The power of paradiplomacy

INDIAN STATES ARE NOW ACTIVELY SHAPING THE COUNTRY’S ECONOMIC ENGAGEMENT WITH THE WORLD

- HARSH V PANT Vice-President, Observer Research Foundation, New Delhi

ARADIPLOMACY—SUB-NATIONAL GOVERNMENTS engaging directly with international actors—has gradually become a defining feature of India’s evolving foreign policy landscape. While India’s external relations remain constitutionally anchored in the authority of the Union government, the growing participation of states in global engagement reflects the deeper transformation of India’s political economy since the early 1990s. What was once an overwhelmingly centralised diplomatic architecture has slowly adapted to the realities of globalisation, federalism, and competitive economic development.

The most decisive turning point in this trajectory was the economic liberalisation initiated in 1991. By dismantling many of the state controls that had defined India’s post-independence economic strategy, the reforms integrated the country more closely with the global economy. Foreign direct investment, global supply chains, and international technology partnerships suddenly became central drivers of development. In this new environment, state governments could no longer remain passive administrative units waiting for centrally mediated economic opportunities. Instead, they began to compete actively to attract capital, infrastructure investment, and industrial partnerships. States such as Maharashtra and Gujarat were among the pioneers, reaching out to foreign investors and positioning themselves as gateways to India’s expanding market.