Beyond trade deals to building a new architecture, Pg6

Key Highlights:

• In early 2026, India signed a Free Trade Agreement with the European Union (EU) and a deal with the United States to lower tariffs on Indian goods.
• Access to critical goods like computer chips, rare minerals, and medical supplies is increasingly influenced by global politics, with the U.S. and China using economic power as a tool of control.
• Dependence on the U.S. or China for critical supply chains carries risks due to political shifts, necessitating a long-term strategy for India.
• The suggested alternative is sectoral plurilateralism, forming smaller, focused partnerships with countries in specific sectors to set standards and develop capabilities.

Detailed Insights:

• The global system of free trade is weakening, with politics dictating access to essential goods, impacting India's ability to trade freely and build its industries.
• China has previously restricted exports to India during territorial disputes, highlighting the risk of relying on single countries for critical supplies like Active Pharmaceutical Ingredients (APIs).
• The U.S. has also used trade as leverage, imposing tariffs on Indian goods in response to India's purchase of Russian energy resources, causing economic disruption.
• Sectoral plurilateralism involves India forming partnerships with countries in specific sectors to create interdependence and set standards, exemplified by the historical European Coal and Steel Community.
• India can leverage its strengths like the UPI payment system, Aadhaar identity system, and DigiLocker platform to build shared, open-source digital standards with other developing countries.
• Pilot partnerships in space, digital infrastructure, and AI are recommended, enabling India to set binding standards and exert influence in these sectors.

Key Concepts Involved:

• Free Trade Agreement: An agreement between two or more countries to reduce or eliminate trade barriers, such as tariffs and quotas, to encourage trade.
• Sectoral Plurilateralism: Forming focused partnerships with a few countries in specific sectors to set standards, develop capabilities, and create interdependence.
• Active Pharmaceutical Ingredients (APIs): The chemical base for generic drugs, essential for pharmaceutical production and healthcare.