India’s answer to a risk-priced world is openness, not fragility: PK Mishra | Economy & Policy News

India’s answer to a world increasingly priced for risk is not insulation but openness without excessive vulnerability, Principal Secretary to the Prime Minister P K Mishra said on Saturday, arguing that the cost of building resilience must be weighed against the risks it seeks to insure against. 

“The world that is coming will belong to those who can be steady without being closed, careful without being fearful, and ambitious without being naive. India intends to be such a country,” Mishra said while delivering the keynote address at the fifth Kautilya Economic Conclave. 

Speaking at a plenary session themed “A world priced for risk”, Mishra said the nature of the challenge facing economies had changed. Individuals and countries are now confronted not merely with risk, whose probability can be estimated, but with uncertainty, where probabilities cannot be reliably assigned. He cited the pandemic, wars that disrupt energy and food markets, and the growing use of tariffs, sanctions and export controls as instruments of economic policy. 

For energy-importing economies, he said, the question is no longer only the price of energy but whether supplies will be available and can reach them. A disruption in a major shipping route can affect crude oil prices thousands of kilometres away, he said. 

The same vulnerability is emerging in the clean-energy transition, Mishra said, with the extraction, processing and refining of lithium, cobalt, rare earths and other critical minerals highly concentrated geographically. “The transition is being repriced along with everything else,” he added. 

Mishra, however, emphasised that the response to this uncertainty cannot be resilience at any cost. Strategic stockpiles carry a financing cost, maintaining multiple suppliers can mean sacrificing economies of scale, and domestic production may initially be more expensive than imports. 

“We should not pay a premium for every conceivable disruption,” Mishra said, while arguing that where a disruption could impose a large economic and social cost, investing in resilience could be economically rational.

Outlining India’s strategy, Mishra highlighted four areas — energy security, critical minerals, productive domestic capacity and diversification of external economic relationships.

On energy, he said India had maintained substantial stocks, increased domestic production where possible and diversified procurement, with the number of countries from which it imports crude oil rising from 27 to 43. The disruption around the Strait of Hormuz, he said, was a clear reminder of how geography can translate into economic risk.

On critical minerals, he pointed to the National Critical Minerals Mission and India’s partnerships with countries including the United States, France, Germany and the Netherlands for exploration, processing, recycling, technology and supply-chain resilience.

But domestic capability, Mishra stressed, must ultimately translate into productivity and competitiveness. “The purpose of building domestic capability cannot simply be to replace imports at any cost. The ultimate objective has to be to create capabilities that are competitive, scalable, and eventually export-oriented,” he added. 

He cited electronics as an example. Production has risen from around ₹2 trillion in 2014-15 to about ₹13 trillion in 2025-26, while exports have increased from around ₹38,000 crore to ₹4.24 trillion. The policy focus, he said, has progressively shifted from assembly towards components and a deeper manufacturing ecosystem, with similar efforts under way in semiconductors, pharmaceuticals and other strategic sectors. 

India’s external economic strategy is similarly aimed not at eliminating dependence but at avoiding excessive concentration. Mishra highlighted trade agreements with the UAE, Australia and the European Free Trade Association (EFTA), and more recently the UK, Oman, New Zealand and the European Union, as part of this strategy. 

Mishra said macroeconomic resilience through fiscal space, adequate foreign exchange reserves, a sound financial system and credible institutions gives countries room to respond to external shocks. India has continued fiscal consolidation while maintaining public investment, with the fiscal deficit projected at 4.3 per cent of gross domestic product (GDP) in the Budget, down sharply from pandemic-era levels. 

Security and sustainability, he said, were increasingly converging, while markets would price risk differently across economies depending on their fiscal credibility, financial strength, diversified trade relationships, institutions and capacity to respond.