Globalization faces a slowdown due to US protectionism (28% tariffs), US-China trade war, and India-Pakistan tensions (post-Pahalgam), threatening India’s growth, necessitating reforms for resilience.

About Globalisation

• Globalisation refers to increased interconnectedness and interdependence among countries through trade, investment, technology, information, and people movement.
• It spans economic, political, social, and cultural domains.

Evolution of Globalisation

Proto-Globalisation: Ancient Trade Routes (1st century BC – 15th century AD)

• Silk Roads (1st century BC to 5th century AD; revived 13th–14th centuries AD)
  • First instance of long-distance trade between China and Rome via land routes.
  • Goods like silk and spices flowed, creating global trade links for the first time.
  • Trade flourished under powerful empires (Han China, Roman Empire, Mongol Empire).
  • Trade disrupted when political stability collapsed.
• Spice Routes (7th to 15th centuries)
  • Expansion of maritime trade by Islamic merchants after the rise of Islam.
  • Spread trade through the Mediterranean, Indian Ocean, Southeast Asia.
  • Focused on high-value goods like cloves, nutmeg, mace.
  • Islamic trade dominance extended from Spain to Indonesia.

Globalisation 1.0: Age of Discovery (15th–18th Century)

• European exploration expanded global linkages.
  • E.g., Columbus’s “discovery” of the Americas, Vasco da Gama reaching India.
• Scientific Revolution improved shipping, navigation, and astronomy.
• European powers (Portugal, Spain, Britain, Netherlands) built colonial empires.
• Global trade expanded, but:
  • Trade remained exploitative and unequal.
  • Mercantilist economies emerged (colonies supplying raw material, buying finished goods).
  • Slave trade became a major part of global commerce.

Globalisation 2.0: First Wave (19th Century to 1914)

• The Industrial Revolution in Britain triggered large-scale globalization.
• Inventions: Steam engine, railways, telegraph.
• Suez Canal (1869) opened up fast East-West maritime routes.
• Massive expansion in:
  • Global trade (exports rose from 6% to 14% of global GDP).
  • Foreign Direct Investment in mines, plantations, railways (e.g., India, Africa).
• The world economy interconnected for the first time.

Collapse: 1914–1945 (World Wars and Great Depression)

• World War I shattered global trade.
• Protectionism and economic nationalism rose.
• Great Depression (1929) further broke down international economic ties.
• World War II devastated economies, collapsed international trade.

Globalisation 3.0: Second and Third Waves (Post-1945 to 2008)

• Post-World War II Recovery
  • Led by the United States and Western Europe.
  • Creation of IMF, World Bank, GATT (later WTO).
  • Reconstruction efforts (e.g., Marshall Plan) boosted trade.
  • Formation of European Union and other regional trade blocs.
• Post-1989 Global Expansion
  • Fall of Berlin Wall (1989) and collapse of Soviet Union integrated Eastern Europe.
  • China joined WTO (2001) — global manufacturing revolution.
  • Third Industrial Revolution (Internet) enhanced connectivity.
  • Global supply chains emerged: R&D, production, distribution spread across multiple countries.
  • Global exports peaked at 25% of GDP, trade became half of world GDP.

21st Century: Globalisation 4.0

• Globalization 4.0 refers to the new phase of globalization shaped by:
  • The Fourth Industrial Revolution (4IR) (technologies like AI, IoT, robotics, biotechnology).
  • Multipolar geopolitics, ecological challenges, and growing inequality.
  • It emphasizes rapid technological transformations reshaping economies, societies, governance, and global cooperation.
• New Phase of Hyper-Connectivity: Driven by AI, Big Data, Blockchain, E-commerce​.
• Services Globalisation: Services like software, consulting, and finance dominate cross-border trade.
• Emergence of New Powers: Rise of China, India, Brazil, and ASEAN economies reshaped global economic dynamics.
• Social and Environmental Concerns: Criticism regarding inequality, job losses, climate change associated with unchecked globalisation.

Features and Characteristics of Globalisation

• Economic Integration Across Borders: Economies of different countries are increasingly interconnected through trade, investment, and production networks.
  • By early 2000s, global trade (exports + imports) accounted for almost half of world GDP.
• Technological Advancement Driving Connectivity: Innovations in transport, communication, and information technology have drastically shrunk time and distance.
  • Digital Revolution: Rise of internet and e-commerce platforms like Alibaba’s Silk Road Headquarters linking ancient trade roots to digital economies.
• Rise of Multinational Corporations (MNCs): MNCs spread production, services, and markets across multiple countries, becoming key drivers of globalisation.
  • MNCs often have wealth larger than the budgets of many developing countries .
• Cultural Exchange and Hybridisation: Faster movement of ideas, arts, food, and lifestyles across the world, leading to mixing (hybridisation) of cultures.
  • Americanisation through fast food (e.g., McDonald’s adaptation in India)​.
• Increased Interdependence and Mobility: Countries rely on each other economically, politically, socially; people, goods, services flow across borders more freely.
  • Global Village Concept: Integration of supply chains across continents — example: a single garment’s production spread over Korea, Thailand, India, and Europe .
• Irreversibility of the Globalisation Process: Once global connections are deeply established, they are hard to completely reverse even amidst crises.
  • The Russian invasion of Ukraine (2022) impacted global food and fuel prices everywhere, showing how interconnected economies remain .
• Shift towards Knowledge-Based Economy: Value creation is increasingly based on knowledge industries like IT, software, media rather than purely material goods.
  • India’s IT sector (including BPM, ITeS) contributes over 13% to India’s GDP .

Factors Facilitating Globalisation in India

• Economic Liberalisation and Policy Reforms (Post-1991): Major policy shift towards opening the economy, liberalising trade, and encouraging foreign investment.
  • 1991 LPG Reforms (Liberalisation, Privatisation, Globalisation) removed restrictions on foreign trade and investment .
• Rapid Technological Advancements: Breakthroughs in transport, communication, and IT have shrunk geographical distances.
  • Internet and IT Revolution: Allowed outsourcing of services like customer care, R&D to India (example: call centres in Bengaluru servicing foreign customers)​.
• Emergence of Multinational Corporations (MNCs): MNCs spread their production and marketing networks across India, linking local markets to global value chains.
  • MNCs not only brought capital but also technology, management practices, and global distribution systems.
• Institutional Support from Global Organisations: International institutions encouraged trade liberalisation and economic cooperation.
  • India joining WTO in 1995 increased its access to global markets .
• Rise of Information and Communication Technology (ICT) Sector: India’s strong ICT capabilities made it a global destination for outsourcing.
  • India’s IT industry is likely to hit the US$ 350 billion mark by 2026 and contribute 10% towards the country’s GDP.
• Large Skilled and Cost-Effective Workforce India’s educated, English-speaking, and relatively low-cost labour became attractive for MNCs.
  • Example: Ford Motors benefited from skilled Indian engineers and low-cost workforce to produce cars and components .
• Global Diaspora and Remittances: A large Indian diaspora abroad strengthened India’s integration with global networks.
  • Remittances contribute significantly to India’s foreign exchange reserves.

Impact of Globalisation on India

Economic Impact

• Growth of Trade and Exports: Foreign trade became a major channel connecting India to the global economy.
  • Ford Motors produced cars in India not just for domestic consumption but for export to countries like South Africa, Mexico, and USA .
• Inflow of Foreign Investment (FDI): India liberalised trade and investment policies after 1991, attracting MNCs.
  • Cargill Foods, an American MNC, bought Parakh Foods and expanded edible oil production in India.
• Rise of Service Sector: IT and ITeS boom made India a global outsourcing hub.
  • India’s digital economy, driven by IT and BPM sectors, now contributes over 13% to GDP 

Social Impact

• Emergence of a Middle Class: Increased income levels, consumption patterns changed.
  • Indians began accessing global goods — cars, electronics, branded garments .
• Employment Opportunities: New jobs created in IT, telecom, BPOs.
  • However, informal sector workers and traditional artisans faced displacement due to competition from imported goods.
• Lifestyle Changes: Western cultural influence seen in food habits (e.g., McDonald’s adapting to Indian tastes) .
  • Increased preference for international education, fashion, media.

Impact on Agriculture and Small Producers

• Competition from Imports: Indian farmers and small industries faced pressure due to cheaper foreign goods.
  • In the case of toys, cheap Chinese imports led to the closure of 70–80% of Indian toy shops .
• Market Access: Some sectors benefited from export opportunities (e.g., cotton, rice), but many small producers lacked competitiveness due to poor infrastructure and technology.

Cultural Impact

• Cultural Hybridisation: Exchange of ideas and culture created a hybrid Indian identity influenced by global trends .
  • Western music, fast food, movies, fashion blending with Indian traditions.
• Threat to Indigenous Cultures: Globalisation led to cultural homogenisation, often marginalising local languages, customs, and small cultural industries .

Technological Impact

• Spread of ICT: Rapid access to mobile technology, internet, digital platforms.
  • E-commerce platforms like Alibaba (global model) influenced Indian startups like Flipkart, Paytm.
• Transfer of Technology: Collaborations and technology agreements helped upgrade India’s manufacturing and service sectors .

Environmental and Social Challenges

• Environmental Degradation: Higher industrial output increased environmental stress.
  • Globalisation led to increased transportation, emissions, and resource depletion .
• Inequality and Urban-Rural Divide: Benefits of globalisation largely concentrated in urban areas.
  • Rural regions continued to face poverty, lack of infrastructure, and exclusion from globalisation gains.

Challenges of Globalisation

• Economic Inequalities: Globalisation has widened the gap between the rich and the poor. The benefits of global growth have been unevenly distributed, leaving many sections marginalized. 
  • India’s top 10% hold nearly 77% of the national wealth, reflecting skewed wealth distribution.
• Cultural Erosion: There has been a homogenization of culture where local traditions and identities are being diluted under the influence of dominant Western culture​.
  • Fast food chains like McDonald’s adapting Indian cuisine (Paneer Tikka Burgers) symbolize ‘glocalization’, but traditional food habits and attire have been increasingly replaced by Western norms​.
• Displacement of Tribal and Rural Populations: Development projects driven by global capital have often displaced indigenous communities without adequate rehabilitation​.
  • The Narmada Bachao Andolan is a notable movement against the displacement caused by big dams and infrastructure projects.
• Vulnerability of Informal Sector: Approximately 90% of India’s workforce is in the informal sector​. Global competition pressures small producers and informal workers, leading to precarious livelihoods.
  • The influx of cheap Chinese garments has impacted traditional Indian weavers and informal textile workers.
• Environmental Degradation: Globalisation-induced industrialization has led to overexploitation of natural resources, pollution, and environmental hazards​.
  • The dumping of e-waste from developed countries into India exposes children and poor communities to hazardous conditions​.
  • Increased CO₂ emissions due to shipping, aviation, and industrial production.
• Jobless Growth: While GDP growth has accelerated post-globalisation, employment generation has not kept pace, leading to what is termed as “jobless growth”​.
  • The rise in automation and preference for skilled labor has reduced opportunities for low-skilled workers.
• Protectionism and Deglobalisation Trends: Rising protectionist measures worldwide, like the US-China trade wars, pose challenges for India’s export-driven sectors​.
  • India faces difficulties in maintaining its software exports growth amidst tightening immigration norms in the US and Europe.
• Political and Governance Challenges: Globalisation weakens nation-states’ control while global institutions struggle to fill the gap.
  • Populist backlash demanding restoration of sovereignty against “global forces”.

Deglobalisation

• Deglobalisation refers to the slowdown, stagnation, or reversal of global interconnectedness in trade, finance, technology, and culture.
• It reflects a decline in global trade as a share of GDP, re-emergence of protectionist policies, nationalism, and reduced cross-border movements.
• Deglobalisation is not a complete retreat from global links, but a move towards reshoring, localisation, and reassertion of national sovereignty over global integration ​.

Factors Leading to Deglobalisation 

• Global Financial Crisis (2008): Broke trust in global markets; countries shifted focus to reviving their own economies.
• Rising Inequality: Unequal benefits of globalisation created anger among middle classes, especially in Western countries.
• Trade Wars and Protectionism: US-China trade war led to higher tariffs and restricted international trade.
• Technological Disruption: Automation and new technologies made countries prefer domestic production over outsourcing.
• COVID-19 Pandemic: Exposed global supply chain weaknesses; countries pushed for self-reliance (e.g., India’s Atmanirbhar Bharat).
• National Security Concerns: Cyber threats, technology domination fears led to more economic nationalism and protection of critical sectors.

Indicators of Deglobalisation

• Stagnation of Global Exports: After peaking around the 2000s (~25% of global GDP), the share of exports has plateaued and slightly declined.
• Reduced Cross-border Investments: FDI flows have been volatile and declining in many sectors .
• Regionalism over Globalism: Rise of regional trade blocs (e.g., RCEP, USMCA) prioritising closer neighbours rather than global trade .

Deglobalisation Trends in India

• Atmanirbhar Bharat Abhiyan (Self-Reliant India Mission): Focus on strengthening domestic manufacturing, reducing import dependence .
• Review of FTAs: India re-evaluating existing Free Trade Agreements to safeguard local industries.
• Trade Protection Measures: Tariffs imposed on imports like steel, electronics to protect Indian manufacturers​.
• Technology Sovereignty: Promoting indigenous digital platforms (e.g., UPI, ONDC) over reliance on global tech giants​.

Way Forward for Globalisation

• Promote Inclusive Globalisation: Ensure that the benefits of globalisation are widely and fairly distributed across all sections of society.
  • Focus on policies that reduce inequality, promote social mobility, and empower marginalized groups .
  • Support for small producers, informal workers, and rural communities affected by global competition​.
• Strengthen Domestic Capabilities (Self-Reliance with Openness): Build strong domestic industries and innovation capacities without resorting to complete protectionism.
  • Initiatives like Atmanirbhar Bharat aim to enhance India’s resilience while remaining connected to the world .
  • Invest in sectors like manufacturing, digital economy, and health infrastructure.
• Reimagine Global Governance Structures: Modernise global institutions (like WTO, IMF) to make them more democratic, representative, and capable of handling new-age challenges like digital trade, cybersecurity, and climate change.
  • Encourage multilateral cooperation and public-private partnerships for global good.
  • Ensure that developing countries have a stronger voice in global decision-making.
• Sustainable and Environmentally Responsible: Align globalisation with the principles of environmental sustainability and responsible consumption.
  • Global supply chains should incorporate climate resilience and eco-friendly practices.
• Harness Technology for Equitable Growth: Leverage digital technologies like AI, blockchain, and IoT to bridge development gaps rather than widen them.
  • Invest in digital education, rural internet penetration, and e-commerce support for small businesses​.
  • Regulate tech giants to ensure fair competition and data privacy.
• Resilient and Diversified Global Supply Chains: Build supply chains that are not over-dependent on a few countries or regions.
  • Encourage regional production hubs and friend-shoring (moving supply chains to trusted partners)​.
  • Boost logistics, infrastructure, and local manufacturing capacities.
• Foster a New Social Compact Between Citizens and Governments: Renew trust in governance by addressing citizen concerns about job security, welfare, and identity in a globalised world.
  • Social security nets, skill retraining programs, and community empowerment must accompany economic reforms.

Conclusion

Globalisation, pivotal to India’s post-1991 growth, faces a 2025 slowdown due to US protectionism, US-China trade tensions, and regional conflicts, necessitating reforms to ensure resilience. India must leverage its macroeconomic stability and strategic policies to sustain global integration while fostering inclusive, sustainable growth.