India’s evolving role in the global order positions it as a key economic and geopolitical player, navigating challenges while seizing opportunities to shape a multipolar world
Tejeswar Patnaik
The global community appears to be experiencing an era of volatility, uncertainty, complexity, and ambiguity (VUCA), with imminent challenges that are reshaping the geopolitical landscape. One of the most significant developments is former U.S. President Donald Trump’s growing alignment with Russian President Vladimir Putin, which is altering global power dynamics. As the U.S. reconsiders its commitment to NATO, European nations find themselves at a crossroads, facing uncertainty about continued American support.
Shifting Power Blocs
Since the end of the Second World War, the world has witnessed the emergence of two dominant power blocs, leading to Cold War tensions between NATO and the Warsaw Pact. The dissolution of the Soviet Union in 1991 marked the end of the Warsaw Pact, leaving the U.S. as the world’s unchallenged superpower and a steadfast supporter of NATO.
However, Russia’s invasion of Ukraine in February 2022 reignited Cold War-era hostilities. NATO and Russia once again found themselves at odds, leading to Western-imposed economic sanctions. This prolonged conflict has resulted in immense casualties and destruction on both sides over the past three years.
Against this backdrop, Trump’s return to the White House has disrupted the existing global order. Democratic values and moral commitments in international relations appear to be taking a back seat. His foreign policy has focused on brokering a ceasefire between Russia and Ukraine while simultaneously pressuring NATO members to shoulder a greater financial burden in supporting Ukraine. Additionally, he has signaled that the U.S. will no longer provide free military aid to Ukraine.
Trump’s unpredictable foreign policy has reshaped global geopolitics, particularly through his growing alignment with Putin. His stance—at times even accusing Ukraine of provoking Russia—has left Europe stunned and increasingly doubtful of America’s continuing support to NATO. His actions reinforce the reality that, in international politics, there are no permanent friends or enemies—only shifting alliances guided by national interests.
Trade Wars
One of the most significant foreign policy shifts in Trump’s second term has been his aggressive stance on trade. By increasing tariffs on imports from Mexico, Canada, China, India, and the European Union, he has reignited global trade tensions. Many strategic analysts view this as the emergence of a new world order.
China’s growing economic dominance, particularly in trade and commerce, poses a direct challenge to U.S. interests. In this evolving scenario, the U.S. recognizes India’s strategic importance as a counterweight to China. This changing global dynamic presents India with a unique opportunity to strengthen its economic position.
India, a major trading partner of the U.S., must handle this contentious issue of tariff hikes carefully. While maintaining strong economic ties with the U.S., India should also safeguard its national interests. Given that the U.S. is a major source of investment, India can hardly ignore its importance. At the same time, the Indian government is actively exploring new trade opportunities, and strengthening partnerships with the European Union, Gulf nations, Africa, and other Asian countries.
Additionally, India can leverage its vast domestic consumer market. The recent free trade agreements with New Zealand, the UK, and the European Union reflect India’s proactive and pragmatic approach to expanding its trade partnerships. The increasing regionalization of global trade further positions India as a key player in emerging economic frameworks. Recent visits by EU leaders to strengthen trade relations with India highlight their recognition of India’s vast market potential.
India’s Role
The ongoing U.S.-China trade war has further emphasized India’s potential as an alternative global manufacturing hub. Given its lower cost of capital, strategic geographic location, and expanding industrial base, India stands to benefit significantly. However, China remains a dominant force in global manufacturing. According to the United Nations Industrial Development Organization (UNIDO), China is projected to account for nearly 45% of global industrial output by 2030. This underscores the need for India to accelerate and sustain its industrial and economic growth to remain competitive.
A recent SBI Research report suggests that the impact of America’s new tariff hikes—set to take effect in April—on Indian exports may be limited. The study estimates that if reciprocal tariffs are imposed, India’s exports to the U.S. might decline by just 3-3.5%. However, this potential reduction could be offset by India’s diversified export portfolio and its ability to tap into alternative markets. The expansion of trade routes from Europe to the U.S. via the Middle East is also expected to mitigate potential losses.
While Trump’s tariff policies may initially seem disruptive, they could catalyze India’s economic transformation. By strategically lowering tariffs, strengthening trade alliances, and enhancing domestic manufacturing, India can turn these challenges into opportunities.
The global economic order is shifting, and India’s ability to adapt will determine its role in the new world trade architecture. By leveraging its strengths and pursuing an independent, strategic trade policy, India can solidify its position as a key player in the evolving global landscape.
(The writer is a former Dy General Manager of Bank of India. Views expressed are personal.)
