India’s Multi-Alignment Trade Strategy in Multipolar World

Context

The Indian trade policy in a multipolar world appears not to be protectionist anymore, but rather a proactive globalization strategy that aims at maintaining freedom and autonomy along with diversification in the world of US-China conflicts and rising powers.

Multipolar Global Trade Dynamics

The multipolar world will have rival economic blocs: US-led blocs, China Belt and Road, European strategic independence, and middle powers such as India, Brazil, and Indonesia. The US-China decoupling, Russia-Ukraine blowout, Red Sea turmoil, etc. as geopolitical tensions have increased tariffs, geographical re-optimised GVCs, and protectionism. Reforms in WTO come to a halt, driving plurilaterals in e-commerce and services. India is an asymmetric player in this flux, and it employs trade as a geoeconomic instrument as opposed to zero-sum competition.

Historical Evolution

The trade level in India boom up but FTAs did not develop progressively after 1991 liberation with the fear of losing jobs with defensive policies. FTP 201520 also placed greater focus on self-certification; FTP 2023 was a pivot with four spears: incentive to Remission (eliminating the disadvantages of duty), Export Promotion through councils, Ease of Doing Business (e.g. automatically granted licenses), and Emerging Areas (e.commerce hubs). By the year 2026, 71% of exports will be FTAs, as compared to 22% in 2019, and it is aimed at 1 trillion merchandise and 1 trillion services.

Core Pillars of Strategy

• FTA Negotiations: India signs paradigm shifting agreements: EU FTA (Jan 2026) 90% of all tariffs gone within 7 years, market of 1 trillion euros with autos, chemicals, agri; UK FTA (2025) all the way to textiles/services; UAE CEPA (2022) to trade with rupee/energy security; Australia ECTA critical minerals. These deals are underway: mini-US defence/GVACs deal, Oman/ Gulf deals, Canada relapse. These include 2.5 billion consumers in which rules-of-origin is concerned with the curbing of China rerouting.
• Diversification and Resilience: China dependency (imports are down 10 per cent YoY 2025), India looks at China+1: Indo-Pacific (QUAD supply chains), Africa (40+ FTAs), Latin America. DEDP is a strategy made up of 800+ clusters; Towns of Export Excellence on leather/gems. IT/ITES Services exports were 350 billion G20 push on digital trade.
• Production-Linked Incentives (PLI) and GVCs: 2 lakhcrore PLIs in 14 (phones, solar, pharma) industries will be used to attract $ 20bn FDI. Lower input tariffs aid in the electronics (iPhone export gained 40 percent); semiconductor mission with US/Taiwan location makes India in high-tech Rupee internationalization through 20 plus currencies clears 20 percent of oil imports.

Strategic Objectives

Trade brings about to itself strategic autonomy: EU agreement is an omen of multipolarity (UN chief Guterres, Jan 2026); rival Pakistan through reviving SAARC. Increases labor (10 million jobs through FTAs), technological transfer, soft power. In line with Atmanirbhar Bharat, becoming a grant-taker to intermediary.​

Challenges and Risks

Trade deficits are still there (250 billion 2025); agri barriers in the EU, US steel tariffs, straining. The risk of inflows is deindustrialization without reforms; the credit gap of MSMEs faces scaling. The US election volatility, the border tensions between China and the US, require hedging. Domestic bottlenecks logistics (ranked 38 th), R&D (0.7 per cent GDP), labour laws.

Way Forward

Pursue ‘multi-alignment’: deepen BRICS for South-South trade, QUAD for security, WTO for rules. Reforms: single-window clearances, carbon border tax readiness, AI/digital standards. Leverage G20 legacy for plurilaterals; invest $50 billion in infra via NIIF. Position as ‘Vishwa Mitra’—global bridge in fractured trade, ensuring inclusive growth for Viksit Bharat 2047.

Source: The Hindu

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