India's strategic location in a world that is becoming more interconnected has allowed it to play a bigger role in the global economy. India, one of the fastest-growing major economies, is currently reevaluating its international relations, trade strategy, and industrial policies to create a more stable economic base that can compete on a global scale.

India has responded to the rising tide of protectionism and inescapable adjustments in global supply chains by learning from the past and adapting to new global realities with self-reliance. The “Make in India” and “Atmanirbhar Bharat” projects are promoting indigenous production, international investment, and technological advancement.

This strategy is consistent with a broader global trend in which governments, particularly those that have continued to suffer economically, such as India, prioritize industrial policy in the aim of developing resilience and achieving long-term economic stability.

Recently, the European Union and China modified their policies to encourage self-sufficiency, resilience in difficult situations, and technical advancement. These changes are substantial. While remaining committed to its fundamental economic aims, India has adjusted its policies to reflect the global circumstances. To ensure its role in global value chains, India must pursue changes that cut red tape and encourage foreign direct investment.

As a result, India has increased its ties with other countries. Furthermore, it strengthens ties with local organizations such as BRIC nations in the Caribbean, ASEAN countries, and Australia. These partnerships are critical because India is a vital actor in developing an Indo- Pacific strategy that ensures economic and geopolitical stability.

The India-EU Trade and Technology Council and other collaborative frameworks are instrumental in driving technological innovation and investment.

However, India still faces challenges in addressing infrastructure development, labor market competition and regulatory efficiency. It’s crucial for India to remove these barriers for its advancement and emergence in the upcoming fast paced technologies like artificial intelligence, robotic technology, and biotechnology, and sustain its growth in the longer run, but it still faces significant challenges with its economic growth. This article explores the changes occurring in India's economic landscape and how these industrial policies, trade strategies as well as international relations may contribute to its increasing prominence in the world economy.

Industrial policy is once again gaining attention as a key lever for economic growth and resilience in major economies around the world. The global economic landscape is shifting toward prioritizing self-reliance, technological advancement, and supply chain security in response to economic shocks such as the COVID-19 pandemic and geopolitical tensions

(Mazzucato 2021)[1]. The United States introduced initiatives such as chips and science laws to revive the internal semiconductor, reduced dependence on foreign suppliers, and solved the problem of national security (law on chips and science 2022).[2]

China will continue the policy in China in 2025. It aims to expand national abilities in the higher education industry, such as artificial intelligence, aerospace, and electric vehicles (CHINA State Council 2015)[3]. The measure aims to reduce China's reliance on Western technology and strengthen its manufacturing industry.

The European Union has also adopted an industrial strategy with a focus on sustainability, and the European Green Deal has made significant investments in green technologies and renewable energy (European Commission 2019).[4]

Protectionist measures such as tariffs, subsidies, and reshoring efforts have gained further ground, reflecting a broader trend toward economic nationalism. Countries around the world are increasingly prioritizing economic security by reducing their dependence on external suppliers and securing domestic production capacities (Rodrik 2023)[5]. These strategies are changing global trade patterns, creating both opportunities and challenges for emerging economies like India.

India has taken important measures to strengthen industrial base and reduce imports. The Initiative "Make in India" released in 2014 promote foreign investment (PII) directly to major sectors such as defense, electronic devices, and car production (Indian government 2014)[6]. We aim to position India as a global production center. The initiative has led to significant IED entries, in particular in the manufacture of electronics, where companies like Apple and Samsung have expanded their production bases in India (Sharma 2023).[7]

In response to the vulnerabilities exposed by the COVVI-19 pandemic, the Indian government introduced "Atmanirbhar Bharat" (autonomous India) in 2020. This campaign focuses on promoting domestic production in important sector, including pharmaceuticals, defense, and technology to increase economic resilience (Ministry of Finance 2020).[8] For example, Indian pharmaceuticals have become worldwide with the ability of vaccine production and generic drug manufacturing (Mukherjee 2021)[9]. Despite these efforts, problems remain regulatory inefficiencies, inadequate infrastructure, and labor market constraints continue to hinder industry growth (Kern 2021)[10]. Compared to China, the Indian production ecosystem is less integrated into the global supply chains of technical and bureaucratic obstacles (Singh 2022)[11]. In addition, high energy costs and the complexity of land acquisition is still slowed in industrial development (World Bank 2023)[12]. To solve these problems, India has presented a production stimulus scheme (PLI). This provides economic incentives to companies that expand domestic production (SINGH 2022). These incentives have attracted the recycled energy source electronic devices, automobiles, and sector investments, which helps India to compete with Southeast Asia established production centers (Banerjee 2023)[13]. However, the effectiveness of these measures will depend on improving infrastructure and reducing bureaucratic delays (World Bank 2023).

The resurgence of industrial policies and the rise of protectionism are creating new challenges for the World Trade Organization (WTO). As an institution established to promote free trade and regulate international trade agreements, the WTO now faces challenges in addressing the increasing use of industrial policies that prioritize national economic interests (WTO 2023)[14]. Countries such as the United States and China are engaged in trade disputes over subsidies and tariffs, further complicating the governance of global trade (Rodrik 2023).

India has played a key role in WTO negotiations, particularly in promoting fair trade policies that protect developing countries. India has argued for greater flexibility in implementing industrial policies such as agricultural subsidies and technology transfer, citing the need for policy space to ensure food security and economic stability (Vikram 2022)[15]. However, the WTO's ability to regulate industrial policies remains a contentious issue as powerful economic powers continue to pursue self-reliance strategies that challenge established trade norms (WTO 2023). Moreover, India’s trade policy is evolving to keep up with the changing global landscape: China is strengthening its engagement with regional blocs such as BRICS and ASEAN, while deepening its strategic economic partnerships with the United States, Japan, and Australia (Banerjee 2023). These alliances play a key role in India’s Indo-Pacific strategy, balancing economic cooperation with geopolitical considerations (Mukherjee, 2021).

Global trade dynamics will also continue to change as industrial policies gain importance around the world. While India has made great strides in industrial development, addressing regulatory inefficiencies and infrastructure shortfalls remains critical to sustaining long-term growth. The effectiveness of India's industrial policy will ultimately depend on how well it aligns with global trade norms while fostering economic resilience and innovation.

India's geopolitical strategy aims to maintain a balance between the United States and China while securing its interests in the Indo-Pacific region. India works with the United States, Japan and Australia under the Quadrilateral Security Dialogue (Quad) to counter growing Chinese influence.

These partnerships cover infrastructure development, maritime security and technology exchange. The Quad has strengthened its engagement through joint military exercises, supply chain resilience initiatives and joint cybersecurity efforts. According to the Ministry of External Affairs, India's participation in endeavors such as the Malabar naval exercise demonstrates India's commitment to regional security and freedom of navigation in the Indo-Pacific region.[16]

The relationship between India and China is complex and characterized by economic interdependence and territorial disputes. While China remains one of India's major trading partners, border tensions and strategic competition have forced India to diversify its economic and military alliances. The 2020 Galwan Valley conflict has significantly changed the nature of India-China relations, prompting India to adopt a cautious stance toward Beijing. Krishnan (2023) highlights how the Galwan Valley conflict has changed India's military and diplomatic strategy towards China.[17] In response, India has tightened restrictions on Chinese investment and increased oversight of Chinese technology companies operating in its market[18]. The Indian government has also stressed the need for self-reliance in key sectors such as semiconductors, pharmaceuticals and defense manufacturing.[19]

To counter China's Belt and Road Initiative (BRI), India is working with Japan to increase its engagement in alternative connectivity projects such as the Asia-Africa Growth Corridor (AAGC). According to the Japan External Trade Organization (2023)[20], the AAGC aims to promote sustainable infrastructure development in Africa and the Indian Ocean region.

According to the European Commission 2023, India is also involved in the European Union's Global Gateway Initiative to provide an alternative to China's BRI by financing critical infrastructure in developing countries[21]. Additionally, India's participation in initiatives such as the Indo-Pacific Economic Framework (IPEF) underscores its commitment to regional economic integration and security cooperation. Launched in 2022, IPEF aims to bring together major economies in the Indo-Pacific region to strengthen trade, supply chain resilience, the clean energy transition, and anti-corruption efforts mentioned as per the USTR report[22]. India’s selective participation in the trade pillar of IPEF reflects its cautious approach to international trade agreements while prioritizing domestic industrial growth.[23]

India is an active participant in regional and international blocs such as BRICS (Brazil, Russia, India, China and South Africa) and ASEAN (Association of Southeast Asian Nations), which serve as a platform for economic cooperation and alternative financial institutions such as the New Development Bank[24].[25] However, internal divisions among the BRICS countries limit their effectiveness as a unified economic force[26].

The Russia-Ukraine conflict further complicates BRICS dynamics, with India carefully balancing its ties with Moscow while maintaining a strategic partnership with its Western allies[27].

On the other hand, ASEAN offers India an opportunity to deepen trade and investment ties in Southeast Asia. The India-ASEAN Free Trade Agreement has strengthened economic ties, but challenges such as trade imbalances and regulatory barriers remain[28].[29]

India’s Act East policy aims to strengthen diplomatic and economic engagement with ASEAN countries, with a focus on infrastructure development, collaboration in the digital economy, and regional connectivity projects such as the India-Myanmar-Thailand Trilateral Highway[30].

India and the European Union (EU) have strengthened cooperation through the India-EU Trade and Technology Council, an initiative aimed at enhancing cooperation in the areas of digital economy, green technology and trade rules. The EU is India's third largest trading partner and ongoing negotiations on a free trade agreement (FTA)[31] could further strengthen economic ties[32]. The proposed FTA aims to remove trade barriers, enhance market access for Indian exporters and create a framework for sustainable trade practices[33].

The India-EU partnership has expanded to include important areas such as data governance, artificial intelligence and cybersecurity[34].

The two entities have initiated dialogues to align digital regulatory frameworks to facilitate smoother cross-border data flows while ensuring data protection and privacy[35]. India's growing expertise in fintech and digital payments is attracting European investment, leading to joint ventures in financial technology solutions[36].

Green technology and sustainable development play a central role in India-EU cooperation[37]. The European Green Deal has paved the way for enhanced cooperation in the areas of renewable energy, electric vehicles and sustainable infrastructure development[38].

India's National Hydrogen Mission works to align with the EU's carbon reduction targets by encouraging joint research and development of hydrogen energy solutions[39].

Additionally, India and the EU have launched a program to promote circular economy initiatives aimed at improving waste management practices and increasing resource efficiency[40].

As geopolitical tensions change the dynamics of global trade, India's strategic partnerships with the EU, Quad, ASEAN and BRICS play a key role in ensuring economic security and sustainable growth[41].

The strengthening of diplomatic relations and the use of trade agreements are important for India to navigate global order development while maintaining strategic autonomy.

India already had introduced a number of significant economic reforms that aimed at the improvement of the business environment and attraction of foreign investment. Improving the business environment and attracting foreign investment center India's efforts toward strengthening its integration into GVCs and toward sustainable economic growth.

Some of the most critical reforms include GST, IBC, various labors law reformations, and so on. The initiatives helped India's regulations framework become the game-changer, reducing doing business complexity in the country with the ease with which domestic investments and foreign can be made easier.

The Goods and Services Tax has been implemented from 2017, thereby replacing an indirect tax system with a unified structure. GST is expected to reduce the transaction cost, enhance greater compliance by business entities, and simplify the process of taxation. It will also enhance interstate trade by making it more efficient and transparent. GST will combine the multiple taxes so that it becomes less cumbersome to operate and make more competitive conditions to both domestic as well as international businesses. However, the idea of TPS is associated with technical infrastructure and also with compliance requirements by small and medium-sized enterprises.

The bankruptcy and bankruptcy laws (IBC) introduced in 2016 provide structures to solve important bankruptcy and bankruptcy to maintain financial stability and investors' trust. IBC has helped lenders improve recovery rates and reduce the burden of non-performing assets, which was a major issue for the banking industry.

The norms have been of greater attractiveness to the foreign investor, increased predictability in business operations, and the risk of asset write-offs lowered. India has also undertaken the reforms in labor law to address the long-standing issues in the labor market. For example, more flexibility in the labor market is promoted and there is less of a regulatory burden on businesses with the Industrial Relations Act and Occupational Safety, Health and Working Conditions Act. Employment in the formal sector is facilitated. These are labor law reforms that intend to make India's labor laws world-class. However, they have faced strong criticism from unions and state governments, which want the rights of workers to be strengthened.

These economic reforms have helped India significantly for its rise in the Ease of Doing Business Index as ranked by the World Bank-India jumped from 130th position in 2017 to 63rd in 2020.

It has been widely acknowledged that such progress has come about because India has made effort to make doing business more facilitative.

These reforms are hoped to attract greater FDI, push industrial growth, and make India a more competitive entity in the international arena.

Despite these changes, there are still problems. Business operations are hampered by bureaucratic inefficiencies and red tape. In most areas, the long process of approvals and complex regulatory frameworks continue to burden the businesses' operations. Problems with land acquisition continue to be one of the biggest hindrances to infrastructure projects. The delays experienced in obtaining industrial permits have caused anxiety for foreign investors.

Moreover, the absence of clear policies in many Indian states leads to a business environment that is broken and thus does not allow proper management of companies in the whole of India.

Furthermore, the inefficiency of corruption and regulation continues to maintain the risk of the limit of possibility of full integration into the Indian global value chain.

Indian integration into GVC is a progressive process, and the country achieves steady progress in some areas such as information technology, pharmaceuticals, and textiles. However, crucial issues remain, mainly in the infrastructural field, cost of labor, and the logistics of the supply chain. All these factors hamper India's capability to construct effective production networks that are needed to fully integrate into GVCs.

Infrastructure is one of the major deterrents for India's integration into GVCs. Indeed, India has gone a long way in such areas, but there's much to be done still in transport, logistics, and energy infrastructures. India has much greater logistics costs than other countries, owing to insufficient transportation networks and congested ports, as well as weak warehousing infrastructure. High logistics expenses enhance enterprises' production costs and reduce India's competitiveness in the global market. The challenge of fragmentation in Indian supply chains is brought about by factors like incoherent regulatory frameworks and low connection between major sectors, which worsen this task.

Labor cost in the global value chain is another factor impeding competitiveness for India. It is gifted with a high labor force that is abundantly available at a relatively low cost. Due to the variations in wage and skills, however, it is difficult to create a seamless and effective manufacturing network. To some extent, the labor laws of India, though reformed during recent years, are still quite rigid and because of problems like strikes by labor unions and political interference in labor-related matters, dislocate production. These may prove to be serious competition for India in the low-cost manufacturing sector of China, Bangladesh, and Vietnam.

However, with these problems India has great scope to be the ideal hub of high value-added industries in GVCs. The Indian pharmaceuticals sector is one of the largest in the world and the country provides a major share of generic medicines all over the world. Along with this, the IT and BPO sectors have also worked to a great extent to keep India at the top for software services, IT outsourcing, and digital solutions; the Indian automobile sector has vast growth with Indian automobile manufacturers such as Tata Motors and Mahindra & Mahindra increasing its share in the global market. PLI stands for PLI, which is an Indian government stimulus scheme initiated during the year 2020 for building up local production with helping domestic electronic devices, solar panels, automobiles, and more pharmaceutical products. This initiative provides incentives for companies manufacturing locally; it encourages foreign as well as local companies to invest in Indian manufacturing facilities. This scheme is part of India's overall strategy of making the country a global leader in supply chain and drastically reducing imports.

Except for manufacturing, the services sector happens to be an enormous opportunity that India can relate to. Already, India is a world leader in IT services and outsourcing and companies such as Infosys, Tata Consultation Services (TCS) and Wipro dominate the world market. As more and more countries drift to digital and technological savings, India can enhance its role in high-tech GVC, using its forces in software development, cloud computing, analysts of data and cybersecurity.

This potential can also lie in becoming a future leader in many emerging technologies- including AI, robotics, and biotechnology. Integration of India with global value chains would open many doors for immense opportunities in improving the technological development capability of the country, for foreign investment as well as developing India's strength for global competitive purposes.

Therefore, the Indian government periodically launches R&D programs in new fields. The National AI Strategy, for example, lays out a broad roadmap for developing and deploying AI technology in fields including health, agriculture, and education. The Government of India promotes the use of AI in all these sectors in a way which leads to innovation and efficiency and will make India an important global player in AI-based solutions.

Indian biotech is gaining popularity worldwide also. The Serum Institute of India and Bharat Biotech have been at the head of the vaccine production front, especially in the wake of the COVID-19 pandemic. These organizations supply vaccines to numerous other countries in the world. This indicates that India is playing an increasingly important role in the global biotechnology value chain.

The Indian government has been working to improve biotechnology infrastructure and encourage the private sector to participate in research and development, which will increase India's strengths in this area.

The IT sector is still a very significant part of India's treasure globally. The country has a large, highly qualified workforce in software development, data analytics, cloud computing, and digital services. Infosys, Wipro, and TCS are global leaders in providing IT services to clients in industries ranging from banking, healthcare, and retail. India will be in a unique position to take a larger bite out of the global digital economy because of its leadership position in IT services.

The other area of growth is India's focus on green technologies like solar power, electric mobility, and sustainable infrastructure. The National Hydrogen Mission by the government and efforts in promoting renewable energy are in sync with global trends on sustainable development and environmental responsibility. Investment in green technologies would position India at the forefront of the global clean energy value chain.

Realization of these gains would necessitate the further improvement of the innovation ecosystem for India through investments in research and development, support to public- private partnerships, and creation of an enabling environment for start-ups and entrepreneurs.

Better coordination among the government agencies, academia, and private sector would be critical for India to become technologically advanced to be effective in global value chains.

India's ability to reconcile internal aims such as economic growth, social development, and technological innovation with its global ambitions will be critical in determining whether it becomes a power in an increasingly interdependent world. As globalization accelerates, India must prioritize its own goals while also aligning its ambition of becoming a larger player in global geopolitics with increased influence in international diplomacy, commerce, economic alliances, and security. And the successful management of the balance will determine whether India can develop both within and outside its borders. One of the most important factors in strengthening India's position in the world is a solution to internal structural issues. These include improvement of management efficiency, elimination of inequality, and improvement of infrastructure. Solving these problems can create an attractive and prosperous environment for foreign investment and international cooperation.

India's position in the global market would improve if economic changes were centered on efficiency and technological adaption. This is where innovation comes into play, as the component that can propel India to the forefront of the global economy. Indeed, with tremendous expansion in its tech industry and a plethora of competent labor, India is making rapid progress in fields such as artificial intelligence, renewable energy, and biotechnology.

Fostering an innovative culture, investing in R&D, and improving education and skill development would help India gradually transition from a labor-intensive economy to one driven by knowledge and advanced technology, assuring long-term growth and global competitiveness.

The most significant feature of India's international policy is to strengthen its worldwide partnerships. With its expanding economic and military might, India can work with existing global powers, regional players, and emerging economies. Such agreements not only help India improve its diplomatic and economic clout, but also pave the way for cooperation on some of the world's most pressing challenges, including climate change, security, and trade.

Engaging with multilateral institutions and strategically forming alliances are the ways for India to stretch its global outreach and become an important player in the emerging order of the international system.

India's ability to deal with both internal challenges and external ambitions will define its position in the world. The correct combination of local prosperity and foreign involvement would be required to define India's place in a changing global context. If India can successfully handle these complications, it will be well positioned to emerge as a key player in global affairs in the coming years.