OPINION | Global Trade in a Fractured World: Why India must help shape a reformed WTO

WTO's architecture will not remain frozen. It will evolve to stay relevant 

For over seven decades, the multilateral trading system (MTS) anchored around the General Agreement on Tariffs and Trade and later the World Trade Organization (WTO) rested on a delicate political bargain. That bargain balanced power asymmetries between developed and developing economies through principles such as Most Favoured Nation (MFN), consensus-based decision-making, and binding dispute settlement. India’s trade diplomacy, alliances, and negotiating strategies were all built within this framework.

That world no longer exists.

Undone by strategic rivalry among big powers

The fracture of WTO-centred trade governance is not accidental nor episodic. It is structural, driven primarily by the deepening strategic rivalry between the United States and China.

In response, major economies and middle powers are experimenting—sometimes cautiously, sometimes opportunistically—with new forms of trade cooperation, both within and outside the WTO.

Plurilateral agreements, selective rule-making clubs, managed trade arrangements, and geopolitical conditionalities are increasingly substituting for universal rules. India today stands at a crossroads in this evolving landscape.

A question India hasn’t yet answered

On the surface, New Delhi appears active. A string of Free Trade Agreements (FTAs) with major developed partners—the UAE, Australia, and ongoing negotiations with the UK, EU, and others—signals pragmatic engagement. But beneath this activity lies a deeper strategic question that India has yet to fully confront: what role does it seek to play in shaping the next global trade order?

At present, India is largely absent from the most consequential debates on WTO reform. This absence is deliberate. It reflects discomfort—perhaps even distrust—towards ongoing discussions that appear to dilute MFN, weaken consensus, and legitimise differentiated obligations among members. These concerns are not unfounded.

The United States, once the principal champion of unconditional MFN under Article I of the GATT, is today the most prominent violator of that very principle, applying differential tariffs under national security justifications. Were other countries to emulate this behaviour, the result would be chaos rather than reform.

Middle powers have taken the lead to find solutions

Across Geneva and other capitals, middle powers—the European Union, Japan, Australia, and even several emerging economies—are exploring alternative pathways. Some favour “open” plurilaterals that extend benefits on an MFN basis, such as the Information Technology Agreement. Others are more comfortable with closed, non-MFN plurilaterals, where benefits accrue only to signatories, as in the Government Procurement Agreement.

Outside the WTO, mega-regionals like the CPTPP continue to expand and deepen, setting new norms in areas such as digital trade, subsidies, and state-owned enterprises.

The jury is still out on which of these pathways will prevail. But one trend is unmistakable: rule-making is moving ahead—with or without India.

World trade environment is influenced by other changes

India’s traditional stance has been to defend what might be called the “basic structure” of the multilateral trading system—unconditional MFN, consensus, and development sensitivity. These principles were not accidental; they were hard-won political compromises that gave legitimacy to globalisation in a deeply unequal world. To abandon them lightly would be short-sighted.

However, it is equally short-sighted to treat these principles as immutable relics of a bygone era. Geopolitics today intrudes directly into trade policy. The United States increasingly frames trade through the lens of strategic loyalty— “you are either with us or against us.” For a country like India, with a complex relationship with China, a long-standing strategic partnership with Russia, and a comprehensive but asymmetric engagement with the US, such binary choices are neither feasible nor desirable.

Indian policymakers are acutely aware of this. Trade cannot be viewed in isolation from defence, technology, energy security, or broader geopolitical calculations. Nor should the government’s approach be caricatured as naïve. It is entirely possible, indeed likely that New Delhi is pursuing a calibrated strategy, offering tactical concessions while keeping its powder dry for a post-Trump United States and a more predictable global environment.

Right now, India lacks strategic clarity

What is missing today is not tactical flexibility but strategic clarity. India lacks a clearly articulated vision for the future of the MTS and the WTO, one that recognises both normative commitments and emerging realities. Vision must precede strategy. Without it, India risks being reactive - responding to initiatives designed by others rather than shaping outcomes.

A central fault line in the coming years will be whether MFN and consensus survive in their current form. There is credible reason to believe that a significant group of WTO members—including most major trading powers—may settle for their dilution.

If that group coalesces, and India finds itself largely alone in opposition, difficult choices will arise. Standing firm on principle will entail real economic and political costs. Until now, those costs have been manageable. They may not remain so.

Even principles have to be prioritised

This is not a simple trade-off between “immediate material benefits” and “long-term principles.” The principles themselves are evolving, shaped by power, technology, and geopolitics. The real challenge is to identify which principles are foundational and non-negotiable, and which can be adapted without undermining India’s long-term interests.

Engaging in plurilateral negotiations does not, by itself, dismantle the multilateral system. Law-making through plurilaterals within the WTO can coexist with MFN and consensus, provided red lines are clearly drawn. India should resist any attempt to weaken MFN within plurilaterals and oppose efforts to erode consensus through procedural manoeuvres.

Resistance is more effective when exercised from within the room, not from outside it.

India’s expanding FTA network provides leverage that has not yet been fully utilised. These agreements should not be seen merely as market-access instruments, but as strategic assets that allow India to engage more confidently in global rule-making debates. Being part of the conversation on WTO reform—rather than a bystander—will be essential as discussions intensify after the next WTO Ministerial Conference.

Be prepared for the possibility of a “new WTO”

A more unsettling possibility must also be confronted: the emergence of a “new WTO” in which India is not a founding architect. If that happens, New Delhi will face a stark choice—adapt to a reconfigured system or risk marginalisation. Preparing for such contingencies does not imply capitulation; it reflects strategic foresight.

Ultimately, the question is not whether India should defend the multilateral trading system, but how. Defence through isolation will fail. Defence through principled engagement may yet succeed.

India needs a clear vision of the trade order it wants to see—one that balances sovereignty with interdependence, development with competitiveness, and principle with pragmatism. Only then can it craft a strategy that mitigates losses, maximises gains, and ensures that as the global trade system is rewritten, India is not merely reacting to the script—but helping to author it.

(Views are personal, and do not represent the stance of this publication.)