Globalisation and Its Impact on India’s Foreign Policy

​​In 2023, Prime Minister of India, Shri Narendra Modi, called for globalisation to be “human-centric.” 

This is rooted in Indian ethos, visible by the often-quoted Sanskrit phrase: “Vasudhaiva Kutumbakam”, meaning the world is one family. This phrase also mirrors the spirit of globalisation-seeing the world as one interlinked entity.

Illustration by The Geostrata

At its core, globalisation refers to the interdependence between the world’s economies, cultures and people driven by advancements in trade and technology. It is a crucial pillar of neo-liberalism which calls for free movement of goods, services and capital in its quest to develop interlinkages between economies.

While the cause-and-effect relationship of globalisation is often understood in strict economic terms, it has also impacted international relations significantly. Specifically, this article deals with how Globalisation has shaped India’s foreign policy. 

ECONOMIC INTERDEPENDENCE

One of the most important pillars of globalisation is the economic linkage between nations. As a result of the 1991 economic reforms, India threw open its closed economy via Liberalisation, Privatisation and Globalisation. This interlinking of the Indian economy with the world did not just have domestic economic ramifications. 

As a result, India also changed its foreign policy outlook, leading to the emergence of relatively new areas in its strategic calculus. This began a multi-aligned foreign policy, shedding the traces of a strict non-aligned foreign policy in the pursuit of economic globalisation.

One such aspect of this multi-alignment was the ‘Look East Policy’ to strengthen economic relations with the East Asian Tiger economies. The interlinkage produced results as India’s trade with ASEAN nations increased from a meagre $2 billion in 1992 to more than $75 billion currently. Along with this, India also developed a newfound zeal to enhance its interlinkage with global economies by embracing trade agreements, from the India-Sri Lanka Free Trade Agreement (ISFTA) in 1998, to the latest agreements such as: India-UAE Comprehensive Economic Partnership Agreement (2022). 

Trade agreements, as foreign policy tools, demonstrate strong strategic convergence between the parties, linking their economies. This gives nations a stake in the other party’s stability and security, facilitating cross-border movement of goods, services, and people.

A SHIFT IN INDIA'S DIASPORA ENGAGEMENT

The connectivity ushered in by globalisation has led to an increased migration of people, with the UN World Migration Report 2024 showing that India is the origin of the largest number of international migrants in the world. This is another dimension where Globalisation has induced dynamism: India’s diaspora engagement. 

Increased migration has led to a recognition of the diaspora’s importance as an important asset of foreign policy, propelling a changed, proactive approach towards their engagement. 

The present approach is starkly different from India’s pre-globalisation policy towards the diaspora. Nehru proclaimed that ‘Indians who chose to remain abroad would consider themselves nationals of the host lands’ but the current administration considers diaspora as part of the “Great Indian Family.”  

This is due to the recognition of the influence that the diaspora exercises. For instance, the Howdy Modi summit in 2019, the diaspora’s lobbying in the US Civil Nuclear Deal are clear examples of the diaspora’s clout. ‘People flows’ and its impact on Indian foreign policy towards diaspora, depicts newer priorities on the agenda.

INFRASTRUCTURE DEVELOPMENT, ANOTHER FOREIGN POLICY SHIFT BROUGHT BY GLOBALISATION

Globalisation has also infused an appetite among Indian diplomats to engage in infrastructure building as a tool of diplomacy. As Khanna states rightly, “Mankind has a new maxim – Connectivity is destiny – and the most connected powers, and people, will win.”

The importance of connectivity as an instrument to maximise national interest in this globalising world is widely recognised in India today.

The India-Myanmar-Thailand trilateral highway aims to increase India’s connectivity with Southeast Asia, promoting regional integration by increasing trade, tourism, and people-to-people ties by reducing transportation time and costs. 

Similarly, the India-Middle East-Europe Economic (IMEC) Corridor launched at the G20 Delhi Summit is an economic corridor expected to improve connectivity between Asia, Europe and the Middle East. This will also enhance economic and strategic ties among the participating countries, interlinking their economies. This foreign policy tool ensures economic benefits for India and places it as an important player, leveraging infrastructure as a tool to advance its interests.

GLOBALISATION: CHALLENGES AND INDIA'S RESPONSE

In order to guard its interests, Indian foreign policy has prioritised multilateralism in the initial stages, but is now seeing a slow transition to prioritising minilateralism. While it may seem unrelated, this transition is also induced in part by globalisation. In the pursuit of developing interlinkages between the economies, solutions require a quick fix, which is usually provided by these small institutions when the existing institutions tend to resist reform. 

Moreover, Globalisation is the primary force which enabled the rise of powers like India and China on the global stage; hence, the desire for them to create new groupings on their terms is another factor for the recent rise in minilateralism. 

This shift in the pre-globalisation and post-globalisation Indian foreign policy’s preference for institution building is significant. For instance, the establishment of the New Development Bank by BRICS as an alternative to the International Monetary Fund for developing economies due to its stringent lending conditions.

As seen above, Globalisation has presented several opportunities for India and the world at large; but it is not without its challenges. Globalisation induced environmental damage has led to climate change and Climate Change like globalisation transcends borders.

To deal with this challenge, it is imperative that actions are taken keeping in mind the interlinked state of the world. 

For instance, the ambitious ‘Green Grids initiative-One Sun, One World, One Grid’ calls for the supply of solar energy across borders. This concept banks on the idea that “the sun never sets,” hence by connecting different regional grids through a common grid energy supply can be ensured. This project also displays how India is keen to harness a connected world to deliver actionable solutions and is poised to play a leadership role for the same.

A 'SLOWBALISATION' ON THE HORIZON?

The impact of globalisation on India’s foreign policy has been significant; however, the discussion doesn’t end here. The emerging trend of ‘slowbalisation’ is also shaping the nation’s foreign policy. This slow pace of globalisation is due to several global shocks like the COVID-19 pandemic, geopolitical fault lines such as the Russia-Ukraine war. 

Increasing protectionism worldwide is another factor, as per the European Central Bank: in 2020, more than 1,900 new restrictive trade measures were implemented globally. The deep interlinkage, otherwise a boon, also exposes economies to several global shocks and requires timely action. Indian foreign policy is adapting itself to this new emergence, which can be seen by initiatives such as the Supply Chain Resilience Initiative -an agreement between India, Japan, and Australia to improve the security of global supply chains from sudden economic disruptions. 

India is also keen to emerge as an alternate destination under the ‘China plus one’ strategy employed by several companies, by diplomatic outreach and favourable policies like ‘Make In India’ at home.

Globalisation has been a significant contributing force in shaping India’s foreign policy: from allowing it to look towards new partners and regions to bringing new priorities like diaspora and connectivity within its ambit. It is also not without its challenges, such as the slow pace of multilateral institutions and climate change. However, India’s foreign policy has been dynamic and has moulded itself as per the needs of a connected world and is now also preparing for a possible slowdown in globalisation, depicting its agile nature. 

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BY NIHARIKA SINGH COVERING MINISTRY OF EXTERNAL AFFAIRS

TEAM GEOSTRATA

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