What is changing
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State capital compacts
Populist leaderships are fusing state power with large oligopolies, steering credit, trade and regulation toward a few firms. This weakens competitive markets and social contracts, and can mortgage public assets to private interests. -
Geo economic blocs and hard security
The US and China are reshaping supply chains for chips, rare earths, and routes. Tariffs and secondary sanctions constrain trade and finance. Strategic spheres of control increase flashpoints and raise costs for third countries. -
Platform and cloud dominance
Big Tech extracts rents along digital value chains and shapes information flows. Cross-border rules like data access laws, payment messaging control and standard setting tilt the field. State backed digital currencies may improve settlement but can undermine smaller states’ monetary autonomy. -
Retreat of aid and safety nets
Cuts in development finance and food support raise poverty and volatility, fuelling migration and conflict risks that spill across regions. -
Global South reactions
Countries are localising production, building gold and FX buffers, experimenting with currency diversification, and relying more on bilateral deals and South-South clubs.
Why this matters for India
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Exposure to tariffs and sanctions raises uncertainty for exports, technology access and payments.
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Supply chain rewiring is an opening to capture manufacturing, but only if India upgrades logistics, skills and standards.
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Digital rule making will set terms for data, AI and finance that affect sovereignty and competition at home.
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Debt stress in neighbours can spill over into security and migration pressures, affecting India’s regional ties.
A practical playbook for India
1) External strategy
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Build coalitions for fair finance: push quota and voice reform in IFIs, a predictable debt workout framework, and climate finance that is fast and concessional.
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Diversify markets and corridors: deepen ties in West Asia, Africa and Latin America; keep multiple routes alive including INSTC and Indian Ocean links.
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Risk manage with rules: pursue high quality FTAs that include mutual recognition of standards, trusted trader programs and digital provisions that respect data sovereignty.
2) Domestic capability
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Compete, do not concentrate: tougher competition policy, open access in logistics and power, and transparent public procurement to avoid crony concentration.
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Public investment with discipline: sustained capex in transport, power transmission and urban services; outcome based funding and fast dispute resolution.
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Science and skills: raise public R and D, back translational institutes, apprenticeships at scale, and management upgrading for MSMEs.
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Digital sovereignty with openness: interoperable digital public infrastructure, privacy and competition guardrails, and pro-innovation sandboxes for fintech and AI.
3) Safety nets and legitimacy
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Targeted buffers: food and job programs that can scale in shocks, and portable social protection for migrant workers.
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Transparent institutions: independent regulators, timely data, and predictable rules that reduce country risk and crowd in private capital.
4) Foreign policy posture
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Non alignment in substance: multi vector engagement without single point dependence for energy, tech or finance.
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Bipartisan ties abroad: engage opposition, parliaments, states and business ecosystems in partner countries to reduce volatility across electoral cycles.
Risks to watch
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Over centralisation that crowds out competition and innovation.
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Debt and contingent liabilities if public banks or SOEs take on excessive risk.
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Tech lock-ins if standards or cloud dependencies are decided without portability.
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Neighbourhood fragility that can upend trade and connectivity.
Bottom line
The rules of globalisation are being rewritten. India can turn turbulence into advantage by combining coalition building abroad with competitiveness at home, while anchoring markets in fair rules and strong institutions. That is the surest path to resilience and influence in the next economic order.
Source: The Hindu
