Canadian Prime Minister Mark Carney has issued a battle cry in the global fight against deglobalisation. In a historic speech at the World Economic Forum’s annual meeting in Davos, he called on the world’s “middle powers” to take a new approach to revisionist powers, a list that now includes not only China and Russia, but also the United States. In an era of economic nationalism, Carney argues that middle powers must band together to uphold a rules-based international order.
Can India, the world’s largest middle power, reinvent its foreign policy to meet this moment? Doing so would certainly benefit the country, as its interests are largely aligned with Carney’s proposed approach. India’s economic success over the last three decades was born out of engagement with the global economy: the miracle of services exports, built on Western technology, financing and markets.
US President Donald Trump’s capricious trade policy targeted those commercial ties, inflicting a serious blow to India. The India-US trade deal that Trump recently announced is expected to lower US tariffs on India’s goods exports from 50% — among the highest imposed by his administration — to 18% in exchange for India agreeing to halt Russian oil imports and reduce trade barriers. But many questions remain unanswered, and the absence of a rules-based order means that trade friction between the two countries will persist.
In this environment, deepening ties with the rest of the OECD economies, which boast a combined GDP of roughly $38 trillion, holds immense potential for India. Indian heft would also help stabilise the international order. Logic dictates that India should focus its diplomatic engagement here, forging the commercial and technological links required to drive economic growth. Its new free-trade agreements with the European Union and the United Kingdom are steps in this direction.
But this approach is inconsistent with the conventional wisdom of India’s foreign-policy establishment. Many in India have interpreted Carney’s call as a vindication of its traditional non-alignment doctrine. Some commentators have seized on the “middle power” rhetoric to argue for a return to the vision of India’s first prime minister, Jawaharlal Nehru, who believed India should stand aloof from global affairs, hovering above great-power rivalries.
Where does this thinking come from? It reflects deep-seated anti-colonial, anti-Western sentiment. While India’s stated position for decades was non-alignment, its operational bias tilted toward the Soviet Union. The Indian state’s strategic memory is long: China’s attack on India in 1962 and the Soviet Union’s support for India in the 1971 war with US-backed Pakistan, which established an independent Bangladesh, are not historical footnotes. For many in the establishment, they remain formative events. Alongside this, India has long displayed economic nationalism, with an enduring willingness to use state power to “protect” domestic firms and workers.
Former prime ministers Atal Bihari Vajpayee and Manmohan Singh, as well as former foreign ministers Jaswant Singh and Yashwant Sinha, spent years trying to awaken India’s foreign-policy and security establishment to post-Soviet realities. They recognised that, in the 21st century, India’s natural partner is the West. Their impact on mainstream beliefs was limited. Trump’s behaviour has reinforced sceptics’ view that the West is unreliable, and that “strategic autonomy” remains India’s safest harbour.
To anticipate how Indian foreign policy will evolve, we should categorise state capability into three modes. At the most basic level, a state may practise strategic autonomy and avoid deals. Policymakers may engage in moral posturing and deliver stirring speeches while eschewing the compromises required for deep engagement with alliance partners — like a judge who lectures but refuses to issue enforceable orders.
The second mode is transactional behaviour, resulting in volatile relationships that fluctuate with political cycles. The third, most advanced mode focuses on values-based alliances, requiring long-term strategic connections across economic, defence and cultural domains. Foreign-policy sophistication emerges when governments accept modifying domestic policies to suit partners, as security and economic benefits outweigh absolute sovereignty concerns.
But building alliances demands complex state capability and coordination between the Ministry of External Affairs and other government arms. Aggressive diplomacy is easy; explaining necessary compromises to a domestic audience is difficult. After decades of non-alignment and strategic autonomy, India’s foreign policy oscillates between the first two modes. Authorities remain resistant to modifying domestic policy to accommodate external partners. Consequently, India often finds itself isolated and, when security is threatened — such as Chinese incursions along its northern border — forced to respond alone.
State capability does not change quickly. While many in the international community hope India will join a coalition of middle powers to offset American isolationism and Chinese expansionism, such an evolution will be gradual at best. India is likely to respond to global turbulence with a mix of aloofness and continued engagement with Russia.
Ajay Shah is the co-author (with Vijay Kelkar) of In Service of the Republic: The Art and Science of Economic Policy (Penguin Allen Lane, 2022)
Project Syndicate