Deglobalization refers to the reversal or slowdown of globalization trends—characterized by reduced cross-border trade, investment, and collaboration—driven by geopolitical tensions, protectionist policies, and supply chain disruptions. For India, this shift presents both challenges and opportunities given its increasing role as a regional economic powerhouse. While India’s export-to-GDP ratio has slightly declined from 25% in 2013 to about 22% in 2025, the country’s GDP growth remains resilient at 7.8% year-over-year as of Q1 FY 2025–26, supported by strong domestic demand and reforms[1][2].

However, reduced global trade flows and supply chain realignments affect sectors differently. Service-based industries, particularly IT and outsourcing, face risks from reduced foreign demand, while manufacturing and MSMEs (Micro, Small, and Medium Enterprises) must navigate disrupted supply chains and rising input costs. The Indian government’s focus on Atmanirbhar Bharat (self-reliance) aims to mitigate these risks by boosting domestic production, infrastructure investment, and digital adoption, especially in Tier 2 and Tier 3 cities[1][6].

Key Investment Insight:** Indian investors should focus on sectors aligned with domestic demand and government support, such as infrastructure, digital services, and local manufacturing, while cautiously evaluating exposure to export-dependent sectors vulnerable to global trade shocks.

The deglobalization trend reshapes sectoral dynamics in India, creating winners and laggards. Understanding these shifts is vital for both retail investors and financial professionals.

Manufacturing and MSMEs:** With supply chains diversifying away from China and global firms seeking alternate hubs, India’s manufacturing sector and MSMEs stand to gain. The government’s Production Linked Incentive (PLI) schemes have accelerated investments in electronics, pharmaceuticals, and automotive sectors. However, challenges remain in infrastructure and skilled labour availability.

Information Technology (IT) and Services:** While India’s IT exports contribute significantly to GDP, rising protectionism and data localization policies globally pose risks. However, increased digitization domestically offers growth avenues.

Energy and Renewables:** Energy security concerns and climate commitments have accelerated India’s renewable energy investments, with solar and wind sectors growing rapidly. Traditional energy sectors face volatility due to global price fluctuations.

Financial Services:** Banking and NBFCs benefit from digital penetration and government schemes like Jan Dhan Yojana but are exposed to macroeconomic risks from global economic slowdowns.

Sector Performance Comparison:

Investment Tip:** Diversify across sectors that benefit from domestic demand and government incentives, and avoid overexposure to sectors heavily reliant on global trade.

Navigating the multipolar world of 2025 requires a recalibrated investment playbook emphasizing resilience, diversification, and domestic growth themes.

1. Emphasize Domestic Consumption and Infrastructure:** With India’s GDP projected at 6.7%–6.9% growth, sectors tied to urbanization, infrastructure development, and consumer spending are poised for growth. The government’s capital expenditure push supports companies in construction, cement, and logistics.

2. Focus on Quality and Governance:** In an environment of heightened risks, companies with strong balance sheets, low debt-to-equity ratios, and transparent governance will outperform. For example, Reliance Industries and TCS maintain robust financial metrics despite global uncertainties.

3. Diversify Across Asset Classes:** Consider mixing equities with debt instruments, gold, and real estate to hedge against inflation and geopolitical risks.

4. Leverage Thematic Mutual Funds:** Funds focusing on Atmanirbhar Bharat themes, renewable energy, and digital India offer strategic exposure to growth sectors.

5. Risk Management:** Investors must be aware of inflationary pressures, currency volatility, and sector-specific regulatory risks.

Summary:** A well-diversified portfolio emphasizing domestic growth, quality companies, and thematic funds aligned with India’s strategic priorities will position investors to navigate the uncertainties of deglobalization effectively.