India is facing challenges as the traditional boundaries of geopolitics are being redrawn by geo-economics.

• Geopolitics: Power through traditional factors like geography and military.
• Geo-economics: Use of economic instruments (trade, sanctions) to promote and defend national interests and produce beneficial geopolitical results.

How Geo-economics is shaping Geopolitics?

• Energy and Resource Diplomacy: E.g. the U.S. recently launched the "Pax Silica" initiative to secure supply chains for semiconductors, AI, and critical minerals; India was excluded from the nine-member group.
• Weaponization of Interdependence: E.g. use of financial sanctions by the US like cutting off Russian banks from SWIFT.
• Trade Policy as Strategic Tool: E.g. "Trade War" between the US and China, involving technological supremacy (e.g. semiconductors).
• Geo-economic Fragmentation: E.g. EU’s Carbon Border Adjustment Mechanism (CBAM) that shifts the burden of emission reductions onto the Global South.

India’s Key Challenges in the Geo-economic Arena

• Mineral and Technology Gaps: Despite a geology comparable to Australia, India has only explored 25-30 percent of its potential, leading to a 100 percent import dependence for critical minerals like lithium.
• Low R&D & Tech Ecosystem: India spends just about 0.6-0.7% of its GDP on the R&D Sector, significantly lower than the 2.5–3% spent by China and the US.
• Policy & Governance Gaps: such as bureaucratic red-tapism which limits private sector participation and investment in mineral exploration.