Abstract

Certain factors like well-developed infrastructure, a large number of professionally educated and English-speaking people in the population and a reformed legal system have contributed to a great extent to the opening of the Indian economy, after some decades when it had been mostly closed to external corporate and economic interests. That has done much to attract global brands to come to India. Still, there have been movements against these practices and protests against globalisation, especially during the economic downturn of 2008, which proved a turning point in reducing the degree of economic integration at a global level. The process of slobalisation and deglobalisation had already started globally and the Covid-19 pandemic added further momentum to these trends. Global value chains are beginning to fray, the global environment is observing the reduced level of alliances and international cooperation is almost absent. It can be said that globalisation has reached its peak and now it would be interesting to see whether it can still expand in the tail-end stage or whether it is time to wrap up things gradually. Many countries worldwide, including India, have started working towards reducing economic interdependence as Covid-19 forced people to adopt a new rationality. Apart from these, especially in India, factors like a bitter relationship with China, drivers of consumption-driven economy, demographic dividend, “Make in India” campaign and the appeal of “Aatmanirbhar Bharat (Self-Reliant India)” by the honourable PM after the pandemic started, among other things, are motivating Indians to achieve increased consumption of domestic offerings. On the other hand, the increased purchasing power of consumers, increased education, a higher population of generation Z, increased exposure to foreign cultures and increased materialism and individualism drive the consumption of overseas offerings. Considering all these factors, this chapter considers the extent to which India is set for slobalisation and selective deglobalisation.

Keywords

deglobalisation, globalisation, India, liberalization, slobalisation

Introduction

Levitt (1993) referred to the term globalisation a “new commercial reality”. The objective of globalisation is to reduce the blockades among nations and promote personal, political and economic interaction (Spears, Parker & McDonald, 2004) and that is why it is also identified as the process by which the world is made into a single place (Robertson & Lechner, 1985). There is another term called economic globalisation, which includes the free movement of capital, products, and labour because consumers take various stances towards economic globalisation. From a consumer perspective, globalisation is “mostly a state of mind” (Scherer & Palazzo, 2011). The integration of financial markets and products of economies around the world was made possible through economic globalisation which ultimately proved to be a driving force of capital and trade flows worldwide (Zhang & Zhang, 2003). Globalisation has noteworthy effects on the economies of both developed and developing countries, but it has broader and more profound impacts on developing countries (Prasad, Rogoff, Wei & Kose, 2003). The competition and interdependence between the economies of the global markets have been intensified due to globalisation. Therefore, market conditions and domestic policies do not determine the domestic economic developments of developing nations. They are primarily affected and determined by policies and market conditions of the domestic and the global communities (Hartungi, 2006). Globalisation is a double-edged sword. It has provided many opportunities like faster transfer of know-how from advanced nations, greater access to the world market, productivity enhancement and improved efficiency for emerging nations. However, it has also brought many challenges like environmental degradation, exploitation of labour and more volatile financial markets.
The majority of the world’s economies started opening up more than three decades ago, primarily in developing and underdeveloped nations. During this period, the diffusion of the innovation process has speeded and products and brands have started moving quickly from developed countries to the rest of the world. Apart from that, due to globalisation and economic liberalisation, international trade has amplified. Consumers got exposed to many overseas products than ever before. Due to increased opportunities in the international market, intercontinental and intercountry travel has also improved a lot. People of one country got exposed to various other cultures of the world which broadened their mind. Penetration of low-cost internet and smartphones has boosted this exposure. Manufactures from developed nations are less affected, rather grown because of five reasons. One, they were already providing better quality products, second, they already had established market in their own country and preferred by consumers even after entry of overseas products in their home country, three, they receive a warm welcome by most of the countries, four, they are perceived superior by consumers across the world and five, they are getting more and more opportunities to expand and generate higher profits by attaining economies of scale at a global level. This setting has created an environment of threat for the domestic manufactures of developing and underdeveloped nations.
Like many other nations, India could not stay away from winds of globalisation for too long. India, as the largest democracy in the world, is also known for its cultural diversity and values and comprises many regions, languages, and religions. The year 1991, witnessed a significant change in the Indian economic scenario, wherein liberal trade policy opened Indian economic borders for foreign investments (Chadchan & Shankar, 2012). Economic liberalisation and globalisation have impacted the Indian economy in massive ways (Kotwal, Ramaswami & Wadhwa, 2011) and influenced socially, economically and culturally (Ganguly-Scrase & Scrase, 1999). Vast number of foreign products and brands are easily accessible to Indian consumers. India’s growth story towards a global economy and entries of many foreign brands are majorly due to liberalisation (Varshney & Chakravarti, 2011). A watchful investigation of the Indian market discloses the intense changes that happened. International brands from outside India have been very well competing for share of market, share of mind, share of heart and share of wallet. It is considered one of the largest markets globally which attracts corporates from all around the world. India is an attractive market because of well-developed infrastructure, comprehensive legal systems, large numbers of professionally educated people and a growing middle class.
Out of 217 economies, India positions as the third largest nation in purchasing power parity-based GDP and eleventh largest country in terms of nominal GDP (Joshi & Joshi, 2017). In the Asia-Pacific region, India also grips the distinct position of taking the second fastest growing populace of high-net-worth individuals (Parhi & Pal, 2021). The quantity of middle-class people in India is constantly growing (Atwal & Khan, 2008) and according to a study by Mckinsey Global Institute (MGI), India is expected to arise as the fifth largest consumer market in the world by 2025 (Dey, 2017). The Indian consumer sector has developed at a yearly rate of 5.7 per cent between 2005 and 2015. Twelve-monthly growth in the Indian consumption market is anticipated to be 6.7 per cent during 2015-2021and 7.1 per cent during 2022-2025 (Al-Gasaymeh, Ahmed, Mehmood & Alzoubi, 2019).
According to a report by the World Economic in collaboration with Bain & Company in January 2019, India’s economy has some structural strengths like domestic consumption-driven economy, healthy savings, policy reforms, active campaigning, increased ease of doing business, large-scale infrastructure development projects etc. that have enabled robust economic growth and allowed the economy to be relatively resilient to the vagaries of global economic patterns.

Before Globalisation

India was known as “Sone ki Chidiya” (Golden Sparrow) because of its unparalleled rich heritage, wealth and prosperity. India had well established socio-economic systems and a well-developed business ecosystem. The Indian economy was the reason it was known as a golden sparrow as it had the best gross domestic product (GDP) for centuries. Indians were far more responsible and civilised than the rest of the world. Indians were known for their knowledge in complicated subjects in the area of science, medicine and economics. India was the first country to go away with the barter system. India had plentiful natural resources and precious stones. Indians were the very proud suppliers for many products to the world. Nevertheless, slowly and gradually, the scenario in British rule changed and started affecting the country adversely.
However, even during the fight for Independence, India’s citizens had a powerful sense of belongingness towards the country and its products. India’s political past stalwartly endorsed the ‘Swadeshi Movement’ (support to indigenous manufacturers), leading the ‘Be Indian, Buy Indian’ nationalist motto that limited the entry of foreign products. The inclination towards overseas products started emerging among consumers in India due to exposure to overseas people, culture and media. The Indian government imposed certain restrictions on imports to uplift the economy and encouraged industrialisation after independence to ensure that domestic products are preferred. The situation led to restrictions on the free exchange of goods and services, public sector domination due to lack of competition from private and foreign companies and huge complications to start a new business. All of these resulted in poor economic growth. However, Indians were buying inland goods yet craving for more options.

The big decision

The Indian government took a big decision in the 1990s and opted for globalisation, economic liberalisation and privatisation, which resulted in the entry of many foreign firms in India and the free movement of goods and services from other countries. Indian consumers started getting more and more exposure towards overseas products, media and culture and in a majority of the sector, foreign players outperformed domestic players in delivering value proposition. The GDP started growing and lot of short-term benefits of liberalisation started showing. However, it was changing the likings, preferences and buying patterns of consumers slowly and gradually. Then there was a time when it was very typical in India to openly admit that it is not wise to buy inland products as well it was considered as a symbol of anti-modern. Unfortunately, the same is still prominent in most of the product categories. There are mainly two reasons for it. Domestic manufacturers could not deliver superior offerings as compared to overseas producers and the second is that the feeling of supporting domestic manufacturers by sacrificing personal benefit is diminishing among Indian consumers over a while. Consumers who did not experience the struggling days during British rule are not that sensitive to this feeling and started seeking value-driven products which in a majority of the cases could only be fulfilled by foreign players.

Thirty years of Globalisation

Restrictions continued to lessen, the supremacy of overseas companies flourished, consumers’ preference towards imported products improved and the struggle of domestic players increased. As a growing country with enormous market potential, has grabbed the attention of numerous global businesses from all over the world (Kumar, Lee & Kim, 2009). It is fast emerging as a potential market for a diversity of consumer and industrial products. People of India are provided with more foreign-made product choices than they had ever experienced before because of its economic restructurings after 1991. The USA, China, Switzerland, Saudi Arabia, and UAE stay as the chief trading associates of India for last few years (Narang, 2016). Noteworthy changes in the tastes and preferences of the Indian consumers were in the era after globalisation (Gupta, 2011; Bhardwaj & Fairhurst, 2010; Kaur & Singh, 2007). Indian consumers differentiated and discerned luxury according to global image of the brand and fit with tradition. Globalisation shaped a greater level of exposure to foreign nations and media among Indian consumers which carried western culture to India and caused a shift in lifestyle (Batra, Ramaswamy, Alden, Steenkamp & Ramachander, 2000; Bhardwaj & Fairhurst, 2010).
Indian consumers are obsessed with foreign brands. Western brands generate symbolic representation in Indian societies and that is why Indian consumers show a preference for western brands (Eng & Bogaert, 2010). The rapidly expanding middle-class consumers in India (with their increasing purchasing power) constitute the primary market for branded foreign products (Kumar et al., 2009) and past studies of Indian customers have revealed their preferences for foreign products over domestic products (Wang, Wong & Yuen, 2021). Even today, the scenario is still poor in many product categories like fashion products, consumer electronics, consumer durables, toys, automobiles, FMCG, and many household products as most of the consumers prefer overseas players in these product categories. It is an eminent fact that though the quality of many Indian companies is far better, their Indian names make them lose out on many potential customers (Bhattacharya, 2015). Many domestic manufacturers choose to skin their Indian origin by picking brand names that deceive and make consumers believe that the brand belongs to the foreign country. They select such brand names that can easily hide their Indian origin and are accepted by many people in India. Some brands who have successfully done this are, Hidesign, Allen Solly, Da Milano, Monte Carlo, Franco Leone, Munich Polo, La Opala, Peter England, Flying Machine, Louis Philippe, American Swan, Royal Enfield etc. (Joshi & Joshi, 2021).

Drivers of Globalisation in India

Many social, psychological, political, economic and demographic drivers that boosted sales of overseas products in India. Some of these factors are discussed here.
Cultural Openness
Merton (1957) explained cultural openness as individuals comfortable of adapting ideas beyond their own cultures. According to Sharma, Shimp and Shin (1995), the readiness to interact with individuals from other cultures and experience a few of their artefacts is known as cultural openness. With the advent of globalisation, consumers in India have got more exposure to foreign culture due to increased usage of televisions and internet (Deresk, 2000). According to Mitta and Anjaneyaswamy (2013), Indian people travel to other countries increases almost 10 per cent every year and travel to almost every destination. In the year 2000, there were 4.42 million departures with reached 26.30 million departures in 2018. At the same time, India has seen an influx of foreign tourists and foreign employees working for Indian companies, which has further caused an amalgamation of foreign and Indian cultures. An increase in exposure to other cultures increased the familiarity with them and resulted in reduced hostility which ultimately caused motivated consumers to buy more foreign products (Sharma et al., 1995).
Individualism
As opposed to collectivism, Individualism refers to the intensity to which people act as individuals instead of as members of a group, while collectivism refers to a supportive social structure taking care of people in exchange for firm loyalty (Steenkamp, Ter Hofstede & Wedel, 1999). Individualism is defined as an individual’s tendency to prioritise personal goals compared to an in-group’s goals (Triandis & Gelfand, 1998). Indian consumers can be better understood by getting an idea about their collectivism and individualism values. Santos, Varnum and Grossmann (2017) stated that Asian people have swiftly travelled from collectivist to individualist value. Oyserman, Coon and Kemmelmeier (2002) mentioned that value orientation of people changes with the economic development and according to Neuliep (2012) and Han (2017) gradually, Asians, especially Indians have become more individualistic and westernised. Consumer preference towards domestic and overseas products is largely affected by the value they hold and individualistic or less collectivist consumers generally tend to buy local products less (Shankarmahesh, 2006). Moreover, as individualistic consumers have a higher degree of innovativeness (Schueth & O’Loughlin, 2008) they tend to have higher preference overseas products and brands (Cleveland, Erdogan, Arikan, & Poyraz, 2011).

Materialism

Materialism has been categorised as a personality trait (Belk, 1985), value (Richins, 2004) and a set of attitudes (Chan & Prendergast, 2007). Moschis and Churchill (1978) defined materialism as an alignment toward money and possession that drive the happiness at a personal level and they investigated materialism as one of severe traits to study consumer behaviour. As per the survey by Ipsos, a market research firm, studied “Global Attitudes on Materialism, Finances and Family” with some important revelations about consumer attitudes in certain Asia-Pacific countries. The survey finding revealed that China and India topped the rankings as the most materialistic based on the number of respondents who agreed with the statement that “I measure my success by the things I own.” 71 per cent of and 58 per cent of respondents from China and India agreed with that statement, the highest among countries surveyed by Ipsos. The average at the international level signified 34 per cent of respondents agreeing, making the Chinese and Indians stand out as materialistic not only regionally, but on a global level.

Conspicuous Consumption

Conspicuous consumption refers to consumers’ willingness to exhibit their capability to afford costly goods and provide prominent visibility for the same (Piron, 2000). They are motivated to impress others are inspired by the social benefits of the product and not with its physiological or economic benefits (Mason, 1981). Conspicuous consumption is an unconcealed display of wealth (Trigg, 2001; Patsiaouras & Fitchett, 2012). As far as a phenomenon of conspicuous consumption in India is concerned, it has become very widespread and usual because of increased foreign travel, the spread of internet, increasing in a number of earners, rising middle class etc. They can now see and compare them with their neighbours and people around the globe which indirectly motivates them to showcase their wealth through conspicuous consumption.

Belief about national economy and personal finances

Indians are optimistic about the national economy and personal finances according to the survey conducted by Ipsos. The findings regarding the questions that what do they feel about their country, themselves and their family, optimistic or pessimistic, in next twelve months revealed that India scored highest in optimism rankings with more than 50 per cent Indians believe that the future of the country is optimistic. It was the only country which crossed 50 per cent mark in optimistic consumers. With 46 per cent China was at fourth position and 32 per cent was the global average.

Age

India is at a stage of yielding results of demographic dividends. United Nations Population Fund (UNFPA) defined demographic dividend in a simple language. According to them, when age structure changes and the proportion of people between 15 to 64 years (working-age group) is more than the combined proportion of people 14 years and younger, and 65 years and older (non-working age group), demographic dividend can be achieved. As reported by Statista, the Indian population that fell into the 0-14-year category has reduced from 31.24 per cent in 2009 to 26.62 per cent in 2019. There is a rise in 15-64 years age group category from 63.74 per cent in 2009 to 67 per cent in 2019 and the population with the age of 65 and above has also increased from 5.02 per cent in 2009 to 6.38 per cent in 2019. The above definition and data reflect that India is all set to achieve the certain advantages of demographic dividends like better economic growth, increased labour force, rise in women in the workforce, increased savings and investment rates and rise of aspiration class.
Indian has entered the 37-year period of demographic dividend from 2018 to 2055. Different nations enter and exit period of demographic dividend depending upon their age mix structure. If we look at some other economies then Japan had demographic dividend period of 40 years (1964-2004), Italy – 18 years (1984-2002), Republic of Korea – 40 years (1987-2027), Spain – 23 years (1991-2014), China – 37 years (1994-2031), Thailand – 34 years (1994-2028), Brazil – 32 years (2006-2038) and Bangladesh – 34 years (2018-2052). If we talk about the total dependency ratio (([Population ages 0-15] + [Population ages 65-plus]) ÷ [Population ages 16-64]) × 100) of India, it was all-time high with 81.5% in 1960s and reduced to 49.8% in 2018. The ratio will further deepen during the demographic dividend period and reach to 49.5% again in 2055. Then it will again increase gradually over some time. Based on median age, India is considered one of the youngest nations in the world. The median age of the population of India was just 28 years in 2020, as compared to 49 years in Japan, 45 years in Western Europe and 37 years in China.
As compared to earlier generations, youth in India today are more exposed to the western world due to the penetration of television, smartphones, and the internet. They have more ideas and are more influenced by foreign culture and products. Furthermore, the present Indian youth have not witnessed India’s freedom-struggle movement which the older generation has been a part of.

Education

At the time of India’s independence in 1947, India had a literacy rate of just 18 per cent. However, according to the report on ‘Household Social Consumption: Education in India as part of 75th round of National Sample Survey – from July 2017 to June 2018’ conducted by National Statistical Office (NSO) survey among 64,519 rural households from 6,188 blocks all-over India, the literacy rate has risen to 77.7 per cent. The literacy rate in urban India is 87.7 per cent while the same is 73.5 per cent in rural India. The literacy rate in Gujarat is 82.4 per cent, fairly above the figures of India. The survey presented that at the all-India level, among all states, the male literacy rate is higher (84.7 per cent) than female literacy rate (70.3 per cent). The report also discovered that almost 4 per cent of rural households have computers and among persons of age 15-29 years, approximately 24 per cent and knew how to operate a computer. When we talk about the urban area 23 per cent of urban households possessed computers 56 per cent of people of age 15-29 years in urban areas know how to operate a computer. Overall, nearly 35 per cent of persons (25 per cent in rural areas and 58 per cent in urban areas) of age 15-29 years reported use of internet during the 30 days before the date of the survey. Education widens the mental horizons of people and brings them out of the shallow confines of their thinking and living. The use of computers, tablets, smartphones and internet accelerates this process of making individuals more broad-minded and cosmopolitan.

Income

According to a report by the Boston Consulting Group (BCG) and Statista Research Department, in India, there were 70 lakhs households that belong to the Elite group (annual income greater than Rs. 20 Lakhs) in 2016 which is expected to grow to 1.60 crores in 2025. Affluent households (earning Rs. 10 lakhs – Rs. 20 lakhs per annum) were 1.70 crores in 2016 and expected to rise to 3.30 crores. A number of households in Aspires category (annual income of Rs. 5 lakhs-10 lakhs) was 4 crores and expected to reach 6.10 crores by 2025. The next billion categories (annual income between Rs. 1.50 lakhs – 5 lakhs) were 12.10 crores in 2016 which is expected to rise to 14 crores by 2025 and when we talk about the struggler category (annual income less than Rs. 1.50 Lakhs), the number of households was 8.20 crores in 2016 which are expected to reduce to 5.50 crores in 2025. So, looking at these figures, it is a straightforward indication that the income of an average Indian will increase regardless of the category he/she falls. Many households will be shifting to the entire category.
These figures turn out to be more lucrative when they are seen according to their share in domestic consumption. First of all, if we see the overall domestic consumption, it has increased 3.5 times in the decade of 2010-20 from Rs. 31,00,000 crores (31 trillion) to Rs. 1,10,00,000 crores (110 trillion). BCG estimates this figure to touch to Rs. 3,35,00,000 crores (335 trillion) by 2028. India’s affluent and aspiring households (Annual income between Rs. 5 lakhs-20 lakhs) have seen a sharp jump in absolute numbers in the last decade and these income group households have contributed to 43% of the annual consumption even if they constitute only 28% of total households in India.

Urbanisation

Urbanisation is one of the most inevitable and oldest progressions of transformation that shapes societies worldwide. Urbanisation responds to changing perceptions and values of the inherent characteristics in a dynamic way. Urbanisation quickens the speed of diffusion of innovation. According to Davis (1965), the proportion of the total population concentrated in urban areas is urbanisation. It can be said as a change in the concentration of the urban population both absolutely as well as relatively. Growth, jobs, lifestyle etc. are the reasons and consequences of this process. The increasing rate of urbanisation makes lot of changes in people in their role as a consumer.
According to a report in May 2020 by the Ministry of Statistics and Programme Implementation rural population contributed almost 83 per cent of the total Indian population in 1950, which has reduced to 65.53 per cent in 2020. The population will further reduce and is expected to reach 50 per cent by 2050.

Drivers of Slobalisation and Selective Deglobalisation

India has traditionally been a conservative society, and most of Indians still hold on to their conservative beliefs about certain aspects of life. Indians in general and especially people who are Hindus (people who follow Hinduism which is a religion followed by the majority of Indians) are considered with openness, tolerance and flexibility (Erdman, 1978). However, is still a somewhat conservative religion focusing on factors such as peace, group-harmony, non-materialistic attitude, and spirituality (Clarke, Kornberg, Scotto & Twyman, 2006).
India is also known for its unique cultural diversity and rich heritage. Indian mythology and folklore are stories depicting patriotism, i.e. Maharana Pratap, Shivaji Maharaj, Rani Laxmi Bai, Mahatama Gandhi, Sardar Patel, Bhagat Singh, etc. Indian handicrafts, fabric and designs are world famous. Indians are not only proud of their goods but have also welcomed goods of almost all categories from foreign countries (Agbonifoh & Elimimian, 1999). Alternatively, contrary to the trend of globalisation since 2008, there are signs of increasing nationalism due to the economic crisis (Sharma, 2019). There are many instances where Indian consumers have started actively considering that they buy Indian products and services (Joshi & Joshi, 2018). There are many factors that have reduced the pace of globalisation and in many product categories, deglobalisation has started. Some are as under
Degree of consumer ethnocentrism
Consumer ethnocentrism is intended to discover normative-based dogmas, as an element of the common consumer orientation towards foreign goods, that purchasing domestic goods is someway noble for the country, whereas buying foreign goods is harmful to the economy of the nation and to fellow country people and is purely unpatriotic (Shimp, 1984). Shimp and Sharma (1987) established a 17-item scale entitled the CETSCALE (Consumer Ethnocentrism Tendency SCALE) to measure the construct of consumer ethnocentrism. As measured by the CETSCALE (Shimp and Sharma, 1987), individuals high in consumer ethnocentrism favour to buy indigenous rather than overseas goods and perceive domestic merchandises as superior to those manufactured in other nations. Whatever may be the result in various countries, CETSCALE should predict appropriate purchase preferences (Klein et al., 2006). The intensity of consumer ethnocentrism amongst the consumers can be straightforwardly interpreted from the total CETSCALE score (SCALEMEAN) popularly known as CETSCORE. Various reporting related to CETSCORE in India suggests that the degree of consumer ethnocentrism is increasing in India suggesting that the tendency to prefer domestic products and services is increasing.

Table 1. Reported CETSCORE in India

Source: Compiled by authors

As visible in Table 1, CETSCALE has been showing an increasing trend in India in the last two decades. The lowest CETSCORE is reported by Anwar (2002) while the highest is reported by Rizvi (2008). The CETSCORE reported by Joshi and Joshi (2021) is also on the positive side indicating that consumers in India have shown positive inclination to buy domestic products.

Make in India

Without global economic integration and foreign direct investment (FDI), the economy of any country cannot progress. In order to promote global economic integration and to invite foreign investors to invest in all sectors in India, the “Make in India” strategy is launched. India’s initiative called “Make in India” was launched in September 2014 by honourable prime minister to make India a manufacturing hub and attract many overseas manufacturers eyeing the Asian market. It can be said as another term for foreign direct investment but the objective is to bring more long-term capital. FDI also helps in reducing the deficit of savings. It also helps in reducing the deficit of the balance of payments. It not only provides support to the economy in the long run but also helps the domestic industries develop infrastructure, generate employment opportunities, transfer technology quicker and enhance productivity. It will support the country to achieve self-sufficiency in many sectors.
China was always a preferred country for manufacturing for most MNCs but now the scenario is changing. The total population of the world is approximately 750 crores. China (144 crores) and India (139 crores) consists of nearly 37 per cent of the world population, signifying that one-third of the total world market resides in these two countries. When it comes down to selecting one of these, India is now preferred because of several reasons. One, it is better for MNCs to manufacture in China but very difficult to sell those products in China nevertheless, it is very convenient for them to do both, manufacture and sell, in India. Second, India’s economy is growing nearly as quickly as China. India also has shown tremendous progress in ease of doing business ranking. India’s ranking in ease of doing business was 130 in 2016 which has reached 63 in 2020.
Moreover, the economic and political outlook is more stable in India as compared to China. India was already strong in service sector and with “Make in India” initiative, it has also started dominating the manufacturing sector. The credibility of India has increased a lot across the world. Many foreign companies were always interested in coming to India and the “Make in India” campaign proved to be a big motivation for them. Many companies did the strategic alliances with Indian companies and started operations in India. It has also generated indirect confidence in Indian consumers about the quality and trustworthiness of products manufactured in India.

Consumption economy

According to World Economic Forum (WEF), India is all set to become third-largest consumer market in the world after the US and China. By 2030, consumer spending in India is expected to reach USD 6 trillion by 2030. As seen in Figure 1, within this macro context, five significant drivers will be the critical pillars of the future of consumption in India. As far as the consumption environment is concerned, India has been in the top list of the most evolving nations.

Figure 1. Five drivers of future consumption in India

Source: Bain & Company/World Economic Forum analysis

Moreover, India is anticipated to continue its stable economic growth. India will maintain its young age and diversity even in 2030 while at the same time people will be richer as compared to today. Adding to all these, technological development and innovation will raise consumption to the next level altogether.

Figure 2. Evolution of the household-income profile in India
Source: PRICE Projections based on ICE 360o Surveys (2014, 2016, 2018)

Empowered by the five key drivers, seven key predictions i.e. rising incomes, a significant reduction in urban-rural divide, more consumption by liberalization’s children – millennials and generation Z, Indian peculiarities demanding indigenous offerings and digital platforms, emerging new consumer archetypes, connected India and new business model will define the future of consumption in India in 2030. These key predictions have significant business and societal implications for India’s future.
Income growth will transmute India to a middle-class from a bottom-of-the-pyramid economy, with consumer expenditure will grow to nearly $6 trillion by 2030. India will add about 21 million high-income households and 140 million middle-income households by 2030. Compared to 30 per cent today, an upper middle-income household will generate 47 per cent of total consumption while the figures would be 14 per cent compared to 7 per cent today. All these factors and the increasing tendency to prefer domestic products have further boosted the slobalisation and selective deglobalisation.
Appeal of Aatmanirbhar Bharat (Self-reliant India)
The announcement of “Atmanirbhar Bharat Abhiyan” (Self-Reliant India Mission) was done by honourable prime minister Shri Narendra Modi on 12th May 2020. The five pillars of Self-reliant India are economy, demand, infrastructure, system and vibrant democracy. A self-reliant India does not mean turning the country into a protectionist but gripping the world by becoming more assertive. Covid-19 and an appeal of “Aatmanirbhar Bharat” from the honourable prime minister motivate consumers to prefer domestic products. The courage of Indian companies to disclose their Indian origin is boosted after a appeal on “Aatmanirbhar Bharat (Self-reliant India)” and “Vocal for Local”. Post that, several companies have rolled campaigns expressing the same. Dabur came up with a tag line – “Made in India, by Indians, for Indians” to encash the spirit. Lotus Herbals came up with promotional campaigns like – “Made Locally, Loved Globally” and “Beautifully Indian”. Similarly, Parle Agro rolled out campaigns with a tag line – “Proudly Indian” while Prestige, a leading brand of kitchen appliances, came up a message “Made with pride in India” in their latest campaign. Apart from many regional and local brands also started appealing the consumers in the same manner.

Bitter relationship with China

Regardless of the surge in two-sided business between India and China, the affinity between both nations remains flawed with disbelief and suspicion. Some reasons like dubious border issue, China’s mounting existence in the Indian Ocean and its solidification of affiliation with Pakistan (after their corresponding war against India in 1962 and 1965, China and Pakistan established natural cronies surged by a shared anti-India sentiment), another neighbouring nation with which India has an acrimonious relationship. Even for the exhilarated days of Hindi-Chini Bhai Bhai (Indians and Chinese are brothers), the two nations could not solve their of products with 3000 items like fashion apparel, border dispute (Singh, 2008). There are numerous clashes including China postponing India’s pains to produce a UN ban on Jaish-e-Muhammad leader Masood Azhar, Beijing hindering India’s access to the Nuclear Suppliers Group (NSG), the China-Pakistan Economic Corridor along with the 73 days of the standoff at Doklam, the longest one. All these issues frequently generate a sense of patriotism and motivate consumers to prefer domestic products over Chinese products.
Moreover, the trade associations also appeal consumers to buy local. For Eg. The Confederation of All India Traders (CAIT) which has 40,000 trade associations and a network of 7 crore traders under its belt, in June, 2020, condemned the attack on Indian soldiers by the Chinese military and launched “Boycott Chinese Goods” campaign with a message “Bhartiya Samaan-Hamara Abhimaan (Indian Goods, Our Pride)”. They appealed to Indian consumers to purchase Indian products and also released a list of 450 plus broad categories FMCG products, food, electrical and electronics, food, toys, furnishing fabrics, textiles, consumer durables, Diwali and Holi items, furnishing fabrics, watches, builder hardware, packaging and health products, Feng Shui items, auto parts and optical items which can easily be replaced by Indian products.

Conclusion

The speed of globalisation has started to lessen but the momentum was very slow. The outbreak of Covid-19 has accelerated this process to a great extent. Government, policy makers and companies worldwide are skeptical whether they should reduce their economic integration and interdependence. This retreat may not end the process of globalisation but definitely can reverse it partially. Covid made governments, business leaders and consumers across the globe to think more rationally. Though everyone appreciates globalisation, they do not want to put their lives and financial strengths at risk. It is cutting down the cross-border movement along with maintaining the global standards. After decades of growing globalisation, it looks like the trend has turned towards the slobalisation and deglobalisation.
India observed liberalisation, globalisation and privatisation in 1991 and has allowed the entry of a many foreign firms in India. Many companies started importing their products to India and many enhanced their presence. India still is and in future too is a lucrative market for companies across the world. Covid-19 pandemic has provided a perfect occasion and an excellent opportunity for India to redefine its position in global trade and protect the national interests. Honourable Prime Minister’s call on “Atmanirbhar Bharat (self-reliant India)” can change the scenario in the country’s favour. However, the big question arises that “is India capable of doing so?”. The answer is “Yes”.
For ages, India has been known as an agriculture economy; however, it has achieved massive success in the service sector in the last two and a half decades. India is a peninsula country with having a coastline of over 7500 Kms with more than 200 ports of different sizes. They are very well connected with the world’s fourth-largest rail network and second-largest road network with a favourable supply chain and special economic zones. India is already the world’s largest producer of pulses, jute and milk. FMCG, dairy, food process and relates sectors are expected to flourish more. India is endowed with rich natural resources like copper, coal, zinc, iron ore etc. which offers massive potential for mining and associated activities. A special economic package of Rs. Twenty lakh crores (US$ 283.73 billion) from government after the pandemic has added fuel to this growth. The government refocused the priorities back to manufacturing and agriculture. Agriculture at the centre and reforms in contract farming, food processing and marketing are really putting power back in the hands of farmers. To rescue micro, small and medium enterprises from the adverse effect of the Covid-19 pandemic, government provided Rs. Three lakh crores which can ensure uninterrupted manufacturing.
Indian economy is at the stage where it can afford to implement slobalisation in specific sectors while can start deglobalising in some other. India is still dependent on imports in specific sectors like electricals and electronics (especially mobile and computer), pharmacy (key ingredients), medical devices, electric vehicles, dyestuff chemicals, industrial machinery etc. The government is putting efforts to reduce this global dependency. On the other hand, India has identified certain sectors like food processing, agrochemicals, food processing, leather and shoes, defence, textile, automotive parts, furniture, healthcare, infrastructure and aviation sectors where it can not only be self-reliant but also can lead the global supply chain.
As discussed, there are many drivers of globalisation in India however, at the same time, there are signs of increasing protectionism among consumers. In India, if these drivers of globalisation like the greater number of foreign firms entering India, expansion of middle and high-income segments, poverty reduction, consumption growth, increased urbanisation and reduction in urban-rural divide, working-age majority, presence of millennials and generation z, improving technology infrastructure, growing innovations, developing consumer attitudes, increasing joint ventures between foreign and Indian companies in various sectors, enhanced exposure to foreign cultures directly through visits and indirectly through internet and smartphone, are given proper direction and moved towards slobalisation and selective deglobalisation, the world’s largest democracy is well on its way to becoming the world’s most powerful economy.