Trade uncertainty: India should forge a resilience alliance of neutral countries with common interests

The proceedings made one thing clear: multilateralism is still alive, but only just. It resembles a patient in intensive care—kept stable by routine and rhetoric rather than genuine recovery.

Familiar fault lines—agriculture, fisheries, development and now digital trade—remain unresolved, layered one over the other like old arguments that refuse to fade.

What this means in practice is not particularly comforting. India’s agricultural exports, now exceeding $50 billion, are deeply entangled in subsidy debates that remain unresolved, particularly with key markets such as the US and parts of West Asia.

Absence of clarity often keeps the system working to the advantage of countries with deeper pockets and greater negotiating leverage. For example, India’s public stockholding programme—built around minimum support prices to ensure food security—has long been contested at the WTO, particularly by the US.

What India sees as a safety net for millions of farmers is viewed by others as trade-distorting support. A temporary ‘peace clause’ offers breathing room, but not resolution.

Fishery negotiations echo a similar story, though in a quieter register. Better equipped fleets in more developed countries can undertake trawling operations in a manner that the fish stock is preserved, which small-scale fisherfolk in developing economies can ill afford.

In the case of digital trade, the problem remains one of lack of clarity on taxation or data governance, which is why the e-commerce moratorium keeps extending instead of a permanent resolution. A rapidly expanding slice of global trade is hence effectively operating in a policy grey zone. With the WTO’s dispute settlement system in paralysis, enforcement starts to feel less like law and more like persuasion.

All this must be viewed against India’s role as a spokesperson for the Global South. It explains why we must pursue a delicate balancing act.

While we rightly argue that development concerns cannot be treated as an afterthought, our policy hedges take the shape of various instruments: bilateral deals, production-linked incentives and considered choices while integrating with global value chains.

To engage the world on a multilateral basis, India has been preparing backup plans for trade pathways. This shift is not unique to India. Multilateralism, once the crown jewel of global economic cooperation, now feels like an overbooked flight. Everyone insists they have a seat; few trust the system to get them there.

The change is especially visible in the manner countries are coping with the recent tariff tirade by the US. Increasingly, traditional multilateral forums are being sidestepped. If the last century was about pursuing access to new markets, this one is now about leveraging dependencies. The irony is hard to ignore: interdependence, once seen as a buffer against conflict, has become a tool within it.

The US restrictions on access to advanced semiconductors are a case in point. Measures such as reciprocal tariffs imposed by the US and export controls on critical materials by China are creating interstices in deeply interdependent supply chains that are proving to be strategic chokepoints.

The war in West Asia has exacerbated this situation, with Iran charging tariffs for ‘innocent passage’ through the Strait of Hormuz. If this stays unresolved, it could have harsh implications for global trade, logistics and the global economy.

India’s evolving industrial policies have no doubt been shaped by such developments. Production-linked incentive schemes to develop local manufacturing capacity are not about stepping away from globalization so much as reshaping the country’s place within it. Home capacity helps reduce single-source exposure even as we stay connected to global supply chains.

This is not just about reducing reliance on China, the world’s factory, but about avoiding over-dependence on any one system. Strategic autonomy, once largely restricted to use in diplomatic parlance, is now a guiding tenet of economic policy formulation.

Take India’s approach to developing the digital economy. The country has been cautious about locking itself into global rules on data governance, even as it builds large domestic platforms—like Aadhaar and UPI—that could potentially wield influence beyond our borders.

To improve the efficacy of such initiatives and put the domestic economy on firmer ground, our trade strategy must shift from one of reacting to global developments and the opportunities they offer to one where the world depends on us.

In the near term, that means picking plurilateral tables that matter—for supply chains, clean tech, digital trade—through platforms like the Indo Pacific framework, while keeping a pragmatic eye on high-standard clubs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Alongside, India could spearhead a ‘Resilience and Neutrality Alliance.’ This could focus on ‘strategic de-risking,’ positioning India as an anchor for middle-power nations seeking to avoid being caught between rival superpowers.

This alliance could target a specific ‘diplomatic whitespace’ by bringing together Brazil, Vietnam, Indonesia, South Africa and potentially France, Canada and Japan, among others, to create a bloc that prioritizes economic sovereignty and supply chain security.

Such a resilience alliance would be a caucus of key developing economies that moves beyond rhetoric to coordination. To catalyse world trade, for instance, it could align drug approvals, public food stock holdings and build interoperable digital rails. The bigger play would relate to export systems, not just goods.

Our digital mosaic, exemplified by the UPI platform that has reached places like Singapore and the UAE, shows how India could create alternate payment systems. The e-rupee has significant potential too.

Over time, digital strength can be paired with goods and services across the commercial spectrum, from critical minerals to co-building technology with trusted partners and moving up the value chain from assembly to design and standard setting.

Notably, this approach is not about ensuring self-sufficiency; rather, it is one of trusted interdependence—being indispensable to others while never being overly exposed.

These are the author’s personal views.

The author is former additional secretary and lead negotiator for bilateral agreements with the US, Canada, Japan and South Korea, ministry of commerce.