Beneath its professed neutrality, though, India has begun pivoting westward. This has less to do with Russia, where India has longstanding ties, than with China, which both India and the West increasingly see as a principal adversary.<\/p>\n\n\n\n
This pivot is visible in India\u2019s closer security cooperation with Australia, Japan and the U.S. in the so-called Quad<\/a>. Potentially as important, the pivot is also showing up in trade policy.<\/p>\n\n\n\n India\u2019s trade barriers have long been among the highest of major economies. Its average \u201cmost favored nation\u201d applied tariff in 2021 stood at 18.3%, one of the highest among major economies. That\u2019s actually up from 2014, a result of Mr. Modi\u2019s efforts to encourage domestic and foreign companies to manufacture more in India.<\/p>\n\n\n\n Yet, while keeping its MFN tariffs high, India since 2021 has embarked on a series of negotiations to reduce tariffs, quotas and other barriers with selected partners. Last year, free-trade deals with the United Arab Emirates and with Australia came into force, the first such deals in roughly a decade.<\/p>\n\n\n\n Negotiations on deals with the U.K., Canada and the European Union are all well advanced. In these talks, India has typically sought more access for its professional services while partners have pursued more access for agricultural and manufactured products.<\/p>\n\n\n\n The high MFN tariff is aimed at \u201cnontransparent economies who are dumping really low-quality, substandard goods at really low prices, which is hurting the Indian economy and Indian manufacturing,\u201d Piyush Goyal, India\u2019s minister of commerce and industry, said in an interview, in a reference to China. \u201cThe tariffs are not meant to be a detriment, ideally, to\u2026Europe or America or Canada or Japan or Korea. We are looking at having more trading relationships, bilaterally or collectively, with the developed world with whom we want more and more open borders.\u201d<\/p>\n\n\n\n In other words, India wants more protection from China, and freer trade with everyone else. That\u2019s a lot like the U.S., except India starts with high barriers and is lowering them for friends while the U.S. starts with low barriers and is raising them on China. It is a more selective model of free trade than the universal model idealized since the early 1990s.<\/p>\n\n\n\n Trade advocates, often disappointed by India in the past, are cautious about this latest opening. \u201cIt is definitely a positive step by India,\u201d said Chad Bown of the Peterson Institute for International Economics. \u201cThe question is, how far are they willing to go?\u201d<\/p>\n\n\n\n The deals to date still spare many sectors deemed sensitive by India. Its pact with Australia grants duty-free access to 70% of Indian tariff lines after 10 years. Free-trade deals typically cover 95% to 98% of tariff lines, Mr. Bown said.<\/p>\n\n\n\n But, as with Mr. Modi\u2019s domestic reforms<\/a>, his external liberalization needs to be judged relative to India\u2019s traditions, in which nonalignment and protectionism were virtually hard-wired. During the movement for independence from the U.K. in the early 1900s, Indians would boycott British imports in favor of homemade products, or Swadeshi. Jawaharlal Nehru, India\u2019s first prime minister, pursued a policy of import substitution under which imports routinely required licenses.<\/p>\n\n\n\n India began to dismantle the \u201clicense raj\u201d in the early 1990s. Still, India found its access to foreign markets compromised as the U.S. and Europe pursued regional trade deals with their neighbors, and then by China\u2019s admission into the World Trade Organization in 2001, said Suman Bery, vice chairman of NITI Aayog, an Indian government think tank. \u201cIndia gained less than its partners did,\u201d he said. \u201cIt is trying to navigate a world reshaped by China with large and growing trade blocs.\u201d<\/p>\n\n\n\n Trade liberalization stalled by the mid-2000s. The Doha Round of global negotiations collapsed largely over the refusal by emerging markets, led by India<\/a>, to lower barriers to agricultural imports.<\/p>\n\n\n\n Mr. Bery said India\u2019s renewed interest in trade reflects the growing international success of Indian firms and the Indian diaspora. The chief executives of Microsoft<\/a> Corp., Google parent Alphabet<\/a> Inc., and International Business Machines<\/a> Corp. were all born and educated in India. \u201cThey have proven themselves in the most competitive environment, and so we should have that confidence ourselves,\u201d Mr. Bery said. India also wants less dependence on China. In 2019, it dropped out of negotiations with 15 other Asia-Pacific nations that led to the Regional Comprehensive Economic Partnership, or RCEP, over concerns Chinese imports would squeeze out Indian manufacturers at home. \u201cWe walked out of it when we realized that we are not dealing apples-to-apples,\u201d Mr. Goyal said. China \u201cis a nontransparent economy.\u201d<\/p>\n\n\n\n India is using its presidency of the G-20 to promote itself as a gigantic potential market and a trusted partner that, unlike China, is a democracy and doesn\u2019t compel foreign companies to share their technology or ownership with local companies.<\/p>\n\n\n\n Western leaders are also eager to expand economic ties<\/a>, despite India\u2019s refusal to join Western condemnation of Russia for its invasion of Ukraine or its $60 price cap on Russian oil<\/a> imports. For the U.S., India\u2019s use of the price cap as leverage to drive down Russia\u2019s oil price and revenue matters more than formally joining the cap.<\/p>\n\n\n\n India\u2019s leaders long stuck to nonalignment because they were wary of American hegemony, grateful for Russia\u2019s support since the 1970s in India\u2019s rivalry with Pakistan, and fearful of driving Russia into China\u2019s arms, said Harsh Pant, vice president of Observer Research Foundation, a New Delhi-based international relations think thank. \u201cModi has changed that discourse completely,\u201d he said. \u201cHe does not carry the baggage of nonalignment.\u201d Mr. Pant said India recognizes that Russia is \u201ca declining power\u2026You don\u2019t want to put them off completely, but you also realize that there\u2019s nothing really there.\u201d<\/p>\n\n\n\n Meanwhile India\u2019s historical tensions with China have intensified since 2020 when 20 Indian and four Chinese soldiers died in a clash along the countries\u2019 disputed border<\/a> in the Himalayas. The two sides fought again<\/a>, without fatalities, in December. Since the initial clash India has banned hundreds of Chinese smartphone apps<\/a>, including TikTok, and restricted Chinese investment into Indian companies.<\/p>\n\n\n\n India\u2019s economic pivot away from China and toward the West faces obstacles. China is now central to Asian supply chains. By raising restrictions on Chinese imports and staying out of RCEP, India has made itself less attractive to global value chains.<\/p>\n\n\n\n
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