India is currently at a crossroad on its road towards success. This statement seems correct every few years but now it has more choices than it had four decades back. During that period, India suffered from economic crisis involving external pressures. This eventually led to the start of the period ‘reform’, which continues in its own manner. Great progression has happened since then, but it is not even close to the “East Asian Miracle” and India is not close to the income level where “middle-income traps” hold back countries. On basis of theory of comparative advantage, one can easily argue for countries such as India to make and export labor-intense products such as leather goods and garments. A large practical complication is the dawn of Global Value Chains (GVCs) or Global Production Networks (GPNs) – first one states the results and the second one states mechanisms.
Policy solution for India is not just passive opening by removing trade barriers. Policymakers must take an approach in a confident manner to integrate into the global economy, including GPNs and multinationals that govern them. As India moves past the pandemic with its demographic dividend still available to be cashed and with MNCs and their governments looking for reconfigurations of Global Value Chains to provide flexibility in the face of pandemics, the Indian government cannot afford to take a wrong path.