Dr. Arvind Kumar*
World is at a crossroads at this bewildering spring of 2025, one with skyrocketing geo-economic showdowns and geo-political tensions. The re-elected President of America had squeezed in another significant thud on the already fragile world order with his re-elected protectionist trade agenda. Heavy tariffs were imposed on trade with other enormous economic powers such as China and the EU, even with long-time friends, upsetting supply chains, creating fears of a worldwide slowdown, and compelling nations to rethink their strategic partnerships in an economically more nationalistic world. There is no doubt that the immediate impact of Trump’s trade tariffs reaches the American soil, despite all redistribution of the global economic balance, the United States is anything but losing influence as an economic superpower. By its very protectionist approach, it rewrites the rulebook of international trade. Increased expenses for American consumers, from steel and aluminum to technology and agricultural products, are but part of the problem. The real pressure is being felt globally. China, usually the biggest target of trade ire from the US, is now set to face tariffs over certain goods at more than 60%, which is expected to exert pressure on its export-oriented economy and incentivize the return of American manufacturing. Europe’s prized automotive and machinery sectors are also caught in the crossfire of tariffs, and it has already voiced strong objections and hinted at retaliatory measures.
Emerging economies like India are not insulated from these global headwinds. India’s key export sectors, textiles, pharmaceuticals, and IT services, now have to contend with an even harder environment in accessing the highly lucrative U.S. market. The WTO, already fighting for its relevance in an increasingly multipolar world, now seems to be on the back foot facing unilateralism. This tempest in trade occurs amid other pressing global challenges. The war in Ukraine is still disrupting energy markets and food security; the Middle East continues to be a region with persistent volatility. The Belt and Road Initiative, notwithstanding huge economic challenges, is nevertheless increasing Chinese influence with untold debt risks for participating nations. The conflict is being made worse by the aggressive competition across the globe in crucial technologies, such as semiconductors, artificial intelligence, and green energy.
For a nation like India, which is currently amidst its Amritkaal – this propitious period on its way to a centenary – aspiring from self-reliance to global leadership, this is a unique moment of opportunity and challenge. This bodes well for New Delhi as it has prioritized its “Neighbours First” policy as one of the cornerstones of its diplomatic strategy to leverage tensions through its self-interest when it comes to becoming the “Vishva Guru.” It will become critical to laying New Delhi’s trajectory toward being that “Vishva Guru,” the global teacher and leader it aims to be. For India, this complex global situation represents a situation of very high stakes. Its fifth-largest economy in the world has ambitions of occupying the third slot by the turn of the decade, and international trade coupled with partnerships is the lifeline for such aspirations. The U.S. tariffs not only threaten India’s trade surplus with the American markets but they also provide an opportunity to project India as a reliable, democratic alternative manufacturing hub for China and a trustworthy Western partner.
Quest for Global Leadership
Notably, therefore, the “Neighbours First” policy of India becomes important in such a context. By this principle, it should be well understood: the stable and prosperous neighborhood should and must precede India’s development and vision of becoming a global leader. The neighborhood of India- including South Asia, the Indian Ocean Region, and some parts of Southeast Asia – is one large, complicated weave of opportunities and challenges. Relations with Pakistan are mired in tensions over borders and proxy conflicts. Once India’s brightest star in regional diplomacy, Bangladesh is now in a state of uncertainty following the political transitions that have created a vacuum for foreign influence, perhaps China’s most of all. Sri Lanka is struggling down its tortuous road to economic recovery, and although it owes a heavy debt to Beijing, it needs India as a crucial support. Nepal and Bhutan try to navigate through India’s classical influence as well as China’s widening net of economic outreach. The Maldives, under a new pro-China administration, has witnessed considerable changes in its foreign policy, compelling India to increasingly undertake efforts to reclaim its influence there.
These regional dynamics have considerable geo-economic repercussions. A volatile neighborhood works against India’s case as a trustworthy player in the global arena in a world where Trump’s tariffs are prompting searches for stable investment sites. If the neighbors start to lean toward Beijing in areas that include strategic considerations as port development and infrastructure, India’s maritime security and trade routes in the vital Indian Ocean will be compromised. The Indian Ocean, an artery for global trade, is already an arena for contestation between the string of pearls from China and SAGAR from India. Now, the extra pressure that global trade tensions exert means India cannot afford to treat its immediate neighborhood carelessly while reaching out to the rest of the world.
It, thus, demands that India undertake a multi-track diplomatic approach based on intensified, proactive and detailed diplomacy with neighbors. Economically, India may further consolidate trade relations along with investments in cross-border infrastructure initiatives and collaborative energy initiatives with India’s neighboring nations, such as Bangladesh. Absent are problems of less urgent character due to political change in Dhaka; there is still so much potential for being a textile hub and a first-rate market for Indian products that could make possible the conditions of economic integration. Furthermore, India’s generous funding support to Sri Lanka may also be tied to long-term ventures involving port access coupled with renewable energy to eliminate some level of risk from the Chinese debt. Nepal would benefit from such soft power abilities as educational dialogue with India, whereas India could do well to publicize tourism and hydropower projects there so that the Indian image of a good neighbor is set in stone. As for the Maldives, a highly cautious strategy may be called for that might comprise increased climate support or even a bit of naval cooperation and tourism programs aimed at evening the ground.
Economic Diplomacy or Fair-Trade Deals
India could use the present international scenario to take its agenda beyond economic diplomacy. The American strategies of countering Chinese moves provide India with fertile ground to press for favorable trade deals, like tariff import exemptions for key exports in pharmaceuticals, IT, and textile sectors, in exchange for long-awaited defense cooperation and joint ventures in emerging technologies. For instance, the U.S.-India potential semiconductor manufacturing partnership would allow for tariff-free exports and place India in a good position to be the winner of the technology race in the world. India could proactively seek more intensified economic partnerships with the EU, as the latter itself is committed to diversifying Chinese supply chains. An entire trade agreement with the EU in the areas of green technologies and digital services would fill the gaps in the local market as well as create a strong brand presence for India at the global level.
There is a distinct need for the “Neighbors First” policy to have imaginative diplomatic initiatives going beyond economic transactions. India can conceive of a big South Asian summit, perhaps named the “Amritkaal Dialogue,” as a platform for regional convocation to deliberate on the responses to common challenges as well as build a greater base for cooperation. One wonders if leaders from neighboring countries could gather in India to discuss trade agreements, perhaps strategies to combat climate change, or ask for regional security frameworks that project an image of Indian leadership but also sustain authentic dialogue. India could spearhead a regional naval coalition cooperating on maritime security, and anti-piracy measures will also subtly address the fears over the surge of Chinese naval presence in the Indian Ocean. All this might be bolstered by very active cultural diplomacy schemes using the appeal embedded in Bollywood yoga and the intellectual standing of institutes like the IITs, thus boosting India’s soft power even further and strengthening regional ties.
Having normalized ties with other global powers, it becomes vital for India to balance strategic equations to keep Russia engaged with the shifty act of exploiting its historical ties while ensuring that energy imports normalize, if not increase, for a peaceful resolution to the conflict in Ukraine, thus isolating energy security from Western partnerships. There is no clear blueprint to traverse the complex China-India relationship; there is an engagement based on pragmatism. There would be avenues for talks from trade tiffs, keeping India strong on border issues, maybe looking for options for de-escalation on the Line of Actual Control while building leverage in other strategic spheres. The Quad is going to provide a platform – and very powerfully – to India, the US, and probably Japan and Australia for imagining the strength and cultivating the rules-based order in the Indo-Pacific, but not necessarily putting India into a straitjacket, anti-China bloc.
Way forward
Ultimately, though, India’s vision to become “Vishva Guru” at the moment of its Amritkaal will be a reality only when it has succeeded in creating an environment of stability, prosperity, and harmony with its neighbors. An economically prosperous and coherent South Asia, in turn, not only makes India secure and stable to look towards as a periphery in the future but also adds to its freedom to exercise political and economic influence in the international arena. Once again, the same uncertainties that prevail currently around the globe, coupled with even further disruptions caused in trade in the hands of U.S policy dictates, remind India yet again of its global ambition to be planted and grounded solidly in the region. By skillfully keeping “Neighbours First” as a priority in advancing a well-balanced interaction with international powers, India can navigate through the anarchic present and stand as a truly global power, showing how actual global power functions next door. The hour of united and deliberate action is now.
*Editor, Focus Global Reporter
