A New Quest for Self-Reliance: East Asia and Indian Economic Nationalism

Abstract

Since 2017, India has introduced an increasing number of protectionist economic policies including higher tariffs, import duties and production subsidies while also rejecting and reviewing free trade agreements and imposing new regulations on foreign companies. This paper seeks to make sense of India’s recent foreign economic policies and their potential impact on its relations with East Asia. It does so by analyzing the economic, political and geopolitical drivers of these policy changes and placing their emergence within a broader historical context. It is argued that India is entering a new period of “neo-mercantilist” economic nationalism that simultaneously seeks to protect and nurture industries while attracting foreign investment and integrating India into global value chains. This is the outcome of the consequences of “liberal” economic nationalist policies and a changing geopolitical environment — including a broader global impetus toward neo-mercantilist policies and conflict with China. The COVID-19 pandemic has intensified this pre-existing turn toward neo-mercantilism. India’s new economic nationalism has the potential to produce significant changes in India’s relations with East Asia but also faces significant challenges in its implementation in the post-COVID era.