New Delhi, Oct 3: Principal Secretary to the prime minister, P K Mishra, on Saturday said export restrictions, sanctions and tariffs become instruments of economic policy and they are sometimes even weaponised.
The top government functionary also said that wars disrupt energy and food markets while shipping routes and geographical choke points become sources of economic vulnerability.
Addressing the Kautilya Economic Conclave on the subject 'A World Priced for Risk', he said India is a major energy importer, and any prolonged disruption to an important maritime route can affect the economy adversely. India's response, therefore, has combined several layers of protection.
"For energy security, the disruption around the Strait of Hormuz has been a particularly clear reminder of how geography can translate into economic risk," he said.
Without mentioning any country, the top official said export restrictions, sanctions and tariffs become instruments of economic policy, sometimes they are even weaponised.
The United States has in the past announced tariffs on a number of countries, including India, for a variety of reasons.
Recently, the US has enacted the 'Lindsey O. Graham Sanctioning Russia and Iran Act of 2026', which authorises tariffs of up to 100 per cent on nations purchasing Russian oil and gas, including India and China.
Mishra said India has maintained substantial stocks, increased domestic production where possible, diversified procurement, and ensured that alternative supply routes and suppliers are available.
For example, he said, the number of countries from which India imports crude oil has increased from 27 to 43, which is "very large".
"The same logic applies to energy transition. Greater domestic capacity in renewables, nuclear energy, storage and associated technologies is not only about sustainability, it is also about reducing exposure to external shocks over time," he said.
Mishra said that another example is critical minerals and strategic industrial inputs, this being an area where distinction between efficiency and resilience becomes important.
"Critical minerals, technologies and even financial infrastructure acquire a new strategic significance," he said.
The top official of the Modi government said there is another question arising — if the energy will be available or if it can reach its destination.
"A disruption in a major shipping route can affect the price of crude oil thousands of kilometres away. Geography has therefore become an economic variable. The same is true for supply chain," he said.
The principal secretary to the prime minister said uncertainty arises when people cannot reliably assign probability, and the events of this decade have brought this distinction into sharp focus.
"We have seen a pandemic disrupt production and mobility across the world," he said.
Mishra said India has taken steps to strengthen domestic exploration, processing and recycling through the National Critical Mineral Mission.
At the same time, he said, India has built a growing network of international partnerships on critical minerals, examples of those are with countries like the United States, France, Germany, Netherlands, and many others, for exploration, processing, recycling, technology and supply chain resilience.
The principal secretary to the prime minister said there is one more form of resilience that, of course, is perhaps less visible, and that is macroeconomic resilience.
"A country facing an external shock needs room to respond. That room comes from fiscal space, adequate foreign exchange reserves, and a sound financial system and credible macroeconomic institutions. India has therefore continued on a path of fiscal consolidation while maintaining public investment," he said.
Mishra said he believes that the world in the near future will belong to those who can be steady without being closed, careful without being fearful and ambitious without being naive, and India intends to be such a country.
"I hope that together, we can help build such a world," he said.
The top official said the economic logic of globalisation was built around specialisation and the produce where costs are lowest, and goods move efficiently across borders.
"The logic remains relevant and even powerful. But the experience of the pandemic, geopolitical conflict and more recent disruptions has highlighted another consideration — the cost of interruption," he said.
Mishra said a supply chain that is efficient in normal times may be fragile if the single node supplier or geography becomes unavailable.
"We are seeing similar development in critical minerals. Lithium, cobalt, rare earths, and other minerals are essential to batteries, electronics, renewable energy and advanced manufacturing.
"But their extraction, processing and refining are highly concentrated geographically. Geography, we thought, technology has made it irrelevant. But it has returned to the centre of the table and it is not only oil," he said.
Mishra said India's response to this changing risk environment reflects an important lesson from its own economic history.
"Resilience cannot be insulation from the world. It has to mean the ability to remain open to the world without becoming excessively vulnerable to it," he said. (PTI)
