Is India prepared for the end of globalisation?

Earlier this month, U.S. President Donald Trump remarked that India reduced Russian oil imports to make him happy, and issued a further warning that more tariffs could be imposed if India displeases him. This was an accurate representation of how Mr. Trump approaches bilateral negotiations. What is broken is not just global trade, but the political system that governs it. What is taking its place is a return to mercantilism — a view of trade as an instrument of state power, where surpluses are strength and deficits are weakness.

Globalisation is usually described as the expansion of free trade of goods and services. That is an incomplete description. Globalisation is a political system that defined how governments ran markets and societies, and how they engaged with each other and with networked global institutions that they had established. It came to be associated with liberalism, democracy, and global cooperation. That system is now over.

A new order

The world economy was global long before it was liberal. Early globalisation was built on force. Wealth accumulation in the industrialised north was on the backs of domestic resource exploitation and overseas resource extraction. Trade was lopsided, not free.

Towards the middle of the 20th century, as the rest of the world found its voice and war had ravaged the industrialised countries, it was time for a new order. Sovereignty spread faster than democracy. Global institutions were birthed to offer a normative framework to manage international affairs. Even when unilateral power was exercised, it was couched as a pursuit of democracy, regional stability, or humanitarian compassion. The legitimacy of the system depended on that restraint. That restraint has now been abandoned openly.

This global system, with a normative multilateral core, rested on several political assumptions – open markets, free movement of capital but not people, cross-border enforcement of contracts, negotiations over management of shared resources. For a while, these assumptions seemed to hold as many countries experienced economic growth and declines in poverty.

Unintended consequences

There were, however, two unintended consequences. First, returns to capital far outstripped increases in wages. As the integration of global markets and supply chains deepened, economic pressures intensified. Manufacturing declined in some regions and surged in others. Migration from poor to rich countries increased. It was a matter of time before populist politics would take shape to respond to these imbalances.

Second, the geopolitical foundations of the post-colonial era were shaken by the rise of China. China provided the starkest example of a country that broke through into the global economy and accumulated wealth and power without complying with the multilateral order. China benefited enormously from access to global markets, supply chains, and technology, but retained firm state control over capital, labour and information. China’s trade surplus reflects the relentless pursuit of a model of excess capacity and external demand, which has stunted the industrial ambitions of poorer countries, including India. Over time, China accumulated enough power to emerge as an alternative model for both economic growth and consolidation of domestic political power.

Together, these developments changed how major economies came to view globalisation. Global cooperation came to be viewed as an opportunity cost, or at best as a distraction, as populist politics turned societies inward-looking. Their response is essentially an assertion of sovereignty at the expense of liberal values, such as the politicisation of migration and the promotion of industrial policy to buy self-sufficiency. This is why globalisation, as it was practised, is now dead.

The crutch of global cooperation has already been taken away from the developing world. International aid is now conditional on the national interests of donor countries. With multilateral institutions failing, the ability of developing countries to negotiate jointly on matters such as climate change or illicit financial flows is weakening rapidly. Domestically, restless youth now demand much more of their governments. Political elites need to recognise this moment and act decisively, even if they initially do so to further their self-interest.

India’s role

What is India’s role going to be in this emerging global order? India is simultaneously too large to ignore and too poor to matter. Over the last 15 years, we have squandered the opportunity to convert our demographic advantage into productive capacity. The social pyramid has become more sharply stratified, with an overwhelmingly poor and powerless base supporting a narrow apex.

India can still become a serious player in a few selected domains — digital public infrastructure being the most prominent, but also with potential in renewable energy, the services sector, and democratic decentralisation. But it is hard to see how those possibilities can be realised under the current political economy. Even the limited economic growth we have seen has not been accompanied by a credible commitment to expanding the base through sustained public investment in health and education. In a mercantilist world order, low state capacity will only result in long-term irrelevance.

Without stronger state capability, greater social cohesion, and a social contract committed to sharing growth more evenly, India risks remaining a country that lays claim to being a Vishwaguru without the institutional foundations and economic means to achieve it. Rhetoric alone will not be enough.

Suvojit Chattopadhyay, Governance and public policy professional with over two decades of experience across South Asia and East Africa

Published – January 30, 2026 12:09 am IST