Amid Economic Shifts bilateralism seems to be the new tool, says finance minister, Nirmala Sitaraman
Finance Minister Nirmala Sitharaman on Thursday highlighted the need for India to strengthen its bilateral trade and investment relations amid the ongoing global economic shifts. Speaking at the BS Manthan event, she stated that bilateralism is emerging as the key driver of international engagement as traditional multilateral institutions lose their effectiveness.
Sitharaman emphasized that the world is witnessing a major economic transition where multilateralism is increasingly being sidelined and bilateral agreements are gaining prominence.
“Bilateralism is now taking the top of the agenda. It is essential for us to enhance our bilateral relations with multiple nations—not just for trade and investment, ut also for strategic partnerships,” she noted.
She further observed that efforts to revitalize multilateral institutions, such as the World Trade Organization (WTO), have not yielded significant results, diminishing their influence on global trade regulations.
“At present, forums that previously addressed multi-nation concerns are no longer as effective. Multilateral institutions are losing their impact, and even though there are attempts to revive them, these efforts may not yield results shortly,” Sitharaman explained.
The Finance Minister underscored that global trade dynamics are being reshaped, moving away from the long-standing principles upheld by organizations like the WTO.
“The conventional trade framework that once operated under WTO guidelines is no longer applicable. The Most Favoured Nation (MFN) principle is losing relevance as every country now seeks special treatment in trade negotiations,” she said.
As a result, bilateral trade agreements are becoming the preferred model for international trade, with countries negotiating exclusive deals to secure favorable terms.
“With the WTO weakening and multilateral frameworks proving ineffective, bilateral agreements will be the dominant approach for trade in the foreseeable future,” she asserted.
Recognizing this shift, India has proactively engaged in bilateral trade negotiations with multiple nations.
Ongoing discussions with the UK for a Free Trade Agreement (FTA).
Plans for a bilateral trade deal with the United States.
Active negotiations with the European Union (EU), a 27-nation bloc, for a comprehensive trade pact.
Sitharaman stressed that India must leverage its strengths in technology, skilled workforce, and economic potential to enhance its role in the new global trade order.
“In this evolving landscape, India must expand its bilateral ties to attract investment, boost trade, and strengthen strategic partnerships. With its vast talent pool and technological expertise, India has the potential to become a key driver of global economic growth,” she stated
The Finance Minister described the current period as both challenging and transformative, highlighting India’s responsibility to contribute meaningfully to the global economic reset.
“India needs to climb higher on the global economic ladder—not just in terms of per capita income but also as a premier business hub that attracts investors and skilled professionals,” she remarked.
She emphasized that India can serve as an engine of global growth, fostering economic expansion and innovation in a rapidly changing world.
Speaking on India’s economic policy, Sitharaman reaffirmed the government’s commitment to ongoing reforms, particularly in areas like debt management and fiscal discipline.
She stressed that reform is not solely the responsibility of the central government but must also be a priority for individual states.
“Economic reform should not be limited to the union government alone. State governments must actively participate in driving economic growth. I would like to see healthy competition among states, with each striving to build a stronger and more resilient economy,” she said.
As the world moves away from traditional multilateral frameworks, India is positioning itself to capitalize on bilateral trade opportunities. The Finance Minister’s remarks underscore the country’s strategic approach to navigating the shifting global economic landscape. With a focus on bilateral partnerships, investment-driven policies, and structural reforms, India is laying the groundwork for sustained economic growth in the years to come.
