The 21st century has transformed the nature of global power. Military strength alone no longer defines influence; instead, economic statecraft—through trade, supply chains, and technology ecosystems—has become central to geopolitics. For India, this shift presents both opportunities and challenges as it seeks to achieve the ambitious goal of Viksit Bharat by 2047. Alongside external economic diplomacy, internal productivity reforms are critical to sustain growth and ensure resilience.

Global Transformation: From Military Alliances to Economic Statecraft

• Collapse of Old Globalisation: Once seen as a driver of cooperation, globalisation is now weaponised through tariffs, sanctions, and supply-chain restrictions.

• Rise of Economic Power: Nations with control over semiconductors, rare earths, and digital infrastructure wield influence comparable to military alliances.

• India’s Strategic Position: With its large market, political stability, and expanding workforce, India is increasingly viewed as a reliable partner in diversified global supply chains.

India’s External Strategy: Economic Security and Partnerships

• Semiconductors & Critical Minerals: Partnerships in these sectors are no longer commercial but strategic, ensuring resilience against supply shocks.

• Diversification Imperative: Overdependence on one nation—whether for technology or trade—creates vulnerability. India’s multi-alignment strategy helps preserve autonomy.

• Flexible Alliances: As multilateralism weakens, India must build agile bilateral and regional partnerships tailored to strategic interests.

Internal Imperative: Productivity for Viksit Bharat

• Manufacturing as the Missing Link: India’s growth has been service-driven, leaving manufacturing underdeveloped. For structural transformation, manufacturing must absorb labour and drive productivity.

• Zombie Firms Challenge: Inefficient firms continue to survive due to weak insolvency mechanisms and credit misallocation, locking resources in low-productivity activities.

• Business Dynamism: Productivity requires creative destruction—efficient firms must replace inefficient ones. Stronger R&D, better financing, and regulatory simplification are essential.

Reform Priorities

1. Strengthening Manufacturing Competitiveness: Integration into global value chains, sustained infrastructure investment, and trade facilitation.

2. Boosting Productivity: Encouraging mid-sized firms to scale, fostering innovation, and enabling efficient resource allocation.

3. Exit Mechanisms: Strengthening insolvency frameworks to allow unproductive firms to exit, freeing capital and labour.

4. Institutional Credibility: Political stability, democratic institutions, and social cohesion are vital for sustained economic growth.

India’s path to Viksit Bharat requires a dual strategy: externally, leveraging economic statecraft to secure supply chains and partnerships; internally, driving productivity through manufacturing reforms and business dynamism. The fusion of economics and geopolitics has reshaped the world order, and India’s ability to balance global integration with strategic autonomy will determine its success.