In the new world order, economic policy is also foreign policy

Indian Express

Context and Central Thesis

The article argues that in the emerging global order, economic statecraft has merged with traditional diplomacy, making trade, supply chains, technology policy and investment rules central instruments of foreign policy. The separation between economics and geopolitics, characteristic of the post-Cold War era, is portrayed as effectively over.

The core thesis: economic security is now national security, and India must adapt its foreign policy discourse accordingly.

Key Arguments Presented

End of the old globalisation consensus
The article traces the erosion of the 1990s–2000s consensus that economic interdependence would reduce geopolitical tensions. Trade and supply chains are now weaponised tools of strategic competition.

US shift toward economic nationalism
It highlights the American pivot—beginning under Trump and consolidated under Biden—towards reshoring manufacturing, restricting technology flows, and prioritising supply-chain resilience over free trade orthodoxy.

Rise of economic security doctrine
The concept of “economic security” has replaced trade liberalisation as the dominant policy narrative in advanced economies. Controls on technology, capital flows, and critical minerals illustrate this shift.

Geopolitics of supply chains and Russia factor
The Ukraine conflict and Western sanctions on Russia demonstrate how energy trade and financial networks can become geopolitical battlegrounds. India’s oil purchases from Russia are presented as a case study in strategic balancing.

India’s pivot to Western trade partnerships
The article frames India’s recent focus on FTAs with Western economies as a recognition of economic complementarities and a recalibration of its earlier “Look East” emphasis.

China as structural reference point
Without being overtly polemical, the piece situates India’s choices within the broader US–China rivalry and global supply-chain realignment.

Author’s Stance

The author adopts a strategic realist stance, broadly supportive of India’s recalibration toward Western partnerships. The tone suggests approval of India’s growing alignment with economic-security frameworks while retaining space for autonomy.

The article does not advocate abandoning strategic autonomy, but implies that neutrality is increasingly costly in a polarised geoeconomic environment.

Biases and Perspective

Strategic alignment bias
There is a clear leaning toward closer economic convergence with the US and Western economies as structurally beneficial.

Understated Global South dimension
The article focuses heavily on US–China–Russia dynamics, with limited engagement with multilateral or Global South economic frameworks.

Security-over-development emphasis
Economic policy is analysed primarily through strategic competition rather than developmental equity or welfare lenses.

Pros and Cons Highlighted

Pros

• Recognises structural transformation of global trade
• Emphasises need for economic resilience and supply-chain security
• Frames trade agreements as strategic tools
• Encourages integration with high-value technological ecosystems

Cons

• Risk of over-alignment reducing strategic autonomy
• Increased exposure to bloc-based fragmentation
• Possible neglect of South–South cooperation
• Domestic industries may face adjustment shocks

Policy Implications

Trade and foreign policy integration
India’s trade negotiations must be aligned with broader geopolitical strategy, especially in technology, critical minerals, and energy.

Industrial modernisation
Economic diplomacy must be backed by domestic reforms in manufacturing, logistics, skilling and innovation.

Energy strategy recalibration
Balancing discounted energy imports with Western partnerships requires calibrated diplomacy.

Institutional coordination
Greater coherence between commerce, finance, technology, and external affairs ministries becomes essential.

Real-World Impact

• Export sectors may benefit from integration into Western value chains
• Energy policy becomes geopolitically sensitive
• Domestic reforms gain urgency under external competitive pressures
• Foreign policy discourse shifts toward economic-security vocabulary

UPSC GS Paper Alignment

GS Paper II (International Relations)

• India–US relations
• Geopolitics of trade and supply chains
• Strategic autonomy

GS Paper III (Economy)

• Global value chains
• Economic resilience and industrial policy
• Energy security

Essay Paper

• “Economic statecraft in the 21st century”
• “Strategic autonomy in a fragmented global order”

Balanced Conclusion and Future Perspective

The article compellingly argues that economic policy can no longer be treated as technocratic domestic management. In an era of sanctions, technology restrictions, and supply-chain weaponisation, economic decisions shape diplomatic alignments.

For India, the challenge lies in navigating this terrain without surrendering autonomy. Closer ties with Western markets may enhance resilience and technological capability, but durable success will depend on domestic economic modernisation. In the new world order, the boundary between commerce and diplomacy has dissolved; the real test is whether India can convert economic alignment into sustained strategic advantage without losing flexibility.