It is time the Indian state governments develop greater capacity to understand India’s foreign policy and the foreign policy objectives of other nations investing in their states. For much of India’s post-independence history, foreign policy has remained under the exclusive domain of the Union government, and rightly so. Questions of sovereignty, diplomacy, and national security require a unified voice and centralised control. State governments have historically focused on domestic administration and development, with limited direct interface with the strategic domain.
However, this separation between the external and the internal is becoming increasingly blurred. The exposure of Indian states to foreign capital as well as foreign influence is only going to increase with time. Increasing FDI, the growing presence of foreign businesses, and the embedding of global capital into technology platforms, logistics networks, and long-term supply chains are changing the nature of economic engagement at the state level. Trade agreements now shape agricultural incentives, shifts in global energy markets influence domestic pricing and sourcing decisions, and evolving standards in exports directly affect state-level industries. At the same time, diaspora networks and transnational linkages continue to shape investment flows, innovation, and even social expectations in states such as Punjab and Gujarat.
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In this context, when a state government facilitates investment—whether in manufacturing, infrastructure, or services—it is not simply enabling economic activity; it is participating, often implicitly, in a wider geopolitical and technological ecosystem. With many industries now opening up to the “direct route” of investments from abroad, the autonomy and exposure of state-level decision-making to foreign policy dynamics is only going to increase.
Even if such investments are vetted at the central level, critical decisions relating to land allocation, regulatory facilitation, and infrastructure provisioning are made at the state level. The decision-making of state bureaucracies and political leadership therefore already has an influence on India’s foreign policy outcomes, even if indirectly—and the reverse influence of foreign policy on state outcomes is already well established.
At the same time, our states have limited capacity to deal with these foreign influences or read into all of the strategic aspects that impact the long-run well-being of their economies and populations. This creates a growing mismatch between exposure and preparedness. In the absence of such capacity, states risk adopting a narrow, transaction-oriented approach to global engagement—prioritising immediate gains while overlooking longer-term strategic, technological, or regulatory consequences. This is not merely a missed opportunity; it can become a structural constraint on India’s broader economic and strategic trajectory.
It is important to clarify that the issue at hand is not one of redistributing constitutional authority. Foreign policy must—and will—remain under the aegis of the Ministry of External Affairs at the centre. The need is not for states to conduct foreign policy, but to develop the capacity to understand, interpret, and implement it effectively within their spheres of governance. In fact, strengthening such capacity at the state level can improve the implementation of India’s international commitments, reduce policy friction, and ensure that national objectives translate into outcomes on the ground.
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At the same time, this proposition is not without its risks, and these must be acknowledged clearly. Foreign policy requires coherence, and uncoordinated external engagement by states could lead to policy fragmentation or mixed diplomatic signalling. There are also national security considerations, particularly in border states and politically sensitive regions, where cross-border dynamics have historically had complex implications. There is also the risk of capacity without coordination—where partial or uneven understanding leads to decisions that may inadvertently conflict with national priorities. These concerns highlight a central point: the objective is not to expand the domain of foreign policy, but to strengthen its informed and coordinated implementation.
Therefore, the question is not whether states should engage with global actors—they already do—but whether they will do so with sufficient understanding and strategic awareness.
In this regard, the MEA’s earlier step to have an office that looks at states, and its initiative of encouraging Indian Foreign Service officers to be well-versed in the affairs of at least two states, is a welcome one. It is time to also build some reverse capacity—i.e., of the state leadership and bureaucracy to perhaps take upon itself to learn about specific countries, their strategic culture, political systems, economic structures, and long-term policy orientations.
There are multiple pathways through which such capacity can be built. Public policy schools and existing academic infrastructure such as the IIMs and ISB could play a role, given their understanding of industrial policy and incentives. Institutes such as the Manohar Parrikar Institute for Defence Studies and Analyses and the Observer Research Foundation, along with similar think tanks, could contribute by designing training programmes and generating policy-relevant knowledge.
A third way to do this, and perhaps the most immediately effective, would be greater interactions, structured training programmes, and regular knowledge-sharing mechanisms between the MEA, the Ministry of Commerce and Industry, the Ministry of Petroleum and Natural Gas, the Ministry of Corporate Affairs, and their counterparts at the state level. While some of this is already happening, it would be beneficial to institutionalise and significantly scale up these efforts.
At the same time, states themselves do not necessarily need large new bureaucratic structures. Small, specialised units within existing departments—focused on tracking global economic trends, understanding key partner countries, and supporting decision-making—could significantly enhance institutional competence without creating administrative bloat.
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There are formalised examples of such arrangements across the world. In the United States, for example, the New York City Mayor’s Office has a foreign affairs function that engages with embassies, hosts international businesses, and supports investment facilitation. Similarly, in China, every province and many major municipalities operate Foreign Affairs Offices under a coordinated framework involving both provincial authorities and the Ministry of Foreign Affairs, alongside their commerce departments. These models demonstrate that subnational engagement with global actors can coexist with strong central coordination.
In India, we have investment promotion agencies, but they are largely focused on attracting FDI and do not always incorporate a deeper strategic understanding of either India’s foreign policy objectives or those of the partner countries involved. In essence, there is a need to embed foreign policy understanding within the broader agenda of economic development through carefully designed institutional mechanisms.
Lastly, it would be imperative for state leaders, civil society, and bureaucracy to develop a clear sense of India’s foreign policy and national security objectives, as well as those of the countries they are engaging with. In an increasingly interconnected world, strength lies not only at the centre, but in the ability of the system as a whole to think and act strategically.
Building foreign policy capacity at the state level does not dilute the authority of the Union government. Properly designed and coordinated, it reinforces it—by improving implementation, reducing risk, and ensuring that India’s engagement with the world is both coherent and effective.