P K Mishra: Sanctions and Tariffs Have Become Policy Tools, Sometimes Weaponised

NEW DELHI, Oct 3: Principal Secretary to Prime Minister Narendra Modi, P K Mishra, on Saturday said export restrictions, sanctions and tariffs are increasingly being used as instruments of economic policy and can, at times, be weaponised.

Addressing the Kautilya Economic Conclave on the theme “A World Priced for Risk”, Mishra said geopolitical conflicts can have far reaching economic consequences by disrupting energy and food markets, while shipping lanes and strategic chokepoints can expose economies to additional vulnerabilities.

He pointed to the disruption around the Strait of Hormuz as a clear example of how geography can translate into economic risk for countries dependent on imported energy.

Mishra said India, being a major energy importer, could face significant economic consequences if an important maritime route remains disrupted for an extended period. He said the country’s response has therefore focused on building multiple layers of protection against external shocks.

According to Mishra, India has maintained substantial energy stocks, expanded domestic production wherever feasible, diversified its procurement sources and worked to keep alternative suppliers and transportation routes available.

He said the number of countries supplying crude oil to India has risen from 27 to 43, describing the expansion as a significant diversification of the country’s energy sourcing.

The Prime Minister’s Principal Secretary said the same approach is relevant to India’s long-term energy transition. Building domestic capabilities in renewable energy, nuclear power, energy storage and related technologies, he said, is not only important from a sustainability perspective but can also reduce the country’s exposure to external disruptions.

Mishra also highlighted the growing importance of critical minerals and strategic industrial inputs. He said recent global developments have demonstrated why countries need to balance economic efficiency with resilience when designing supply chains.

“Critical minerals, technologies and even financial infrastructure acquire a new strategic significance,” he said.

He explained that economic security depends not only on whether a commodity is available but also on whether it can reach its intended destination. A disruption along a major shipping route, for instance, can influence crude oil prices thousands of kilometres away.

“Geography has therefore become an economic variable,” Mishra said, adding that the same principle increasingly applies to global supply chains.

He noted that uncertainty becomes particularly challenging when the likelihood of an event cannot be reliably assessed. The experience of the current decade, he said, has brought this distinction into sharper focus.

The COVID-19 pandemic disrupted production, transportation and mobility across economies, while subsequent geopolitical conflicts and trade restrictions have added further pressure to international supply networks.

Mishra said India has consequently taken steps to strengthen domestic exploration, processing and recycling capabilities through the National Critical Mineral Mission.

At the international level, India has also expanded cooperation with several countries on critical minerals, including the United States, France, Germany and the Netherlands. Such partnerships cover areas including mineral exploration, processing, recycling, technology development and strengthening supply chains.

He also underlined the importance of macroeconomic resilience, which he described as a less visible but essential form of protection against external shocks.

A country’s ability to respond to international disruptions depends partly on the fiscal space available to the government, adequate foreign exchange reserves, a stable financial system and credible economic institutions, Mishra said.

He said India has continued with fiscal consolidation while maintaining public investment, seeking to preserve the capacity to respond when global conditions become difficult.

Mishra further argued that the traditional economic rationale behind globalisation remains relevant. International trade has historically benefited from specialisation, with production concentrated in locations where goods can be manufactured at lower costs and then transported efficiently across borders.

However, he said recent events have highlighted another factor that needs to be considered alongside efficiency: the economic cost of interruption.

A supply chain that operates efficiently during normal circumstances can become vulnerable if a critical supplier or geographic location suddenly becomes unavailable, he said.

The issue is particularly visible in the market for critical minerals. Lithium, cobalt, rare earth elements and other strategic materials are essential for batteries, electronic equipment, renewable energy systems and advanced manufacturing.

Mishra noted that the extraction, processing and refining of several such resources remain concentrated in particular parts of the world. This geographical concentration can create vulnerabilities when trade or transportation is disrupted.

He said the assumption that technological progress had reduced the importance of geography has been challenged by recent developments.

“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 experience has reinforced the importance of preparing for disruptions without withdrawing from the global economy.

He stressed that resilience should not be interpreted as isolation or protection from international trade. Instead, he said, countries need the capacity to remain connected to global markets while limiting excessive exposure to external risks.

The principal secretary also linked India’s approach to a broader shift in the way governments assess economic security. Supply chains, energy access, critical technologies, financial systems and strategic resources are increasingly interconnected with geopolitical developments.

He said India intends to remain open to international economic engagement while developing sufficient domestic capabilities and diversified international partnerships to withstand unexpected disruptions.

Mishra concluded by saying that the global economy will increasingly favour countries capable of maintaining stability while remaining engaged with the world.

He said the objective should be to remain “steady without being closed, careful without being fearful and ambitious without being naive”.

His remarks at the Kautilya Economic Conclave come amid continuing changes in global trade and energy markets, where geopolitical tensions, shipping disruptions, sanctions and tariff measures are increasingly influencing economic decisions.

The emphasis, Mishra said, should therefore be on building resilience without sacrificing the benefits of international cooperation and economic openness.