India Should Pursue Indigenisation that Maintains Global Export Competitiveness: Chief Economic Adviser

India should pursue indigenisation that maintains global export competitiveness rather than isolated protectionism, Chief Economic Adviser V Anantha Nageswaran said on Thursday. Addressing the SBI Banking & Economics Conclave in Mumbai, he said the country should build physical buffers for key commodities, such as maintaining at least six months of oil storage and focus on irreplaceable small components in global production chains to gain strategic leverage, he emphasised. Nageswaran said India must be “very mindful of getting supply-side resilience in the economy”, as “most shocks now arrive not by accident but by design” and are increasingly part of geopolitics. He warned that “market access has become conditional” as countries, including the United States, China and Europe, increasingly resort to “trade weaponisation”. “We have to make sure that we begin to build buffers, whether in the private sector or the government, for key commodities, including oil, with at least six months of storage,” he said. But this also requires more fiscal resources while the balance of payments will remain a challenge, not just episodically but almost continuously, he said. China’s goods surplus has already reached roughly $800 billion in the first eight months of 2026, putting pressure on manufacturing ambitions in developing countries, including India. At the same time, the AI investment boom is reshaping global trade. “Half of the growth in world merchandise trade in 2025 came from AI-related goods,” he said, adding that countries such as Korea and Taiwan have benefited from rising chip exports. The Indian basket of imported crude had risen to around $114-$115 a barrel, nearly 30% higher than in August. Unlike the 2000s and 2010s, “trade, technology, and energy now reinforce one another,” Nageswaran said. Any disturbance in one area can therefore travel through the other two, amplifying the effects on prices, capital and trade, he added. Nageswaran argued that the world may have moved beyond the long period of disinflation. “It is safe to say for the next 25 years we probably have put the disinflation era of the 1990 to 2015 or 2020 behind us.” Higher commodity prices, elevated interest rates and rising public debt could put sustained pressure on countries dependent on global capital. As a capital-importing nation, India must improve tax-policy certainty, investor protection, contract sanctity, infrastructure and the skills of its workforce. On the demographic dividend, he said AI may not yet be producing the massive labour shock anticipated, but junior-level jobs are indeed lower than what was there pre AI. For India, this matters because a young country with a narrowing door has to worry. The answer is to create both “jobs that use AI and jobs that are AI insulated”, particularly through labour-intensive manufacturing and services such as elder care, tourism and hospitality, he said. “India does not have the luxury of a binary choice between manufacturing and services. It has to do both,” he said. Indigenisation must therefore be paired with export competitiveness, while strategic buffers and niche manufacturing capabilities can provide resilience.