- In an era where power is increasingly produced by the manipulation of markets rather than the simple projection of arms, India is learning fast.
- India has stopped pretending the rules the West wrote for the post-Cold War era will serve its ends.
- For competitors, particularly those who might seek coercive leverage, this is a warning: India is moving to make such leverage ineffective or expensive to wield.
- Semiconductor subsidies and the arrival of large chip investments, including major commitments from players such as Micron, demonstrate a new truth: India will not wait for global market forces to deliver critical technological capacity.
India has stopped pretending the rules the West wrote for the post-Cold War era will serve its ends. The decision to walk away from broad trade packages, the rapid courting of non-Western partners, the state-fuelled push into chips and critical minerals, and an unapologetic defence of industrial sovereignty together point to a single strategic pivot: India is weaponising economic policy as national power. This is not protectionism for its own sake. It is a deliberate bet, a realpolitik of markets designed to reduce strategic dependence and manufacture leverage on India’s terms.
The pivot is visible in at least five clear moves. New Delhi’s refusal to join the Regional Comprehensive Economic Partnership (RCEP) in 2019 signalled that access alone would not trump political economy concerns at home; India chose selective sovereignty over unsecured market openness. That exit was not merely about tariffs or farmers; it was a signal that India would manage integration by political judgment, not by default.
At the same time, India has been busy rewriting the geography of its commercial relationships. The India–UAE CEPA and fast-tracked engagement with the Gulf are not boutique trade wins. They are deliberate attempts to fashion deep, fast, and fungible corridors of capital, supply and services that sit outside the old Western economic core. The CEPA has already reoriented considerable trade flows and investment expectations, evidence that New Delhi can craft large regional pacts that better match India’s developmental and strategic timetable.
The most consequential strand of this strategy is the marriage of targeted industrial policy to geopolitical purpose. Semiconductor subsidies and the arrival of large chip investments, including major commitments from players such as Micron, demonstrate a new truth: India will not wait for global market forces to deliver critical technological capacity. States now shape tech ecosystems, and India is using financial incentives, land-use planning and cluster formation to convert strategic vulnerabilities into industrial projects on home soil. That political underwriting of industry is the essence of geoeconomic nationalism.
Likewise, when New Delhi publicly rejects external climate-policy instruments that it views as disguised trade barriers, such as aspects of the EU’s Carbon Border Adjustment Mechanism, it is defending development space as a form of national sovereignty. That posture is not anti-climate; it is a contest over who makes the rules of the green industrial transition and who pays for it. The bite of CBAM is not only economic, it is geopolitical: control of standards and supply chains will reconfigure winners and losers in heavy industry, and India is positioning itself to refuse rules that would lock the country into subordinate terms.
Finally, the scramble for critical minerals and rare earths, whether by shoring up domestic reserves, incentivising magnet production, or courting new African partners, reveals India’s growing strategic calculus around inputs to clean energy, defence and high tech. Recent moves to conserve and prioritise rare earths for domestic needs are the industrial equivalent of hoarding strategic fuel during wartime: they are insurance and leverage.
Taken together, these signals add up to a doctrine in formation. Call it geoeconomic nationalism: state-led industrial policy fused to foreign policy, calibrated to reduce dependency, win strategic autonomy, and shape rules rather than follow them. It is a middle path between autarky and unfettered globalisation, a selective, calibrated integration that permits trade and capital while protecting the levers that matter for sovereignty.
What makes this different from older models of economic nationalism is the mixture of ambition and discipline. India’s strategy is not a mere throwback to tariff walls. It is an attempt to marry market access with domestic capability: attract global firms where it suits strategic ends (semiconductors, pharmaceuticals, green metals) while maintaining controls and policy space in domains where dependency translates to vulnerability (data, defence, critical minerals, and core manufacturing). The state’s hand is not everywhere, but it is precisely where the geopolitical payoff is largest.
This realpolitik has three practical logics. First: resilience. Supply-chain shocks in the last half-decade exposed single-source vulnerabilities. Building domestic or diversified production is now a national security policy. Second: leverage. By cultivating alternatives, Gulf finance and markets, African mineral partnerships, ASEAN manufacturing linkages, India can offer other Global South states an intermediate option between China and the West. Third: normative agency. If India can build credible supply options and regulatory standards for itself and willing partners, it can export rules (or at least resist rules) that would otherwise be imposed by richer blocs.
None of this is costless. The trade-off is slower liberalisation, higher fiscal outlays, and the risk of protectionist capture by incumbents. India’s industrial policy will have to be ruthlessly competent: clear benchmarks, sunset clauses for incentives, and fierce attention to competition and innovation. Otherwise, geoeconomic nationalism risks ossifying into rent-seeking and reduced global competitiveness.
Critics will argue that this is just a disguise for inwardness; boosters will insist it is strategic sovereignty. Both perspectives miss the point: India’s project is transactional and pragmatic. It is not ideological closure but selective openness. New Delhi wants the benefits of globalisation, i.e., investment, technology, export markets, but on a timetable it sets and with guardrails that protect strategic industries and social resilience.
For partners and investors, the message is simple but nuanced. India is open for business, but the terms will increasingly reflect national priorities. The state will subsidise and partner where strategic outcomes matter; market freedom will remain the rule elsewhere. For competitors, particularly those who might seek coercive leverage, this is a warning: India is moving to make such leverage ineffective or expensive to wield.
Two final implications matter for policy practitioners. One, India must continue to professionalise its industrial interventions. If subsidies and local content rules are to deliver strategic gains, they must be governed by tight performance metrics and sunset mechanisms. Two, New Delhi should embed its geoeconomic posture in diplomatic practice: trade agreements should be paired with institutional cooperation on standards, financing and dispute-resolution that reflect India’s developmental realities.
In an era where power is increasingly produced by the manipulation of markets rather than the simple projection of arms, India is learning fast. The country is not seeking to replace a rival; it is seeking to change the terms of competition. That is what geoeconomic nationalism looks like when practised by a democracy that still wants growth, foreign capital and integration but refuses to let its strategic fate be decided in other people’s markets.
If India succeeds, it will not have built a fortress. It will have woven a web: selective, strategic, and suffused with bargaining power. If it fails, it will pay dear for the cost of half-measures- bigger deficits, kleptocratic subsidies, and persistent dependence on brittle suppliers. The gamble is clear; whether New Delhi has the administrative capacity and political steadiness to see it through will determine if this is merely a phase or India’s new operating system.
Diksha Bharti is currently pursuing a Master’s program in Russian studies. She has previously worked as a Research Associate at Politika and the Consilium Research Institute. She has a keen interest in geopolitics and has contributed to several reputed platforms. Views expressed are the author’s own.
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