Why in news?

P K Mishra, Principal Secretary to the Prime Minister, said that tariffs, export controls and other trade restrictions are increasingly used not just for commercial objectives but for strategic purposes — and that these "instruments of economic policy are sometimes even weaponised.

He was speaking at a session titled 'A World Priced for Risk' at the 5th Kautilya Economic Conclave.

He framed India's goal in a memorable formulation: the future will belong to those who can be steady without being closed, careful without being fearful, and ambitious without being naïve.

What’s in Today’s Article?

• Risk vs Uncertainty: The New Global Condition
• Energy: From "What's the Price?" to "Will It Arrive?"
• Rethinking Globalisation's Core Logic
• Critical Minerals: A New Concentration Risk
• The Policy Question Going Forward
• India's Response to Supply Chain Shocks
• Diversifying Trade Relationships

Risk vs Uncertainty: The New Global Condition

• The Secretary drew a key distinction: the world today faces not merely risk, but uncertainty — and this decade has sharpened that distinction.
• Examples he cited:
  • A pandemic disrupting production and mobility worldwide.
  • Wars disrupting energy and food markets.
  • Shipping routes and geographical chokepoints becoming sources of economic vulnerability.
  • Export restrictions, sanctions and tariffs turning into instruments of economic policy — sometimes weaponised outright.
  • Critical minerals, technologies, and financial infrastructure acquiring new strategic significance.

Energy: From "What's the Price?" to "Will It Arrive?"

• He highlighted a fundamental shift in how energy-importing economies must think.
  • For decades, the principal question for energy importers was simply the price of energy.
  • Today, a second question has emerged: will the energy be available, or can it even reach us?
• He noted that a disruption in a major shipping route can affect crude oil prices thousands of kilometres away — meaning geography has become an economic variable in itself.

Rethinking Globalisation's Core Logic

• The speaker reflected on how the traditional logic of globalisation is being supplemented, not replaced.
  • The old logic: produce where costs are lowest, move goods efficiently across borders.
  • This logic "remains relevant and even powerful," he stressed.
  • But recent experience — the pandemic, geopolitical conflict, and other disruptions — has added a new consideration: the cost of interruption.
  • A supply chain efficient in normal times can become fragile if a single-node supplier or geography becomes unavailable.

Critical Minerals: A New Concentration Risk

• Mishra pointed to a parallel pattern in critical minerals essential to the clean energy transition.
  • Lithium, cobalt, rare earths and other minerals are essential for batteries, electronics, renewable energy, and advanced manufacturing.
  • Their extraction, processing, and refining are highly geographically concentrated.
  • For nearly all of them, a single country does most of the refining.
• His key warning: "the clean energy future, which was meant to free us from oil dependence, risks creating new ones."
• In other words, moving away from oil dependency may simply replace it with mineral-refining dependency on a different single country.

The Policy Question Going Forward

• Mishra framed the central challenge for policymakers precisely:
  • The question before policymakers is therefore not whether globalisation has ended. It has not.
  • The question is how we preserve the gains from openness, while making economies less vulnerable to concentrated and unpredicted shocks.
• This reframes the debate — not openness versus protectionism, but openness with resilience against concentration risk.

India's Response to Supply Chain Shocks

• Discussing disruptions around the Strait of Hormuz, Mishra noted India is a major energy importer, vulnerable to prolonged disruption of important maritime routes.
• India's response has combined several layers of protection:
  • Maintaining substantial stocks.
  • Increasing domestic production.
  • Ensuring alternative supply routes and suppliers are available.
• Concrete Evidence of Diversification: The number of countries from which India imports crude oil has increased from 27 to 43 — a significant expansion.

Diversifying Trade Relationships

• Mishra emphasised that an open economy will always depend on other economies — but the goal is avoiding excessive concentration, not eliminating dependence altogether.
• India's expanding trade agreement network now includes: UAE; Australia; AIFTA (ASEAN–India Free Trade Area); United Kingdom; Oman; New Zealand; European Union.
• He also flagged a less visible form of resilience: macroeconomic resilience — strength in the broader fundamentals of the economy, beyond trade diversification alone.

Conclusion

P K Mishra's remarks capture a broader shift: trade tools once reserved for commerce are now instruments of geopolitical leverage, and geography itself has re-entered economic calculus.

India's answer isn't retreat from globalisation but deliberate diversification — more oil suppliers, more trade agreements, deeper domestic buffers. Whether this strategy holds will depend on how well India converts diversification into genuine resilience, not just a longer list of partners.