Resolute, not reactive: How to read India's approach to ceasefire with Pakistan

Indian Express

19-05-2025

Recently, the term 'ceasefire' has dominated headlines, with some critics labelling the India-Pakistan ceasefire 'US-brokered' and framing it as a threat to our sovereignty. The US has since changed its stance. Their reaction reflects short-term political opportunism and a limited understanding of national security, often overlooking the economic aspects of peace. India's decisions are not influenced by external forces; they are rooted in national interest. Unlike the Cold War era of the 1970s, India today is atmanirbhar, leveraging domestic capabilities while engaging globally. Strategic patience stems from our institutional maturity and economic strength.
Yes, the conflict may have inflicted a sharper financial toll on our adversary. But we must never forget that our future is worth protecting — not only because we have more to lose but also because we have built more to safeguard. Our industries are far more advanced, and our youth population, at over 550 million, is more than twice the size of Pakistan's entire population. This gives us a workforce with unmatched potential. In addition to our growing network of global partnerships, it becomes clear that India has built far more and has far more to protect.
It must also be stated clearly: A ceasefire is not a stop to the government of India's fight against terrorism. It is not a retreat. The PM stands firm on his words — terrorists and their sponsors will be treated alike. Those who aid or abet terrorism will face consequences, diplomatically and economically. In our own lives, we already practise this resolve. Turkey's alignment with Pakistan has triggered spontaneous public boycotts. This is a principle of reciprocity and accountability. Other nations would do well to take note.
The opportunity cost of a prolonged conflict in today's context is far greater than in previous decades. Every year of peace adds to India's capacity. Peace allows for uninterrupted capital formation, innovation and infrastructure creation. India is the fourth-largest economy with a nominal GDP of $4.19 trillion and is expected to become the third-largest by 2027. The IMF projects India's GDP to grow by 6.2 per cent in 2025, compared to Pakistan's 3 per cent. Stability is key with a GDP projected to exceed $30 trillion by 2047.
Additionally, India has over $620 billion in foreign exchange reserves, covering over 11 months of imports, whereas Pakistan's reserves are around $15 billion, sufficient for only about three months of imports. India's global export share has increased from 1.2 per cent in 2005 to 2.4 per cent in 2023, while Pakistan's remains at 0.12 per cent. India ranks 63rd on the Ease of Doing Business index and 40th on the Global Innovation Index 2023, with a thriving startup ecosystem of over 1,00,000 startups and 115+ unicorns, in contrast to Pakistan's ranking of 108th and 88th, respectively.
India's actions, like suspending the Indus Waters Treaty, limit Pakistan's ability to fund operations without external support. A ceasefire and the emerging 'new normal' present an opportunity where we don't even have to use arms — economic instruments such as the IWT can be more potent. Cotton accounts for over 60 per cent of Pakistan's exports and the textiles sector makes up 8.5 per cent of its GDP. It risks significant yield losses if sowing is delayed. In rice, where India controls 65 per cent of the global basmati market to Pakistan's 35 per cent, any hit to Pakistan's paddy crop could widen that gap. Pakistan's major hydro plants rely on treaty-governed river flows.
India's trade architecture is rapidly evolving, marked by multiple operational trade agreements and a recent FTA with the UK. Pakistan is stuck in a narrow trade matrix, heavily dependent on textiles and agriculture. India is positioned to lead globally, allowing it to diversify markets and enhance resilience in sectors like electronics, pharmaceuticals, and renewables. Meanwhile, with cautious foreign investment, Pakistan continues to face scrutiny, attracting only $1.5 billion in 2024 compared to India's $60 billion in FDI.
Some critics suggest India's decision to uphold a ceasefire results from external pressure. That is both inaccurate and outdated. India's defence partnerships today are assertive, not dependent. Japan has invited India to co-develop the sixth-generation GCAP fighter programme. Russia has offered joint production of the S-500 missile system, an upgrade to the already formidable S-400. Meanwhile, domestic defence manufacturing is rapidly expanding. In 2023-24, over 75 per cent of defence capital procurement was earmarked for Indian firms.
Energy security, too, has improved. India is the third-largest wind and solar energy producer, reducing its exposure to global oil shocks. And through platforms like UPI and Aadhaar, India has created the world's most inclusive financial and welfare delivery system. These pillars of self-reliance allow it to choose timing and tactics based on strategic rationale, not foreign expectations.
For investors, peace signals stability. The $47 billion committed under PLI schemes across electronics, EVs, and telecom would be difficult to sustain under prolonged uncertainty. Moreover, conflict risks disproportionately hit border-facing industries. Many textile and handicraft units are located near the western front — any escalation risks disrupting export deadlines, damaging brand credibility, and raising insurance premiums.
India's approach is not reactive, it is resolute. Peace is not the absence of options, but the presence of priorities. India's priorities are clear: Sovereign dignity, economic ascent, and technological leadership. Ceasefire, in this sense, is not a compromise. It is a commitment to security, growth and a future that belongs not to the most belligerent but to the most prepared.
The writer is professor of finance, XLRI Xavier School of Management and a BJP leader