As economics replaces warfare as the primary instrument of power, India’s resilience, autonomy and leadership offer a critical counterweight to a fractured global order.
The nature of global power has changed more decisively in the past decade than in the previous half-century. Conflict today rarely announces itself through declarations of war or advancing armies. Instead, it unfolds through frozen foreign exchange reserves, disrupted supply chains, denied technologies and manipulated markets. Economic terrorism has emerged as a defining instrument of contemporary geopolitics, a form of coercion that inflicts long-term structural damage while remaining legally ambiguous and politically convenient.
Economic terrorism operates through instruments that once symbolised cooperation and integration. Sanctions, trade restrictions, financial exclusions, export controls and debt conditionalities are now routinely deployed as tools of pressure. These measures are often framed as defensive, moral or rules-based, yet their real impact is punitive and far-reaching. Entire societies bear the cost through inflation, unemployment, energy insecurity and developmental stagnation. Unlike conventional warfare, this violence is slow, administrative and largely invisible, making it easier to justify and harder to contest.
The Russia–Ukraine conflict marked a watershed moment in the evolution of economic coercion. The freezing of Russian sovereign reserves and the exclusion of major banks from global payment systems shattered long-standing assumptions about financial neutrality. While these actions were intended to weaken Moscow’s war-fighting capacity, their effects travelled far beyond the battlefield. Global energy and food markets experienced sharp volatility, European economies faced severe price shocks, and political backlash followed. The episode demonstrated that economic coercion, once deployed, rarely remains contained.
Iran offers a longer and more revealing case. Decades of sanctions targeting oil exports, banking channels and shipping insurance have reshaped its economy and society. Currency depreciation, restricted access to essential medicines, constrained trade and chronic inflation have become structural realities. Yet the strategic outcomes remain uncertain. Civilian suffering has not produced predictable political change, underscoring the moral and practical limits of prolonged economic punishment.
China’s confrontation with the United States illustrates a more technologically calibrated form of economic terrorism. Export controls on advanced semiconductors, artificial intelligence tools and high-end manufacturing equipment are justified on national security grounds. In practice, these measures are designed to slow industrial upgrading and reshape global innovation ecosystems. Supply chains that once reflected efficiency and interdependence are increasingly treated as strategic chokepoints, signalling a shift from competition towards containment.
For smaller and developing nations, the consequences of economic coercion are often existential. Sri Lanka’s financial collapse demonstrated how debt dependence, commodity volatility and external shocks can strip governments of policy autonomy. Across parts of Africa and Latin America, recurring debt crises and conditional financing continue to constrain sovereign decision-making. In such contexts, economic vulnerability becomes an avenue for external influence, blurring the line between assistance and control.
India confronts this global reality from a position of growing strength. Its demographic scale, expanding economic base and strategic autonomy ensure that it is neither marginal nor easily coerced. At the same time, Indian policymakers recognise that openness without resilience invites pressure. India’s approach reflects a clear understanding that economic capability and national security are now inseparable. India’s commitment to strategic autonomy is not ideological posturing; it is a rational response to an era of weaponised interdependence. Energy engagement with Russia, technology partnerships with Western economies and sustained outreach to the Global South coexist without contradiction. This diversification is deliberate. Dependence on any single bloc would create leverage for coercion. In the contemporary international system, options—not alignments—are the true currency of resilience.
Financial sovereignty has emerged as a central concern. The dominance of a single global settlement architecture allows sanctions to operate with extraordinary reach. Exclusion can paralyse trade, investment and even routine economic activity. India’s exploration of alternative payment mechanisms, bilateral currency arrangements and diversified financial platforms reflects a growing recognition that monetary autonomy is now a strategic imperative rather than a technical preference.
Technology represents another critical battlefield. Control over semiconductors, data infrastructure, digital platforms and technical standards increasingly determines national capacity. India’s investments in digital public infrastructure, semiconductor fabrication, space technologies and indigenous innovation are not merely developmental initiatives. They function as strategic buffers against technological denial and external pressure in a fragmented global technology landscape.
Energy security further illustrates the mechanics of economic coercion. Europe’s experience following disruptions in gas supplies revealed how quickly prosperity can erode when energy becomes politicised. India’s emphasis on diversified imports, renewable energy expansion and strategic petroleum reserves reflects a determination to avoid similar exposure. In this domain, sustainability and national security increasingly converge.
External resilience, however, depends fundamentally on internal strength. Economic terrorism exploits domestic fragility. Inflation, unemployment, inequality and fiscal instability magnify the effects of external pressure. India’s long-term defence therefore rests on inclusive growth, institutional credibility and social cohesion. A confident, economically secure population remains the strongest deterrent against coercion.
India’s role extends beyond narrow self-interest. As a leading voice of the Global South, it occupies a unique strategic and moral position. Many developing nations lack the buffers required to absorb economic shocks or withstand coercive pressure. India’s advocacy for reforming global financial institutions, promoting development-oriented lending and ensuring fairer trade norms contributes to a more stable international environment in which economic coercion becomes less effective.
Naming economic terrorism is itself an act of resistance. The practice thrives on euphemism and moral camouflage. When economic suffering is recognised as a deliberate instrument of power, accountability becomes possible. Silence, by contrast, normalises coercion and entrenches asymmetry within the global system. The emerging world order will be shaped less by ideology than by endurance. Nations capable of absorbing shocks, adapting supply chains and maintaining strategic autonomy will define the rules. Those who cannot will find their policy choices increasingly constrained by external pressure rather than domestic priorities.
Economic terrorism risks fragmenting the global economy into hardened blocs, eroding trust and amplifying systemic risk. Retaliation invites retaliation, and cooperation gives way to suspicion. Over time, this trajectory undermines the very stability it claims to enforce.
India’s strategic moment lies in demonstrating a different path. By combining openness with resilience, autonomy with engagement and strength with responsibility, India can resist coercion without replicating it. In confronting economic terrorism, India is not merely defending its national interest. It is helping shape a more balanced global order, one in which economics serves development rather than domination.
(Dr Nishakant Ojha is a strategic and geopolitical affairs analyst specialising in global political economy, economic statecraft and India’s role in the evolving international order)
