When Geopolitics Rewrites Trade Turning Risk into Advantage

The world your business professor described five years ago no longer exists. The era of seamless globalisation, where goods flowed freely, supply chains stretched across continents without a second thought, and politics stayed politely out of the boardroom, is over. What has replaced it is messier, more volatile, and — for the businesses that understand it — full of unexpected opportunity.

From the Russia-Ukraine war reshaping European energy markets to the US-China technology rivalry forcing companies to pick sides, geopolitical risk has moved from the footnotes of annual reports to the front page. And nowhere is this shift more consequential or instructive than in the strategies of Indian businesses and emerging-market multinationals as they navigate global trade challenges in real time.

The New Geography of Trade

For decades, global business ran on one simple logic: put your factory where labour is cheapest, sell where demand is highest, and let markets sort out the rest. That logic built Apple’s empire in China. It also left Apple extraordinarily vulnerable when US-China relations deteriorated, forcing the company to scramble for alternatives while still manufacturing roughly 90 per cent of its devices in a single country.

The semiconductor crisis of the early 2020s drove the lesson home. When Covid-19 disrupted chip production concentrated in Taiwan and South Korea, entire industries ground to a halt. US companies waited a year for components. The dependency was not just a supply chain problem; it had become, as American officials acknowledged, a national security risk.

The response has been a fundamental rethinking of where businesses operate and why. Two concepts now dominate boardroom conversations: friend-shoring, which means relocating supply chains to politically aligned countries, and near-shoring, which means bringing production closer to home markets. Both represent a deliberate trade-off between pure efficiency and strategic resilience.

India’s Moment, India’s Challenge

This reshuffling of the global map has created a genuine opening for India. As multinationals execute “China-plus-one” strategies — supplementing Chinese operations with facilities elsewhere to reduce single-market dependency — India competes alongside Vietnam, Indonesia and Bangladesh for a share of redirected investment.

But India’s relationship with globalisation has always been complicated. The country sits at an interesting crossroads: large enough domestically that its GDP is relatively insulated from external shocks, yet deeply embedded in global trade through pharmaceuticals, software and a growing manufacturing base. Indian policymakers have historically oscillated between protectionist impulses — visible in tariff barriers, FDI restrictions and the controversial decision to stay out of the Regional Comprehensive Economic Partnership (RCEP) — and genuine liberalising ambition.

The impact of geopolitical risks on business has forced a harder look at this ambivalence. Indian businesses that once viewed geopolitics as someone else’s problem are discovering that trade wars, sanctions and diplomatic tensions affect them whether they participate or not. The rupee moves when global investors panic. Commodity prices spike when conflict breaks out in distant regions. Export markets close overnight when regulations change.

Leaders Who Saw It Coming

The businesses that are navigating global trade challenges most effectively are those whose leaders understood, often years in advance, that politics and commerce were becoming inseparable.

Carlos Tavares, chief executive of global automaker Stellantis, dissolved his joint venture with a Chinese automotive group in 2022, months before many peers even acknowledged the risk. His reasoning was direct: when geopolitical tensions produce cross-sanctions between competing blocs, companies with operations on both sides are forced to choose. Better to choose proactively than under pressure.

Royal Dutch Shell’s scenario planning department, famously established in 1969, had anticipated the consequences of the Yom Kippur war a full four years before it happened, and the company earned billions as a result. The lesson is not that businesses can predict geopolitical events — they cannot. The lesson is that companies that build structured processes for imagining multiple futures are far better positioned when the unexpected arrives.

The Emerging Market Playbook

For emerging-market multinationals, the playbook increasingly involves building geopolitical literacy into corporate governance itself. Harvard Business Review has argued that the old approach — in which siloed risk management means that financial, legal and operational teams operate independently — is dangerously inadequate. A board that does not include people who understand how geopolitics intersects with business is flying blind.

Practical steps that research consistently identifies as effective include: supply chain diversification across multiple jurisdictions; scenario planning that stress-tests operations against disruptive geopolitical events; strong local stakeholder relationships in key markets; and robust compliance frameworks that stay ahead of evolving sanctions regimes. Insurance instruments and financial hedging round out the toolkit.

Uncertainty as Advantage

Here is the counterintuitive truth about the current environment: the businesses most threatened by geopolitical volatility are those that assumed it would never arrive. For businesses willing to engage seriously with a more fragmented world, uncertainty itself becomes a competitive advantage. While competitors react, they anticipate. While others retreat, they position themselves.

The map has changed. The businesses that thrive will be the ones that helped draw the new one.