India and the Changing Landscape of Globalisation

• 16 Dec 2024

For Prelims: Globalization, India and globalization, FDI in India, Aatmanirbhar Bharat, US-China trade, India-China relations, Demographic dividend 

For Mains: Impact of Globalisation, Deglobalisation, Issue of Protectionism and Globalisation  

Source: FE 

Why in News?

Recent geopolitical shifts, such as the ongoing Russia-Ukraine war, conflict in the Middle-east and deteriorating political relations between China and the West, have raised questions about the future of globalisation and its implications for countries like India.  

• At the same time, India’s vision of Aatmanirbhar Bharat sparks debates about balancing self-reliance with global integration.

Note: Globalisation is the growing interconnectedness of countries through the exchange of goods, services, technology, and ideas, driven by advancements in communication, transportation, and trade liberalisation.  

How has Globalisation Evolved Over Time? 

• The Foundations of Globalisation: 
  • Early Trade Networks: Trade routes like the Silk Road, Indian Ocean Trade, and Trans-Saharan Trade Routes connected diverse regions, enabling the exchange of goods such as silk, spices, gold, salt, and ivory.  
  • Cultural and Religious Exchange: Trade and migration facilitated the spread of religions like Buddhism, Christianity, and Islam, while also enabling the exchange of art, architecture, and scientific knowledge across regions.  
  • Colonialism and Industrialisation: European colonial expansion and the Industrial Revolution connected distant economies through mechanized production and long-distance trade.  
• Institutionalizing Globalisation in Post-War Era: 
  • Global Institutions and Cold War Rivalry: Institutions like the International Monetary Fund (IMF), World Bank, and World Trade Organisation (WTO), promoted global trade, while the Cold War created competing blocs like the North Atlantic Treaty Organization (NATO) and the Warsaw Pact. 
  • Decolonisation and New Alliances: Newly independent countries joined global trade and diplomacy, moving beyond colonial ties through efforts like the Non-Aligned Movement (NAM). 
• Modern Globalisation:  
  • Technology as a Catalyst: The rise of the internet and digital communication in the late 20th century enabled instant global connectivity, fostering a borderless world through e-commerce, social media, and the Internet of Things (IoT). 
  • Emergence of MNCs: Multinational corporations like Apple, Google, and Toyota exemplify global supply chains, spreading production and services across continents while driving innovation, investment, and job creation worldwide. 
  • Global Financial Flows: Economic liberalization boosted cross-border investments and global financial market integration, with initiatives like the Eurozone, BRICS, and ASEAN exemplifying regional interdependence within a global framework. 
  • Globalisation Resilience: Despite setbacks like the 2008 financial crisis and the Covid-19 pandemic, global trade and communication rebounded, demonstrating the robustness of global interconnectedness. 

What are the Challenges Related to Globalisation in the 21st Century? 

• Challenges to Globalization: 
  • Economic Nationalism and Protectionism: Nationalist governments often adopt protectionist measures such as higher import duties, trade barriers, and subsidies for domestic industries, hindering global trade and investment flows. 
    • For instance, India’s Atmanirbhar Bharat has faced criticism for being inward-looking or protectionist. 
  • Geopolitical Conflicts: Tensions like the US-China trade war, Russia-Ukraine conflict, and economic sanctions disrupt global supply chains and undermine multilateral cooperation. 
  • Economic Inequalities: Disparities between developed and developing nations in terms of market access, technological advancements, and resource distribution challenge the inclusiveness of globalization. 
• Challenges Posed by Globalization: 
  • Economic Disparities: Globalization often benefits wealthy nations and multinational corporations more, widening income gaps and leaving smaller economies vulnerable. 
    • Companies also tend to move production to low-wage countries and countries with less stringent labour laws, raising questions about job creation versus worker exploitation. 
  • Cultural Erosion: The spread of global culture often risks overshadowing local traditions — the dominance of Western culture through global media and consumerism threatens local customs, languages, and cultural identities. 
  • Environmental Impact: Increased industrialization, global transportation, and resource exploitation driven by globalization contribute to environmental degradation and climate change. 

What are India's Achievements in the Era of Globalisation? 

• Background: India embraced globalization in 1991 through economic reforms triggered by a balance of payments crisis.  
  • The reforms included liberalization, privatization, and opening up to foreign investments, transforming the economy from protectionism to a market-driven system. 
• Economic Contributions: 
  • IT and Digital Revolution: India, a global leader in Information Technology, with cities like Bengaluru and companies like Infosys and TCS, has become a hub for digital services catering to clients worldwide. 
  • Participation in Global Supply Chains: India is integrating into global supply chains in sectors like pharmaceuticals, textiles, and automotive components, supported by initiatives like Make in India to boost manufacturing and attract foreign investments. 
  • Trade and Investment: India has expanded trade partnerships with blocs like ASEAN, the EU, and the United States while fluctuating Foreign Direct Investment (FDI) inflows reflect its appeal as a global investment destination. 
  • Demographic Dividend: With a young workforce and a vast diaspora, India significantly contributes to the global labour market, particularly in healthcare and technology, while diaspora remittances bolster its global economic ties. 
• Political and Strategic Role: 
  • Championing Multilateralism: India's active participation in global forums like the United Nations (UN), G20, BRICS, and Shanghai Cooperation Organisation (SCO), along with its G20 presidency, highlights its advocacy for developing countries and commitment to inclusive, sustainable growth. 
    • India’s QUAD participation underscores its commitment to a free and open Indo-Pacific. 
  • Balancing Powers: India's strategic positioning enables balanced relations with major powers like the US, Russia, and China,  
  • Soft Power Diplomacy: India leverages its cultural heritage, including yoga, Bollywood, and traditional cuisine, with initiatives like the International Day of Yoga enhancing its global influence and promoting its image as a peace-loving nation. 
  • Security and Defence: India’s contributions to UN peacekeeping missions and its defence exports and collaborations with nations like Israel and the US underscore its significant role in global security and strategic affairs. 

How can Nationalism and Globalisation Coexist in India’s Development Strategy? 

• Promote Indigenous Products and Culture Globally: Expand initiatives like One District One Product and Vocal for Local to export Indian handicrafts, traditional medicines, and local goods while leveraging cultural diplomacy to strengthen India’s soft power and integrate traditional crafts into global value chains. 
• Lead in Renewable Energy: Strengthen India’s role in the International Solar Alliance (ISA) and renewable energy innovations to balance national energy security with global climate action. 
• Leverage Technology for Trade: Integrate blockchain, fintech, and digital tools to modernize trade, ensuring transparency, efficiency, and alignment with sustainable development. 
• Diversify Global Partnerships: Foster resilient ties with emerging markets to reduce reliance on a single nation for resources like critical minerals, semiconductors,  and renewable energy components, promoting mutual growth. 
• Harnessing the Demographic Dividend: India can harness its demographic dividend by enhancing skills, fostering entrepreneurship, and integrating into global supply chains to drive economic growth. 

Conclusion 

Globalisation is evolving, demanding adaptive strategies to address challenges like geopolitical tensions and climate change while seizing opportunities for innovation and sustainability. India, with its demographic potential, economic influence, and leadership in global initiatives, is well-positioned to drive this transformation. By aligning self-reliance with global integration, India can shape a resilient, inclusive, and forward-looking global order. 

Drishti Mains Question:

Discuss the challenges and opportunities globalisation faces in the 21st century. How can India balance its self-reliance ambitions with the demands of a globalised world?

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Mains:

Q1. To what extent globalisation has influenced the core of cultural diversity in India? Explain. (2016)

Q2. Discuss the positive and negative effects of globalization on women in India. (2015)