India at inflection point: Seizing leadership in changed global trade landscape

The global trading system is undergoing a profound transformation. The earlier assumptions of seamless globalization, stable supply chains and predictable geopolitical alignments are rapidly fading. In its place, a new world is emerging—one shaped by strategic rivalries, regional trading blocs, technological competition and reliable supply chains.

For India, a fast-growing major economy aiming to become a global manufacturing and export hub, this shifting landscape presents both formidable challenges and significant opportunities. The manner in which we respond to these changes will determine whether we simply adapt to external shifts or actively position ourselves to lead in the new global order.

At the heart of this lies the deepening strategic rivalry between the US and China. As the two largest economies compete for technological and geopolitical dominance, global supply chains are being reconfigured.

Companies worldwide are increasingly adopting “China+1” strategies to diversify risks, and this opens an opportunity for India to position itself as a credible, large-scale manufacturing alternative.

Simultaneously, the rise of regional trade agreements such as Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) signals a move toward trade regionalization, while varying reciprocal tariffs on countries, innovated by the US and followed by Mexico, hit at the basic tenets of the Most Favored Nation (MFN) principle under the World Trade Organization (WTO).

This dangerous trend is likely to worsen in the future unless it is nipped in the bud. Economic nationalism has resurfaced, with many countries imposing stricter export controls, tariffs and non-tariff barriers in sectors deemed strategically important.

Yet within this landscape of uncertainty, India stands to benefit in several ways. The global desire to diversify supply chains away from China creates new opportunities in electronics, semiconductors, pharmaceuticals, engineering goods, textiles and automobiles.

Another major opportunity lies in India’s leadership in services exports. With rapid digitisation worldwide, demand for India’s IT services, fintech solutions, ed-tech products, consulting, and other professional services, as well as research and development (R&D) capabilities, is poised to grow sharply, providing a strong and resilient export pillar.

India can also expand its footprint in global agricultural markets. Climate disruptions and food shortages have heightened the need for reliable suppliers. India, already a major producer of rice, grains, spices, fruits, milk, and seafood, will benefit in modernizing supply chains, improving processing, and strengthening quality. Another advantage stems from India’s growing influence in the Global South, where demand for affordable healthcare, pharmaceuticals, engineering goods and digital public infrastructure is rising.

However, these opportunities come with some challenges. Domestic logistics and infrastructure, though improving, still lag global benchmarks. High logistics costs, port congestion, limited cold-chain capacity and procedural delays add friction to export processes.

Non-tariff barriers in developed markets—such as stricter quality norms, environmental regulations, and carbon border taxes—pose additional hurdles for Indian exporters. Over-reliance on a few major markets, such as the US, EU, and Gulf Cooperation Council (GCC), increases vulnerability to geopolitical or economic disruptions. Moreover, several Indian industries continue to face gaps in technology, skilling, scaling capacity and R&D investment, especially in high-tech sectors dominated by established global competitors.

At the same time, India must embrace the green manufacturing transition. Investments in renewable energy corridors, green hydrogen hubs, battery cell production, and sustainable industrial practices can position India as a preferred destination for future-focused industries. Digital adoption across the export ecosystem—fully digital customs, blockchain-based traceability, AI-driven market intelligence, and global standards training for Micro, Small, and Medium Enterprises (MSMEs)—can sharply reduce frictions in export operations. Complementing these reforms, India should leverage its soft power—its technological capabilities, digital public infrastructure, and expanding global partnerships—to deepen engagement across the Global South.

In my view, the evolving geopolitical environment represents not merely a disruption but an inflection point in global trade. As countries seek trusted partners, diversified supply chains and sustainable manufacturing solutions, India is uniquely placed to meet these needs. This is India’s opportunity to lead—and the choices made today will determine its global standing for decades to come.

(Ajay Sahai is the director general & CEO, FIEO; the views are personal)