India Navigating the New World Order: From Observer to Rule-Shaper?
There was a time when the world seemed headed in one direction — toward open markets, shared production systems, and multilateral institutions designed to prevent economic isolation. Globalisation wasn’t just a theory; it was the rhythm of the world economy, marked by free-flowing trade and interconnected supply chains. But that world is shifting — sometimes slowly, sometimes with tectonic force. Trade wars, energy nationalism, and the race to restructure supply chains are dismantling the frameworks that once held globalisation together. India finds itself both a participant and an observer of this transition. The disruption is real — and so are the opportunities.
The Fracture of Multilateralism
Trade wars did more than just disrupt the flow of goods; they exposed the vulnerability of global consensus. The U.S.–China standoff was only the beginning. Tariffs on hundreds of billions in goods, retaliatory sanctions, and the undermining of the WTO’s dispute resolution mechanism signalled a fundamental departure from collective arbitration toward transactional bargaining. What followed was a broader disillusionment with global trade bodies — not just in Washington or Beijing, but in capitals across the world.
India, traditionally cautious in its multilateral engagements, read this shift early. Its refusal to join the Regional Comprehensive Economic Partnership (RCEP) was more than just domestic economic caution; it was a strategic assessment. If large trade blocs can be held hostage by dominant economies, then smaller players must preserve the ability to negotiate terms bilaterally. But is bilateralism sustainable in the long term? Or is it simply a holding strategy while new global norms are formed?
Strategic Bilateralism: Calculated Compromise or Assertive Autonomy?
India’s turn toward bilateral trade agreements reveal a preference for controlled openness. Trade deals with Australia, the UAE, and the European Free Trade Association reflect not a rejection of global trade, but a recalibration — towards partnerships where economic gains align with strategic interests. Unlike multilateral pacts, bilateral deals offer New Delhi the advantage of negotiating from a position of political clarity and calibrated economic ambition. Yet these are not without risk. Bilateralism inherently favours stronger economies, and India’s engagements with the United States underscore this imbalance. The U.S. is moving away from strategic altruism — even toward long-time partners like India — in favour of a more transactional stance. Tariff cuts and regulatory concessions are being sought not as goodwill gestures but as prerequisites for continued support. In this context, India’s economic policymakers must walk a fine line — offering enough to satisfy strategic partners without ceding control over domestic priorities.
Supply Chain Realignment: A Window or a Wall?
The pandemic revealed what few had anticipated: the world’s supply chains, praised for their efficiency, lacked resilience. As production lines halted and essential goods became inaccessible, it became clear that economic globalisation had built a house of cards. With China at the epicentre of many of these networks, alternative production hubs became a global priority. India saw the moment — and moved swiftly.
The government’s Production Linked Incentive (PLI) schemes, targeted at electronics, pharmaceuticals, and semiconductors, were part of a deliberate attempt to draw in global capital while building domestic capability. Companies like Apple and Micron announced plans to shift manufacturing into India. Friendshoring — the strategic relocation of production to aligned countries — seemed to be working in New Delhi’s favour. But building trust in supply chains takes more than incentives. It requires predictability, policy stability, and infrastructure readiness — areas where India still faces hurdles. Bureaucratic delays, import restrictions, and policy reversals have at times created investor hesitancy. While India’s labour pool and market size are attractive, its ease-of-doing-business narrative remains contested. Can India move from being a viable alternative to China to becoming the next indispensable hub of global production?
Energy Nationalism: A New Race for Sovereignty
If trade and supply chain shifts have eroded globalisation’s foundations, the global energy order has nearly detonated them. Russia’s invasion of Ukraine and the resulting sanctions not only disrupted oil and gas markets but revived an old instinct — national energy security above all else. Energy nationalism is no longer just about fossil fuels. It’s about the entire ecosystem of the future — solar panels, wind turbines, and the critical minerals that power electric vehicles and energy storage. Nations are scrambling to lock down access, secure bilateral resource agreements, and reshore their energy dependencies.
India, which imports over 80% of its crude oil, has responded with characteristic pragmatism. Discounted oil from Russia continues to flow in, despite Western scrutiny. It’s a calculated move — one that has raised eyebrows in Washington but helped cushion domestic inflation and economic strain. Parallelly, India’s commitment to green energy remains ambitious: 500 GW of non-fossil fuel capacity by 2030, large-scale green hydrogen projects, and plans for domestic solar and battery production. But these ambitions require inputs — lithium, cobalt, rare earths — that India doesn’t yet produce in scale. So once again, strategic autonomy depends on carefully structured dependencies.
The Protectionist Pullback: A Tactical Retreat?
Protectionism has returned to global politics in the language of self-reliance. India’s own version — Atmanirbhar Bharat — gained momentum during the pandemic. The idea wasn’t new, but the urgency was. Industrial policy shifted decisively toward import substitution, tariff hikes, and performance-linked incentives for domestic production. But results remain uneven. While some sectors — notably electronics — have seen investment inflows, others continue to struggle. Manufacturing as a share of GDP remains stagnant, and export competitiveness in high-value goods lags behind. Tariff barriers, although designed to protect, sometimes deter the very global players India seeks to attract. A pivot toward moderate liberalisation — particularly in areas aligned with U.S. and European interests — could unlock deeper investment and access to critical technologies. Can nationalism be rebranded as strategic reform?
India’s Dual Alignment: Autonomy in a Polarising World
India’s foreign policy has long emphasised “strategic autonomy,” a doctrine rooted in non-alignment but evolved for a multipolar world. Today, that autonomy faces its hardest test. With the U.S.–China rivalry sharpening and the world splitting into competing blocs, the pressure to pick sides is mounting. India’s answer has been to deepen partnerships without locking itself into alliances. The Quad — involving the U.S., Japan, Australia, and India — reflects this philosophy: cooperation without formal obligations. Energy deals with Russia coexist with defence collaborations with Washington. The approach is neither contradiction nor compromise — it is strategic calibration. But this balance comes at a cost. India’s reluctance to fully integrate into U.S.-led technological or security frameworks limits its ability to access critical infrastructure or shape global standards. At the same time, China’s aggressive posturing along the Line of Actual Control and its expanding regional footprint heightens India’s vulnerability. How long can India remain both indispensable and unaligned?
Regional Influence: Diminishing Returns?
India’s natural leadership in South Asia is increasingly contested. China has made strategic inroads through infrastructure investments, arms deals, and regional partnerships — particularly in Sri Lanka, the Maldives, and Pakistan. The Belt and Road Initiative has succeeded where India’s own neighbourhood policies often stall: in sustained financing and visible outcomes. New Delhi has responded with currency swaps, military exercises, and development assistance. But these efforts are often undermined by restrictive trade policies and a lack of regional economic integration. South Asia remains one of the least economically cohesive regions in the world — a reality that weakens India’s leverage. To reverse this, India must see its neighbourhood not just as a security sphere but as an economic opportunity.
India’s Technological Ascent: Aspirations and Constraints
No conversation about India’s global role is complete without examining its technological ambitions. From artificial intelligence to semiconductors, India seeks to move up the value chain. Its talent base is world-renowned; its innovation ecosystem, increasingly robust. But capability gaps persist. Unlike China or the U.S., India lacks the infrastructure to produce advanced chips or lead AI research at scale. Its defence manufacturing still relies heavily on foreign inputs, and its digital policies — especially those surrounding data localisation — often deter global investment.
The path forward lies in deeper collaboration. Co-production deals, technology transfers, and participation in global R&D frameworks are essential. But for that, India must balance its desire for digital sovereignty with openness to strategic partnerships. Can India protect its data without isolating its developers?
Conclusion: Towards a Multipolar, Strategic Future
The decline of traditional globalisation isn’t a retreat — it’s a reordering. Nations are redrawing economic alliances, recalibrating priorities, and building security into their trade and energy decisions. In this world, flexibility is power. India’s response so far has been measured and adaptive. Bilateralism over multilateralism. Autonomy over alignment. National security over blind openness. These aren’t rejections of globalisation, but attempts to redefine it on Indian terms. Yet the moment demands more than caution. It demands strategic boldness — not only in policy, but in execution.
As the world moves toward a fragmented but interconnected future, India must ask: is it content to remain a reactive power, or ready to shape the rules of the game?
Riya Goyal brings curiosity and conviction to her work at Cult Current.