Economic Policy in a Riskier World
India’s Economic Resilience in an Era of Weaponised Trade: India is reassessing the meaning of economic resilience as tariffs, export controls, sanctions and other trade restrictions increasingly acquire strategic dimensions. P K Mishra, Principal Secretary to the Prime Minister, highlighted these concerns while speaking at the 5th Kautilya Economic Conclave during a session titled ‘A World Priced for Risk’.
He noted that instruments traditionally associated with commercial policy can increasingly be used for strategic objectives. For India, this creates a need to remain globally connected while reducing vulnerabilities arising from excessive dependence on particular countries, suppliers or routes.
From Risk to Uncertainty
The distinction between risk and uncertainty has become increasingly important. A pandemic can disrupt production and mobility, wars can disturb energy and food markets, while sanctions and export restrictions can suddenly alter the availability of critical goods.
Shipping routes and geographical chokepoints have also become important economic variables. A disruption thousands of kilometres away can influence domestic prices by affecting the movement of commodities and energy.
Static GK fact: The Strait of Hormuz is a major maritime chokepoint connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea. Its strategic importance arises from the large volume of global energy trade passing through the region.
Energy Security Gets a New Dimension
For decades, energy-importing economies primarily focused on the price of energy. Increasing geopolitical disruptions have added another question: whether energy will remain physically available and whether it can reach the importing country.
India has responded to supply-chain risks through multiple measures, including maintaining stocks, increasing domestic production and developing alternative suppliers and routes. The number of countries supplying crude oil to India has reportedly increased from 27 to 43, reflecting a broader diversification strategy.
Globalisation and Concentration Risk
Traditional globalisation is based on producing goods where costs are competitive and moving them efficiently across borders. This logic remains important, but recent disruptions have introduced another variable—the cost of interruption.
A supply chain may be highly efficient under normal conditions but vulnerable if production depends on a single supplier or geographical location. Economic resilience therefore requires diversification without completely abandoning the gains from international trade.
Critical Minerals and Clean Energy
The transition towards clean energy has created new strategic dependencies. Lithium, cobalt and rare earth elements are essential for batteries, electronics, renewable-energy technologies and advanced manufacturing.
Their extraction, processing and refining are geographically concentrated in several cases. This creates a potential concentration risk in the clean-energy supply chain, demonstrating that reducing dependence on fossil fuels does not automatically eliminate strategic resource dependence.
Static GK Tip: Rare earth elements comprise 17 metallic elements widely used in electronics, magnets, defence technologies, renewable-energy equipment and other advanced applications.
Diversifying Trade Partnerships
India’s resilience strategy also extends to its trade relationships. The objective is not to eliminate economic dependence on other countries, but to prevent excessive concentration in critical trade and supply chains.
India’s expanding network of trade agreements and partnerships includes arrangements involving the UAE, Australia, ASEAN, the United Kingdom, Oman, New Zealand and the European Union. Such diversification can create additional markets and alternative sources of imports.
Macroeconomic Resilience
Trade diversification represents only one component of economic resilience. Stronger macroeconomic fundamentals, domestic production capacity, adequate buffers and stable financial conditions can improve an economy’s ability to absorb external shocks.
The broader policy challenge is therefore not choosing between openness and protectionism. It is about preserving the benefits of global integration while reducing vulnerabilities created by geographical concentration, strategic dependencies and unpredictable disruptions.
India’s Resilience Strategy
India’s emerging approach combines supplier diversification, alternative trade partnerships, domestic capacity and economic buffers. The strategy recognises that globalisation continues to generate significant benefits but that resilience must become an integral part of economic policymaking.
In an environment where trade instruments can acquire geopolitical significance, economic strength increasingly depends on the ability to remain open, diversified and prepared for disruption.
Static Usthadian Current Affairs Table
India’s Economic Resilience in an Era of Weaponised Trade:
| Fact | Detail |
| Key speaker | P K Mishra |
| Event | 5th Kautilya Economic Conclave |
| Central concern | Weaponisation of tariffs, sanctions and export controls |
| Major policy objective | Economic resilience |
| Crude oil supplier countries | Increased from 27 to 43 |
| Energy strategy | Stocks, domestic production and supplier diversification |
| Major supply-chain risk | Excessive geographical concentration |
| Critical minerals | Lithium, cobalt and rare earths |
| Major trade partners/arrangements | UAE, Australia, ASEAN, UK, Oman, New Zealand and EU |
| Broader resilience | Trade diversification plus strong macroeconomic fundamentals |
| Policy approach | Global openness combined with resilience against concentration risk |
