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Rise of protectionism in trade: India’s role in fostering an inclusive trading ecosystem

By Lalit Arora

In the digital landscape that is making the world more and more interconnected, the rise of protectionism in global trade is a cause for great worry. The last decade in particular has witnessed a growing trend towards protectionist policies and trade barriers among countries. This has been threatening the open and inclusive trading ecosystem, a critical priority in promoting economic growth and prosperity.

In light of the above, India has a deep commitment to overcoming these challenges as a voice of inclusivity and a prominent member of the G20, particularly with a focus on startups, small traders, businesses, and retailers.

The G20 Summit

The foundation pillar of the G20 was built on collective action and inclusive partnership between advanced and developing economies. For the first time, the Startup20 Engagement Group was formed under India’s G20 presidency to understand the role of startups in driving innovation that answered the rapidly changing global scenario. India adopted a very tactical attitude and hosted over 200 meetings in 60 cities across 32 diverse work streams across the country. This facilitated G20 delegates and guests to get a foretaste of India’s rich cultural heritage helped these cities with infrastructure development, and encouraged startup ecosystems, trade, and investment. The ongoing discussions and outcomes during this period undoubtedly became global indicators to measure progress in critical priority areas under a clear outline.

The Growing Threat of Protectionism

Protectionism, characterized by the imposition of tariffs, quotas, and other trade barriers, poses a significant challenge to global trade. While such measures are typically implemented under the pretext of protecting domestic industries and employment, they can have wide-ranging consequences that eventually hinder economic growth and innovation. For developing economies like India, the impact of protectionism can be especially devastating. Protectionism limits access to global markets. It limits the smooth flow of goods and services.

Startups and Small Businesses at Risk

Startups and small businesses are integral to any economy. They initiate modernization, create employment opportunities, and encourage competition, eventually contributing to economic development. However, protectionist policies can pose a threat to the growth of these enterprises. Important resources such as raw materials and technology, which are often sourced globally, can be difficult to access due to tariffs and trade barriers. It subsequently increases working costs and decreases their affordability in the international market.

Small traders and retailers face similar challenges. With the imposition of trade restrictions, many products available to them can be restricted. It can therefore make it harder for them to meet consumer demands and gain a competitive edge. These small players are often unable to absorb the additional costs imposed by protectionist measures, leading to a decline in their businesses and potential job losses.

India is Playing a Role in Fostering an Inclusive Trading Ecosystem

As a member of the G20, India has an exceptional vision to influence the global trade agenda and encourage an open and inclusive trading ecosystem. To address the rising tide of protectionism and support startups, small businesses, traders, and retailers, India can adopt diverse strategies.

For startups and small businesses to succeed, digital trade and e-commerce are crucial in this digital era. International agreements can be pushed to help cross-border e-commerce, making it easier for these enterprises to access global markets.

Moreover, to ease trade, India should invest in infrastructure development, including ports, roads, and logistics networks. Consequently, this will reduce the cost and time associated with moving goods. It will help boost the competitiveness of startups and small businesses.

India should continue to champion the cause of multilateral trade agreements. Multilateralism promotes fair and open trade, reducing the risk of unilateral protectionist measures. Encouraging dialogue among G20 nations to strengthen and reform institutions like the World Trade Organization The rise of protectionism in trade can help create a level playing field for all.

The country can also take the lead in advocating for policies that specifically support small and medium-sized enterprises (SMEs). This could include capacity-building programs, financial assistance, and technical support to help SMEs navigate international markets.

Notably, many protectionist measures come in the form of non-tariff barriers like complex regulations and standards. India can ally with G20 partners to update and harmonize these regulations, easing international trade for businesses of all sizes.


India’s role as a member of the G20 is paramount in a world where protectionism threatens an open and inclusive trading ecosystem. By promoting digital trade, supporting SMEs, multilateralism, investing in infrastructure, and addressing non-tariff barriers, India can underwrite creating a more favourable environment for startups, small businesses, small traders, and small retailers. At the G20 summit, India can take the baton forward in shaping a future where global trade is about both protectionism and nurturing economic growth and prosperity for all.

Lalit Arora is the Co-founder of UBON. Views expressed are the author’s own.

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