A Retreat from Global Trade will Hurt India’s Geopolitical Stature

Context: The recent call for self-reliance shall be fruitful if achieved through robust economic expansion and not by shutting the world out and losing foreign support.

Reasons for the call for Self-Reliance:

• Slow Economic Growth: It could take five years for India’s gross domestic product to return to the 2019-20 levels.
• A slow recovery also risks the proliferation of bad economic ideas—like protectionism and raising taxes, that will eventually hurt the economy much harder.
• To tackle China’s Hegemonic Plans: to restrain India into a sub-subcontinental role after its transgression in Ladakh.

Challenges to the Self-Reliance model: The slow economic Recovery

• May lead to an environment of inefficiencies and competitiveness: 
• Shielding domestic producers from the competition will eventually lead to lower quality products.

• Self-Reliance is mistaken as ‘Self-sufficiency’: It is possible to be self-reliant, but impossible to be self-sufficient in the modern world. 

• For E.g. The United States is self-reliant not because it makes everything within its borders, but because it can purchase or make everything that it wants, and more.
• True self-reliance comes from wealth: the greater our per-capita income, the greater our self-reliance and not by imposing restrictions.

• May diminish geopolitical space for India: Geo-Economic attractiveness depends on India’s ability to provide ease of market and not just by the rhetoric of siding with the US or against China.
• To the extent that India recedes in importance in the pursuit of their interests, they will be less inclined to back India’s foreign policy positions.
• Reducing the common ground will highlight more differences especially with India is aspiring to be partnered with like the USA. 

Way Forward:

• Focus on the massive deficit financing plan: Similar to Marshall Plan public investment in infrastructure to galvanize post-pandemic growth. 
• Diversifying imports: rather than shutting all out in a way to tackle China or volatile oil prices from West Asia.

• • •  Strengthens international relations: It also means working with like-minded nations and shaping the international trading system in a manner that reduces catastrophic risks and geopolitical coercion.

• Resist the forces of de-globalization: and lead the charge for a new, more balanced international economic order. The openness that we seek in the global economy must start at home.