India is undergoing a significant transformation in its foreign policy, marked by growing geo-economic and geopolitical ambitions. This shift, while promising potential benefits, also presents challenges in a world grappling with escalating tensions and a possible retreat from globalization.
A key aspect of this change is India's growing relationship with Israel under Benjamin Netanyahu, a move that has sparked internal debate due to accusations of Israeli human rights abuses in Gaza. This budding alliance is indicative of India's evolving "multi-alignment" approach, which seeks to balance relationships with various global powers.
This new direction is taking place against the backdrop of a changing global landscape, as highlighted in the Reserve Bank of India's 2023-24 Annual Report. Geopolitical conflicts and geo-economic fragmentation are increasingly impacting economic stability, posing challenges for countries like India that are seeking to expand their global influence.
The rise of geo-economic blocs, particularly around the U.S. and China, has led to a redirection of trade and investment flows along geopolitical lines. India's growing economic ties with both these powers, while maintaining a relationship with Russia, highlight its multi-alignment strategy.
However, this approach comes at a time of increasing global uncertainty, with the potential for deglobalization and the re-emergence of protectionist policies. India's foreign trade data reveals a growing tilt towards the U.S. and China, with their combined share of India's total trade increasing significantly over the past decade.
As India navigates these complex realities, it must balance its national interests with the demands of a rapidly changing global landscape. The challenge lies in preserving the benefits of economic integration while addressing the risks posed by geopolitical tensions and fragmentation.
