Explain the term ‘Economic Decoupling’ with examples, and discuss its potential impact on Indian economy. (‘आर्थिक वियुग्मन’ शब्द की व्याख्या कीजिए तथा भारतीय अर्थव्यवस्था पर इसके संभावित प्रभाव पर चर्चा कीजिए।)

⛓️‍💥 Economic Decoupling (आर्थिक वियुग्मन)

  • It refers to the process where two or more nations, which were previously interdependent, reduce their economic connections and dependencies, for trade, investment, and supply chain.
  • (आर्थिक वियोजन: जिसमें दो या दो राष्ट्र, जो पहले एक-दूसरे पर निर्भर थे, व्यापार, निवेश और आपूर्ति श्रृंखला के लिए – वे अपने आर्थिक संबंधों और निर्भरताओं को कम करते हैं।)
Before After Economic Decoupling
USA outsourcing its electronics & car mfg to China. 1. USA imposing more taxes on China-made goods, cars, medical equipments.
2. USA made laws to prevent export of semiconductor/supercomputers manufacturing machines /blueprints to China
3. USA making alliances/groupings against China’s Chip/Lithium-battery industry e.g.
(1) MSP: Minerals Security Partnership (2) IPEF:Indo-Pacific Economic Framework for Prosperity
(3) iCET: United States–India Initiative on Critical and Emerging Technology, .
EU-Russia oil-gas dependence EU trying to reduce the dependence on Russia after the Ukraine war. Refer to Price-cap on Russian oil topic in Prelims Handout Pill3A

⛓️‍💥🦁 Economic Decoupling: Impact on India

+ve -ve
– India could benefit from global trade, production and investment shifting from China after such decoupling steps by USA/EU. – but for political rhetoric and appeasement of blue collar voters, if future USA president also imposes high tariffs on India, then India could also suffer. So, India should simultaneously focus on export and diversification to other markets e.g. Africa, South America
– EU/USA price cap on Russian oil → Indian refinery were able to purchase Russian oil for cheaper price. – Our mfg base still faces tough competition from Malaysia, Vietnam, Vietnam, et cetera. Challenges related to infrastructure and skilling.
– India could export solar energy to EU via Green Grids/One Sun One World One Grid (OSOWOG) Initiative.

⛓️‍💥🦁 Economic Decoupling- ✍️ Conclusion

Economic Decoupling of USA-China offers opportunities for Indian exports but need to focus on investment, infrastructure and skilling to ensure we are able to reap the benefits. Simultaneously, India should also focus on export diversification to other regions to ensure we do not suffer if we become the next target by next USA/EU leader. (यूएसए-चीन के आर्थिक वियोजन से भारतीय निर्यात के लिए अवसर उपलब्ध हुए हैं, लेकिन हमें निवेश, बुनियादी ढांचे और कौशल पर ध्यान केंद्रित करना होगा है ताकि हम इस अवसर का लाभ उठा सकें। साथ ही, भारत को अन्य देशो में निर्यात विविधीकरण पर भी ध्यान केंद्रित करना चाहिए ताकि अगला यूएसए/ईयू नेता हमें अपना निशाना बनाए तो हमें नुकसान न हो।)