Amid talk of fractures in world trade, India continues to pursue globalisation as an economic development strategy. After a decade without any trade deals, India signed agreements with the European Union, United Kingdom, and New Zealand over 2025 and 2026, and is continuing negotiations with the US and other regions, signaling a renewed commitment to global economic integration. Most analyses of these agreements emphasise their geopolitical implications, especially for India’s emerging-power status and strategic relationship with the US, China, and Russia.

But these new deals will also contribute to the transformation of India’s domestic political economy. From India’s initial liberalisation in 1991, to its (re)emergence as a major exporter of textiles and apparel, to its dominant position in information technology services, globalisation has reshaped economic opportunity, social conflict, and political outcomes.

This transformation has touched areas intensely integrated with the global economy, but also localities that are little exposed to world markets. These new agreements, which grant extensive access to lucrative export markets, will likely catalyse deeper connections between India and the global economy.

My research on India’s 30-year experience with globalisation reveals how future economic change might influence domestic politics. Economic integration creates opportunity, but its benefits often concentrate in a handful of places, deepening regional inequality and leaving many behind.

This drives migration to centers of global production and fuels nativist backlash. Left-behind areas suffer doubly; excluded from globalisation’s gains, they also see local public goods erode as advantaged residents leave. As new trade deals deepen India’s global ties, policymakers should reckon with these uneven geographic impacts.

Globalisation’s uneven promise

While globalisation has many impacts on emerging economies like India, my work focuses on one key consequence: the introduction of new, higher-paying employment opportunities in exporting firms and multinational corporations. This proposition is rooted in economic theories that suggest trade liberalisation redistributes labour-intensive economic activity from labor-scarce economies like the US and Europe to labour-abundant economies like India. Indeed, politicians often tout these employment gains to promote liberalisation.

Yet these opportunities are inaccessible to many Indians, who live far from globalisation’s direct impacts. Within India, a handful of places have captured an outsized share of trade and investment’s benefits. These “winner-take-all” areas attract the vast majority of global production, owing to their superior infrastructure and industrial agglomeration.

For example, the lion’s share of India’s foreign direct investment concentrates in just six of India’s 28 states. A handful of districts, out of 800 in total, account for nearly all IT services exports. Meanwhile, large swaths of India have been “left behind”, as they lack the requisite conditions to compete in world markets. In other words, while India has gained from globalisation, the gains are highly unevenly distributed across space.

How have Indians responded to inequality in access to the benefits of globalisation?

People migrate toward centres of global production to take advantage of the new labour demand that liberalisation brings. Major shocks to India’s engagement with the world economy, like the end of global textile and apparel quotas in the 2000s and the IT boom, generated internal migration from left-behind localities and into the handful of areas experiencing a labour market boom. This mobility effect is not limited to India; other emerging economies like China, Brazil, and Mexico similarly experienced rising internal migration as they integrated with the world economy.

This migration has had political consequences, both for areas that migrants go to and for the areas they leave. In centers of global production that see new migrant inflows, nativist backlash has reshaped local politics. Areas left behind by globalisation – and by migrants seeking new opportunities – have experienced declining public goods provision. As India gains deeper access to valuable export markets, its global connections to labour-intensive and high-skilled industries will likely accelerate migration, with political impacts that should draw policymakers’ attention.

Labour-intensive exports, native-migrant conflict

India’s Ministry of Commerce and Industry has touted the elimination of trade barriers on labour-intensive sectors as a key benefit of new trade deals.

In an article published in the American Journal of Political Science, I explored an earlier external shock to India’s most prominent labour-intensive export sector: textiles and apparel. The Multi-Fiber Arrangement previously governed global trade in textiles and apparel and erected protectionist quotas that shielded the US and Europe from competition with emerging economies like India. Advanced economies delayed the elimination of key quotas until the last minute on January 1, 2005, such that overnight, India suddenly gained access to valuable new markets.

An export boom followed. Investment and export growth in India’s textile and apparel sector doubled in just a few years. But this boom was heavily concentrated in areas that already had well-established textile production. Using a difference-in-differences research design, I found that this geographically uneven shock stimulated internal migration to centers of textile production, as people pursued new, highly concentrated global employment opportunities.

What were the political consequences of this globalisation-induced wave of migration? The result was heightened social conflict between natives and internal migrants. Locals, concerned by migration’s perceived impacts on labour market competition, public services, and cultural threat, engaged in nativist backlash.

Rioting – a form of public violence closely related to nativist concerns – increased substantially in areas most exposed to the boom. In Maharashtra, which has both a leading textile sector and history of “sons of the soil” politics, nativist parties electorally benefitted in state elections. In short, the internal migration created by globalisation can interact with existing social cleavages to generate nativist reaction; this happens regardless of whether or not natives identify globalisation as the primary cause.

If new agreements with Europe and other trading partners similarly boost labour-intensive sectors like textiles and apparel, leather, and jewelry, India might face new native-migrant social conflict in export hubs. Government efforts to alleviate local concerns and protect migrants from targeting and discrimination may be necessary to limit costly social conflict that could result from deepening global economic integration.

Higher-skilled exports and inequality in public goods Provision

Of course, India’s exports are not limited to labour-intensive goods. It has also developed a comparative advantage in higher-skilled sectors like IT and business services, which represent 7.5 percent of the total GDP. The India-EU Free Trade Agreement also provides India broader access to the European services market, which could boost India’s IT sector.

In another article recently published in the American Journal of Political Science, my coauthor, Junghyun Lim, and I analysed India’s original, turn-of-the-century IT boom. The labour market benefits created by the IT boom were even more geographically concentrated than textiles and apparel.

We found that the IT boom similarly fueled internal migration to prominent IT hubs, like Bangalore. However, members of socioeconomically advantaged groups were best positioned to seize these high-skilled employment opportunities, creating selective out-migration from areas left behind by the IT boom. This selective out-migration meant that left-behind localities were increasingly composed of lower-caste, less educated, and poorer Indians.

The political impacts on areas left behind by the IT boom were striking. They experienced substantially weaker per capita provision of vital public goods like education, healthcare, and electricity, as compared to booming localities.

We attribute this decline in provision to the disproportionate out-migration of advantaged groups, as their exit severed local links to powerful officials and social networks that are critical to attracting public goods in India. The worst impacts were in areas most geographically distant from IT export hubs, where migration can be cost-prohibitive for members of disadvantaged groups.

Our results suggest that areas left behind by globalisation experience a “double whammy.” They not only experience few benefits of globalisation, but they also experience deepening inequality in access to public goods, further reducing economic mobility. As the economic impacts of new trade deals for higher-skilled services become clearer, policymakers should pay attention to barriers to opportunity that marginalised groups face and perhaps target public goods provision at left-behind areas.

Disruptive consequence

The conclusion of multiple free trade agreements suggests that India’s integration with the world economy will only deepen in the coming years.

My research suggests that if deepening integration continues to transform internal migration, even its positive economic impacts are likely to have disruptive political consequences. This is the case for both lower- and higher-skilled forms of globalisation, and for exposed and unexposed areas alike.

Observers should pay attention to how globalisation continues to reshape internal migration patterns and the distribution of new economic opportunities, especially for marginalised groups. Better understanding the linkages between globalisation and human mobility might also help us predict its likely economic impacts and the extent to which ordinary Indians support pursuing further liberalisation in trade and investment.

Benjamin Helms is an Assistant Professor in the Department of International Affairs at the Bush School of Government and Public Service.

This article was first published on India in Transition, a publication of the Center for the Advanced Study of India, University of Pennsylvania.

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