HTLS 2025: India acting with panache, valour in shaping the new global order

THe domain has suit thomas more higgledy-piggledy than imagined. Francis Fukuyama in 1989 wrote the rule book End of History in the belief that the world was a settled one. It was the post-Cold War era, when liberal democracy and market capitalism were broadly accepted in what he described as the free world. Three decades later, this script has been torn up. The new era is turbulent. Geopolitics is back in the driver’s seat. Climate risk now shapes macroeconomic outcomes. Technology is redrawing power itself. The global order is shifting from universal rules to smaller strategic clubs. Multilateral pluralism is in the past tense. Ten trends define this new world: five describe the shifting global context and five chart out India’s trajectory.First, global growth is stuck near 3%. Advanced economies will grow at 1.4 to 1.6% and emerging markets near 4.2%. India remains the clear outlier. Real GDP rose 8.2% in Q2 FY26, keeping even the most cautious full-year estimates above 7%. Viksit Bharat by 2047 requires about 7.9% real GDP growth. India has previously expanded at 10.1% in nominal dollar terms.Second, recent performances and events strongly suggest that Viksit Bharat 2047 is within reach. The government recently implemented new labour codes. This reform priority strengthens productivity and growth. Taken together, and given the power of compounding, India’s pathway to Viksit Bharat by 2047 becomes entirely achievable.Third, deeper fault lines have reopened sovereign balance sheets. Public debt in advanced economies has crossed 110% of GDP. The United States stands at about 107%. It spends over 3.2% of GDP on interest, which is more than what it spends on defence. Systemic risk have shifted from stock markets to bond markets. Nations must pay for ageing, defence and climate adaptation. Fiscal space is shrinking. Central banks have limited manoeuvrability.Fourth, trade, the engine of globalisation, has lost steam. Merchandise trade growth is set to fall from 2.4% in 2025 to below 1% in 2026. The WTO’s dispute system is frozen. Countries have turned to regional pacts such as USMCA, RCEP, CPTPP, the India-UAE CEPA and the India-EFTA deal. Trade routes are being reshaped by security politics as much as cost and efficiency. Trust has become a trade variable. Mercantilism replaces global trade rules.Fifth, industrial policy has returned with force. The United States has rolled out more than $390 billion through the Inflation Reduction Act and the CHIPS Act. Europe is widening state-aid rules and testing carbon-border levies. China continues its long-standing model of credit-fuelled capacity and export pushes. The tension is this: China’s factories remain oversized, overproducing while their domestic demand is fatigued. Its deflationary consequences spill into the global economy.The numbers are stark. Chinese solar companies lost more than $40 billion in 2024. Cumulative losses are near $60 billion. Module prices have fallen 45 to 55% since 2023. Steel plants have upgraded 80% of their capacity even as construction at home stalls. EV exports are up 70 to 90% in 2024 and 2025. Shipments are being redirected to Europe and Southeast Asia. The world faces thinner margins and a more nervous industrial West.Taiwan, an exemplary example of industrial policy, is now the world’s most crucial choke point. More than 60% of global semiconductors come from there, along with over 90% of cutting-edge chips. Taiwan’s current account surplus this year was 16% of GDP. Its financial system is tightly woven into global markets. Any disruption in the Taiwan Strait would shake supply chains in ways the pandemic only hinted at. The world has no fallback for Taiwan.This churn of global fragmentation sets the stage for India. The opportunity is real if the country moves with intent and pace. The fundamentals are the strongest in a generation. Gross NPAs are about 2.6%. Net non-performing assets (NPAs) of banks are below 0.6%. FDI reached $70.9 billion in FY24 and could rise to $80 to $90 billion this year. Central government capital expenditure has crossed 3.4% of GDP. Yet constraints persist. The corporate bond market remains stuck at 18% of GDP. Manufacturing stays near 17%. Female labour participation is still too low for an economy that wants scale. India’s question is not whether it has an opening. It is whether it can convert macro stability into structural lift.Becoming a developed economy by 2047 is a national mission. Growth must stay above 8%. Capital markets must deepen. Institutions must strengthen. Human capital must improve sharply. It must balance between growth, fiscal responsibility and climate goals. Five trends will shape India’s opportunities and risks ahead.One, supply-chain realignment is the moment India cannot waste. About 14 to 15% of Apple’s global iPhones are now built in India. Estimates point to 25% by 2027. India must build full-stack capacity in testing, packaging and eventually chip fabrication. Supply chains reward reliability. India must become synonymous with it.Two, India must export value, not just volume. Electronics and pharmaceuticals, now at roughly $25 to $30 billion each, must double. The next tier of export strength must include defence manufacturing, speciality chemicals, clean-tech components and advanced digital services.Three, domestic capital markets need urgency. A corporate bond market at 18% of GDP cannot finance an infrastructure and energy-transition bill that runs into trillions. India must mobilise long-term domestic capital. Pension funds, insurance pools and sovereign pools must grow deeper and more confident. Large global players are entering Indian markets, raising the RBI’s regulatory responsibilities. Financial stability will require sharper tools and faster reflexes.Four, frontier technology must become a national priority. Global AI and semiconductor spending exceeds $400 billion each year. India’s R&D investment is about 0.7% of GDP. It must move toward 2%. The country must place hard bets on AI, advanced manufacturing, hydrogen, battery technologies and critical minerals. Missing this wave would be costlier than missing earlier ones.Five, India must unlock its demographic dividend with a focus on jobs and labour. Admiration is not enough. Action matters. The extraordinary panache of Prime Minister Narendra Modi in implementing the delayed labour reforms opens new vistas, enhances competitive efficiency and unlocks job markets. Harnessing skills can unlock this demographic dividend. The Ministry of Labour and Employment has announced a strategic plan to raise India’s Female Labour Force Participation Rate (FLFPR) from 41.7% to 55% by 2030. The East Asian average is above 60%. This gap is not a social statistic. Raising participation will enlarge GDP, broaden opportunity and make growth more resilient.Finally, prosperity and security must move in step. Kashmir has stabilised when compared to the past. The Indo-Pacific is more militarised. India’s strong economy is the bedrock of credible power.This is not an age of collapse. It is an age of compression. Fiscal space is narrow. Technology is decisive. Yet it is also an age of possibility. Nations that adapt will thrive. India must act with audacity and panache, a Modi-characteristic undoubtedly. This is not the end but the beginning of history. India is shaping it in multiple ways. The Greeks believed that the winds and the tide favour the brave. This is India’s brave new world.NK Singh is president, Institute of Economic Growth, and chairman, Fifteenth Finance Commission. The views expressed are personal