Why in the News?

External Affairs Minister S. Jaishankar highlighted that over the past 25 years, globalisation has led to job losses and dissatisfaction in many societies, as trade has become both globalised and weaponised.

How is trade being weaponised in global politics?

• Trade is increasingly being used as a strategic tool by countries, intertwined with national security concerns. Nations impose tariffs, subsidies, and other economic measures as defensive actions to protect domestic industries and geopolitical interests.
• Technologies and supply chains are viewed through a national security lens, leading to greater control over economic interactions.

Note: Economic and military power comes under hard power.

What implications does this weaponization of trade have for India and its foreign relations?

• Rising Protectionism: India has responded to this trend by imposing over 30 anti-dumping measures against Chinese goods in 2024 alone. These defensive actions are meant to shield Indian industries from what is perceived as China’s predatory pricing strategies.
• Impact on Global Supply Chains: As global supply chains become more transnational, India’s ability to secure its interests, especially in high-tech sectors, becomes crucial.
  • India is balancing its integration into the global economy while protecting critical sectors from foreign influence, especially from China.
• Foreign Relations: India’s foreign policy is increasingly being shaped by economic security concerns.
  • Trade disputes, such as those with China, have prompted a re-evaluation of economic partnerships and collaboration within frameworks like the Indo-Pacific to reduce dependency on potentially adversarial nations.

What historical context informs India’s current approach to trade and international relations?

• China’s Entry into WTO (2001): India, like many other countries, faced economic repercussions when Chinese goods flooded global markets after China joined the WTO. This led to job losses and industrial competition.
• Globalization and Job Losses: The rapid globalization of the past 25 years has contributed to domestic job losses and dissatisfaction in various sectors in India.
• Strategic Autonomy: India’s foreign relations have historically been guided by a principle of strategic autonomy.
  • This informs its cautious stance on fully integrating into global supply chains without safeguarding critical industries, and influences its desire to promote reforms in Multilateral Development Banks (MDBs) to suit developing nations’ needs.

Way forward:

• Strengthening Domestic Industries: India should continue enhancing self-reliance through initiatives like Make in India and Atmanirbhar Bharat, focusing on boosting high-tech sectors and reducing dependency on foreign imports, especially from adversarial nations like China.
• Diversifying Trade Partnerships: India must deepen economic ties with friendly nations and regional alliances such as the Indo-Pacific, while advocating for reforms in global trade systems like the WTO and MDBs to ensure fair competition and support for developing economies.

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