In looking at the reinvention of globalization, India can potentially play a critical role as a new champion of globalization for three reasons:
First, given the increased weight of Asia in global economic growth, globalization needs a new Asian champion. China, which positioned itself as a major pivot of global trade supply chains over the past 30 years, may find it difficult to sustain that role. Worldwide, concerns over China’s supply chain dominance in the context of territorial conflict risks in Asia, as well as growing worries of debt sustainability in some countries on account of Beijing’s Belt and Road Initiative, may push other Asian economies to decouple their economic interests from China’s. As a large and fast-growing Asian economy with a vast domestic market, India may be well placed to play a pivotal role by offering itself as a supply chain alternative for the region.
Second, faced with global protectionist pressures worsened by covid, inflation, supply chain disruptions and changing geo-political equations, India has sought to navigate these shoals by striking bilateral trade agreements with developed countries and blocs without preferences. India recently signed pacts with Australia and the UAE, and remains in pursuit of such deals with the UK, EU, Canada and other trading blocs, such as the Gulf Cooperation Council. The recent courting of India by the US, UK and EU countries in the shadow of the Ukrainian conflict and India’s neutral stance makes these hitherto distant trade prospects seem more tangible. Prospective trade-deal partners could view India as a neutral trading partner (for both imports and exports), with such ties with New Delhi considered in some cases to be a part of their broader agenda to play a bigger role in the Indo-Pacific region.
Third, and perhaps most significantly, there is a churn underway in global trade agreements, which may result in India’s moment in the global arena. The US decision to withdraw from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU call against ratifying its negotiated investment agreement with China, which it increasingly considers a “systemic rival", and India’s decision to stay out of the China-dominated Regional Comprehensive Economic Partnership (RCEP) have had a significant impact on global trading equations. For decades, India had been knocking at the door of the Asia Pacific Economic Cooperation grouping, with little headway, but this group has suffered a serious decline over the Ukraine conflict, as seen in the recent US walkout. On the other hand, a transformation of the four-nation Quad partnership, which was originally conceptualized as security group, into a wider Indo-Pacific Economic Agreement (IPEA) may provide another alternative to China-centric supply chain arrangements for economies looking for clean and resilient linkages. While the IPEA appears to be a scaled-down version of the CPTPP and RCEP, with no reference to market access and tariff commitments, it could speak to India’s own interests and bolster our negotiating strength in striking bilateral trade deals.
Why should India take up this role as a champion of globalization? The answer lies in the logic with which the Indian economy was liberalized. This involved an increasing orientation towards private sector competitiveness, away from a state-run and heavily-controlled economic system. The benefits of increased domestic competitiveness, higher value addition, supply chain efficiencies and innovation across sectors can be strengthened through trade agreements that would help Indian industry find new export markets.
At the dawn of Indian independence in the 1940s and 1950s, romantic idealism in the form of Asian non-alignment at Bandung and domestic Fabian socialism at home were the drivers of India’s global ambitions. As the record has shown, these ultimately collapsed. A more clear-headed and pragmatic role for India that relies upon equal, fair and reciprocal trading relationships with multiple countries and regions, backed by a liberalized economic regime and other assurers of a globally competitive ‘Atmanirbhar Bharat’, may allow us to more sustainably and realistically fulfil our dream of global championship in the 21st century.
Vijay Pratap Singh Chauhan, partner, Cyril Amarchand Mangaldas, contributed to this article.
Arjun Goswami & Avaantika Kakkar are, respectively, director of public policy and partner, Cyril Amarchand Mangaldas
