India’s Critical Five-Year Window, Can The Country Capitalise On The Global Supply Chain Reset Sparked By China+1?

India has a unique window of opportunity  –  in the churning waters of global trade, where shifting tides of geopolitics, tariffs, and strategic realignments are redrawing economic maps. According to Ajay Banga, President of the World Bank Group, India has roughly five years to strategically leverage the global supply chain diversification stemming from the China+1 recalibration. With the world recalibrating trade routes, economic alliances, and production hubs, the global South, especially India, finds itself at a crucial inflection point.

Banga’s assessment isn’t based on wishful thinking. As the United States and other Western economies reassess their trade exposure to China, imposing tariffs and rethinking long-term dependencies – the global economy is undergoing a gradual but significant pivot. While these moves may seem to introduce volatility in stock and bond markets, and by extension in consumer and investment sentiment, they simultaneously present an opening for emerging economies to reimagine their roles in global trade.

But the path to seizing this moment is far from automatic. As Banga illustrates, while the U.S. continues to operate on relatively low trade tariffs even post-adjustments, many developing countries still struggle with rigid tariff and non-tariff barriers. For India to step into the gap left by a receding China-centric supply chain model, it must also address its own internal barriers to trade and investment. This isn’t merely about attracting multinationals looking to diversify; it’s about creating the domestic conditions that support such a shift – right from regulatory reforms to enhancing manufacturing readiness and deepening trade linkages both regionally and globally.

A New Face of Globalisation. Regional Webs and India’s Urgency to Act

The architecture of globalisation is not crumbling, it is simply being rebuilt. The notion that globalisation is fading because multilateral deals have slowed is misleading. As Ajay Banga points out, the world is not retreating into economic silos; instead, it is diversifying and decentralising trade through regional and bilateral agreements.

Over the past decade alone, more than a hundred such pacts have been signed, including significant ones like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). These deals transcend borders and continents, signifying that globalisation is evolving into a more multi-nodal, flexible system, no longer dominated solely by the WTO-led mega frameworks of yesteryear.

In this new trade paradigm, the implications for India are profound. The country has a shrinking window,  five years at most, Banga emphasizes, to capitalise on the tectonic shifts in supply chains triggered by the China+1 movement. This urgency means India cannot afford to wait a decade or more to fix its inefficiencies. Logistics costs, for instance, remain a thorn. Despite recent investments in improving ports, highways, and reducing red tape, India still lags behind its East Asian counterparts in terms of supply chain efficiency and trade facilitation.

A reimagining of trade policy is also essential. The cumbersome nature of dealing with tariffs and VAT refunds can dissuade companies from integrating India into their global value chains. Moving towards a ‘zero-for-zero’ approach on tariffs, eliminating them entirely on sectors of mutual advantage, could be a game-changer.

Similarly, while India has a demographic advantage with its vast labour pool, the quality of that manpower needs urgent uplift. Skilling not just in quantity but in relevance and agility must become a national priority if India is to become a hub of sophisticated, high-value manufacturing and services.

All of this indicates the fact that while the opportunity is enormous, the clock is ticking. For India to emerge as a central player in the new age of global trade, it must match its ambition with accelerated reforms and execution. The foundations are being laid, but without deeper and faster implementation, the moment may pass India by.

Rewiring Development Finance. The World Bank’s Ambitious Overhaul

At a time when the world’s development needs are both immediate and immense, the World Bank is trying to rewire itself from a cautious lender into an agile, risk-sharing partner. Ajay Banga’s leadership has accelerated this shift, translating high-level policy advice into tangible institutional reforms. One of the most pivotal shifts has been the unlocking of nearly $100 billion in new capital, not through fresh member contributions, but by optimising the World Bank’s own balance sheet – tinkering with loan-to-equity ratios, deploying hybrid capital, and innovating around portfolio guarantees. It’s financial engineering with a purpose – to do more with what already exists.

Cooperation with other multilateral development banks (MDBs) is also being reimagined. A previously fragmented ecosystem is now moving toward cohesion, with a digital platform launched to aggregate and coordinate projects among global institutions. Already, 175 projects have been pooled into this shared space, and $14 billion worth of co-financing has materialised. It’s the kind of synergistic capital movement that could have long-term multiplier effects, especially for large-scale infrastructure and climate-related investments.

Perhaps the most radical rethinking, however, is taking place in the Private Sector Lab –  the World Bank’s experimental arm to better understand and unlock private capital in emerging markets. Here, the focus is on five real-world bottlenecks that continue to deter large-scale private investment despite the obvious opportunities in regions like South Asia, Africa, and Latin America. The diagnosis is blunt and accurate – a lack of regulatory clarity, inadequate political risk insurance, the absence of junior equity investment to catalyse follow-on funding, underdeveloped local capital markets, and the need to create a standardised asset class for institutional investors.

To tackle these, the Bank is responding with tailored interventions. It has consolidated its insurance offerings under MIGA and is streamlining access, already boosting uptake by 30%. It’s also embracing bolder positions in project finance, setting up the Frontier Opportunities Fund with $100 billion in retained earnings, signaling a willingness to lead with risk capital. On currency mismatches – often a dealbreaker in emerging economies – the International Finance Corporation (IFC) has increased local currency lending from 20% to 40% in just a few years, and is experimenting with daily liquidity swaps and rolling hedges with domestic banks.

Yet the holy grail lies in building a new, investable asset class around development infrastructure something that can bring the trillions held in global pension and sovereign funds to the table. But that requires scale, standardisation, and liquidity. One-off, bespoke projects won’t cut it. That’s why the World Bank has enlisted Doug Peterson, former CEO of Standard & Poor’s, to craft a blueprint for bundling and rating such projects, making them as investable as corporate bonds or green bonds are today.

In short, it’s a rethink of development finance at the system level. And while challenges remain, especially in gaining political consensus for standardisation across countries, the early signals point to a multilateral institution beginning to punch at the weight of today’s global demands.

Private Sector, Jobs, and India at the Center of World Bank’s Strategy. President Ajay Banga

In an ambitious reorientation, World Bank President Ajay Banga outlined the institution’s evolving game plan for India and beyond, with an unmistakable focus on catalyzing private sector-led growth and enabling large-scale job creation.

India’s New Partnership Framework

The upcoming country partnership framework for India marks a pivotal shift.

“India no longer needs heavy public funding, it needs catalytic capital, global knowledge, and private sector acceleration,” Banga stated.

The Bank will scale up IFC and MIGA activities, targeting $5 billion this year in India up from $1.5 billion just two years ago, with 30% of that being equity capital.

Four focus areas emerge: rural prosperity and agribusiness, urban development and municipal innovation, skilling and vocational institutions, and MSME growth, all oriented toward job creation.

On the Indus Waters Treaty
On a sensitive diplomatic front, Banga clarified the World Bank’s role in the Indus Waters Treaty.

“We are a signatory, but our function is administrative creating neutral experts or arbitration courts, not opining on disputes,” he stressed. The trust fund established decades ago continues to finance dispute resolution mechanisms, even as tensions persist.

A Deep Retune for Jobs
The biggest thematic overhaul underway at the World Bank is its sharpened focus on employment.

“The best way to eradicate poverty is to give somebody a job, it changes income, optimism, and dignity,” Banga said.

The World Bank’s newly established Jobs Council, co-chaired by Singapore’s President Tharman and Chile’s President Bachelet, is examining scalable strategies for employment growth.

Their framework rests on three pillars – 

Infrastructure – from roads and electricity to healthcare and digitization, where India has shown global leadership.

Regulatory Reform – progress has been made, but labor laws, land reforms, and tariff barriers still pose challenges.

Capital & Risk Enablement – facilitating early-stage, risk-bearing, and insurance-backed capital for MSMEs.

Banga emphasized the need to look beyond traditional outsourcing-based job models, pointing to five core sectors for domestic job generation:

—Infrastructure (both construction and its ripple effects)

—Agriculture as a business

—Distributed primary healthcare

—Tourism

—Localized manufacturing focused on domestic and regional demand

“Not all jobs are equal, but we don’t need equal jobs—we need jobs for everyone,” he concluded.

The Last Bit, A Pragmatic New Dawn in Development Thinking

World Bank President Ajay Banga’s strategic vision signals a significant shift in how development aid, financing, and global partnerships will be redefined, particularly with India at the fulcrum. With an unapologetically private-sector-first approach, Banga is moving the World Bank beyond traditional aid paradigms of public funding and into an era that rewards entrepreneurship, risk capital, and practical, on-the-ground results.

India’s case stands as a prototype for this evolution – a country once heavily dependent on aid, now seen as a hub for catalytic capital, global knowledge sharing, and scalable solutions. Whether it’s mobilizing $5 billion in private investments, boosting MSMEs, or ensuring digitization touches every rural and urban corner, the strategy is clear – enable, don’t overreach.

The renewed focus on job creation, anchored in infrastructure, healthcare, agriculture, and local manufacturing, also reflects a deeper understanding that development is no longer about building things, but building futures. Jobs are not just a means of economic survival but a driver of dignity, optimism, and stability. This pivot from poverty alleviation to prosperity enablement is what truly sets Banga’s approach apart.

And while geopolitical issues like the Indus Waters Treaty remain diplomatically sensitive, the World Bank’s hands-off, rules-based approach reflects a maturing multilateral institution that respects boundaries and focuses on impact where it matters most.

In sum, Ajay Banga’s World Bank is not chasing legacy; it’s building one, on jobs, on enterprise, on pragmatism. And in doing so, it may just rewrite the future of development economics itself.