New Delhi, Sept. 14 -- India's external buffers are strong, but rupee depreciation exposes vulnerabilities. Dependence on imported fossil fuels worsens current account deficits. Geopolitical turmoil and oil shocks cause inflation and currency depreciation. Market volatility can lead foreign investment to reverse, putting more pressure on the rupee. Temporary measures help briefly, but cannot replace structural reforms.

The durable response is to attract stable foreign direct investment (FDI) and grow exports. For India's external sector, the most valuable FDI is that which embeds India in global value chains (GVCs), builds export capacity, transfers technology and creates competitive domestic supply chains. From nearly 2.1% of GDP in 201...