‘Swadeshi’ a legitimate and necessary policy tool in fractured global trade order: CEA 

Chief Economic Adviser V Anantha Nageswaran on January 29 said that Swadeshi has emerged as a legitimate and necessary policy instrument for India at a time when global trade is no longer reciprocal and markets are no longer neutral.  

Briefing the media on the Economic Survey 2025-26, Nageswaran said India’s growth momentum remains intact and that the country has the potential to achieve a growth rate of up to 7.5%, driven by improvements in manufacturing, land reforms and sustained public investment. “India is an oasis of economic performance in the global scenario,” he said, pointing to the country’s resilience amid rising global uncertainty.  

The Economic Survey places renewed emphasis on Swadeshi against the backdrop of a changing global economic order marked by geopolitical rivalry, trade coercion and growing supply-chain risks. It argues that the traditional assumptions of free trade — neutral markets, predictable access to inputs and rule-based multilateralism — are increasingly breaking down, making strategic indigenisation an economic necessity rather than an ideological preference.  

The Survey clarifies that Swadeshi in its current articulation is distinct from past models of import substitution. Rather than advocating inward-looking protectionism, it calls for a calibrated approach aimed at securing critical supply chains, reducing excessive dependence on a narrow set of external suppliers and building domestic capabilities in essential and infrastructure-related sectors.  

According to the Survey, rising incomes will inevitably lead to higher imports, even with successful indigenisation efforts. The policy challenge, therefore, lies in ensuring that India is not strategically vulnerable in key inputs, technologies and manufacturing capabilities when global disruptions or geopolitical pressures intensify.  

The document also links Swadeshi to India’s long-term growth and currency stability. It notes that countries with strong and stable currencies have historically built competitive manufacturing ecosystems. While India’s services exports have played a stabilising macroeconomic role, they cannot fully substitute for a strong base of goods exports that anchor external resilience and institutional capacity.  

At the same time, the Survey cautions against indiscriminate protection. It warns that shielding upstream industries through high tariffs can raise costs for downstream manufacturers, undermining export competitiveness. Instead, it advocates a tiered framework for strategic indigenisation that prioritises global competition, cost efficiency, technology acquisition and lower cost of capital over blanket trade barriers.  

Nageswaran said India’s ongoing structural reforms — spanning manufacturing, infrastructure, land markets and deregulation — have strengthened the economy’s ability to absorb external shocks while sustaining growth. In a world where trade is increasingly shaped by strategic and political considerations, the Survey argues that building domestic capacity is no longer optional but unavoidable.