India is set to fuel approximately one-fifth of global GDP growth, thanks to its strong domestic demand and sound economic and financial policies. These strengths have allowed the nation to successfully navigate and absorb various external economic challenges, as stated by Shaktikanta Das, Principal Secretary-2 to Prime Minister Narendra Modi.
Speaking at an event in Pune, Mr. Das underscored India’s core objective in free trade negotiations with countries like the U.S.: to establish fair and balanced agreements that genuinely serve the best interests of the Indian populace. He further noted India’s remarkable adaptability and strength amidst the current unpredictable global landscape.
Mr. Das shared these insights during the 85th Kale Memorial Lecture at Pune’s Gokhale Institute of Politics and Economics, where he discussed “Indian Economy in a changing global order.” Observing the global economy’s current state of profound uncertainty and fundamental transformation, Mr. Das highlighted that the long-standing rules-based trading framework, which has championed globalization and free trade for over eight decades, is now encountering significant challenges.
He pointed out a significant shift from the past perception of a “flat world” aiming for a single global market. While cost competitiveness and comparative advantage once guided international trade, a fundamental alteration in these principles has emerged. “The global economic and trade landscape has undergone a profound change, becoming increasingly fragmented,” Mr. Das explained. “Established rules are now under scrutiny, and new norms are still being defined. Both the COVID-19 pandemic and the conflict in Ukraine and Russia have significantly hastened a global shift towards greater self-reliance.”
The former RBI Governor also noted that vulnerabilities exposed in global supply chains have prompted many countries to re-evaluate their reliance on external sources, prioritizing supply chain resilience above mere cost efficiency. “Strategic autonomy has become a paramount concern,” he stated. “This evolving dynamic is further underscored by the rising prominence of regional trade agreements, indicating a move towards more localized, yet pragmatic, trade partnerships. Essentially, 2025 marks a crucial turning point in the global economic trajectory.”
Mr. Das highlighted that India, guided by a decade of structural reforms and strategic global positioning aligned with the “Aatmanirbhar Bharat” (self-reliant India) vision, has effectively navigated numerous global challenges. “Our strong domestic demand, coupled with judicious macroeconomic and financial sector policies, has empowered India to resist many external pressures,” Mr. Das asserted. “Consequently, India is on track to account for roughly one-fifth of the world’s GDP growth.”
He further elaborated that India is proactively recalibrating its trade relationships to adapt to this evolving global order. “Currently, India is a signatory to 14 Free Trade Agreements (FTAs) and six Preferential Trade Agreements (PTAs), with the UK, Australia, and the UAE recently joining the ranks of FTA partners,” he confirmed. Mr. Das also mentioned the signing of a comprehensive Trade and Economic Partnership Agreement in March 2024 between India and the European Free Trade Association (EFTA) members: Iceland, Liechtenstein, Norway, and Switzerland.
“Furthermore, India is actively engaged in FTA negotiations with the U.S., the EU, Peru, Oman, and New Zealand, among other nations,” he stated. “The paramount goal in all these trade discussions is to forge agreements that are equitable and balanced, ultimately benefiting our nation and its citizens.” In this era of shifting global trade dynamics, it is crucial to recognize the strong foundational elements supporting the Indian economy and the significant structural reforms that have further fortified them. “These collective factors,” he concluded, “have been instrumental in allowing India to successfully navigate the complexities of a turbulent global landscape.”