Why India could shape the next global financial order

The prevailing architecture of international finance — the web of institutions, rules, and practices that govern global capital — is undergoing a profound transformation. For decades, this system, anchored by the International Monetary Fund and the World Bank, operated under the aegis of the developed world, or the Global North. However, as global power dynamics shift, the traditional model faces increasing strain, struggling to address the urgent requirements of the Sustainable Development Goals (SDGs) and the escalating climate crisis. As the influence of the Global North wanes, a new, more multipolar order is emerging, with India positioned at its vanguard to redefine the future of global green finance.Shift in global power dynamicsThe international financial architecture is no longer the sole purview of the West. The rise of emerging economies — China, Brazil, and India — has introduced new dimensions to global economic and political landscapes. This transition is being accelerated by a perceptible withdrawal of traditional leaders, led by the United States, from key global commitments, including the SDG agenda, UNFCCC, and the Paris Agreement.This vacuum of leadership, combined with a growing reluctance among traditional Multilateral Development Banks (MDBs) to aggressively pivot their portfolios toward climate and clean energy, has created a pressing need for alternatives. Given the growing needs of green finance, the future is not about governments or institutions providing trillions themselves; it is about using constrained public budgets to reduce risk and mobilise private capital. The MDBs have found it challenging not only to raise more money themselves but also in designing instruments capable of mobilising private capital particularly for green development. By an estimate, MDBs expect to provide only about $120 billion a year in climate finance to low- and middle-income countries by 2030, alongside $65 billion of private capital mobilisation.It is within this context that India has emerged as a crucial bridge, utilising its leadership in the “Voice of the Global South Summits”, its 2023 G20 presidency, and its strategic positioning at COP conferences to advocate for a more equitable global order for the developing south.India’s institutional entrepreneurshipIndia has moved beyond mere advocacy, actively exercising “institutional entrepreneurship” to build the infrastructure of the future. By leading the establishment of the International Solar Alliance (ISA), the Coalition for Disaster Resilient Infrastructure (CDRI), and the Global Biofuel Alliance (GBA), India has created practical, action-oriented platforms that focus on specific global public goods.These initiatives are not intended to dismantle existing systems, but to complement and reinforce them. By providing focused, scalable policy and institutional models, these initiatives demonstrate that the Global South can take the lead in solving the existential challenges of climate change. During its 2023 G20 presidency, India successfully leveraged this influence to secure the Green Development Pact, championing the need for MDB reform, particularly regarding voting rights that accurately reflect the contemporary economic weight of developing nations.The BRICS+ catalystA pivotal opportunity for reshaping this financial landscape lies within the expanded BRICS+ coalition. Comprising over 40% of global GDP and population both, BRICS+ possesses the collective weight to challenge entrenched financial hierarchies. Central to this potential is the New Development Bank (NDB), which represents an alternative paradigm for development finance characterised by more equitable governance.To maximise this potential, BRICS+ can move toward a “twin-track” approach for mobilising international green finance. First, there is a clear strategic advantage in leveraging the existing framework of the NDB. By recapitalising the bank and strengthening its balance sheet, BRICS+ can transform it into a leading MDB capable of offering innovative solutions, such as local currency financing and Multilateral Risk Guarantee Initiatives, which are essential for de-risking green infrastructure projects in emerging markets. Second, this must be paired with broader, country-led efforts to create exclusive green development mechanisms for the Global South. By diversifying liabilities, callable capital and assets across countries, NDB can also effectively reduce its cost of borrowing, which could then translate to lower cost of lending and required returns on investment without the structural barrier of global sovereign ratings for developing countries.By harmonising trade regulations, reducing reliance on Western-dominated payment systems like SWIFT, and fostering digital infrastructure, BRICS+ can reinforce financial sovereignty while channelling capital into renewable energy and green growth.A new visionMDBs have traditionally been judged by the size of their own lending books. The next generation of development finance institutions (DFIs) should be judged by how effectively they use public balance sheets to crowd in private capital. In this context, India could champion a new generation of risk-sharing instruments — guarantees, first-loss facilities, currency hedging and transition-finance platforms — that turn relatively small amounts of public capital into much larger pools of private investment.India’s vision for the future is not about replacing the old system with a new form of dominance, but about creating an inclusive framework that enables developing countries to guide their own development priorities and decarbonisation. This necessitates a fundamental shift in how the world perceives development finance — moving away from top-down, conditional aid toward collaborative, risk-mitigated investment in local solutions.By combining its diplomatic soft power with the institutional strength of forums such as BRICS and the practical, action-oriented nature of its own initiatives such as the ISA and CDRI, India is well-positioned to drive the next wave of financial reform. The goal is a truly global financial system: one that is environmentally sustainable, inclusive, and, crucially, reflective of the realities of the 21st century. As the world navigates the transition to a low-carbon future, India’s leadership will be central to ensuring that this journey is both equitable and effective for all nations, regardless of their position on the global stage.Dhruba Purkayastha is a senior development and climate finance specialist, and Abhinav Jindal is a senior economist. Views expressed are personal