India's trade and foreign policy in a changing world order

US President Donald Trump’s return to the White House, and the ripple effects that followed, is perhaps the most dramatic force reshaping global trade and foreign policy in recent years. It brought together top diplomats of the usually-divided Japan, China and South Korea and had Indian Prime Minister Narendra Modi rubbing shoulders with Russian leader Vladimir Putin and Chinese President Xi Jinping.

These shifts have forced India to recalibrate its own trade and foreign policy as well. Here's a look at how India’s trade and foreign policy has adapted to the changing geopolitical currents and demonstrated its prowess in the last decade. 

Security and counter-terrorism 

India started retaliating to Pakistan's repeated attacks on Indian soil. In 2016, India carried out tactful surgical strikes on terror camps in Pakistan-occupied Kashmir in response to the terror attacks launched in Uri where India lost 18 Indian defence personnel.

It also countered the Pulwama terror attack effectively by conducting air strikes in terror camps in Balakot. More recently, when the terror attack in Pahalgam killed 26 civilians in April 2025, India launched Operation Sindoor and carried out precision attacks against terrorist infrastructure in Pakistan. In the months that followed, the Indian government and members of the Parliament have also rallied support from global allies to condemn the terror attack and clearly state that Pakistan was in the wrong. 

Leader of the global south 

That the Global South should have a fairer say and a seat at the world-leadership table has long been talked about. India has stepped up by voicing concerns of the developing world before several international fora. 

In September 2023, India successfully hosted the G20 summit and ensured a communique despite differences between several participating nations over the Russia-Ukraine war. It also ensured that the African Union was included as a full member of G20 during India’s presidency.   

India had also convened the first Voice of Global South Summit in January 2023 to draw international attention on priorities, perspectives, and concerns of the developing world. The summit featured eight ministerial-level thematic segments dedicated to addressing the most pressing concerns of the developing world. 

Also Read: Pak PM Shehbaz Sharif to meet Donald Trump on sidelines of UNGA 

More practically, India played a key role in meeting pharmaceutical demands of the world including wealthy economies like the US during the coronavirus pandemic. According to Union Health Minister Mansukh Mandaviya, the country sent medicine, vaccines, and other pharmaceuticals to over 150 countries without raising the price nor compromising on quality. 

Drug and pharmaceutical production increased from $15.07 in 2013-14 to $27.85 in 2023-24, government data shows. 

Defence ties strengthened

Deepening of strategic relations has also been exemplified by increasing defense ties with several countries. Since 2015, the US has authorized India over $3 billion in defense articles and licensed the export of defense equipment, services, and related manufacturing technologies controlled under the 21 categories of the US Munitions List (USML).

Among American defense equipment, India already uses the C-130J Super Hercules, C-17 Globemaster III, P-8I Poseidon aircraft, CH-47F Chinooks, MH-60R Seahawks, AH-64E Apaches, Harpoon anti-ship missiles, M777 howitzers, and MQ-9Bs.

Defence cooperation with Russia involves ongoing projects like the licensed production of T-90 tanks and the Sukhoi-30-MKI aircraft, supply of MiG-29-K aircraft and Kamov-31, the production of the Brahmos cruise and the joint Venture Indo-Russia Rifles Private Limited (IRRPL) for production of AK-203 rifles in India.

India has also deepened defence cooperation with Singapore, especially in emerging areas such as quantum computing, artificial intelligence (AI), automation, and unmanned vessels.

Multi-pronged approach to trade ties

The Indian government maintains that national interest is the core driver of its trade policy. In a deeply divided geopolitical scenario, India has maintained cordial relations with several sparring countries while advocating for global peace and development. This is evident in India’s stand on the Russia-Ukraine war and the Israel-Palestine conflict.

However, the US imposing a hefty 50% tariff including 25% penalty for purchasing Russian oil, is one of the biggest challenges the country has faced in global trade. Even so, US President Donald Trump came around to admit last week that India is their “biggest customer” and that enforcing the tariff was “not an easy thing to do.” 

PM Modi’s recent visit to the SCO summit in China, along with India’s engagement with the Russia-led Eurasian Economic Union, highlights the country’s efforts to expand trade into new geographies to benefit exporters and boost employment. The broader data remain positive through FY 2023-24: exports rose more than 67%, from $466.22 billion in FY 2013-14 to $778.21 billion in FY 2023-24.

Rising export competitiveness was accompanied by several trade deals with developed economies, giving Indian exporters greater access to foreign markets while ensuring a steady supply of key intermediate products and finished goods for the domestic economy. 

In the past few years, India has signed Free Trade Agreements (FTAs) with Mauritius (2021), the UAE and Australia (2022), and the UK (2025). It is negotiating bilateral trade agreements (BTAs) with the United States, the European Union, Oman, Chile, New Zealand, and Sri Lanka, discussing an upgraded trade agreement with Australia, and reviewing existing arrangements with the ASEAN bloc and South Korea.

The ongoing trade talks with the United States remain the most closely watched.