When India was rich for much of the 17th century, its share in global trade was an astounding 33%, according to Angus Maddison’s historical economic analysis. When India gained independence in 1947, its share in global exports had declined to two per cent.
The significant reduction was largely the result of colonial exploitation, which deindustrialised India by dismantling traditional industries, especially textiles, and converting them into a supplier of raw material for British factories. The subsequent industrialisation of Europe widened the gap between India and the developed world, and today, we are playing catch-up in our pursuit to become Viksit or developed by 2047.
Even before the rhetoric of Viksit Bharat gained public consciousness, India had long recognised that the road to development would involve trading with the outside world. In other words, ‘no man is an island, entire of itself’ was a motto that reflected India’s approach towards international engagement, at least in theory. In practice, however, it has had phases of self-imposed quarantine that are akin to scoring a self-goal.
Nations engage with each other via trade because it is beneficial to do so. No one holds a gun to our head and says you must buy from China. Consumers in the U.S., for example, buy truckloads of Chinese goods because it is significantly easier on their wallets. If everything was made in the U.S., prices would skyrocket along with inflation.
Post-World War II, India became one of the founding members of the General Agreement on Tariffs and Trade (GATT), established in 1948. The GATT aimed to promote international trade by reducing tariffs and other trade barriers. Over time, as global trade became more complex, GATT’s inadequacies in addressing non-tariff barriers (NTB), services, intellectual property, and dispute resolution became palpable.
