India’s New Globalisation Raj

The Indian market’s metamorphosis from a sequestered fortress into a vanguard of global trade is perhaps the most significant structural shift of the 21st-century world economy. The country has pivoted from a closed, defensive economic posture to an outward‑looking, globally assertive stance. A hesitant participant in globalisation has become an increasingly confident force shaping global supply chains.

For decades, the Indian market was defined by the “License–Permit–Quota Raj,” a stifling apparatus of bureaucratic red tape and formidable tariff walls designed to insulate domestic industries from the perceived predations of foreign capital. Throughout much of the post‑independence period, India’s economic strategy was built on self‑sufficiency, import substitution (the domestic production of goods that could be purchased from others), and a deep suspicion of global markets.

Although this approach produced pockets of industrial capacity, it ultimately led to chronic inefficiencies, technological stagnation, and a persistent gap between India’s economic potential and its performance, resulting in what the economist Raj Krishna called a “Hindu rate of growth.” The economy persistently struggled to keep pace with the country’s demographic growth and expanding needs.

Then came economic liberalisation in 1991, marking the beginning of India’s metamorphosis. What started as a crisis‑driven necessity gradually matured into a structural reorientation. India went from protecting itself against the global economy to participating in it, and finally to competing within it.

This shift was as much psychological as economic. To embrace the possibilities of openness, India had to shed its anxieties and sense of vulnerability. Over time, its integration into global trade, capital flows, and technology networks reshaped its growth trajectory, urbanisation patterns, and entrepreneurial culture.

But the story does not end there. The India of 2026 has broken its remaining shackles to become the world’s most open, liberalised major emerging economy. This transformation was born of a fundamental insight: true economic sovereignty in a digitised world lies not in isolation, but in integration. While the initial reforms of 1991 cracked the door open, India has spent the past several years removing the hinges entirely.

Now, India is no longer a peripheral player but a central node in global economic flows. Its services exports, digital capabilities, and manufacturing ambitions have positioned it as a country whose economic choices reverberate far beyond its borders. Within multilateral fora, India has signed landmark comprehensive economic partnership agreements with the United Arab Emirates, Oman, Australia, the United Kingdom, and the European Union. Moreover, both New Zealand and the United States have announced agreements in principle.

These are not mere tariff-slashing exercises. They are designed to drive deeper integration by aligning regulatory standards, facilitating the seamless movement of professionals, and securing India’s place within the high-tech global value chains that define modern manufacturing.

This shift is underpinned by a nuanced reinterpretation of the Indian government’s mantra of atmanirbharta, or self-reliance. Indian leaders now understand that atmanirbharta is achieved through global engagement, not autarky. By leveraging production-linked incentive (PLI) schemes, the government has encouraged global titans in electronics, semiconductors, and green energy to treat the subcontinent not just as a captive market but as a primary export hub. It has even eased rules for foreign direct investment in sensitive sectors like defence and space exploration. India no longer fears foreign capital and is eagerly competing for it as the world’s primary alternative to East Asia’s traditional manufacturing clusters.

India’s economic liberalisation will have profound implications. As the “China Plus One” strategy—driven by geopolitical tensions, supply-chain vulnerabilities, and the desire to diversify risk—becomes the standard for multinationals’ corporate planning, India stands out as an ideal partner—stable, democratic, and increasingly deregulated.

Thus, India’s openness has acquired strategic significance. What once looked like a domestic reform agenda has become a global opportunity. The synergy between its burgeoning digital public infrastructure and its new trade agreements suggests a future where India does not just export goods, but also exports much of the world’s digital architecture. By lowering the cost of imported inputs through trade deals, India is systematically enhancing its own exports’ competitiveness, creating a virtuous cycle of growth that can propel it toward becoming a developed economy by mid-century.

The combination of a large, stable democracy, a young workforce, improving infrastructure, and a regulatory environment that is moving toward greater transparency and predictability makes India not merely an alternative to China but a complementary anchor in a multipolar supply-chain architecture. The country’s manufacturing push through initiatives like PLI schemes, its digital public infrastructure, and its expanding logistics networks all reinforce this positioning.

But the path to becoming the world’s most liberalised economy is not without friction. The challenge lies in ensuring that the “last mile” of reform—addressing high land, labour, and logistics costs and maintaining regulatory predictability—matches the ambition of the high-level trade agreements India has signed.

The transition from a protectionist mindset to a liberal one requires a continuous balancing act between protecting vulnerable agrarian livelihoods and embracing the creative destruction of global competition. Nonetheless, the momentum is undeniable. India’s economic strategy has moved decisively from defensive insulation to strategic integration. It has shifted from fearing global competition to leveraging it; from resisting foreign capital to courting it; from protecting domestic inefficiencies to building global competitiveness; from being shaped by globalisation to helping define its next phase.

The direction of travel is unmistakable. India is no longer a bystander in the global order, but a primary architect of its future.

Shashi Tharoor, a former UN under-secretary-general and former Indian Minister of State for External Affairs and Minister of State for Human Resource Development, is a member of the Indian National Congress.

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