Posted on 04 November, 2016
“A focus on the domestic market will also protect Indian businesses against future global economic crises, which may reoccur due to high debt levels and zero-interest monetary regimes” says Mukul Gulati, Managing Partner, Zephyr Peacock India
Below is an excerpt from the post which originally appeared on Economic Times on 4 November 2016:
Globalisation has been on the ascent since the collapse of
the Berlin Wall, with the free flow of trade and capital benefiting both the
developing and the developed world.
India has more than tripled its per capita income since joining the global economy in 1991. Within a decade and a half of joining the World Trade Organization (WTO), China has transformed itself into a global power.
As a result of lower trade barriers, consumers in advanced economies enjoy low-price goods and a higher standard of living.The companies in the S&P 500, the index of leading American firms, now generate close to half their sales from overseas markets.
However, since the global financial crisis, support for globalisation is declining in the western world. Much of the gains from trade have been secured by the skilled and highly educated while middle-class wages have stagnated and the number of low-skilled jobs have declined, creating significant political backlash.
This blow-back is exemplified by Brexit, the rise of nationalist parties in Germany and France, and the emergence of Donald Trump as a major party nominee for president in the US.
Indian businesses have gained significantly from globalisation and needs access to foreign capital as well as global markets. So what could be India's role in this challenging environment?
India needs to expand its focus beyond the contentious issue of agri-market access, and attempt to facilitate ongoing reduction of tariff and non-tariff barriers in the Doha round discussions.
It must build free-trade agreements across its neighbourhood in Asia, either bilaterally or participate in multilateral regional trade agreements that support market access and protect investor rights.
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