INDIA-U.S. TECH DIPLOMACY

SEMICONDUCTORS, AI, AND STRATEGIC TRADE

- Bill Christopher Arputharaj

Introduction

The global economic order, characterised by liberal trade and U.S.-centric financial institutions, is undergoing seismic shifts due to the U.S.-China trade war in 2018. The tariff truce between these superpowers, while easing market volatility, still highlights the ongoing struggle for technological supremacy and geoeconomic influence. For India, the truce presents a paradox, restores short-term trade stability but also exacerbates long-term vulnerabilities unless addressed with structural reforms and diplomatic foresight. As an emerging pole in the Indo-Pacific, India’s response will determine whether it remains a reactive trading entity or evolves into a proactive geoeconomic actor.

De-dollarisation Effects in the World & China’s Dominance

The de-dollarisation of global trade is driven by dissatisfaction with the current international financial architecture, with countries like Russia, China, Brazil, and the UAE exploring alternative payment mechanisms. China’s promotion of the digital yuan and the establishment of the Cross-Border Interbank Payment System aim to reduce reliance on the SWIFT network and challenge dollar hegemony. This movement, accelerated by geopolitical sanctions and U.S. fiscal policy vulnerabilities, has strategic implications for India. While it provides opportunities to settle trade in rupees with countries like Russia and the UAE, it also risks deepening China’s financial influence in Asia and Africa.¹ India must champion a multilateral, rules-based alternative anchored in digital sovereignty and regional currency cooperation.

U.S.China Chip War and Its Impacts on India’s Strategic Interests