India’s Strategic Trade Diplomacy: Balancing Relations with the US and China
A Shifting Global Economic Order
The post-World War II global trade framework is undergoing significant changes as protectionist policies gain prominence. The Donald Trump-led US administration reshaped global trade policies, undermining institutions like the World Trade Organization (WTO). However, India has taken a pragmatic approach, actively engaging in bilateral negotiations with major economies to secure its economic interests. At the Mint India Investment Summit 2025, veteran trade experts affirmed that India is sending the right signals to global powers through strategic negotiations, particularly with the US.
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India’s Proactive Stance in US Trade Talks
Rajiv Bhatia, a distinguished fellow at Gateway House and a former Indian ambassador, emphasized that India is prepared for a mutually beneficial trade agreement with the US. According to Bhatia, India’s strategy reflects confidence and maturity, ensuring that its political and economic interests remain safeguarded amid global shifts.
Anup Wadhawan, former commerce secretary, critiqued the Trump administration’s economic approach, which prioritizes goods trade surplus as a key indicator of success. He highlighted that the US is a service-driven economy, with global giants like Microsoft, Amazon, Facebook, and Google benefiting disproportionately from international trade agreements.
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The Role of Tariffs and Economic Competitiveness
India’s trade negotiations with the US coincide with domestic policy shifts aimed at enhancing economic competitiveness. Tariffs have historically played a crucial role in India’s trade strategy, and recent budget announcements by Finance Minister Nirmala Sitharaman have underscored the importance of making Indian manufacturing globally competitive.
WTO’s Diminishing Influence and US Economic Realizations
The WTO was envisioned as a platform for equitable trade, particularly benefiting developing nations. However, Wadhawan pointed out that it has failed to bridge the economic disparities between developed and developing economies. He asserted that the US must recognize that its economic challenges stem not from unfair global trade practices but from domestic issues related to income inequality and economic structure.
India-China Relations: A Parallel Negotiation
While engaging with the US, India is also recalibrating its relationship with China. Bhatia acknowledged the complexity of India-China relations, which are influenced by both nations' interactions with the US.
Conclusion: Navigating a New Economic Landscape
India’s approach to global trade reflects a well-calibrated strategy that prioritizes national interests while adapting to an evolving economic order. By engaging in bilateral negotiations and reassessing its tariff policies, India is positioning itself as a key player in the shifting global trade landscape. As economic power dynamics continue to evolve, India’s strategic diplomacy will be instrumental in shaping its future growth trajectory.
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