The Core Argument
The global trading system is fragmenting along geopolitical lines — tariff wars, supply chain decoupling, and the weaponisation of economic interdependence are replacing the WTO’s rules-based multilateral framework. India’s current response — negotiating bilateral Free Trade Agreements (FTAs) — is necessary but insufficient. The editorial advocates for “sectoral plurilateralism”: structured frameworks among middle powers (India, ASEAN, EU, Japan, Australia, Gulf states) covering specific sectors — digital trade, green energy standards, critical minerals, financial services — rather than sweeping comprehensive FTAs. India’s digital infrastructure (UPI, Aadhaar, ONDC), AI capabilities, and engineering talent give it distinctive leverage to lead this new architecture.
The Collapse of the Multilateral Trading Order
WTO Crisis
The World Trade Organisation (WTO), established in 1995 as the successor to GATT, was the cornerstone of multilateral trade governance:
| WTO Crisis | Detail |
|---|---|
| Appellate Body paralysis | US blocked appointments since 2017; Appellate Body non-functional since 2019 |
| Doha Round collapse | 2001 Doha Development Round — never concluded after 24 years |
| Geopolitical fragmentation | US-China trade war; EU’s Carbon Border Adjustment Mechanism |
| Exception creep | National security exceptions (GATT Article XXI) increasingly invoked |
Trade Weaponisation — The New Reality
| Instrument | Who Uses It | Target |
|---|---|---|
| Export controls (semiconductors, rare earths) | USA, China | Each other |
| Tariff escalation | USA (steel, aluminium, EVs) | Multiple |
| Carbon Border Adjustment Mechanism (CBAM) | EU | Carbon-intensive exporters including India |
| Sanctions (secondary) | USA | Russia, Iran, Venezuela |
| Critical mineral export bans | China (gallium, germanium) | Semiconductor supply chains |
India’s exposure: India faces CBAM on steel and aluminium exports to EU; semiconductor dependency on US/Taiwan; rare earth dependency on China.
India’s Current Trade Strategy
Bilateral FTA Track
| FTA Status | Partner | Coverage |
|---|---|---|
| Operational | UAE (CEPA 2022) | Goods, services, investment |
| Operational | Australia (ECTA 2022) | Interim; full FTA under negotiation |
| Operational | EFTA (2024) | Switzerland, Norway, Iceland, Liechtenstein |
| Pending | UK | Under negotiation since 2022 |
| Pending | EU | Under negotiation; CBAM complication |
| Paused | Canada | Negotiation stalled |
| Pending | GCC | Gulf Cooperation Council; advanced |
Limitations of bilateral FTAs:
- Rules of origin complexities create trade diversion without trade creation
- Each FTA creates separate regulatory burden
- Cannot address systemic issues (digital trade, data flows, green standards)
- India’s trade deficit worsens in many FTAs (ASEAN FTA case)
The Sectoral Plurilateralism Proposal
What Is Sectoral Plurilateralism?
Instead of comprehensive FTAs covering all goods and services, sectoral plurilateralism focuses on:
- Critical minerals — India + Australia + Japan + EU supply chain agreement
- Digital trade — India (UPI/ONDC) + ASEAN + Africa digital payment standards
- Green energy — Solar, wind, hydrogen standards and carbon credit recognition
- Financial services — India + Gulf + Southeast Asia payment interoperability
- Semiconductor supply chain — India + Japan + US + EU (Chip-4 adjacent)
India’s Comparative Advantages in This Framework
| Capability | Global Relevance |
|---|---|
| UPI | World’s largest real-time payments system; ~$2 trillion annual volume; expanding to UAE, Singapore, France, Mauritius |
| ONDC | Open Network for Digital Commerce — open protocol for e-commerce; replicable model |
| Aadhaar/DigiLocker | Digital identity infrastructure; potential model for Global South |
| Engineering talent | 1.5 million+ engineering graduates/year; AI and software capability |
| GIFT City | Offshore financial centre; could anchor India-led financial plurilateral |
| Renewable energy | 220 GW solar + wind; green hydrogen ambition |
| Critical minerals | Agreements with Australia, Argentina; potential anchor for critical mineral club |
India-South Korea — The Model Middle-Power Bilateral
The editorial notes India-South Korea ties as an example of middle-power cooperation that goes beyond trade:
| Area | India-South Korea Cooperation |
|---|---|
| Semiconductor | Samsung, SK Hynix exploring India manufacturing |
| Defence | South Korea: K9 Vajra howitzers; joint manufacturing |
| Clean tech | South Korea hydrogen and battery technology + Indian market |
| Digital | UPI-based payment integration with Korean platforms |
| CEPA | India-South Korea CEPA (2009) — but underutilised |
Why middle powers matter: Neither India nor South Korea can individually set global trade rules, but together — with Japan, Australia, Germany, Brazil, Indonesia — they constitute a bloc that can negotiate standard-setting rather than merely accepting US-China rules.
UPSC Angle
| Paper | Angle |
|---|---|
| GS2 — IR | WTO, bilateral FTAs, trade multilateralism, India’s trade policy |
| GS3 — Economy | FTA economics, trade deficit, critical minerals, digital trade |
| GS2 — IR | ASEAN, India-EU, India-UK, CBAM, supply chain diversification |
Mains Keywords: WTO, Appellate Body, Doha Round, FTA, CEPA, CBAM, sectoral plurilateralism, ONDC, UPI, critical minerals, trade weaponisation, supply chain decoupling, GIFT City
Probable Question: “The era of WTO-led multilateral trade governance is over. What new architecture should India advocate for?” (GS2 Mains)
