Indian dilemma affects her geoeconomics

Of late, India found herself on the horns of dilemma. Go with geopolitics or resort to geoeconomics. Put it in other way continue to pally with USA or seek a new beginning with arch rival China. Whatever is the outcome, geoeconomics has become a crucial arbiter.

The Indian experiment continues to foster in two minds. The elites throw the weight around the west, America leading the pack. That demands tying up with the rules based international order (RBIO) as a nuptial thread. But her umbilical connection was, is and continues to be on the side of socialism, non-alignment and Russo-friendliness. Most of her population supports the latter. In the contest between elites and masses, unfortunately the former are winning hands down.

Foreign policy, if it is to be a barometer, shows India aligning more with the western interests rather than with the global south. In fact like Janus India exhibits two faces, one looking at America led west and the other staring down at BRICS, SCO and other paraphernalia. Perhaps the time tested relationship with Russia is sometimes compromised as India plans to hike up her bilateral trade with America to the tune of US$ 500 Billion by 2030.

What fixes India to the western side is that she generates huge remittance income from abroad. In fact India is the largest recipient of remittance income, globally. An estimated US$ 135.5 billion fills her coffer this year alone. Remittance being about 15% of her national income, it is not a toy to play with. A crucial geoeconomics fact was hidden in this figures. Surprisingly, America is the primary source of avowed remittance, pushing Gulf to the second place.

Trump knows the maths. If he bans outgoing remittance to India from USA, that is match over for India. He can also persuade Gulf countries to hire more Pakistani and Bangladeshi labour. In any case, this is trending as Gulf is hesitant to renew existing labour contracts from India and might also dissuade new ones being negotiated.

Oligarchs and elites know their game. India cannot continue to buy Russian oil deep discounted and re-sell refined petroleum at windfall prices. Trump continues to torment India stating umpteenth number of times that he, who got the ceasefire between India and Pakistan. Another arrow in his arsenal is the number of planes India lost in the recent skirmish with Pakistan. He recently blurted out saying India lost seven jets to the chagrin of Indian establishment.

All these years India played on the side of geopolitics. Run with the hare and hunt with the hounds. Now her position is highly compromised. Trump made an astute move putting India on notice that if she continues buying Russian oil, she is in for trouble. On 27 August 2025, a 50% flat rate tariff is imposed on goods exported to America by India.

Now the contest begins whether geopolitics or geoeconomics is the saviour for India. My guess is as good as yours.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist