In a turbulent world, domestic reforms are India’s strongest foreign policy tool

As renewed tensions in West Asia disrupt shipping lanes, raise insurance costs, and unsettle energy markets, an old truth is reasserting itself: geopolitics is inseparable from economics. From the Red Sea to Eastern Europe, trade is no longer shaped solely by comparative advantage, but by strategic alignment, resilience, and trust. For India, this presents both an opening and a test. In an era where economic credibility underpins geopolitical influence, foreign policy is increasingly anchored in domestic performance. The clearest signal India can offer to global investors lies not just in its external positioning, but in the consistency, speed, and reliability of execution at home.

The Jan Vishwas (Amendment of Provisions) Bill, April 2026, represents a paradigm shift in how India governs its economy. While the first iteration in 2023 decriminalised 183 provisions, the 2.0 version covers 784 provisions across 79 central Acts (PIB).

This is not merely a legal housekeeping exercise; it is a competitive necessity. For decades, the “inspector raj” and the threat of imprisonment for technical errors were significant deterrents to FDI. By converting these criminal provisions into civil penalties, India is aligning its regulatory environment with global peers like Vietnam and Indonesia. In Vietnam, aggressive expansion of National Single Window clearances and amended IP law implementation have streamlined investor entry, contributing to disbursed FDI reaching $5.41 billion in Q1 2026, a 9.1 per cent year-on-year increase (Vietnam General Statistics Office).

India’s response, EoDB 2.0, moves towards “silent compliance.” The objective is to reduce the compliance thicket, where a typical MSME still navigates up to 1,450 annual requirements (TeamLease RegTech, 2025-26). By introducing adjudicating officers under Jan Vishwas 2.0, the government is signalling that procedural lapses are no longer treated as crimes against the state, but as administrative errors. But the next phase of reform must go beyond this. For global investors, the real question is not how quickly a company can be incorporated, but how efficiently it can scale: can land be acquired without prolonged uncertainty? Can approvals be secured without delays? Can firms expand across states without navigating fragmented compliance systems?

The reform challenge now is clear: India must shift from ease of doing business to ease of growing business. This requires harmonised regulations across states, streamlined compliance systems, and a consistent on-ground experience that matches policy intent.

The trinity of productivity Judicial efficiency as economic infrastructure

In global boardrooms, contract enforcement is a core investment parameter. India continues to face significant gaps here. Historically, World Bank data indicated that enforcing a contract in India took approximately 1,445 days, nearly four years, significantly longer than in peers like China.

The implications are immediate and material, including higher costs of capital, firms hesitating to enter long-term contracts, and shallow supply chains. At the same time, India’s courts are burdened at scale. Over 5.5 crore cases are pending across all court levels. The vast majority-approximately 4.9 crore-clog the district and subordinate courts, often involving minor procedural matters or long-standing land disputes (National Judicial Data Grid, March 2026).

The Jan Vishwas 2.0 logic of “executive adjudication” is the first real pressure-release valve for this system. By moving minor economic offences out of the courtroom, the judiciary can focus on high-stakes commercial disputes. But more must be done. Judicial efficiency must be treated as economic infrastructure, with faster commercial courts, stronger arbitration frameworks, and time-bound dispute resolution. Without this, India risks losing out in sectors where trust and long-term contracts matter most.

Logistics: The cost of competitiveness

India’s ambitions to become a global manufacturing hub will ultimately be tested on its cost competitiveness. Logistics sits at the heart of that equation. India has made significant progress. Logistics costs have declined from 13-14 per cent of GDP to 7.97 per cent in 2023-24 (DPIIT-NCAER Assessment Report, September 2025), closer to the global benchmark of 8 per cent. Investments in highways, dedicated freight corridors, port modernisation, and digital platforms such as PM Gati Shakti are beginning to yield results.

The competitive landscape is tightening, with Vietnam, Mexico and Indonesia gaining ground. Marginal differences in logistics costs, port dwell time and cargo clearance now determine supply chain decisions. India must prioritise multimodal integration, reduce bottlenecks, and ensure coordination across ministries and states. The National Logistics Policy offers a strong framework; its execution will be decisive

Regulatory certainty in an uncertain world

In a volatile global environment, predictability is often more valuable than incentives. India’s macro-policy direction has been stable. But businesses continue to encounter uncertainty from regulatory changes, varying interpretations, and compliance complexity, especially when operating across multiple states. The government’s commitment to “Minimum Government, Maximum Governance” through the reduction of 47,000 compliances in November 2025 and the Jan Vishwas Bill represents a shift towards trust-based regulation. An important next step is to institutionalise this approach. This includes systematic regulatory impact assessments, stakeholder consultation before major policy changes, time-bound approvals and clear implementation timelines, and reduced multiplicity of regulators.

Regulatory certainty is not about slowing reform; it is about making reform predictable and credible. In today’s world, every domestic reform sends a global signal: a contract enforced in one year instead of four signals reliability; a logistics system operating at 8 per cent of GDP instead of 12 per cent signals competitiveness; and a regulatory system based on trust rather than criminalisation signals maturity. Taken together, these define how India is perceived: not just as a large market, but as a dependable partner.

Countries that combine scale, stability, and speed will define the next phase of globalisation. India is well-positioned to be among them. But this is not guaranteed. The Jan Vishwas reforms show what is possible when policy shifts from control to trust. The next step is to embed this philosophy across the entire economic system. Because in today’s turbulent world, domestic reforms are no longer just an economic priority; rather, they are India’s most powerful foreign policy tool.

The writer is Executive Director, Pahle India Foundation. With inputs from Kuntala Karkun, Senior Visiting Fellow, Pahle India Foundation; Views presented are personal.