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Globalization and Trade in a Post-Pandemic World: India’s Atma-Nirbhar Bharat Abhiyaan

India is on a mission toward self-reliance.

By Parth Patel, Paresha Sinha, and Suraksha Gupta for
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Globalization and Trade in a Post-Pandemic World: India’s Atma-Nirbhar Bharat Abhiyaan
Credit: Pixabay

Ever since the COVID-19 pandemic began in March 2020, the world’s economy has been in tatters due to the resulting health and economic shocks. To deal with the pandemic, countries around the world imposed strict lockdowns on the movement of people, on international travel, and on the transportation of goods and services to minimize the threat to health and safety. This has resulted in many industries and organizations either being shut down or operating at minimum capacity, and the effects are visible globally. 

Whether it’s news of the airline industry suffering major losses, millions of people losing their jobs, or small firms permanently going out of business, the impact of the novel coronavirus on our global economy is colossal. 

To make matters even worse, many countries find themselves to be over-relying on their trading partners and are now struggling to meet internal customer demands. This trade imbalance and over-reliance issue becomes even more problematic when countries engage in international disputes. Take the recent trade dispute between Australia and China, for example. China has imposed an 80 percent tariff on barley imports from Australia in retaliation for Canberra’s demand for an independent investigation into the origins of the COVID-19 pandemic. This will cost Australian farmers AU$500 million annually. In response to Beijing’s announcement, Australia has threatened to appeal to the World Trade Organization (WTO) as it believes this to be a bullying and coercion tactic to force Australia to rethink its demand for the coronavirus inquiry. China is also currently engaged in a major border dispute with its neighbor and the world’s largest democracy, India.

India is currently engaged in fighting a three-pronged battle:

  1. To get its falling economy, which is growing at less than 3 percent, back on track.
  2. To fight the growing number of coronavirus cases, which currently stands at over 500,000; and
  3. To guard its borders against the growing Chinese incursion in the region of Ladakh and along the line of actual control (LAC).

On May 12, 2020, Indian Prime Minister Narendra Modi announced a stimulus package of $260 billion to revive the Indian economy. This economic and COVID-19 relief package is worth 10 percent of India’s gross domestic product (GDP) and ranks among the biggest in the world. The most important part, however, was the prime minister’s speech in which he laid down his vision and an ambition for India to become fully independent and self-reliant through the “Atma-Nirbhar Bharat Abhiyaan” (i.e. self-reliant India mission). But what does this mean, exactly ? It means that India will:

  1. Reduce its over-dependence on other countries for trade by focusing on inward manufacturing.
  2. Promote Indian products, brands and services by becoming “VOCAL FOR LOCAL”; and
  3. Continue to trade with other countries but aim to eliminate trade imbalances and, where possible, adopt a mercantilist approach to international trade.

The most important element of the Atma-Nirbhar Bharat Abhiyaan is that India will not cut off itself from the rest of the world, nor will it adopt anti-trade policies or protectionism. Rather, India will identify and promote industries and sectors where it has the potential and capability to scale up and be globally competitive. 

For example, besides promoting its traditional industries like information technology (IT), in recent years India has also pitched itself as an emerging destination for manufacturing and supply of arms and ammunition to other countries and areas of emerging manufacturing capabilities such as mobile and medical devices. 

Similarly, India has also taken bold steps to protect its domestic industries from the onslaught of foreign competition. This shift can be seen in the most recent decision made by the Indian government to ban 59 Chinese apps, including the popular app, TikTok. Although this could be largely interpreted as Indian retaliation in the wake of its border dispute with China, this move has also provided a huge opportunity for Indian app developers to leverage and create a thriving mobile and digital application ecosystem that will ensure that India can compete in the digital space. 

To fully realize the vision of the Atma-Nirbhar Bharat Abhiyaan, India will have to implement a series of reforms, policies, projects, and key initiatives in various sectors of its economy and business to foster innovation, growth, and sustainable development. An example of this can be seen in the Indian government’s plan to offer a collateral-free loan of up to 3 trillion Indian rupees ($40 billion) to support small and medium enterprises (SMEs), which is the backbone of the Indian economy. According to Indian Ministry of Finance policy reform documents released May-June 2020, the next stage of ease of doing business reforms are aimed at bottlenecks such as time to register a property, the resolution of property disputes, and simplifying the tax regime for investors. Also, to support its “Make in India” campaign, global tenders are disallowed for government procurement up to 2 billion rupees.

Many such initiatives and policy reforms are being planned and taken by the Indian government to revive every sphere of its liberal-market economy to reduce its dependence on global suppliers by adopting the path to self-reliance while continuing to be open to foreign direct investment (FDI). For example, in terms of defense manufacturing reforms, the FDI limit is being increased from the current 49 percent to 74 percent and a more favorable environment for global manufacturers, such as the introduction of a time-bound defense procurement process, is to be created. Atma-Nirbhar Bharat Abhiyaan reforms include converging the defense and civil aviation sectors to position India as a global hub for aircraft maintenance, repair, and overhaul.

This brings up an important question: What will globalization and trade look like in a post-pandemic world?

As Australian Prime Minister Scott Morrison stated, the post-pandemic world will be a poor, dangerous, and disorderly world. Countries will have major trade falls, imbalances, and disputes with each other and will seek to exploit every little opportunity for their gain. Similarly, countries will also use trade as a weapon to economically coerce (and even bully) other countries into granting them special trade concessions or strategic favors like seizures of key assets. China’s managing of the Hambantota port in Sri Lanka and Gwadar port in Pakistan, as well as the United States imposing tariffs on Chinese exports, are key examples. 

One thing is certain: there will be unprecedented uncertainty and countries will no longer be able to wholly depend on each other for global supply chains. To prepare in this post-pandemic globalized world, countries will need to be open to trading with each other without becoming dependent on each other. To do this, countries will have to become self-reliant and self-sufficient. They will need to invest in their economies, in their businesses, in training people and creating jobs, in innovation and entrepreneurship. And, they will need to do all of this while still being open to new opportunities to engage in international business and trade. Countries around the world can, therefore, learn from India’s Atma-Nirbhar Bharat Abhiyaan, and can adapt their own models of self-reliance and self-sufficiency to navigate in the post-pandemic world.

Parth Patel is a lecturer in international management & HRM at Newcastle University Business School, Newcastle University, UK.

Paresha Sinha is a senior lecturer in international management at Waikato Management School, University of Waikato, New Zealand; and

Suraksha Gupta is a professor of marketing at Newcastle University London, UK.