Economic Security and Resilience Review
This issue opens with an assessment of the state visit of President Lee Jae Myung of the Republic of Korea from April 19-21, which yielded several outcomes of significance for economic security. These included the launch of dedicated bilateral dialogues on industrial cooperation, steel, and economic security, intended to institutionalise sectoral coordination. Negotiations on upgrading the India-ROK CEPA to better balance trade are to be fast tracked. In addition, the conclusion of a comprehensive framework spanning shipbuilding, port development, logistics, and workforce training underscores a broadening of bilateral economic engagement. MoUs between Indian and Korean firms in sectors such as steel, electric vehicles, port infrastructure, and maritime and port handling equipment further reinforce this trajectory.
The author highlights policy measures taken by the Government of India to mitigate the economic impact of the ongoing conflict in West Asia. The April economic review of the Ministry of Finance emphasises the need to accelerate structural reforms, rather than relying solely on short-term growth drivers. India’s trade data for FY 2025-26 presents a concerning picture, with goods exports increasing by a marginal 1% and a significant widening of the goods trade deficit; exports financed only 57% of imports during the year.
The India-New Zealand Free Trade Agreement was signed during the month. There was continued engagement with the U.S., focused on operationalising the framework for an interim trade deal agreed in February, particularly in the light of evolving U.S. trade policy actions, including Section 301 investigations.
Following the expiry of the U.S. sanctions waiver for the Chabahar Port, India is reportedly exploring options with both Iran and the U.S. to safeguard its strategic and commercial interests in the project. Meanwhile, Turkey has advanced a proposal, in coordination with Syria and Jordan, for a regional rail corridor linking Europe to the Gulf. This initiative could potentially bypass key maritime chokepoints of West Asia, though its relationship - complementary or competitive - with the India-Middle East-Europe Economic Corridor remains to be seen.
In the energy domain, the decision of the United Arab Emirates to exit OPEC effective May 1 marks a notable shift, with potential implications for energy security. While the immediate impact remains unclear, over the medium term this move could introduce greater flexibility in pricing and supply volumes for crude oil importers.
The issue also flags emerging regulatory moves in Europe, amidst indications that the European Parliament may approve expansion of the scope of the EU’s Carbon Border Adjustment Mechanism (CBAM) to cover additional downstream steel and aluminum products from 2028. This development will warrant careful monitoring and timely preparations by Indian exporters.
Finally, the author outlines recent measures by China aimed at safeguarding its trade and economic security interests. These include opposition to “Make in Europe” provisions proposed by the European Commission; restrictions on the acquisition of the AI startup Manus by Meta; and the introduction of new domestic regulations in China elevating the protection of industrial and supply chains to a national security priority.
To read this issue please click ESRR, Vol. IV, Issue 4.
