India allocates $11 billion to develop Great Nicobar as strategic hub

India is turning its southernmost island, Great Nicobar, into a major military and economic outpost with an $11bn project that could give it control over a key shipping chokepoint near China. The remote island, closer to Thailand and Indonesia than to India’s mainland, has no full census and fewer than 10,000 residents, yet Prime Minister Narendra Modi’s government sees it as vital for regional power. The plan includes a deep-water port, airport, power plant, and a city for 350,000 people—all justified by trade benefits but increasingly framed as a strategic necessity to monitor the Strait of Malacca, where a third of global trade passes.

The Strait of Malacca is the world’s busiest shipping lane, linking the Indian Ocean to East Asia. For China, it’s especially critical: 80% of its oil imports and two-thirds of its trade flow through this narrow 2.8km-wide channel near Singapore. By developing Great Nicobar, just 994 miles from the mainland, India could gain a strategic vantage point to track ships entering and leaving the strait—just as Iran monitors the Strait of Hormuz. “It’s a great place to monitor all the traffic,” said Shekhar Sinha, a former Indian Navy vice chief. “It would give India an edge in maritime domain awareness.”

The government has shifted its messaging from economics to security, especially after recent tensions over Hormuz highlighted the risks of relying on unstable chokepoints. Critics warn the project risks environmental damage and displacement for indigenous communities, but officials argue its location makes it indispensable. “This island has a strategic value because it sits right at the mouth of Malacca,” Sinha said. “If it’s developed as a commercial setup, no one would object.”

With China’s reliance on the strait growing, Great Nicobar could become India’s answer to regional influence—both as a trade hub and a military watchtower. The project’s success hinges on balancing economic ambitions with environmental and humanitarian concerns, but its geopolitical stakes are clear: whoever controls this corner of the Bay of Bengal controls a gatekeeper to the world’s most critical sea route.