MAINS Current Affairs includes Need For India’s Geoeconomic Strategy & India and others are building a ‘G Minus Two’ for Indo-Pacific

ECONOMY

1. Need For India’s Geoeconomic Strategy

Context: In an increasingly fragmented and uncertain global order, countries are no longer separating economics from geopolitics. Trade, technology, investment, supply chains, and financial systems have become instruments of strategic competition and national security.

For India, the challenge is to formulate a Geoeconomic Strategy that simultaneously:

• Promotes economic growth,
• Safeguards national security,
• Reduces strategic vulnerabilities,
• Enhances resilience against external shocks, and
• Strengthens India’s position as a major global power.

The objective is to achieve economic prosperity without compromising strategic autonomy.

What is Geoeconomics?

Geoeconomics refers to the use of economic tools and policies to achieve geopolitical and strategic objectives.

These tools include:

• Trade policies,
• Investment regulations,
• Industrial policy,
• Technology controls,
• Financial instruments,
• Supply chain management,
• Energy and resource security.

In the 21st century, economic policies are increasingly being employed not merely to generate growth but also to:

• Strengthen national security,
• Build strategic influence,
• Reduce dependence on rivals,
• Shape international power dynamics.

Core Aspects / Pillars of Economic Security Strategy

• Resilient and secure supply chains:diversification of imports; strategic stockpiles of critical minerals; trusted logistics and transport networks.
• Trade and Market Access:Expansion of Free Trade Agreements (FTAs); export promotion; trade facilitation and market diversification.
• Technology and Innovation:Greater investment in research and development (R&D); domestic capabilities in semiconductors, artificial intelligence, quantum technologies and biotechnology; and safeguarding critical technologies.
• Industrial Policy:Giving focused support to sunrise sectors, promoting domestic manufacturing through Production Linked Incentive (PLI) and other schemes and public-private partnership.
• Investment Security:Reviewing investments in sensitive sectors; encouraging trusted foreign investment; and addressing vulnerabilities in strategic infrastructure.
• Energy and Food Security:Growth of renewable energy Biofuels from Agricultural Waste, Not Food Crops energy imports, diversified
• Digital and Infrastructure Security:Cyber resilience of critical infrastructure; secure digital networks; and data infrastructure security.
• Economic Diplomacy:Strategy Supply Chain Resilience Initiative (SCRI) Indo-Pacific Cooperation and Multilateral Engagement.

Role of Trade in India’s Geoeconomic Strategy

Trade is one of the most important instruments of geoeconomic power.

1. Enhancing Strategic Autonomy

Diversified trade reduces dependence on:

• A single supplier,
• A single export market,
• A single technology source.

This strengthens India’s negotiating power.

2. Building Resilient Supply Chains

India is increasingly participating in:

• Supply Chain Resilience Initiative (SCRI) with Japan and Australia to build secure and diversified supply chains.
• India-Middle East-Europe Economic Corridor (IMEC): The corridor aims to Improve connectivity, Strengthen trade, Reduce transportation costs, Counter strategic vulnerabilities.

3. Improving Export Competitiveness

• Trade agreements provide market access for Pharmaceuticals, Engineering goods, Textiles, Agriculture, IT services.
• Export diversification reduces vulnerability to external shocks.

4. Free Trade Agreements as Strategic Tools

• India increasingly uses FTAs not merely for trade liberalization but also for strategic partnerships.
• FTAs help integrate India into Global Value Chains (GVCs).

5. Attracting Foreign Investment

Trade openness and economic reforms:

• Increase investor confidence,
• Promote manufacturing,
• Support China+1 strategy.

Important initiatives include Make in India, PLI Scheme, National Logistics Policy, PM Gati Shakti.

6. Strategic Technologies and Trade

Trade in critical technologies is increasingly becoming a national security issue.

Key sectors include: Semiconductors, Artificial Intelligence, Defence manufacturing, Telecommunications.

India seeks:

• Trusted technology partnerships,
• Protection of sensitive sectors,
• Calibrated investment policies.

7. Enhancing India’s Global Role

• Economic strength reinforces India’s position in G20, WTO, Indo-Pacific initiatives, Global South partnerships.
• Economic partnerships improve India’s credibility as a reliable development partner.

Related Issues & Concerns

• Risk of Economic Inefficiency:Excessive protectionism may decrease competitiveness and increase the cost of production and weigh on the consumers.
• Fiscal Constraints: Large industrial subsidies can be a heavy burden on public finances, as was the case with India’s experience before 1991.
• Balancing welfare and security:Over emphasis on security may divert resources from health, education and social development.
• Global Trade Rules: Any strategic trade restrictions should be consistent with WTO obligations and international commitments.
• Coordination problems:Efficient execution requires seamless coordination across different ministries, regulatory bodies and state governments.

Related Efforts/Initiatives of India

• Production Linked Incentive (PLI) Schemefor strategic manufacturing sectors
• Atmanirbhar Bharatto build domestic capability.
• National Logistics Policyto enhance supply chain efficiency
• The National Master Planfor Integrated Infrastructure Development named PM Gati Shakti.
• Semicon India Programmefor semiconductor manufacturing.
• National Mission on Green Hydrogen for Energy Security
• Supply Chain Resilience Initiative (SCRI)with Japan and Australia.
• Bilateral FTAs with UAE, Australia and negotiations with UK and EU, Oman and GCC.
• Screening mechanisms for FDI in sensitive sectors to protect strategic interests
• Enhancing secure digital governance through Digital Public Infrastructure (DPI)

Way Forward: Fortifying India’s Geoeconomic Strategy

• Create a National Economic Security Strategythat links economic growth to national security goals.
• Growing public and private R&D investments, especially in critical and emerging technologies.
• Diversify supply chains, build strategic reserves, and work with trusted partners abroad to build resilient supply chains.
• Strengthen institutional coordination of the economic, technological, diplomatic and security agencies.
• Develop innovative and competitive industrial policies, rather than prolonged protectionism.
• Increase high-quality FTAs with market access for Indian exports.
• Strengthen economic diplomacy to obtain vital resources, technology partnerships and resilient value chains.
• Ensure that economic security measures are consistent with principles of efficiency, productivity and inclusive development.

Conclusion

The emerging global order is increasingly defined by geoeconomics rather than geopolitics alone. Economic strength, technological leadership, resilient supply chains, and secure access to resources have become the foundations of national power.

For India, a comprehensive geoeconomic strategy is essential to:

• Achieve strategic autonomy,
• Build economic resilience,
• Enhance global competitiveness,
• Safeguard national security,
• Realize the vision of Viksit Bharat 2047.

INTERNATIONAL RELATIONS

2. India and others are building a ‘G Minus Two’ for Indo-Pacific

Context: Prime Minister Narendra Modi’s recent diplomatic outreach to Indonesia, Australia, and New Zealand, along with the visits of the Japanese Prime Minister and the South Korean President to India, signals the emergence of a new strategic pattern in the Indo-Pacific.

• This evolving framework is increasingly being described as “G Minus Two” (G-2) — a strategy through which major Asian middle powers seek to expand strategic space without becoming dependent on either the United States or China.
• The concept reflects the changing geopolitical realities of Asia, where countries are attempting to maintain economic engagement with China while simultaneously strengthening security and strategic cooperation with like-minded partners.

What is “G Minus Two”?

• The term “G Minus Two” refers to an emerging network of partnerships among major Asian powers that operates outside the traditional notion of a US-China dominated Asian order.
• It seeks to create an Indo-Pacific architecture where regional countries cooperate among themselves without waiting for either Washington or Beijing to shape the regional agenda.

Origin of the Concept

For many years, Indian strategists have been uncomfortable with the possibility of a US-China condominium dominating Asian affairs.

This concern intensified because:

• Several American policymakers occasionally referred to a possible US-China G2 arrangement.
• Some sections within the US political establishment showed discomfort with the broader Indo-Pacific concept, preferring a narrower Asia-Pacific framework.
• China increasingly sought to position itself as the central power in Asia through initiatives such as:
  • Belt and Road Initiative (BRI),
  • Regional Comprehensive Economic Partnership (RCEP),
  • Economic dependence through supply chains.

These developments encouraged regional powers to create a broader web of strategic relationships.

Why This Shift is Happening?

• Trade interdependence with China cannot be wished away: India’s trade with China stands near $150 billion, while Japan and South Korea each cross $300 billion, and ASEAN’s trade with China has crossed a trillion dollars. Complete decoupling is simply unrealistic.
• The real goal is de-risking, not decoupling: Countries want to reduce the chance of China weaponising this interdependence, whether through export curbs or supply disruptions, without pretending they can walk away from the relationship entirely.
• Trump’s unpredictability adds urgency: Tariff wars and shifting US posture have pushed Asian partners to hedge by strengthening ties with each other, rather than depending solely on the US’s consistency.

What Each Partner Brings India?

• Japan: Advanced manufacturing, defence technology and infrastructure financing.
• South Korea: Strength in shipbuilding, semiconductors and defence production.
• Australia: A critical partner for minerals, maritime security and stability in the eastern Indian Ocean.
• Indonesia: The geographic and strategic heart of the Indo-Pacific, sitting at the meeting point of two oceans, making deeper India Indonesia cooperation a long overdue link in the regional picture.
• New Zealand: A smaller but useful partner in trade, education and select technologies. 

Significance for India

• More diplomatic room: India is no longer boxed into choosing between US and China; it can build independent value with the rest of Asia.
• Defence industrial gains: Working with technologically advanced Asian militaries can feed directly into India’s own defence manufacturing ambitions.
• Strengthened regional credibility: Deeper security and economic transfers to Southeast Asian partners help India position itself as a dependable regional security provider, not just a recipient of partnerships.
• Greater multilateral weight: Stronger bilateral relationships with major Asian industrial powers can, over time, support India’s case for a larger role in global institutions.

Challenges/Concerns

• Structural limits of middle power cooperation: However, coordinated, these countries acting together still cannot substitute for either US or Chinese weight in the region; the strategy widens space, it does not create parity.
• Economic interdependence with China remains a real constraint: Even the most security conscious partners cannot easily unwind commercial ties built over decades.
• Success depends on India’s own homework: The value of these partnerships is capped by India’s pace of internal economic reform and defence self-reliance. Summit diplomacy alone cannot substitute for these deeper structural changes.
• Coordination without formal structure has its limits: Since G Minus Two deliberately avoids becoming a treaty bound bloc, it also lacks the binding commitments that a formal alliance would offer, making follow through dependent on sustained political will.

Way Forward

• Convert high level visits and dialogues into concrete, sector specific outcomesin defence co-production, critical minerals and technology.
• Prioritise India’s own economic competitivenessand manufacturing depth, since partnerships can only be as strong as what India brings to the table.
• Use minilateral formats pragmatically, choosing partners for specific complementary strengths rather than symbolic breadth.

Conclusion

• “G Minus Two” marks a quiet but significant shift in India’s Indo-Pacific thinking, away from anxious commentary on US China intentions and toward practical coalition building with capable Asian partners.

But the real test of this framework is not in summit optics but in whether India can match this outward diplomatic energy with the internal economic and defence reforms that needed to make these partnerships genuinely deep and lasting.

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