012, and these same trends are also apparent in the Indian Ocean.¹⁵⁴

As the PRC’s economic and military power grows, it will continue to leverage “all elements of its power as it pursues its strategic objectives, including to change the current regional balance in its favour.”¹⁵⁵ Chinese surveillance vessels have monitored Australia’s major military exercises, including Talisman Sabre, and Australian naval facilities in Western Australia in 2022.¹⁵⁶ In 2025, a PLAN task group conducting a circumnavigation of the Australian continent for the first time, including conducting an undisclosed live fire exercise off the east coast of Australia.¹⁵⁷ This group included a Renhai Class (Type 055) guided missile cruiser, a Jiangkai II Class (Type 054A) guided missile frigate, and a Fuchi Class (Type 903) replenishment vessel.¹⁵⁸

One of the most significant emerging characteristics of the PLAN’s military presence in the Indian Ocean is the increasing use of submarines. Chinese submarine activity in the Indian Ocean has steadily increased over the past 15 years, though exact figures are difficult to ascertain. The US Naval War College has noted that on average, the PLAN deploys two submarines annually in support of its operations in the Gulf of Aden, a strange capability commitment given that nuclear-powered submarines have little utility in anti-piracy operations.¹⁵⁹ In addition, the massive expansion of the PRC’s oceanographic survey missions in the region is a harbinger of accelerated PLAN submarine operations. Over 80% of the 64 Chinese research and survey ships conducting oceanic missions in the Western Pacific and Indian Ocean have demonstrated behaviour or organisational links to the Chinese Communist Party, including 13 vessels that have been active in the Indian Ocean.¹⁶⁰

These operations are focused on maritime choke points in Southeast Asia and the northeastern Indian Ocean, key parts of Australia’s defined primary area of military operations. These scientific and commercial ships’ oceanography data collection missions in the Indian Ocean not only have clear links to support potential future military, especially submarine, operations, but the PLAN Submarine Academy is open about its links with China’s major maritime research institutions.¹⁶¹ In addition, the PRC has been exporting submarines and transferring technology to and developing supporting base infrastructure in Pakistan, Myanmar and Bangladesh, laying the foundations for China to potentially utilise these facilities for extended submarine deployments in the future. This provides the PRC with port, maintenance, repair and sustainment operations at Jinnah Naval Base in Ormara, Pakistan, and Pekua in Bangladesh, where “satellite imagers of the base shows that the facilities are far more robust than what would be required for two diesel submarines [that the PRC has sold to Bangladesh] — being able to easily support up to six to eight submarines along with several warships.”¹⁶² In Myanmar, the PRC has also supported the development of a submarine base at Made Island, Kyaukphyu, which became operational in 2021 to support its Chinese-built Ming-class submarines.¹⁶³

These developments need to be placed in the context of the PRC’s growing submarine fleet and its deployment of increasingly capable new platforms. New classes of PLAN submarines are quieter and have longer endurance.¹⁶⁴ Currently, PLAN operations are limited by the size of their fleet and the logistical challenges of Indian Ocean region deployment. The PLAN currently only operates six nuclear-powered attack submarines (SSN) amongst a fleet that includes 48 diesel-electric submarines.¹⁶⁵ However, the PLAN is massively expanding its submarine force in line with the growth of its surface navy and military capability more broadly.

The PLAN currently maintains 65 submarines and plans on deploying a fleet of 80 by 2035.¹⁶⁶ In the last 15 years, the PLAN has built 12 new submarines, including four Type 093A SHANG III class nuclear-powered guided missile submarines that provide for a new class of anti-surface warfare and land-attack capability. According to the US Department of Defense, the expansion of the PLAN’s SSN capability is part of its larger transition “from defense on the near seas to protection missions on the far seas.”¹⁶⁷ It is estimated that China has built seven or eight Type 093B SSGN submarines, fitted with 12 vertical launch missile cells, including for YJ-21 hypersonic missiles in only the past three years.¹⁶⁸

Other improvements to this new class of SSN include the adoption of pump-jet propulsion, improving acoustic signatures, indicating that “these new SSNs may be deployed more aggressively than their predecessors.”¹⁶⁹ This growing fleet of SSNs is being developed to conduct “long-range patrols, escort carrier groups, and contribute to strategic deterrence in the Pacific and surrounding waters.”¹⁷⁰ They are designed to undertake effective undersea operations to counter “US Navy domain superiority beyond the First Island Chain and in the Indian Ocean…[to] thwart third party intervention in an East Asian conflict.”¹⁷¹

Indian Ocean defence relationships

Defence relationships remain fundamental to Australia’s engagement in the Indian Ocean. The 2024 NDS dictated that the Australian Government’s regional defence engagement would focus on the bilateral relationship with India, a more regular ADF presence, expanded training and exercising with Sri Lanka, the Maldives, and Bangladesh, and contributions to regional maritime domain awareness.¹⁷² Beyond long-term shared strategic interests in ensuring peace and stability in Indian Ocean waterways, the immediate priorities for Australian defence partnerships include deepening defence industrial cooperation; improving maritime search and rescue capability; countering transnational crime, terrorism, and piracy; addressing people smuggling and other human security risks; and responding to natural disasters.¹⁷³

The Defence Cooperation Program (DCP) is the key means through which Australia conducts defence outreach on these issues. The DCP supports regional countries in developing their own defence capacities through a range of training initiatives and bilateral exercises, capacity building initiatives, and equipment and infrastructure projects.¹⁷⁴ The DCP has made notable progress in the Pacific and Southeast Asia in recent years. The expanded nature of the program in the northeast Indian Ocean also provides an opportunity to link those programs with existing measures in Southeast Asia and orient many of the bilateral and minilateral engagements with Southeast Asia partners in Indian Ocean issues and developments. Most recently, the announcement of a Guardian-class Patrol Boat to the Maldives is a significant step forward in developing partnerships and engagement in light of the notable successes that the DCP has had in the Pacific in bolstering partners’ maritime resilience.¹⁷⁵ The centrality of key Southeast Asia states with an Indian Ocean coastline must be better connected with the new efforts of engagement with Sri Lanka, the Maldives and Bangladesh.

Maritime domain awareness (MDA) and capacity building have stood out as the two priority capability areas shaping Australia’s defence partnerships in the Indian Ocean. The Australian Maritime Identification System (AMIS) is the most sophisticated MDA capability of any Indian Ocean state.¹⁷⁶ These issues remain ripe for multilateral and bilateral security diplomacy. This is embodied in the Indian Ocean aspect of the Quad’s Indo-Pacific Partnership on Maritime Domain Awareness.¹⁷⁷

At a bilateral level, given the ongoing sophistication and maturation of Australia-India defence cooperation among Canberra’s defence relationships, India is featured in every major function of the military to realise greater interoperability across the services. While expanding the scope of its regional engagement, Australia should maintain momentum on this important bilateral relationship. The biennial bilateral AUSINDEX naval exercises — a biennial maritime exercise between the Royal Australian Navy (RAN) and the Indian Navy — are a key cooperative mechanism for addressing Indian Ocean security issues. The two countries have increasingly demonstrated their interoperability in the region, including in their 2021 cooperation on the search and recovery of an Indonesian submarine.¹⁷⁸ Beyond India’s underinvestment in its naval modernisation,¹⁷⁹ the most significant handbrake on closer maritime coordination is a lack of trust between Australia and India. This is, in part, a result of the Australian Government’s concern for the state of Indian democracy and human rights; its legacy partnership with Russia; and, to an extent, lower public regard for the India relationship among the Australian public relative to other partnerships in Asia also poses as a barrier to deepening bilateral security partnerships.¹⁸⁰ Australian officials are right not to expect complete strategic alignment with India, or for India to overcome decades of strict non-alignment foreign policy doctrine. Still, reconciling both countries’ ambitions with their comfort with information sharing continues to set the pace for defence cooperation initiatives.

Figure 6. Timeline of major developments in Australia-India maritime cooperation, 2014-2024

The next ten years

Plateauing, if not declining, US presence

The US presence in the Indian Ocean has primarily been driven by the demands of Middle Eastern security crises. This has been evident, again, in the recent US strikes on Iran. News outlets reported an increased presence of US fighter and bomber aircraft at Diego Garcia, including strategic B-52 bombers, KC-135 tankers, F-15 fighters and a C-5M heavy transport aircraft in June in response to Israel’s attacks on Iranian nuclear and air defence facilities.¹⁸¹ Activity at the base has increased since March 2025, most significantly, B-2 bombers, later used on the strikes against Iran by the United States, were replaced by B-52 bombers on 21 May.¹⁸² CENTCOM capability had also surged in the wake of Houthi attacks in the Red Sea.¹⁸³ Furthermore, the United States has relocated one Patriot missile battery and the USS Nimitz aircraft carrier strike group from INDOPACOM to CENTCOM in the wake of growing tensions in the Middle East,¹⁸⁴ despite a growing bipartisan consensus — especially apparent under the Trump administration — that US forces should be refocused on East Asia.¹⁸⁵ As one US participant in a USSC workshop summarised: “Over the last two years, the volume of material briefed on the Indian Ocean can be counted on one hand. That is a clear indication of where our priorities are.”¹⁸⁶

The Trump administration’s 2025 Interim Defense Guidance assesses China as the “pacing” threat, the Indo-Pacific as the priority region, and a Taiwan contingency as the focus of US efforts in the region.¹⁸⁷ However, the Trump administration has moved US strategy in the Indo-Pacific from the concept of “Integrated Deterrence” under the Biden administration to disaggregated deterrence, that is combined US policy in the region is less than a sum of its parts and in fact some aspects of US engagement are self-defeating (such as tariff policies in relations to close allies) to the task of increased deterrence and are not being offset by pronounces of hard power efforts in deterrence. This is evident through a lack of intra-agency policy coordination and a seemingly focused effort by some US officials and the President to fundamentally separate the different instruments of US national power.

To be sure, the US strategy in the region from Obama’s Pivot to Asia through to the Biden administration emphasised both hard and soft power through diplomacy, aid, infrastructure investment and financing. However, all of these administrations lacked a central policy core around trade. The failure of the Trans-Pacific Partnership during the Obama administration hobbled the cohesion of US strategy in the Indo-Pacific. The increasing protectionist trade policies by multiple states and the rejection of large-scale free trade pacts as policy tools led the Biden administration to instead concentrate on developing a tighter network approach to allies and partners focused on hard power, force posture and diplomacy. During the second Trump administration, the United States’ imposition of the ‘Liberation Day’ tariffs against allies, partners and strategic competitors alike marked another, and arguably definitive blow, to the use of free trade to further US interests. The current administration’s attempt to “restore deterrence”¹⁸⁸ is, in the absence of trade or development pillars, singularly focused on hard military power and the risk of a Taiwan contingency — albeit in the face of a more immediate focus on the Middle East with the strikes on Iran.

Except force flow transfers to and from INDOPACOM and CENTCOM to reinforce the Middle East, the Trump administration’s measures all point to a reduction in US emphasis and role in the Indian Ocean region. Even with an Indo-Pacific priority under the second Trump administration, there is a growing expectation in the United States that Australia is expected to play a more expansive role in the northeast India Ocean region in the event of conflict in the Indo-Pacific. The realities of US prioritisation, coupled with the relative decline of US power, mean that Australia must look at possible contingencies involving the Indian Ocean region and assess the relative interests of Australia and its major alliance partner. Any such assessments must face the clear structural reality that Australia, because of its geography and interests, will be required to do more from its Indian Ocean coastline.

Expanded Chinese operations and the pursuit of sea denial

Sea control in the Indian Ocean Region is an operational priority for Australia, India and the United States.¹⁸⁹ For the United States, its main priorities centre around sea control, enabling and maintaining access to its base at Diego Garcia, to ensure freedom of navigation and overflight, and to prepare for, if not prevent, the operations of a PLAN battlegroup in the region in the case of a major contingency.¹⁹⁰ Similarly, Australia endeavours to ensure the free flow of goods, energy and data across the Indian Ocean. India, as the resident major power, looks to maintain its ability to exert influence and maritime presence in the area from “the Persian Gulf to the Sunda Strait, and as far south as the 60th parallel.”¹⁹¹

As noted, experts anticipate that China will use its emerging military capabilities to effectively undertake sea denial operations in the Indian Ocean in any significant future security crisis.¹⁹² Australia and its partners would be prudent to prepare and pre-empt efforts by any adversary to undertake sea denial operations in a regional contingency along critical waterways in the Indian Ocean. At the same time, Australian officials should be aware that India-China competition is set to intensify at their shared land border and, should a conflict erupt, Canberra should consider what requests may be made of Australia in such a contingency to support its partners in upholding maritime stability in the region.

Security analysts warn that China’s dependence on Indian Ocean sea lanes could inspire the United States and its partners to attempt a blockade in the event of a regional security contingency.¹⁹³ What is clear is that in any major regional contingency that includes the Indian Ocean, China would strive to deter any adversary’s attempts to interdict its trade and to “meaningfully hold at risk the assets of India or its partners in the event of a wider conflict.”¹⁹⁴ The PLAN has already developed experience in escorting merchant vessels in its operations in the Gulf of Aden, and the PRC could, through “show of force missions, hoping that a sizable and timely deployment of major surface combatants and submarines, seek to deter any countries from planning to disrupt its commercial traffic.”¹⁹⁵

The prospect of any such interdiction of PRC trade should be caveated with the immense challenge that it would be for any country, or coalition of nations, to deny China the use of such sea lanes. Neither India nor Australia can prosecute an effective sea denial strategy alone¹⁹⁶ and it would prove to be a formidable task for the United States and its allies and partners.¹⁹⁷ Blockades are challenging both to initiate and maintain.¹⁹⁸

Despite this, the PRC has a long and difficult supply route in the Indian Ocean, and it would face significant vulnerabilities in any conflict.¹⁹⁹ They face major difficulties in Southeast Asian choke points, are vulnerable to land-based air power, and lack sufficient sophisticated anti-submarine warfare and maritime strike capabilities in the region. These vulnerabilities are driving the PRC to take steps to reduce its dependence on Indian Ocean sea lanes, including forging land trade routes with Russia to underwrite energy supply.²⁰⁰ Still, the Houthi attacks on shipping through the Suez Canal have exposed the extensive impacts of disruptions, including surging shipping insurance by orders of magnitude, delays and dramatic price increases.²⁰¹ In addition, China’s attempts to ameliorate its energy dependency on its Indian Ocean trade route have been mainly ineffective as the Chinese economy continues to see surges in demand for energy. As a result, China’s energy supplies have become somewhat more diverse, but its overall dependency on the Indian Ocean remains. This has seen an attempt to shorten its sea lines of supply through port development partnerships such as Myanmar and other states, reinforcing China’s economic and subsequent security engagement in the Indian Ocean.

Leveraging existing groupings to further cooperation in the Indian Ocean

Quad

In addition to continually improved bilateral defence arrangements, particularly with India and the United States in the Indian Ocean, another area of increasing importance is the Quad. India, the United States, Australia and Japan have been working cooperatively for the delivery of public goods in the Indo-Pacific region. The Australian Department of Foreign Affairs and Trade (DFAT) has gone to great lengths to stress that the Quad is “a diplomatic, not security, partnership.”²⁰² However, the grouping’s security dimensions, though latent, are undeniable.²⁰³ DFAT’s overarching communication of the Quad includes repeated references to its security aspects.²⁰⁴ Although this includes health and cybersecurity, the Quad’s overwhelming focus is on maritime security, in recognition of the maritime nature of the region and of the member countries’ maritime dependencies. This focus encompasses key security issues that besiege the Indian Ocean, such as piracy, narco-trafficking, illegal fishing, rising sea levels and climate-induced displacement.

Though its focus is currently on public goods and the grouping has struggled to deliver demonstrably on many of its ambitions, the Quad’s agenda is ripe for increased securitisation in the future, even if resistance persists in some foreign policy bureaucracies. The continual denial of this very fact has been one of the key reasons for the lack of a thorough maritime security agenda. Yet, the international price in reputation and recognition has already been paid by the group both collectively and individually. Upholding a favourable balance of power in the region is becoming more difficult. Given the significant increases in the PRC’s military power in the area, the “Quad has a vital role to play in preserving stability and deterring major power aggression.”²⁰⁵ This must occur in the Indian Ocean, as only here do all four countries’ interests converge around core maritime security issues.

Indeed, in January 2025, Quad foreign ministers met on the sidelines of President Trump’s inauguration, and the four countries agreed to “reaffirm our shared commitment to strengthening a Free and Open Indo-Pacific where the rule of law, democratic values, sovereignty, and territorial integrity are upheld and defended.”²⁰⁶ The key is the last word of this statement. ‘Defended’ is a verb that has not featured as prominently in a Quad statement, and it makes this announcement one of, if not the shortest statement in the grouping’s history, so significant. The use of ‘defend’ indicates a strength of collective resolve, while the statement’s focus on opposition to ‘any unilateral actions that seek to change the status quo by force or coercion’ is a clear reflection of the PRC’s increasingly provocative actions.²⁰⁷ Little though has happened since this statement at the very beginning of the second Trump administration and recently we have witnessed a decline in US-India relations since the imposition of US tariffs on India.

This change in approach must now be reflected in practice. The Quad is not an alliance, but instead serves as a caucus of like-minded states, meaning its members will often disagree and pursue different paths to similar common objectives. However, this should not prevent the Quad from shifting to a more proactive posture, particularly in preparing for future contingencies when alliance-like behaviour may be necessary.²⁰⁸ Ultimately, maritime security in the Indian Ocean is a public good, and the Quad grouping should promote its engagement in the arena on such grounds, conceiving it broadly to the benefit of all regional partners. The Quad countries engage in a range of maritime security exercises both bilaterally and trilaterally. It should move towards more deliberate Quad grouping exercises in the Indian Ocean in the future, including but not limited to Malabar, Keen Edge and Talisman Sabre. Security cooperation can be further enhanced by continuing to mitigate non-traditional security threats, by improving climate security mitigation and by operationalising the Quad Indo-Pacific logistics network.

AUKUS

The AUKUS partnership is among the most significant efforts to expand Australia’s range of defence options in the Indian Ocean. If the AUKUS Optimal Pathway proceeds on schedule, planned transfers and rotational deployments would double the number of allied SSNs west of the international dateline by the early 2030s.²⁰⁹ HMAS Stirling at Cockburn Sound will provide a key outpost for Indian Ocean operations and is expected to complicate the planning of adversaries in that maritime area.²¹⁰

The AUKUS submarine program is a game-changer for the strategic balance in the northwestern Indian Ocean. HMAS Stirling provides a critical force posture multiplier for the US Navy in the Indian Ocean and the western Pacific. As INDOPACOM Command Admiral Sam Paparo noted in his testimony to the US Senate:

Submarine Rotational Force West in Stirling, gives the American submarine force an Indian Ocean port. It gives us the ability to range the Indian Ocean without limitation in the Straits of Malacca, the Lombok or the 20 Sunda Strait. It is a straight shot to the South China Sea, closer and faster than Hawaii; San Diego; Bangor, Maine.²¹¹

The AUKUS partnership provides a valuable force multiplier through collaboration with key allies.²¹²

The addition, a UK SSN in Western Australia will enhance presence operations and help expand regional military superiority in the region in the underwater domain. The sale and transfer of the first US Virginia-class submarine to Australia, expected in 2032, will significantly enhance the ADF’s efforts to increase its presence operations and provide a major force multiplier for ADF capabilities in the region. Australian SSN capabilities will grow to three Virginia-class boats in the 2030s before the delivery of SSN AUKUS-class submarines in the 2040s.

By then, Australia’s submarine force will be the most capable in the eastern Indian Ocean. This could not come soon enough for allied efforts to maintain the freedom of navigation and a free and open Indian Ocean, to accelerate Australia’s deterrence capacities, and to massively advance any ADF operations in the region in the event of conflict.

The AUKUS program is critical to Australia’s strategic aims to provide for asymmetric defence capabilities, to improve the ADF’s self-reliant defence capability and to maintain an asymmetric regional military capability edge against the PRC. While the PRC has improved its SSN and anti-submarine warfare capabilities in recent years, it remains one of the “biggest gaps separating the U.S. and Chinese militaries… [with] little chance that China will catch up with the U.S. in submarine technology soon.”²¹³ The advent of an Australian-based SSN capability will significantly enhance the range, power and endurance of the ADF. AUKUS is the most significant contribution Australia is making to the regional strategic balance in the Indian Ocean.

Comparison of submarine time on station at critical chokepoints
SSK (diesel electric) vs SSN times

Jim Thomas, Zack Cooper, Iskander Rehman, Gateway to the Indo-Pacific: Australian Defense Strategy and the Future of the Australia-U.S. Alliance, CSBA, 9 November 2013. https://csbaonline.org/research/publications/gateway-to-the-indo-pacific-australian-defense-strategy-and-the-future-of-t

Australian Force Posture initiatives

In addition to the AUKUS initiative and its requisite enhancements to facilities at HMAS Stirling, Australia’s all-domain maritime capability in the northeastern Indian Ocean has grown considerably over the last decade. The modernisation underway in Australia’s force posture and planning will equip the ADF to undertake more effective and ambitious Indian Ocean operations in the future. Indeed, in 2024, the Australian Government committed A$11.1 billion over the coming decade to expanding the naval fleet, including doubling the number of surface combatants.²¹⁴ Programs to improve infrastructure on Cocos (Keeling) Island, as well as other key locations across the northwest of Australia, are also underway. The greatest challenge for Australia, though, is resourcing this capability uplift and delivering the required infrastructure and force posture needed to ensure a more regular presence in and beyond Australia’s territorial waters. Subsequently, it is in the Indian Ocean where Australia’s defence strategy is the least developed.²¹⁵

The development of Australia’s force posture initiatives in Western Australia has, in recent decades, been a tale of lost opportunities.²¹⁶ Despite some notable developments from the late 1960s to early 1980s, progress was limited due to a less concerning threat environment.²¹⁷ It was not until the 2010s, when strategic competition between China and the United States was more visibly intensifying in the region, that the Australian Government assumed a more prominent focus on the issue in Canberra. The Australian Government subsequently undertook more significant efforts to assess and adjust the ADF’s force posture in light of the changing strategic environment. The 2012 Force Posture Review found:

limitations to the capacities of the ADF bases, facilities and training areas, particularly in Australia’s North and West and our ability to sustain high tempo operations in Northern Australia and our approaches, the immediate neighbourhood and the wider Asia-Pacific region.²¹⁸

The 2012 review included a range of recommendations to enhance the ADF’s force posture in Northern and Western Australia, including upgrades to key air and naval facilities, bolstering operational readiness through increased joint and simulated exercises, and frequent aircraft and ship visits and senior leadership study programs.²¹⁹ However, due to the Gillard-Rudd Government‘s 2013 electoral defeat, the recommendations were only taken up later, during the 2023 Defence Strategic Review and reassessed against the deteriorating strategic outlook.²²⁰ The DSR noted that “most of those recommendations relating to the northern bases have not been implemented… Irrespective of this history, it is now imperative that our network of northern bases is urgently and comprehensively remediated.”²²¹

Subsequently, the DSR outlined a framework of three layers of defence bases and infrastructure that includes “a network of fully enabled northern operational bases, a series of bases in depth to support the Defence enterprise and identification of relevant Civil infrastructure for Defence needs.”²²² This area includes the development of the:

key line of forward deployment for the ADF stretches across Australia’s northern maritime approaches. Integral to this sovereign Australian posture is the network of bases, ports and barracks stretching in Australian territory from Cocos (Keeling) Islands in the northwest, through RAAF bases Learmonth, Curtin, Darwin, Tindal, Scherger and Townsville.²²³

Australia’s vast and strategically advantageous geography supports the need for multiple operational lines of deployment.²²⁴ A distributed network of well-established bases and facilities across the country provides the “strategic depth” necessary to integrate and sustain defence capabilities to maintain credible deterrence and conduct military operations if required. To achieve this, the DSR conceived three lines of operation and support (see below map).

The Defence Strategic Review conceived three lines of operation and support

The DSR also called for a range of measures to increase force posture and preparedness across the frontline northern base network, including hardening and dispersal; runway and apron capacity; fuel storage and supply; aviation fuel supply and storage; GWEO storage; connectivity required to enable essential mission planning activities; accommodation and life support; and security.²²⁵ The Albanese government subsequently agreed ‘in principle’ with the recommendations.

These force posture provisions were followed up in the 2024 National Defence Strategy (NDS), which included the 2024 Integrated Investment Program to improve “the ADF’s ability to operate from Australia’s northern bases…to ensure the ADF can project deployed forces and continue to operate through disruption.’²²⁶

Despite clear strategic priorities mentioned above, the implementation of upgrades across Australia’s northern defence network has been marred by significant delays and rising costs due to budgetary fluctuations, changes in government strategic planning and broader bureaucratic barriers. The development of the Cocos (Keeling) Islands, a key Indian Ocean asset, saw a decade-long delay between the 2012 Force Posture Review and the 2023 DSR. Budgeted initially at A$184 million, the upgrade costs have since ballooned to A$568 million.²²⁷ Construction only began in late 2024, with completion now expected in 2028, two years behind schedule.

P-8A Poseidon Operational Ranges

Ranges have been halved to simulate returned flight in a contingency where air-to-air refuelling is undesirable or impossible. Courtesy of the Defence and Security Institute at the University of Western Australia.

The strategic importance of the Cocos (Keeling) Islands has grown amid greater US engagement, including a 2024 US Naval Facilities Engineering Command project proposing US$15 billion in infrastructure across the Indo-Pacific, covering the Islands alongside the Philippines, Timor-Leste and Papua New Guinea.²²⁸ The United States is eyeing operations from the Cocos (Keeling) Islands, potentially for the use of P-8s, E-7s, tankers and UAVs. The ADF, meanwhile, plans to deploy its MC-55A Peregrine ISR aircraft from the island within the next year.²²⁹

Nearby, RAAF Base Learmonth in Western Australia also remains underdeveloped despite its strategic role and proximity to the Cocos (Keeling) Islands. The Department of Defence has committed to runway and apron upgrades to support large aircraft operations. However, fuel availability remains a key limitation. The Gascoyne Gateway commercial port project at Exmouth, initially due in 2025 but now delayed until 2029, presents a critical opportunity for dual-use military logistics, including a potential fuel pipeline to Learmonth and a forward operating port for the Royal Australian Navy.²³⁰ Further north, the Department of Defence has committed to upgrades at RAAF Darwin, Curtin, and Scherger, momentum helped by ongoing developments in US-Australia force posture initiatives.²³¹

Yet much of this activity only commenced following years of inaction. A decade of missed opportunity between 2012 and 2023 saw minimal investment in these essential northern bases. Canberra understands the ADF’s force posture is not keeping pace with the changing strategic landscape. In June 2025, Deputy Prime Minister Richard Marles reemphasised the strategic urgency, calling for “a much more capable set of northern bases” to meet today’s regional security environment.²³² The Deputy Prime Minister linked Australia’s continental geography to future US-led Indo-Pacific contingencies, noting its growing relevance to address great power competition.²³³ As part of this renewed focus, the government has appointed Assistant Defence Minister Peter Khalil to lead the response to the Defence Estate Audit. The audit, received in December 2023, warned of a “decades-long legacy of deferred decisions” and highlighted the need for urgent reprioritisation of resources.²³⁴ Marles underscored at the 2025 Defending Australia Summit that the audit offered an opportunity to redirect billions into more strategically aligned infrastructure, particularly the northern base network.²³⁵

Looking ahead, ensuring an adequate Australian defence readiness, as well as supporting ongoing efforts to align US and Australian regional efforts, will depend on accelerating Australia’s force posture enhancements in northwestern Western Australia and the Cocos (Keeling) Islands, long identified as critical but underdeveloped. As Deputy Prime Minister Marles noted in May 2025, our “strategic geography is as much of a question in the here and now as is the building up of our defence capability.”²³⁶

Marine Rotational Force Darwin (MRF-D)

A key element of the existing US-Australia enhanced posture engagement in northern Australia is the US Marine Rotational Force Darwin (MRF-D). MRF-D, a US marine air-ground task force based in Darwin, has been in operation for over a decade, but while its size has increased, its basic organisation and function have seen little change over that time.²³⁷ Since the first deployment of US Marines in 2012, that decade-plus period of deployments, the United States Marine Corps (USMC) has undergone a fundamental shift in its doctrine and organisation to reorient it to the ‘pacing threat’ of the PRC. In March 2022, the USMC officially stood up its first Marine Littoral Regiment (MLR) based in Hawaii.²³⁸ In this new organisation structure, the USMC removed its tube artillery and tanks to focus on littoral warfare and long-range fires. In essence, the USMC was getting back to its roots of supporting the US Navy’s mission to establish sea control. MFR-D has, however, yet to see a significant structural overhaul since its inception.

The new MLR structure consists of approximately 2000 Marines organised in three main elements: a Littoral Combat Team, a Littoral Anti-Air Battalion and a Littoral Logistics Battalion. The MLR is designed to be a core part of Expeditionary Advanced Base Operations (EABO), which is key to the US Navy and Marine Corps’ Littoral Operations in a Contested Environment (LOCE) concept.²³⁹ As part of the DSR and NDS 2024, the Australian Army is adapting to a littoral focus with an emphasis on long-range fires, with the Army’s 1st Brigade in Darwin being re-rolled in 2024 to a littoral manoeuvre brigade. Thus, transitioning the USMC’s current MRF-D structure to one embracing the MLR would provide a range of benefits from doctrinal development, mission set and geographical alignment, along with the synergies of the emphasis on long-range fires and land-based maritime attack. Changes to the current MRF-D’s structure — to include an array of emerging technologies and focus on capability experimentation — would complement and greatly enhance both militaries’ objectives. Technological interoperability and force experimentation with new capabilities will be key to effectively developing joint deterrence. This transition could form a centrepiece of the enhanced force posture initiatives between the United States and Australia and reorient existing force posture agreements to modern strategic concepts in both countries.

Both the force posture upgrades and the MRF-D enhancements are essential not only to support ADF operations but also joint exercises. The emphasis on exercises from the defence facilities in the northwest is critical to a deterrence posture, but they also offer other geographical advantages. As outlined, the distances in the region are vast and the exercise opportunities for the ADF, its allies and partners in the region are limited. As the most recent WA Defence and Defence Industry Strategy 2025 notes:

WA’s vast landmass, uncluttered airspace and coastline of more than 10,000 kilometres offers significant opportunities for exercising multi-domain ADF capabilities, including alongside our nation’s allies to rehearse for joint and multinational operations. The State’s vastness also provides opportunities to establish world-class multi-use testing and evaluation facilities to accelerate the acquisition of world-leading equipment capability, particularly Uncrewed Aerial Systems (UAS) and Counter UAS capabilities.²⁴⁰

In light of these factors, Australia should leverage its growing and deepening defence relationships with intra-regional and inter-regional partners in the Indian Ocean to avoid redundancies and mitigate strategic gaps, but also ensure a more cohesive deterrent architecture that is more resilient to rapid changes in the strategic environment.

Recommendations

1. Place more defence policy planning emphasis on the northeast Indian Ocean by reconceptualising Australia’s strategic geography based on the geographic proximity of northeast Western Australia to East Asia, the relatively more limited reach of the United States in the Ocean, the limits of India’s maritime power and the criticality of Australia’s sea lines of supply for nation’s fuel security and economic survival.
2. Ensure that the development of AUKUS is visibly connected to ensuring a regional strategic balance in the Indian Ocean for the benefit of Australia and its Indian Ocean partners. As such, Australia must ensure that it is undertaking requisite investments in the international partnerships, critical infrastructure, governance, workforce and social license to ensure the success of the project.
3. Accelerate the basing and force posture elements of the DSR and NDS at the Cocos (Keeling) Islands and northwest Western Australia using funds released from the implementation of the December 2023 Defence Estate Audit.
4. Explore trilateral P-8 operations with India and the United States, taking advantage of Australia’s Indian Ocean territories.
5. Embrace opportunity under the Trump administration to reconfigure the Quad around security objectives, including MDA, intelligence, surveillance and reconnaissance, and anti-submarine warfare.
6. Improve maritime security cooperation with Australia’s northeast Indian Ocean and expand on the transfer of Guardian-class Patrol Boats to the Maldives by the evolution of the Pacific Patrol Boat Program into an Indo-Pacific Patrol Boat program, which incorporates countries of the northeast Indian Ocean.
7. Encourage and concretise US interest in the region under the Trump Administration, including options to re-invigorate US-Australia cooperation in the Indian Ocean.

Conclusion

Over the next decade, the Indian Ocean will retain its importance to Australian interests — as a trade superhighway, home to increasingly dynamic trade and investment partners and a site for regional strategic competition. Though Australia may not be able to dramatically increase the resources it commits to maritime security, particularly beyond the northeast Indian Ocean, there is arguably no country better placed to marshal and leverage the collective interests of others. As the Indian Ocean becomes increasingly crowded, with more countries issuing ‘Indo-Pacific’ strategies and in-region countries amassing capabilities, deconfliction is a key imperative. While accepting that most developments in the Indian Ocean at present lie beyond core US interests, Australia should be clear-eyed in its selected areas of cooperation that may encourage the United States to extend its bandwidth in the region in the future, while filling strategic areas where Washington will be unable or unwilling to.

Building on 100 years of operations in the ocean, Australia must envision new principles for engagement and arrive at a new policy agenda in the Indian Ocean. A willingness to support India’s effort to remain the net security provider for the region should certainly remain central, though Australia should not discard areas of divergence in strategic cultures and values. Australia must also consider where it has scope to, independently and alongside partners, improve outcomes for small states across the region, differentiated from peers by its commitment to rules and norms, reliability and by its lack of historical baggage in regional relationships. The recommendations outlined in this report will prepare Australia to answer future expectations of its US and Indian partners and continue to staunchly defend its interests in its second, but indisputably crucial, ocean area.