Representative image. | AI-generation.
India’s economic relations with developed economies focus on high-tech, strategic, and global-scale priorities, such as advanced technologies, large trade targets, and sustainable development. Relations with developing economies emphasize infrastructure, digital inclusion, and sustainability, with India often providing technical expertise. This dual approach underscores India’s expanding role as a global economic leader and a developmental partner.
Introduction
This year, India is expected to continue as the fastest-growing economy in the world and is slated to emerge as the 4th largest global economy, overtaking Japan. In line with its growing economic heft, India has embarked on an intensive agenda of international economic engagement. Numerous inward and outward visits at the head of state / head of government level have taken place since the Government assumed office for its third term in June 2024, with economic issues being a high priority in the joint statements.
A defining feature of the bilateral and multilateral statements is the widening sphere of India’s economic interests, going beyond trade and investments to embrace additional dimensions of cooperation and reflect broader and more ambitious goals. A diverse range of new sectors, new technologies and cooperation for common global challenges characterize the economic component of India’s outward interactions in recent times, imparting greater strategic depth and dynamism to its economic diplomacy.
India’s increasing deployment of economic cooperation to secure its bilateral relations signifies rising confidence in its growth and developmental journey, as well as its desire to share its experiences and learn from other countries. Prime Minister Narendra Modi has stressed leveraging trade, technology and talent for deepening India’s relations with the world.
It is useful to study these documents to understand the overall direction of foreign economic policy and the domestic economic strengths that India is seeking to project overseas.
An overview of bilateral and multilateral documents entered into by India during key inward and outward visits between July 2024 and December 2024 on the website of the Ministry of External Affairs reveals India’s global economic priorities. During this period, interactions, including summit meetings, took place with economies across the development spectrum, including developed economies such as Austria, Australia, Italy and Germany, developing countries such as Guyana, Zambia and Lao, and middle-income economies including Malaysia, Sri Lanka and Vietnam. Certain common strands feature in the documents.
Key areas in which India wishes to deepen its cooperation with partners, other than conventional trade and investments, are outlined below.
Digital Technology
Aligning with advancements in digital technology, cooperation with developed economies is envisaged in advanced and strategic technologies, while with developing economies, foundational digital infrastructure and accessible developmental solutions are prioritised.
In its statements with developed economies, critical and new technologies have received high attention for strategic partnerships. The earlier India-US Initiative on Critical and Emerging Technologies (iCET), now renamed as TRUST, led by the national security advisers of the two countries with the participation of businesses, offered a successful model for such cooperation. Artificial intelligence, Industry 4.0 and smart manufacturing, quantum computing, chip design, semiconductor ecosystem and sectors such as fintech dominate India’s technology outreach. Issues such as cross-border data flows, e-governance, cyber security and interoperability of digital systems have also been discussed with various countries.
The India-Italy Joint Strategic Action Plan 2025-29 in November 2024 includes a section on science, technology, IT, innovation and startups. It seeks to expand cooperation in critical and emerging technologies such as telecom, AI and digitalization of services. Startup cooperation envisages boosting interactions in fintech, edutech, healthcare, logistics and supply chains, agritech and chip design.
Similarly, the joint statement of the 7 th India-Germany inter-governmental consultations stressed technology and innovation. Several of the bilateral statements outlined the forging of closer linkages between industry and academia of the two sides.
On the other hand, India has emphasized the India Stack and digital public infrastructure (DPI) as well as United Payments Interface (UPI) for developing economies. DPI and UPI represent success at scale for India in converging developmental needs with digital technologies, and the country has been keen to share this experience with developing economies. For example, an MoU was signed with Guyana for deployment of a UPI-like payment system. DPI and the digital economy found significant mention in the In the meeting of foreign ministers of India-Brazil-South Africa (IBSA) in September 2024, while India and ASEAN signed a dedicated joint statement on advancing digital transformation at their summit meeting.
UPI cooperation is supporting payments interfaces with countries such as UAE, Sri Lanka, France and Singapore. MoUs have also been signed earlier with various developing countries on sharing India Stack.
Healthcare
In the life sciences and healthcare space, India with the third largest pharmaceuticals industry by volume enjoys recognized global leadership. While healthcare formed a notable component of India’s foreign policy through the time, particularly through initiatives such as e-Arogya Bharati with Africa, its cooperation scope has expanded following Covid-19. The country strategically seeks to project its capabilities in high-tech health solutions, biotechnology, generics and vaccine development. With developed economies, the strategy is to focus on innovation, joint R&D and regulatory alignment to open markets for Indian pharma. In agreements with emerging economies, the focus areas include affordable generics, vaccine supply, medical infrastructure and healthcare capacity-building. A special focus has been accorded to cooperation in traditional medicine.
The IBSA document stressed trilateral and multilateral cooperation on affordable vaccines, therapeutics and other health products as well as traditional medicine.
The 21st ASEAN-India Summit in Lao PDR, October 2024. | ASEAN
The ASEAN-India Summit in October also took up public healthcare cooperation including training, medical technology, vaccine development and production and general and traditional medicine. India has placed recognition of Indian pharmacopoeia in the documents with several countries.
Healthcare found mention in documents with Kuwait, UAE, Spain and Poland, among others, although the exact mode of cooperation was not spelled out.
Sustainable Development
Clean energy and sustainable development have remained important areas of India’s international cooperation over the 21st century; however, in alignment with the emergence of new sectors and priorities, the range of cooperation areas has been significantly extended.
For example, the Indo-German Green and Sustainable Development Partnership delineated a green hydrogen roadmap, sustainable urban mobility, renewable energy investments in third countries, biodiversity, waste management and circular economy, including joint projects in Africa. Innovative solar energy, grid integration, storage and agroecology were also listed. Similarly, with Austria, environmental technology cooperation was envisaged in clean transportation, water management, renewable energy and other fields. The India-Australia Renewable Energy Partnership covers solar PV, green hydrogen, energy storage and skills.
These reflect India’s desire to partner with advanced economies in green hydrogen and energy storage fields through investments and technology sharing. Similarly, with developing economies, the country is looking for partnerships in affordable, localized and scalable climate solutions where it can deploy its capabilities and solutions. India’s earlier initiatives in setting up the International Solar Alliance and Global Biodiversity Alliance have strengthened its global engagement in these sectors.
Labour Mobility
Agreements for welfare and security of workers have been an ongoing effort for the country in nations where Indian workers have traditionally been active such as the Gulf region, Malaysia, etc. In recent agreements, India is leveraging its demographic advantage and aims to expand opportunities for its workers in countries where the workforce is declining.
Migration and mobility agreements have been signed with several countries to facilitate the movement of skilled workers and professionals in high-tech fields, including Japan, Austria, France and the UK. Additionally, skill partnerships are also being taken up to ensure that Indian workers meet the standards of advanced countries. With Australia, Indian STEM graduates are expected to benefit from Australia’s Mobility Arrangement for Talented Early-professionals (MATE) scheme. Germany and India enjoy a migration and mobility partnership agreement and aim to promote skilled migration from India.
Other key cooperation fields that find mention in multiple bilateral and multilateral agreements include startups, critical minerals including mining and technology, Ayurveda and other traditional medicines, tourism, maritime cooperation, polar research, trilateral partnerships, and so on.
What needs to be done ahead
With a widening sphere of India’s economic diplomacy, the concern arises whether India is adequately equipped to deliver tangible outcomes in the many fields that it has delineated - sometimes in passing - in documents signed in conjunction with summit and senior level meetings. Concrete implementation of these areas of cooperation requires a strong convergence of its economic, sectoral and diplomatic expertise. Domestic coordination mechanisms between ministries and departments and various stakeholders including industry and academia, is also necessary. This emerges as a glaring gap in the current scenario, where the lack of alignment means that the proposed strategies yield sub-optimal benefits.
As an example, the joint communique of the 6th session of Zambia-India Joint Permanent Commission stated, “Both sides reviewed and discussed cooperation in the areas of Agriculture, Education, Science & Technology, Energy, Culture, Housing and Urban Development, Finance, Development Partnership, Training Scholarship and Capacity Building, Defence, Mines and Mineral Resources, Transport and Communications, Water Development and Sanitation, Disaster Management Healthcare, Cooperative & SMEs, and Consular issues. Both leaders underscored the need to realize the untapped potential in these important sectors of bilateral cooperation.”
Similarly, the joint statement released during Prime Minister Modi’s visit to Kuwait in December stated that joint working groups were set up on trade, investments, education and skill development, science and technology, and agriculture, adding to the existing ones on health, manpower and hydrocarbons. Cooperation in exploration and production of oil and gas, engineering services, new and renewable energy, healthcare, emerging technologies, e-governance, electronics and IT, food security and others were also mentioned.
As a way forward, India must carefully strategize its bilateral relations with other countries so as to focus on a few key priority areas with specific targets and outcomes.
Two, defining the potential areas of cooperation with greater focus would need to be based on data and analysis of the respective sectors of strength as well as existing gaps, both in India and the partner country. For example, in labour mobility and skill development, different modes of engagement are seen with different countries. India has large worker populations deployed in certain countries, and their security and work conditions are a key priority. With other countries, it seeks to boost labour mobility and movement of natural persons. In some emerging economies, it can provide skill training and capacity building, but with other economies, it wishes to imbibe new training methods and advanced skills. Studying the data on these issues in India and the partner country can provide specific cooperation models.
Three, it is recognized that economic cooperation will continue to expand as India emerges as the third largest global economy within a few years. Therefore, it would be useful to outline the mechanisms of implementing cooperation and define how non-governmental stakeholders can deepen their participation. In the case of industry, India has often established industry forums with other countries where both sides appoint industry members. These forums meet infrequently, usually in conjunction with summit level meetings, and discuss possible areas of cooperation, hurdles to trade and investment, and suggestions for the two governments. Such interactions can be intensified for taking forward the objectives of the governments and developing key ventures. Institutional level linkages such as between research organisations or skill centres can also be strengthened through cooperation platforms that meet regularly to implement identified projects.
Four, bilateral plans of action should be developed with time-bound targets and need to be carefully monitored for course correction whenever required. The India-Germany inter-governmental consultations process can be a model in this regard as this has fostered designated institutional partnerships and yielded significant outcomes. Engagement with Japan and Singapore has also followed a similar methodology. Specific outcome-oriented dashboards should be prioritised as the way forward and progress in relevant areas could be made available to the public.
Finally, diplomatic and sectoral expertise needs to evolve in line with the requirements as spelled out in the statements. There are several ways in which this can be undertaken and different models can be considered for different fields, such as training experts in diplomacy, onboarding sector specialists for specific projects, capacity building of general diplomatic personnel, and so on.
Analysing the recent bilateral and multilateral statements and agreements affirms that India’s economic diplomacy has broadened while reflecting distinct priorities aligned to the capacities and needs of partner nations.
India’s economic relations with developed economies focus on high-tech, strategic, and global-scale priorities, such as advanced technologies, large trade targets, and sustainable development. Relations with developing economies emphasize infrastructure, digital inclusion, and sustainability, with India often providing technical expertise. This dual approach underscores India’s expanding role as a global economic leader and a developmental partner.
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