'Be indispensable', CEA calls for economic statecraft amid geopolitical uncertainty

CEA V Anantha Nageswaran.

The Economic Survey called for a more active use of economic statecraft, urging the government to deploy economic tools to advance strategic, foreign policy, and national security objectives, as the country remains among the world’s fastest-growing major economies for a fourth straight year.

"The global economy has entered a phase in which geopolitical considerations exert a much stronger influence than they did in the 2010s. Rapidly evolving country alignments and supply chains, as well as technological developments, necessitate supplementing traditional economic assessments with a geopolitical perspective," the survey said.

Economic Statecraft, the deliberate use of economic tools to achieve strategic objectives, has seen a rapid resurgence in recent years and is increasingly being wielded by global powers, including the US and China.

Chief Economic Adviser V Anantha Nageswaran’s argument signals a shift in policy thinking in India following the disruptions in global trade since Donald Trump returned to office last year.

“This shift reflects rising geopolitical competition, concerns over technological dominance and vulnerabilities exposed in traditional global value chains. How does economic policy differ from economic statecraft? Economic policy employs traditional instruments, including fiscal, monetary, and trade tools, to achieve economic objectives such as reducing deficits, controlling inflation, and promoting economic growth. Economic statecraft goes a step further by employing economic tools to achieve foreign policy or national security objectives,” the survey said.

Against a changing geopolitical landscape, the CEA notes that while India's reforms and economic performance over the previous decade have helped it remain relevant and resilient, it must now deliberately cultivate strategic indispensability.

“We must now move a step further and focus on deliberately cultivating strategic indispensability,” Nageswaran notes.

Strategic indispensability arises when an economy offers goods, services or roles that are critical to global value chains that partners cannot easily substitute.

Citing India's growth, scale, demographics, capabilities, and success in creating Digital Public Infrastructure, the survey notes that building indispensability is key to maintaining economic sovereignty.

“As a large and rapidly growing economy, India possesses scale, diversity, and capabilities that can anchor it firmly within global economic networks. By strengthening these domestic capabilities, maintaining macroeconomic stability, and actively shaping rules and standards in emerging areas such as digital public infrastructure, India can ensure that integration works as a source of influence and insurance, rather than vulnerability. In an era where economic instruments are increasingly used as tools of statecraft, building such indispensability is central to safeguarding growth, policy space, and long-term economic sovereignty,” the survey said.