India masters strategic economic balancing

OPINION India stands at the cusp of a historic economic transformation.

- SAVIO RODRIGUES

By 2030, it is projected to become the world's third-largest economy, a monumental shift driven by its burgeoning market, robust growth, and increasing integration into global trade networks. For this growth to sustain, India must secure continued flows of American investment and access to its expansive market. Simultaneously, India's pragmatic efforts to internationalize the rupee represent a strategic hedging mechanism, which, far from being a radical de-dollarization policy, underscores a careful balancing act.

While such policies might invite scrutiny in a geopolitically polarized world, they are unlikely to provoke alarm from a potential second Trump administration. Trump's expected "Indophilic" stance could result in an administration historically sympathetic to India, one that may view India as a critical counterweight to China in the Indo-Pacific. This favourable outlook would make sanctions against India highly improbable, even as it advances its economic sovereignty through rupee internationalization.

India's approach is particularly instructive for other nations in the Global South. Unlike some economies that have embraced extreme de-dollarization policies, often at great cost, India has charted a middle path. Few countries can afford to invite punitive tariffs or sanctions from the US, given their economic vulnerabilities. Moreover, aligning too closely with alternative systems, particularly those centred around China, risks creating a new form of dependence.