<h2><strong>Executive Summary</strong></h2><ul><li><p>Going into the Ukraine war, the assumption was that the <strong>shift from the molecule-led economy to an electron-based economy</strong> was an irreversible, structural change.</p></li><li><p>Former US National Security Advisor<strong> Jake Sullivan's description of US trade policy</strong> <strong>('A high fence around a small yard')</strong> captures how protectionism and conservatism have become the natural response for governments everywhere.</p></li><li><p>India is seen as a nimble operator and <strong>businesses need their own web of multi-forum partnerships</strong>, aware that something as specific as a critical minerals export now carries a substantial foreign policy weight.</p></li><li><p>While <strong>Apple's expansion in India is a solid proof point</strong> of its own ability to attract investments, India needs to<strong> cascade into more investments across sectors</strong> before this can be treated as a pattern rather than an exception.</p></li></ul>.<p>Global growth has held at 3% or higher since 2023, even in the face of major conflicts like the Ukraine-Russia and Iran-US wars. 3% is the informal line economists treat as the divide between healthy and suboptimal growth, and India's resolute, 6-7% annual rate has done much of the work in terms of buoying the global figures. Vasuki Shastry, Senior Advisor at Gatehouse Advisory Partners and former Global Head of Public Affairs and Sustainability at Standard Chartered Bank, examined where businesses sit in a fragmenting global order. He argued that the disruption of the past few years is not a passing phase. Businesses can no longer simply wait for conditions to normalise; instead, they need a working set of decision frameworks to operate by.</p><h2><strong>Molecule vs Electrons</strong></h2><p>There is a long-running debate about whether – or when – the world economy will tilt to a point where it is driven by electrons, not molecules. A molecule-led economy runs on physical fuel – oil, gas and coal – that has to be drilled, shipped, refined and burned before it produces usable power. An electron-based economy runs on electricity generated from renewables and moved through grids and batteries: solar and wind generation, electric vehicles, battery storage. Going into the Ukraine war, the assumption was that the shift from the former to the latter was an irreversible, structural change, not something that would reverse with the next downturn.</p><p>Business planning must account for the fact that this ‘inevitable’ shift has not happened and may not happen at all. Each time an oil shock hits, the molecule economy reasserts itself because energy security still runs on physical fuel reserves rather than grid capacity. No country wants to be caught short on oil when a shipping lane closes. China serves as an exception, producing 28% of global manufacturing output spanning both categories at once, chemicals and automobiles on the molecule side, EVs and semiconductors on the electron side, all while keeping its own energy security intact by trimming oil usage in the wake of the US-Iran conflict. Trade barriers are rising but complete decoupling from the molecule economy remains a mighty challenge.</p><h2><strong>A Trade Order Without Rules</strong></h2><p>The AI vs Jobs debate, while lying at the centre of public attention, sits inside a larger vacuum. No major global trade agreement been signed in years, and, as a result, countries are retreating to bilateral deals with little shared ground on economic or social issues. Former US National Security Advisor Jake Sullivan's description of US trade policy ( ‘<em>A high fence around a small yard</em>’) captures how protectionism and conservatism have become the natural response for governments everywhere. In this new world order, businesses must rely on governments to provide political cover and advocate for them because the pre-2016 era of globalisation shows little sign of coming back.</p><h2><strong>Building the 4 A’s</strong></h2><p>In a disruptive global environment, the following capabilities will serve businesses well:</p><ul><li><p><strong>Agility</strong> – Absorbing a steady run of unpredictable, often bad economic news without losing sight of their medium- and long-term plans.</p></li><li><p><strong>Adaptability</strong> – Tracking the government’s evolving cross-border partnerships and following that lead, even when the government itself is wary of certain partners.</p></li><li><p><strong>Acceptance</strong> – Treating disruption as permanent rather than a phase to wait out, since the pre-2016 order is unlikely return.</p></li><li><p><strong>Alliances</strong> – In a multi-polar world organised around convenience, businesses should take their cue from the government. India is seen as a nimble operator and businesses need their own web of multi-forum partnerships, aware that something as specific as a critical minerals export now carries a substantial foreign policy weight.</p></li></ul><h2><strong>What India Has Going for it, and What Needs a Fix</strong></h2><p>India's size and geography continue to work in its favour. Its demographic dividend will run through 2047, but the clock is ticking fast, and India is yet to capitalise on it. India has grown at 6-7% in the last few years, which is credible given an uncertain global environment, but it remains short of the 8-9% this window demands. India’s geography – at the heart of the Indo-Pacific – also works in its favour, given that Asia accounts for ~60% of global growth. This serves as a crucial tailwind that helps bring in global capital.</p><p>On the downside, market entry and policy-related issues remain challenges. Illustratively, there has been no major improvement in India’s Ease of Doing Business ratings in the last few years. Vietnam and Malaysia have done well to capitalise on the China+1 opportunity. While Apple's expansion in India is a solid proof point of its own ability to attract investments, India needs to cascade into more investments across sectors before this can be treated as a pattern rather than an exception. Domestic and foreign investors need to be looked at from the same lens to ensure equality of opportunity. Equally, pollution and urban stress have become central to expansion decisions and should not be viewed separately from the broader investment case.</p><p>India must simultaneously balance its growth path, improve the overall ease of doing business and creating a favourable environment for both domestic and foreign investors. At the same time, the India story needs to be articulated better, with more proofs of concept in place, for the world to strongly believe in it.</p>
<h2><strong>Executive Summary</strong></h2><ul><li><p>Going into the Ukraine war, the assumption was that the <strong>shift from the molecule-led economy to an electron-based economy</strong> was an irreversible, structural change.</p></li><li><p>Former US National Security Advisor<strong> Jake Sullivan's description of US trade policy</strong> <strong>('A high fence around a small yard')</strong> captures how protectionism and conservatism have become the natural response for governments everywhere.</p></li><li><p>India is seen as a nimble operator and <strong>businesses need their own web of multi-forum partnerships</strong>, aware that something as specific as a critical minerals export now carries a substantial foreign policy weight.</p></li><li><p>While <strong>Apple's expansion in India is a solid proof point</strong> of its own ability to attract investments, India needs to<strong> cascade into more investments across sectors</strong> before this can be treated as a pattern rather than an exception.</p></li></ul>.<p>Global growth has held at 3% or higher since 2023, even in the face of major conflicts like the Ukraine-Russia and Iran-US wars. 3% is the informal line economists treat as the divide between healthy and suboptimal growth, and India's resolute, 6-7% annual rate has done much of the work in terms of buoying the global figures. Vasuki Shastry, Senior Advisor at Gatehouse Advisory Partners and former Global Head of Public Affairs and Sustainability at Standard Chartered Bank, examined where businesses sit in a fragmenting global order. He argued that the disruption of the past few years is not a passing phase. Businesses can no longer simply wait for conditions to normalise; instead, they need a working set of decision frameworks to operate by.</p><h2><strong>Molecule vs Electrons</strong></h2><p>There is a long-running debate about whether – or when – the world economy will tilt to a point where it is driven by electrons, not molecules. A molecule-led economy runs on physical fuel – oil, gas and coal – that has to be drilled, shipped, refined and burned before it produces usable power. An electron-based economy runs on electricity generated from renewables and moved through grids and batteries: solar and wind generation, electric vehicles, battery storage. Going into the Ukraine war, the assumption was that the shift from the former to the latter was an irreversible, structural change, not something that would reverse with the next downturn.</p><p>Business planning must account for the fact that this ‘inevitable’ shift has not happened and may not happen at all. Each time an oil shock hits, the molecule economy reasserts itself because energy security still runs on physical fuel reserves rather than grid capacity. No country wants to be caught short on oil when a shipping lane closes. China serves as an exception, producing 28% of global manufacturing output spanning both categories at once, chemicals and automobiles on the molecule side, EVs and semiconductors on the electron side, all while keeping its own energy security intact by trimming oil usage in the wake of the US-Iran conflict. Trade barriers are rising but complete decoupling from the molecule economy remains a mighty challenge.</p><h2><strong>A Trade Order Without Rules</strong></h2><p>The AI vs Jobs debate, while lying at the centre of public attention, sits inside a larger vacuum. No major global trade agreement been signed in years, and, as a result, countries are retreating to bilateral deals with little shared ground on economic or social issues. Former US National Security Advisor Jake Sullivan's description of US trade policy ( ‘<em>A high fence around a small yard</em>’) captures how protectionism and conservatism have become the natural response for governments everywhere. In this new world order, businesses must rely on governments to provide political cover and advocate for them because the pre-2016 era of globalisation shows little sign of coming back.</p><h2><strong>Building the 4 A’s</strong></h2><p>In a disruptive global environment, the following capabilities will serve businesses well:</p><ul><li><p><strong>Agility</strong> – Absorbing a steady run of unpredictable, often bad economic news without losing sight of their medium- and long-term plans.</p></li><li><p><strong>Adaptability</strong> – Tracking the government’s evolving cross-border partnerships and following that lead, even when the government itself is wary of certain partners.</p></li><li><p><strong>Acceptance</strong> – Treating disruption as permanent rather than a phase to wait out, since the pre-2016 order is unlikely return.</p></li><li><p><strong>Alliances</strong> – In a multi-polar world organised around convenience, businesses should take their cue from the government. India is seen as a nimble operator and businesses need their own web of multi-forum partnerships, aware that something as specific as a critical minerals export now carries a substantial foreign policy weight.</p></li></ul><h2><strong>What India Has Going for it, and What Needs a Fix</strong></h2><p>India's size and geography continue to work in its favour. Its demographic dividend will run through 2047, but the clock is ticking fast, and India is yet to capitalise on it. India has grown at 6-7% in the last few years, which is credible given an uncertain global environment, but it remains short of the 8-9% this window demands. India’s geography – at the heart of the Indo-Pacific – also works in its favour, given that Asia accounts for ~60% of global growth. This serves as a crucial tailwind that helps bring in global capital.</p><p>On the downside, market entry and policy-related issues remain challenges. Illustratively, there has been no major improvement in India’s Ease of Doing Business ratings in the last few years. Vietnam and Malaysia have done well to capitalise on the China+1 opportunity. While Apple's expansion in India is a solid proof point of its own ability to attract investments, India needs to cascade into more investments across sectors before this can be treated as a pattern rather than an exception. Domestic and foreign investors need to be looked at from the same lens to ensure equality of opportunity. Equally, pollution and urban stress have become central to expansion decisions and should not be viewed separately from the broader investment case.</p><p>India must simultaneously balance its growth path, improve the overall ease of doing business and creating a favourable environment for both domestic and foreign investors. At the same time, the India story needs to be articulated better, with more proofs of concept in place, for the world to strongly believe in it.</p>
