🌐 Introduction: Globalisation and the Indian Economy
Globalisation, marked by the seamless flow of goods, services, capital, and technology across borders, has profoundly shaped India’s economic trajectory. Following the 1991 liberalisation reforms, India transitioned from an inward-looking economy to a globally integrated marketplace.
However, a new world order is emerging—marked by de-globalisation, protectionism, and supply chain nationalism. This necessitates a reassessment of India’s role and readiness in the changing paradigm.
📈 India’s Economic Transformation in the Globalised Era
1. GDP Growth Acceleration
- India moved from the “Hindu rate of growth” (~3.5%) to an average of 6.5% post-1991.
- Per capita income surged from $320 (1991) to over $2,500 (2024).
2. Service-Led Growth Model
- India became a global hub for IT, BPO, and KPO services.
- Cities like Bengaluru and Hyderabad flourished as global innovation centers.
3. Remittance Economy
- India receives over $100 billion annually in remittances.
- This supports the current account balance and rural economy.
4. Foreign Investment Inflows
- Liberalisation attracted massive FDI and FPI inflows.
- Startup India and unicorn growth driven by global capital.
🚨 Emerging Global Headwinds
1. Slowing Global Trade
IMF projects 1.7% global trade growth in 2025, far below pre-pandemic trends.
2. Rise of Protectionism
- US tariff rates are now at a century-high of 28%.
- “Buy American” and retaliatory trade measures are rising.
3. Geoeconomic Fragmentation
Global economy is splintering into US-centric, China-centric, and EU-centric blocs. Strategic technologies like AI and semiconductors are being weaponized.
4. Declining Role of Multilateral Institutions
WTO, IMF, and World Bank are losing influence as countries favor bilateral FTAs and regional pacts.
⚠️ Strategic Risks for India
- 📉 GDP Impact: Export-reliant sectors may slow down.
- 💻 IT Threat: Automation and nearshoring reduce India’s cost edge.
- 📊 Capital Flight: Risk-averse investors shifting to developed markets.
- 🌍 Geopolitical Tensions: Border and West Asia conflicts threaten trade flow.
🛡️ Macroeconomic Strengths: India’s Buffers
- ✅ Inflation: Under control at 3.3%.
- 💰 Forex Reserves: Over $686 billion.
- 📉 Rupee Recovery: From ₹88/USD to ₹85.4/USD.
🛤️ India’s Strategic Way Forward
1. Competitiveness Reforms
- Improve Ease of Doing Business.
- Speed up land and environment clearances.
- Decriminalise minor economic offences.
2. Atmanirbhar Bharat with Global Synergy
- Focus on semiconductors, defence, pharmaceuticals.
- Scale up green hydrogen and solar exports.
3. Export Diversification
- Move into clean tech, defence, and precision pharma.
- Sign strategic FTAs with EU, UK, EFTA.
4. South-South and Indo-Pacific Cooperation
- Leverage BIMSTEC, IORA, IPEF for regional influence.
5. Digital Public Infrastructure Diplomacy
- Promote UPI, Aadhaar, DigiLocker, CoWIN as global digital commons.
🧭 Conclusion
India must not retreat from globalisation but adapt smartly. The focus must shift to building resilient supply chains, enhancing innovation, and leveraging its digital strength.
As the world moves from multilateralism to fragmentation, India has the opportunity to shape a new, inclusive globalisation paradigm.
📘 UPSC CSE MCQs – Practice Time!
- What was the average GDP growth post-1991 reforms?
a) 3.5% b) 4.5% c) 6.5% d) 8.5%
✅ Answer: c) 6.5% - India’s major export sector since liberalisation is:
a) Agriculture b) Manufacturing c) Services d) Real Estate
✅ Answer: c) Services - Which nation has the highest tariff rates (2024)?
a) China b) Germany c) USA d) Japan
✅ Answer: c) USA - Which initiative pushes self-reliant production in India?
a) Digital India b) Skill India c) Atmanirbhar Bharat d) Make in India
✅ Answer: c) Atmanirbhar Bharat - Which institution is weakened due to rising bilateralism?
a) IMF b) WTO c) ADB d) BRICS Bank
✅ Answer: b) WTO
✍️ UPSC Mains Practice Question (GS-3)
“The golden era of globalisation is giving way to geoeconomic fragmentation.” In this context, critically examine the implications for India’s economic growth strategy.
(250 words)
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