Paradiplomacy—subnational governments engaging directly with international actors—has gradually become a defining feature of India’s evolving foreign policy landscape. While India’s external relations remain constitutionally anchored in the authority of the Union government, the growing participation of states in global engagement reflects the deeper transformation of India’s political economy since the early 1990s.

What was once an overwhelmingly centralised diplomatic architecture has slowly adapted to the realities of globalisation, federalism, and competitive economic development.

The most decisive turning point in this trajectory was the economic liberalisation initiated in 1991. By dismantling many of the state controls that had defined India’s post-independence economic strategy, the reforms integrated the country more closely with the global economy. Foreign direct investment, global supply chains, and international technology partnerships suddenly became central drivers of development.

Difference made by a new enviroment

In this new environment, state governments could no longer remain passive administrative units waiting for centrally mediated economic opportunities. Instead, they began to compete actively to attract capital, infrastructure investment, and industrial partnerships. States such as Maharashtra and Gujarat were among the pioneers, reaching out to foreign investors and positioning themselves as gateways to India’s expanding market.

The technological transformations of the late 1990s and early 2000s reinforced this shift. The rise of India’s IT sector created new opportunities for regional economies to build direct linkages with global markets. Southern states such as Karnataka, Tamil Nadu, and Andhra Pradesh capitalised on these possibilities with remarkable success.

Bengaluru emerged as a global technology hub, while Chennai and Hyderabad developed strong reputations in software services, electronics manufacturing, and innovation ecosystems. State governments played a crucial role in these developments by engaging directly with multinational corporations, technology clusters, and international investors.

In effect, economic globalisation opened the door for Indian states to articulate region-specific development strategies through international engagement.

Political developments within India further strengthened the logic of paradiplomacy. The emergence of coalition governments at the national level during the 1990s enhanced the influence of regional political parties in shaping policy priorities.

Chief ministers began to acquire greater political visibility and leverage, both domestically and internationally. Engaging foreign investors, participating in global forums, and cultivating diaspora networks became useful tools not only for economic development but also for reinforcing political legitimacy at home.

As India’s federal structure matured, states increasingly asserted their developmental ambitions beyond national borders. In recent years, the idea of competitive federalism has given additional impetus to this trend. The central government has actively encouraged states to showcase their economic strengths, improve ease-of-doing-business rankings, and compete for global investment.

India’s diversity and federal character also make paradiplomacy a natural extension of its domestic political structure. Several states possess strong cultural identities, historical trade links, or diaspora connections that naturally lend themselves to international engagement.

Border states often interact with neighbouring countries on issues of trade, connectivity, and cultural exchange. Similarly, states with large expatriate communities—particularly in the Gulf region or Southeast Asia—have strong incentives to maintain close economic and social ties with those regions.

These interactions, informal in earlier decades, have gradually acquired a more institutional character. Since 2020, paradiplomacy in India has entered a new phase of consolidation. The disruptions caused by the Covid-19 pandemic forced governments across the world to rethink supply chains, investment strategies, and technological partnerships.

Efforts to attract foreign investment

Indian states responded by intensifying efforts to attract foreign investment and integrate themselves into emerging global production networks. CMs increasingly embarked on international roadshows, investment summits, and diaspora outreach initiatives aimed at showcasing their states as competitive investment destinations.

The growing maturity of India’s paradiplomatic practices can be seen in the recent international outreach undertaken by Uttar Pradesh CM Yogi Adityanath. His four-day official visit to Singapore and Japan last month was designed as an exercise in investment diplomacy aimed at positioning Uttar Pradesh as a central pillar of India’s manufacturing ambitions.

The state government has articulated an ambitious target of transforming Uttar Pradesh into a one-trillion-dollar economy by 2029-30, and international partnerships are seen as critical to achieving that objective.

The outcomes of the visit were significant. Agreements and memoranda of understanding worth approximately 1.5 lakh crore were signed, while investment proposals exceeded2.5 lakh crore. Together, these commitments represent a potential economic infusion approaching Rs 4 lakh crore and could generate more than five lakh jobs.

The sectors targeted reflect the changing nature of India’s industrial aspirations: semiconductors, data centres, logistics, fintech, aviation maintenance and repair, automobile manufacturing, renewable energy, and green hydrogen technologies.

Japanese participation formed an especially important component of this engagement. Partnerships with companies such as Kubota Corporation, Spark Minda in collaboration with Toyo Denso, Japan Aviation Electronics, and Nagase & Co. were explored to expand industrial and technological capacity in UP.

A notable initiative was the establishment of a Green Hydrogen Centre of Excellence involving the University of Yamanashi, the Yamanashi Hydrogen Company, and Indian institutions including IIT Kanpur and IIT BHU. Such collaborations highlight how state-level diplomacy can facilitate advanced research and technological cooperation.

In Singapore, discussions with sovereign wealth funds, financial institutions such as DBS Group, and major business leaders focused on infrastructure investment, digital technology, and financial innovation. The visit also incorporated a cultural dimension, with the CM promoting Uttar Pradesh’s artisanal heritage and engaging with members of the Indian diaspora.

The broader significance of such initiatives lies in what they reveal about India’s changing diplomatic architecture. States are no longer merely implementing development policies designed in New Delhi; they are actively shaping India’s economic engagement with the world.

For Uttar Pradesh in particular, the outreach also reflects an attempt to reshape international perceptions. Once regarded as a difficult investment environment, the state now seeks to present itself as a stable and attractive destination for global capital, supported by improvements in law and order, infrastructure, and policy transparency. Its paradiplomatic efforts mark an inflection point in the evolution of this idea at a pan-India level.

Ultimately, paradiplomacy in India represents the intersection of federalism and globalisation. As Indian states become more confident participants in the international arena, their initiatives can reinforce national economic diplomacy by expanding networks of trade, investment, and technological cooperation.

If managed with careful coordination between the Union and the states, this evolving partnership has the potential to strengthen India’s global economic presence while ensuring that the benefits of globalisation are distributed more widely across the country.

The writer is Vice-President, Observer Research Foundation, New Delhi

Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.

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