Globalization, the intervention, interconnection, and intercommunication between nations spanning the world, has changed the global spectacle.
Only until a few decades ago globalization persisted in the face of capturing territories, imperialism, and colonialism. The outbreak was obviously vicious -- the ghastly world war. Ironically, World War I was also the historical event that marked the beginning of modern globalization.
Modern globalization was the kind of globalization that involved trade and transactions without the need to establish power and sovereignty, the kind that helped countries evolve together, and the kind that accelerated the growth of emerging powers like the US into superpowers, and developing countries like India into fast-growing economies.
As dynamic as the nature of globalization is, understanding the changing trends is pertinent for the growth of businesses and industries. Through this article, we will delve into the next phase of globalization and discuss whether or not Indian market conditions are conducive to embrace the progress.
How Globalization Has Panned Out In India In The Past Decades
Look around you. The car you drive is in most likelihood Japanese or Canadian, the technology that created it is most probably German, the fuel that powers it is perhaps from Saudi Arabia or Cambodia. Our lives and the most fundamental aspects of it are in true sense globalized.
Similarly, the world and the largest of economies rely on India for consumer products ranging from rice and processed sugar to refined diamonds and precious gems! We have come a long way, and this journey can be broken down into three stages.
Stage 1: India’s Introduction To Global Markets
Ever since independence, India had closed its borders and markets for international powers and influences in order to attain self-reliance and get the stagnant markets to scale. At the dawn of the 1990s, India finally paved the way for liberalization, thereby opening markets in a restricted manner to the world.
Stage 2: India Emerges As An Economic Giant
With several amendments in the restrictions on Foreign Direct Investments during the 2000s and the technological boom, India’s international trade value climbed up to over 6 lakh INR. India’s fast-paced competency in the global markets was applauded while its conservative nature to ease restrictions was criticized. The 2008-2009 recession, however, proved to be the turning point as these restrictions helped India absorb the impact of globally falling economies and bounce back faster.
Stage 3: India Climbs Up As A Technology-Driven Economy
As India entered a new decade, digitization took the country and its markets by storm, and the economy experienced an unprecedented growth driven by technological advancement and start-up culture.
Technology Driven Advancement Dictates The Next Phase Of Globalization In India
The world has its eyes glued to India’s economic performance ever since the IMF forecasted India to touch the growth rate of about 7.5%. However, whether the markets are conducive enough and the population driving the markets are prepared enough, is a different story altogether.
Indian Markets And The Concept Of Globalization 4.0
Globalization 4.0, much like the Industry 4.0 is driven by digital technologies. In the previous stages and phases of globalization, India saw a series of changes that helped foreign investments access Indian markets. International technologies reached Indians as our population advanced.
With the overwhelming digital wave, the next phase of globalization, unlike the previous ones, will hit the service sector harder. This is because technologies like big data, machine learning, and AI will open up enormous service-based opportunities and have a far-reaching impact as Indian innovation will combine with cutting edge technologies.
Physical presence will be lesser of a requirement, manufacturing will be driven by digital technologies, and up skilling to familiarize with such technologies will become a basic necessity. As progressive as these changes sound, India might have it harder than most countries in adapting to this change, as several critics predict and the diving GDP in the latest quarter is just one of those reasons.
To understand the scope of this change completely, let’s first look at how the new phase of Globalization is shaping up positively for the country, and then discuss what’s limiting our growth.
Technology-Driven Globalized Use cases
We can’t talk about the technological boom in India without the mention and demonstration of globally emerged Indian tech giants like Infosys, HCL Technologies, and Wipro. Similarly, we cannot discuss globalization and the international presence of India without discussing the impact left by companies like Reliance Industries and the Tata Group.
Each of these companies, along with the leading Indian names in the petroleum, coal, and financial sectors, have made it big internationally by changing gears in time and creating their premise around digital technologies. From a change as basic as a cloud-centered database to employing advanced AI and ML techniques to create cutting edge innovations, these companies have been exploiting the potential of digital technologies to leave an indelible mark in the global markets.
The Challenge: Widening Inequalities
The question now arises is when the painted picture looks so promising, why are financial critics so skeptical about Indian development through globalization?
The problem lies in India’s mismanagement of opportunities. The larger section of India’s population that continues to be unemployed, poor, or even illiterate are at the losing end while the longstanding proverb continues to be reinforced -- the rich become richer and the poor become poorer.
This economic and status divide, combined with streamlined political agendas giving wind to this divide by favoring the leaders of the Indian economy are posing limitations to the potential of the country to globalize as a whole.
In simpler words, India’s under preparation for Globalization 4.0 might be a hurdle that puts us further behind in the race.
Post Pandemic Era: Prospects Of Globalization In India
While technology continues to be the frontrunner and determiner in driving the impacts and prospects of globalization in India, the recent health emergency has brought in magnanimous changes in diplomatic and business relations between countries.
India Rises Up In Pharmaceutical Export Race
After over six months since the deadly pandemic hit India, the country has emerged as the global COVID-19 hotspot. Despite having our hands full, India has been a major supplier of Covid-19 treatment essential drugs to its neighboring countries as well as its latest best friend across the oceans, the US. With Trump’s hydroxychloroquine demands being promptly met by PM Modi, the world now has its eyes on India’s pharma bank.
Globalization Joins Hands With Globalization
Amidst the health crisis and the increasingly negative sentiment against our neighbor China, India is also bracing for a geopolitical standoff with the world’s largest economy. In the backdrop of India’s brawl with China, the framework of Globalization, particularly with respect to breaking the patterns of India’s import reliance on its volatile neighbor is expected to see a major shift. China is already struggling with the drastic digital attack of India with most of the Chinese apps being banned in the country.
Moreover, if PM Modi’s ‘Atmanirbhar Abhiyan’ sets out to be successful, this will mean greater priority and emphasis on local manufacturing rather than simply assembling. While the stature of foreign imports and factory setups remain ambiguous in this regard, globalization will open up lucrative foreign investment opportunities, thanks to the cheap but highly skilled talent pool in India.