This paper explores what could happen if India reduces its global
trade ties—how it would affect jobs, industries, economy etc.
1. What is Deglobalization?
Deglobalization refers to reducing global interdependence in trade, investment, and culture. It
emphasizes national self-reliance and localized solutions. Driven by political, economic, or
social challenges, it marks a shift away from globalization, often in response to crises or
growing dissatisfaction with global supply chains and foreign dependencies.
2. Key Drivers of Deglobalization
Protectionist Policies: Governments introduce tariffs and trade barriers to protect
local industries, as seen in India’s “Make in India” initiative, aiming to reduce import
reliance and strengthen domestic manufacturing.
Geopolitical Tensions: Conflicts like India-China border issues lead to reduced trade
and restricted foreign investment, impacting cross-border collaboration.
Economic Self-Reliance: Atmanirbhar Bharat encourages indigenous production to
reduce supply chain dependence, promoting resilience through local innovation and
capacity-building.
Global Crises: Events like COVID-19 revealed weaknesses in global logistics and
led countries to re-evaluate foreign trade reliance in favor of national preparedness.
3. Global Examples & India’s Historical Stance
Global Examples: Brexit marked EU exit, U.S.-China trade war revived economic
nationalism, and COVID-19 disrupted supply chains, all accelerating deglobalization.
India's Shift: From protectionist policies post-independence to 1991 liberalization,
India embraced global markets. Today, it balances openness with self-reliance under
initiatives like Atmanirbhar Bharat.
I. Impact on Key Sectors
1. Primary Sector
a) Agriculture:
India’s agricultural exports like rice and spices would suffer if deglobalization limits
market access, affecting farmer incomes. Import reliance on fertilizers and oils could
cause shortages. While it may boost local innovation, price volatility and uncertainty
during transition could hurt production and investment.
b) Mining & Natural Resources:
Deglobalization may reduce export earnings from raw materials like coal and iron.
India’s mining sector, reliant on foreign tech, would need domestic R&D. It could
promote local processing and job creation but demands high investment,
infrastructure, and environmental sensitivity.
2. Secondary Sector
a) Domestic Industry & Supply Chains:
Sectors like electronics and pharma heavily depend on imports. Deglobalization
disrupts these chains but also boosts initiatives like “Make in India.” India must invest
in domestic tech, upskilling, and infrastructure to build resilient and self-reliant
manufacturing ecosystems.
b) FDI & Trade Relations:
FDI may decline, reducing capital and global best practices. While replacing MNCs
with local firms builds autonomy, it needs massive investment and support. Trade
barriers could spark retaliation, so India must balance protection with global
diplomacy and smart FTAs.
3. Tertiary Sector
a) IT & BPO:
India’s export-led IT sector could suffer from foreign restrictions and reshoring
trends. Firms may lose global contracts. But domestic digital growth and high-end
services like AI can drive innovation. Remote work may help sustain global
engagement despite rising protectionism.
b) Financial Markets & Banking:
A pullback in foreign capital from FIIs and VCs could hit markets and startups.
Disruption in global financial systems like SWIFT may affect trade. Remittances
might drop. Inflation risk rises with costly local inputs, requiring stronger domestic
finance systems and investor bases.
c) Education & Healthcare:
Fewer opportunities for international study, research, and exchanges could reduce
exposure to global best practices. In healthcare, import barriers may affect drug and
device availability. Still, it can spur local innovation in medical tech and education if
supported by targeted policy and R&D investment.
II. Social & Political Implications
1. Job Market Shifts: Winners & Losers
Export-driven sectors like IT and apparel may lose jobs, affecting urban professionals. Local
sectors like agriculture and small retail might benefit, but with lower pay and less stability.
Women in export-heavy industries may be hit hard. Reskilling is key to smooth transitions.
2. Changes in Consumer Behavior
Reduced imports and rising costs may shift demand to Indian-made products. “Vocal for
Local” may grow, but domestic industries must improve quality and scale. In the long term,
this shift can encourage innovation and strengthen Indian consumer brands.
3. National Security Considerations
Deglobalization supports strategic independence in sectors like defense, semiconductors, and
telecom. Reducing Chinese imports is crucial. But building domestic capacity requires time,
funding, and public-private cooperation. A balanced approach is needed to combine security
with efficiency.
4. Political Positioning in Global Forums
India may push for fairer trade norms in WTO, BRICS, and G20, especially for the Global
South. But excessive inward focus might limit global influence. India should promote
resilient globalization while maintaining leadership through strategic alliances and issue-
based diplomacy.
III. Policy Recommendations & Future Outlook
1. Policy Interventions to Minimize Negative Effects
Government should prioritize skilling, SME support, R&D funding, and public procurement
favoring domestic firms. A safety net for vulnerable groups is essential. These steps ensure
that the shift to self-reliance is equitable, inclusive, and sustainable.
2. Selective Globalization: Strategic Partnerships
India need not fully withdraw from global trade. Instead, it can selectively integrate with
partners in sectors like green tech and digital infrastructure, while decoupling in sensitive
areas. This hybrid approach reduces risk while leveraging global opportunities.
3. Long-term Economic Sustainability
Self-reliance must not lead to inefficiency. India must focus on competitiveness, innovation,
and fair regulations. Investments in youth, education, and sustainability are critical to turning
self-reliance into a growth engine rather than a retreat from the global stage.
