The economic advantage of non-alignment - focusing on what counts

India as example of a nation using non-alignment

In an era of shifting global power dynamics, the concept of non-alignment has gained renewed relevance. Historically viewed as an ineffective and inconsistent policy, non-alignment is now seen as a strategic approach for countries seeking to balance their national interests amid rising economic nationalism. As superpowers like the United States and China adopt increasingly protectionist policies, smaller nations must navigate a complex landscape. India stands out as an example of a country leveraging non-alignment for economic and geopolitical advantages. This report explores India's strategic position, the benefits it has derived from non-alignment, and the lessons other nations can learn in an evolving world order shaped by American-first policies.

The rise of economic nationalism

Economic nationalism has surged in recent years, with major global powers adopting protectionist policies. The United States, under former President Donald Trump, embraced an "America First" stance, advocating for reduced foreign investment, trade restrictions, and tighter immigration policies. Although President Joe Biden has sought to restore multilateralism, many American policymakers continue to push for a more inward-focused economic strategy. Similarly, China has shifted from generous foreign investments under the Belt and Road Initiative to a more commercially driven approach, prioritising its own economic security.

This trend places smaller nations in a challenging position. During the Cold War, Western European countries benefited from aligning with the US, enjoying open trade and security cooperation. However, non-aligned nations had to adopt a different approach, leveraging their independence to attract investment and security assistance from multiple sources. Today, this strategy remains relevant as global alliances shift and economic pressures mount.

India's approach to non-alignment

India has historically maintained a non-aligned stance, adapting its foreign policy to evolving global conditions. While the Non-Aligned Movement (NAM) originated as a response to Cold War polarisation, India has refined its approach by adopting issue-based alignment. This allows it to collaborate with different powers depending on its national interests, rather than committing unconditionally to any single bloc.

For instance, India's relationship with Russia has been shaped by historical ties and strategic considerations. Russia has consistently supported India on key geopolitical issues, such as abstaining from votes on the Kashmir conflict. In return, India has refrained from directly condemning Russia’s actions in Ukraine, instead advocating for adherence to international law. This delicate balancing act enables India to maintain defence cooperation with Russia while strengthening economic and security ties with the West.

Economic benefits of india’s strategic position

India has successfully leveraged its non-aligned stance to boost economic resilience. The country has accumulated over $500 billion in foreign exchange reserves, reducing its dependence on external financial shocks. This strategy mirrors similar efforts in other nations, such as Brazil and Indonesia, which have also increased reserves and reduced foreign-denominated debt to enhance economic stability.

Additionally, India's strategic importance in global trade has positioned it as a key player in the Indo-Pacific. The country has deepened ties with the United States, Japan, and Australia through security partnerships like the Quad. At the same time, it maintains strong trade relations with Russia and Iran, ensuring diverse energy supplies and access to critical resources. This balanced approach minimises economic risks while maximising opportunities in a competitive global market.

Geopolitical considerations and regional strategy

India’s geopolitical strategy is increasingly focused on the Indo-Pacific, where China’s influence continues to expand. To counterbalance China's rise, India has strengthened military and diplomatic partnerships with democratic nations while maintaining its autonomy in decision-making. The country's growing naval capabilities and regional security role have reinforced its position as a stabilising force in the region.

Domestically, India’s political landscape remains dominated by the Bharatiya Janata Party (BJP), with Prime Minister Narendra Modi leading economic and national security reforms. While these policies have strengthened India’s global standing, internal challenges such as social and regional tensions persist. The rise of regional political parties and coalition governments necessitates careful policy negotiations at both state and national levels.

Lessons for other nations

India’s success demonstrates the advantages of a flexible foreign policy that prioritises national interests over rigid alliances. Other nations can adopt similar strategies by:

1. Building economic resilience – Accumulating foreign exchange reserves and reducing external debt can protect economies from global financial instability.

2. Diversifying strategic partnerships – Engaging with multiple global powers ensures access to investment, technology, and security cooperation without over-reliance on any single nation.

3. Maintaining diplomatic balance – Advocating for international law and sovereignty while avoiding direct entanglement in superpower conflicts enables countries to navigate complex geopolitical landscapes.

4. Enhancing regional influence – Strengthening economic and security partnerships within regional frameworks can help counterbalance dominant global powers.

Conclusion

India's non-aligned strategy has enabled it to navigate a rapidly changing world order while securing economic and strategic benefits. By maintaining flexible alliances, it has positioned itself as a crucial player in global geopolitics. However, non-alignment also presents challenges. Balancing competing interests requires diplomatic skill, and avoiding firm alliances can sometimes limit immediate security guarantees.

As the US-China rivalry intensifies and economic nationalism grows, countries must reassess their foreign policies. India’s approach provides a viable model for nations seeking to maximise their sovereignty while engaging with the global economy. The key takeaway is that non-alignment, when strategically applied, can be a powerful tool for national advancement in an unpredictable world.