On July 29, 2024, in Tokyo, Japan, Subrahmanyam Jaishankar, India’s external affairs minister, attended an important meeting known as the Quadrilateral Security Dialogue (Quad). At a later event in Washington, he shared some fascinating insights about India’s approach to trade, especially with the challenges posed by the United States. Jaishankar also rejected the idea of joining a new “Asian NATO,” asserting that India has its own strategic path. Meanwhile, violence in Manipur continues to escalate, with ethnic clashes resulting in over 200 deaths and 60,000 displaced, as the government investigates the involvement of foreign missionaries in the turmoil.
Jaishankar highlighted that while India values its relationship with the US and the US dollar, it is facing difficulties due to certain US policies. He mentioned that there are times when trading with other countries becomes tough because of these policies, and because of this, India needs to find alternative ways to conduct its business. However, he made it clear that India does not plan to abandon the US dollar; rather, it wants to maintain its trading relationships with other countries, especially those that are struggling with their own dollar reserves.
The Quest for Alternative Trade Solutions
Jaishankar emphasized that many of India’s neighboring countries, such as Bangladesh, Sri Lanka, and Nepal, have been running low on dollars. This shortage has made it hard for them to buy essential goods from abroad. Therefore, India faces a tough choice: either stop trading with these countries or find new ways to settle trade agreements that don’t solely rely on the dollar.
He pointed out that there’s a growing trend toward multipolarity in global trade, meaning that countries are beginning to use a variety of currencies in their transactions rather than depending on just one, like the US dollar. This shift is something India is paying close attention to, as it affects how it interacts with both its partners and competitors.
Challenges with Major Trading Partners
Jaishankar also discussed the challenges posed by US sanctions, particularly against countries like Iran. These sanctions have impacted Indian businesses, especially those that export tea and rice to Iran, a market where they used to do quite well. Additionally, the ongoing conflict in Ukraine has complicated India’s trade with Russia, which has become a crucial supplier of energy, defense, and fertilizers for India.
As a response to the US cutting Russia off from the SWIFT banking system, both Russia and India have started using their national currencies more in their trade dealings. In fact, Jaishankar noted that India’s trade with Russia has grown significantly, surpassing $60 billion last year. This is a remarkable increase and indicates a shift in how India is managing its trade relationships despite pressure from Western countries.
The Bigger Picture
Overall, Jaishankar’s remarks paint a picture of India navigating a complex global trade landscape. By seeking “workarounds” and exploring new currencies for trade, India is striving to secure its interests and strengthen ties with its partners, particularly in a world where economic power is becoming more evenly distributed. The idea of moving toward alternative payment systems and currencies could reshape India’s trade strategy for years to come.
In essence, Jaishankar is suggesting that while India respects the importance of the US dollar, it is also wise to adapt and find new solutions to thrive in an ever-changing global economy. This strategic approach could potentially open up new avenues for trade and cooperation with a broader range of countries, helping India to become a stronger player on the world stage.
