How Modi's ‘swadeshi' call gives India's economic nationalism a new voice

India Today

2 days ago

On August 2, in political hotspot Varanasi, Prime Minister Narendra Modi reached for a word he rarely uses in economic speeches. Not Aatmanirbhar, not Make in India, not Vocal for Local. This time, it was something older and more socio-culturally loaded.'Every new item entering our homes,' Modi told a gathering of farmers, shopkeepers and traders, 'must be swadeshi.' He followed it up with an exhortation to the country's retailers: pledge to sell only swadeshi goods.advertisementThe setting was familiar—Varanasi, his Lok Sabha constituency. But the script felt different. The word swadeshi carries the moral weight of India's freedom movement, associated with Mahatma Gandhi's boycotts, the spinning wheel and the rejection of foreign dependence.For over a decade, Modi's economic vocabulary has largely centred on growth, scale, self-reliance and global competitiveness. But now, with the world fragmenting and protectionism making a global comeback, the prime minister was repositioning India's economic sovereignty not just as policy but as a cultural commitment.
Modi's swadeshi call was promptly endorsed and echoed by several of his top cabinet ministers, especially those with pro-swadeshi credentials, such as Ashwini Vaishnaw and Piyush Goyal. The timing was no accident. The Donald Trump administration in the United States had just imposed a 25per cent tariff on several Indian exports and warned that India's continued imports of cheap Russian crude and defence hardware 'could invite consequences'.The US announcement had jolted diplomats and bureaucrats in South Block and North Block into crisis-mode consultations. To make Washington's blow more intense, the thought leaders of Indian diaspora (among Republicans) were unleashed to build the narrative that 'India needs America more than America needs India'.In the middle of it all, the prime minister's turn to swadeshi wasn't a spontaneous emotional flourish. It was a calibrated message—for domestic consumers and shopkeepers, for trade negotiators and investors and, most of all, for global capitals watching India's next moves. 'The message is clear,' said a top BJP leader. 'New Delhi will not concede to any pressure, and will continue to chart path on the self-reliance trajectory, and rely on the country's purchase capacity and the market's appetite.'For India's political class and industry watchers, the line triggered some dj vu. Ever since Modi came to power in 2014, there has been a tug of war between globalist impulses and swadeshi instincts. The Make in India campaign has had shades of both. The Aatmanirbhar Bharat pitch leaned into strategic autonomy but remained couched in the language of growth and technology. But swadeshi, as a term, has long been favoured more by the Rashtriya Swayamsevak Sangh (RSS) than by technocrats at NITI Aayog or the Union finance ministry. That the prime minister himself invoked it—and repeated it—suggests a pivot.advertisement'Let us march towards a self-reliant India,' posted S. Gurumurthy, former co-convenor of the RSS affiliate Swadeshi Jagran Manch (SJM) on X. 'SJM applauds Hon'ble Prime Minister's appeal for embracing SWADESHI in all walks of life.'The capitalised emphasis was not stylistic. It was triumphal. For years, SJM has criticised India's deepening dependence on foreign electronics, e-commerce platforms and defence imports—even under the Modi government. SJM, since 2020, has been backing the government's push for self-reliance. Several SJM leaders have said in the past that they see the self-reliance call as synonymous with their version of swadeshi. For them, Modi's speech in Varanasi comes as a definitive alignment with the SJM's long-argued economic worldview.But the significance of Modi's swadeshi call goes beyond domestic symbolism. It comes at a time when India is in the middle of delicate trade negotiations—with the US, the European Union and the Gulf Cooperation Council (GCC). These talks are at critical stages and hinge on difficult issues: rules of origin, market access, digital sovereignty and local content mandates. The one with the US is almost in a stalemate. The return of swadeshi into the prime ministerial lexicon signals India may now be drawing firmer red lines, especially on industrial policy.advertisementInsiders in the Union commerce ministry say UK and EU trade negotiators are pushing hard on lowering tariffs for consumer goods and machinery whereas India has historically sought to protect micro, small and medium enterprises (MSMEs). Modi's phrasing—'every item entering our homes'—appears to push back against exactly that. It frames the issue as one of national behaviour and economic nationalism. For Delhi's negotiators, it's a useful rhetorical shield. For their counterparts in London and Brussels, it's a cue to recalibrate expectations.This reassertion of economic nationalism also reflects broader global shifts. Across the world, protectionism is back in vogue. The US has its Inflation Reduction Act. The EU is selectively decoupling from China. Even globalist Germany is subsidising chip-making and green tech. India's own PLI (Production Linked Incentive) schemes were already a nudge towards deeper localisation. Now, Modi's swadeshi comment gives political backing to go further, especially in sectors such as electronics, semiconductors, defence, solar panels and even FMCG (fast-moving consumer goods).Multinational firms and foreign investors will be watching carefully. On the one hand, Modi's remarks reaffirm India's enormous domestic demand potential. On the other, they point to rising policy risk. The warning is implicit: global players will be welcome but only if they embed themselves deeply in Indian supply chains, create value locally and respect India's economic sovereignty.advertisementThe statement also landed within a broader speech where the prime minister celebrated the upcoming BrahMos missile production facility in Lucknow and defended India's sovereign right to source oil 'from wherever it is cheapest'. This was no longer just about consumer products. It was about linking energy, defence and trade policy into a broader economic security doctrine. In that framework, swadeshi is not an emotional cry—it is strategic statecraft.Interestingly, the swadeshi revival call has monetary implications too. Over the past year, India has been quietly expanding rupee-settled trade with Russia, the UAE and several African partners. While still a small fraction of the overall trade, this signals a hedging strategy—one that aligns with the idea of a swadeshi financial architecture. Less exposure to the dollar, more bilateralism and greater control over external vulnerabilities. In a world where economic coercion is being weaponised, India seems to be learning from both friends and adversaries.advertisementStill, questions remain about how far this rhetorical pivot will be translated into hard policy. Will the government formalise local-content requirements across sectors beyond defence and electronics? Will it introduce new import duties on foreign consumer goods, a move that would please domestic industry but upset trade partners? Or is this simply a calibrated nudge to voters and allies, not an ironclad economic doctrine?One indicator may lie in how India navigates its MSME-heavy manufacturing base. These enterprises have long lobbied for protection against Chinese and ASEAN imports, particularly in textiles, toys, leather goods and low-end electronics. According to data from the ministry of commerce and Department for Promotion of Industry and Internal Trade (DPIIT), Indian MSMEs contribute nearly 30 per cent to the Gross Domestic Product (GDP) but face stiff competition from under-invoiced or dumped imports—especially post-RCEP (Regional Comprehensive Economic Partnership) withdrawals.New Delhi is already working with counterparts governing ASEAN (Association of Southeast Asian Nations) trade pacts, along with CEPA (Comprehensive Economic Partnership Agreement)-like agreements in Far Eastern countries such as Japan and South Korea, to review the more-than-a-decade-old agreements. The prime minister's swadeshi call could be seen as a moral cover for a fresh round of defensive industrial policy, particularly in sectors that employ millions and hold electoral importance.Another bellwether will be the digital economy. The EU and US trade teams have been pressing India to commit to non-discriminatory data flow rules in the free trade agreement (FTA) texts. But India's push for data localisation and the wider regulatory moat around digital infrastructure fit naturally with the swadeshi narrative. If India begins couching tech policy as economic self-rule, we could see a hardening of positions in negotiations and tighter scrutiny of foreign digital platforms.Politically, the Varanasi speech was a masterstroke. It allows the BJP to convert the narrative of what could have been framed as a moment of US pressure—tariff threats, energy scrutiny—into a sovereignty narrative. It gives the domestic industry something to rally around and positions India as a confident voice of the Global South. It also puts the Opposition in a bind: how does one oppose a swadeshi call without sounding like a cheerleader for foreign goods?The challenge, of course, lies in execution. If swadeshi becomes policy, it must avoid the trappings of inefficiency and cronyism that plagued licence-era industrialism. If it remains rhetorical, it must still offer clarity to investors, consumers and trade partners. For now, it appears to be doing what it was designed to do: consolidate economic nationalism ahead of a global economic reordering—and set the tone for India's place in it.On that humid August 2 afternoon in Varanasi, Modi didn't just revive a word. He reignited an idea. In doing so, he signalled that India's next phase of global economic engagement will not be dictated from outside, but shaped from within—and that swadeshi, once the vocabulary of freedom, is now the language of power.Subscribe to India Today Magazine- EndsTune InMust Watch