Moneycontrol Pro Panorama | India is doing rather well in a deglobalising world

The realignment in global supply chains and geopolitical partnerships is opening new opportunities. India has embarked on a mammoth task of capturing them.

Globalisation is in retreat. The US, an initial proponent of a rule-based global system, is building barriers to trade. A second Donald Trump presidency, if he wins the election, will likely intensify trade wars. The latest action plan presented by Mario Draghi for the European Union involves security and reduction in external dependencies for the region.

“The world has moved on to a very different system. As former British prime minister Gordon Brown wrote in the IMF magazine Finance & Development, the rules-based system has been replaced by a power-based order,” writes Manas Chakravarty in this piece pointing out intensifying challenges to trade and global economy.

Even so, the world is not moving in a unidirectional manner. The realignment in global supply chains and geopolitical partnerships is opening new opportunities. India has embarked on a mammoth task of capturing them, with a good start.

The success of Apple’s iPhones manufacturing in India is a case in point. The US-based company reportedly plans to sell the latest version of the iPhone produced in India globally. Importantly, as Apple produces more iPhones, its suppliers are setting up base in India and strengthening domestic manufacturing ecosystem. Jabil, a component supplier, plans to set up a manufacturing plant in India, joining other Apple’s vendors. A vote of confidence from Apple can help change India's image as the world scrambles to reorder its supply chains.

Opportunities are not seen in electronics manufacturing alone. Numerous companies in chemical industry have set up new production plants and are supplying products to global majors. Even though excess supplies and competition from China are posing pricing pressures currently, domestic manufacturers are deepening ties with global innovators.

What’s more, the passage of the Biosecure Act in the US is expected to accelerate diversification of global supply chains in the pharma industry. This will benefit contract development and manufacturing organisations and contract research organisations in India. Companies are already seeing a rise in workloads and enquiries from potential customers.

“The first-order impact will be on the biotech/pharma companies directly involved in innovator research. In India, companies involved in discovery or development of molecules are likely to benefit from the possible shift of US companies to new vendors,” writes Anubhav Sahu of the MC Pro Research Team. Read more to find out potential gainers from the Biosecure Act.

These developments show that India is navigating the challenges to global trade relatively well. Despite increasing protectionist measures, offshoring continues to rise in the IT services industry, a large employment generator. Global enterprises are scaling up their presence in India. Exports from global capability centres accelerated after  the COVID pandemic and touched $50 billion in FY24, point out analysts at Jefferies India.

While these trends should please policymakers keen on attracting global investments into the manufacturing sector, India can do more to gain from the current realignment in global supply chains. Simplification of regulations, reduction in trade barriers and helping companies find the right workforce and facilities will go a long way in strengthening exports and supporting the Make in India project.

Kamala Harris has the measure of Donald Trump (republished from the FT)

Martin Wolf: Overcoming the ‘middle income’ trap (republished from the FT)