The World is in Aatmanirbharta Mood: A Strategic Shift in Global Trade Dynamics

The concept of aatmanirbharta, or self-reliance, has gained significant traction in recent times, particularly as nations navigate the complexities of global trade. At the forefront of this movement is the United States, which has adopted a tariff regime that would have resonated with the architects of India’s erstwhile licence-permit raj. With a staggering tariff rate of 50%, India now finds itself facing higher tariffs from the US than even China, marking a pivotal moment in international trade relations.

A Shift in Global Power Dynamics

In a remarkable twist, it is China that appears to have gained a strategic advantage, buying time while India seems to be racing against the clock. This scenario has reignited discussions around self-reliance in India, a theme that has permeated the nation’s policy discourse since its independence in 1947. However, the call for self-reliance must evolve; it should be selective and strategic rather than a blanket approach across all sectors.

The Case for Strategic Self-Reliance

There is a compelling argument for India to bolster self-reliance in specific strategic sectors. The current geopolitical landscape reveals why India finds itself in a precarious position, unlike countries such as China and Russia. For instance, Russia, despite not being as affluent as the US or EU states, has managed to withstand Western sanctions due to its self-sufficiency in oil, gas, and defense equipment. This self-reliance has allowed Russia to maintain its stance in conflicts like the one in Ukraine.

The US: A Model of Economic Resilience

The US, under the leadership of Donald Trump, has been acutely aware of the need to sustain its economic might and great power status. Over the past 25 years, previous administrations have transformed the US into the world’s largest producer of oil and gas, achieving energy independence. Trump’s focus on producing critical minerals and semiconductor chips domestically is indicative of a broader strategy to secure the nation’s economic future. In many respects, these resources have become the new oil, essential for maintaining technological leadership.

The Critical Mineral Supply Chain

America’s dominance in cutting-edge technology hinges on a stable supply of advanced chips and critical minerals. China’s control over rare earth elements gives it significant leverage in global supply chains, particularly in sectors like defense and electronics. This reality explains why China faces lower tariffs than India, despite its more protectionist policies and military rivalry with the US.

India’s Vulnerabilities

Now is a crucial moment for India to reassess its approach to aatmanirbharta. The nation remains heavily reliant on imports for essential resources: approximately 90% for oil and gas, it is the second-largest buyer of imported arms, and it is entirely dependent on imports for critical minerals and semiconductor chips. This dependency compromises India’s strategic autonomy and places it in a vulnerable position.

India’s reliance on Russian arms and cheap oil complicates its relationship with the US, which encourages a pivot away from Russia. Additionally, India’s dependence on China for manufacturing and critical minerals further exacerbates its vulnerabilities, especially given the historically tense relations between the two nations.

The Need for a Strategic Focus

Unfortunately, India’s vision of self-reliance has often lacked strategic depth. The current approach is overly broad, encompassing all sectors and heavily reliant on public sector companies in critical areas like oil, gas, and defense. This strategy is based on the flawed assumption that India’s large domestic market can sustain its needs without external support.

To navigate these challenges, the Government of India should narrow its industrial policy focus to select sectors where it can realistically achieve self-reliance. Leveraging India’s abundant entrepreneurial talent and maintaining an outward-looking perspective towards open markets will be essential. Structural reforms that enhance competitiveness in the economy are also crucial.

Embracing Disruption

Now is not the time for India to retreat into a comfort zone. The best response to global disruptions is to embrace them and adapt. By strategically reassessing its approach to aatmanirbharta, India can position itself more favorably in the evolving global landscape.

In conclusion, the world is indeed in an aatmanirbharta mood, and India must rise to the occasion. By focusing on strategic self-reliance and fostering a competitive economy, India can navigate the complexities of global trade and emerge stronger in an increasingly interconnected world.