Comment: India and the emerging International Economic Order. (2006, 20 Marks)
The post-Cold War economic order has had two phases: a liberal, rule-based one built on the WTO (1995) and the Washington Consensus, and, since the 2008 financial crisis, one of diffused power and growing fragmentation. India has moved through both: from reluctant integrator, to coalition-builder, to an aspiring rule-shaper.
Features of the emerging order
- Diffusion of power: the G20, raised to leaders’ level in 2008, became the premier forum for economic cooperation in 2009, and the 2010 IMF quota reform put India, Brazil, China and Russia among the ten largest shareholders.
- Institutional pluralism: the New Development Bank, the Contingent Reserve Arrangement and the AIIB now operate beside the Bretton Woods institutions.
- A stalled trade regime: the Doha Round is moribund, the WTO Appellate Body has not functioned since December 2019, and the March 2026 Yaoundé ministerial ended without a declaration.
- Geoeconomics: tariffs, export controls and “friend-shoring” turn interdependence into a lever, which Henry Farrell and Abraham Newman call weaponised interdependence (2019).
- New agendas: climate finance, digital rules, AI and critical minerals.
India’s trajectory within it
- Integration on its own terms: the 1991 reforms, founding WTO membership, and coalition diplomacy through the G-20 and G-33 to defend farm livelihoods since Cancún (2003).
- Plurilateral platforms: IBSA (2003), the BRIC foreign ministers’ meeting (2006), and India’s chairing of BRICS in 2026, whose New Delhi Declaration backed local-currency settlement and institutional reform but no common currency.
- Rule-shaping: India’s 2023 G20 presidency secured the African Union’s permanent seat, put digital public infrastructure on the agenda and pushed multilateral development bank reform.
- Selective openness: India stayed out of RCEP in 2019 but signed agreements with the UAE and Australia (2022), brought the EFTA (October 2025) and UK (July 2026) pacts into force, concluded talks with the EU (January 2026), and joined the IPEF supply-chain agreement (2023) and the Quad’s Critical Minerals Framework (May 2026).
Test of autonomy
The 2025–26 period tested this posture. Washington imposed a combined 50% tariff from August 2025, partly over India’s purchases of Russian oil. An interim understanding in February 2026 lowered the rate to 18%, and the US Supreme Court struck down the IEEPA tariffs on 20 February 2026. US sanctions on Rosneft and Lukoil cut Indian imports of Russian crude. India adjusted without abandoning strategic autonomy, and it has refused BRICS de-dollarisation while promoting rupee trade settlement.
Assessment
- Liberal institutionalists see India as a beneficiary of the order who seeks a bigger say in it, not its overthrow.
- Realists read India’s hedging between the US, Russia and China as balancing under uncertainty; S. Jaishankar’s The India Way (2020) presents it as multi-engagement that extracts the most from a fluid order.
- Dependency critics warn that India exports services but imports capital goods and electronics: its deficit with China reached $112.2bn in 2025–26, when China displaced the US as its largest trading partner.
- The constraints are real: a modest share of world trade, thin manufacturing, and exposure to energy shocks such as the 2026 Hormuz disruption.
India is best described as a “global swing state” (Daniel Kliman and Richard Fontaine, 2012): large enough that its choices shape whether the order stays open, yet not strong enough to write the rules alone.
Conclusion
The emerging order is plural, contested and less liberal than the one India joined in 1995. That suits India’s preference for multi-alignment, but it also exposes India’s dependencies. Its realistic goal is a reformed, multipolar economic order, with voice in the IMF, policy space at the WTO and resilient supply chains. Reaching it depends on building domestic manufacturing and technological capacity, not on diplomatic positioning alone.