Global South Must Diversify Trade And Energy Sources To Tackle Geopolitical Shocks: Shaktikanta Das

Developing economies, including India, need to diversify their trade relationships and energy sources to protect themselves from global disruptions, Shaktikanta Das, principal secretary-2 to Prime Minister Narendra Modi, said on Tuesday.

Speaking at an event organised by Research and Information System for Developing Countries (RIS) and Delhi School of Economics, Das said Global South nations possess significant resources, including critical minerals, agricultural commodities and young human capital, which can provide greater influence when countries act collectively.

“Global South economies possess a substantial share of the world's critical minerals, natural resources, agricultural commodities, and youthful human capital,” Das said.

He added that cooperation among developing countries could improve their negotiating position on issues such as trade, climate finance, technology transfers, supply chains and reforms of global financial institutions.

Energy security and geopolitical risks

Das said recent geopolitical developments, including conflicts in Ukraine and West Asia, have exposed the vulnerability of energy-importing countries. He noted that disruptions in global markets have increased pressure on fiscal balances and foreign exchange reserves.

“The lesson is clear – diversification of energy mix can reduce vulnerability and strengthen domestic resilience. Renewables and biofuels can enhance energy security and economic stability,” he said.

India, which imports more than 80% of its crude oil requirements, has faced higher energy costs amid supply uncertainties. Das said countries in the Global South need to manage rising commodity prices, tighter monetary conditions and increasing debt pressures through fiscal and structural reforms.

He also highlighted the importance of reducing dependence on limited sources of energy and strengthening domestic capabilities.

Strengthening competitiveness and cooperation

Das said declining cross-border transaction costs have helped developing economies become part of global production networks. However, rising trade barriers and tariffs have created new challenges for businesses.

“For countries in the Global South, this calls for pursuing policies that strengthen competitiveness, reliability and efficiency of their firms,” he said.

He emphasised that investments in infrastructure, human capital, a business-friendly regulatory environment and private sector participation would help create jobs and improve economic resilience.

Das said greater coordination among Global South countries would help them protect their interests and respond more effectively to unilateral measures taken by larger global powers.