Reverse Globalization or deglobalization is a process by which the global supply chain gets reversed, and goods and services begin to be produced closer to their point of consumption. This process can reduce costs and carbon footprint—helping preserve jobs.
Air India’s move to source their aircraft from Airbus and Boeing is an example of reverse globalization. Reuters reported this week that “Air India unveiled deals on Tuesday for a record 470 jets from Airbus and Boeing, accelerating the rebirth of a national emblem under new owners Tata Group as Europe and the United States hailed deepening economic and political ties with New Delhi.”
So, why is Air India making this move? The decision appears to be economically motivated. By buying from Airbus and Boeing, Air India can expect to benefit from significant cost savings in terms of logistics, labour, and technology transfer. In addition, there are also advantages for the Indian aerospace industry as both Boeing and Airbus will have to transfer technology to build the aircraft—helping boost the capabilities and capacity of Indian aerospace companies, leading to increased exports.
Not long ago, CNBC reported that Indigo, another local Indian airline company, placed an order with Airbus for 300 planes worth $33 billion. This indicates that other Indian companies may follow in Air India’s footsteps and take advantage of the potential benefits that reverse globalization can bring. According to Pratik Modi, a professor at India’s Institute of Rural Management Anand, “Reverse globalization will ensure that India benefits from the latest technology, job opportunities and sustainable economic growth.” He added, in an interview, that “While it will not be an overnight transformation, a few years down the line, India could see some tangible benefits from reverse globalization.”
The decision also has strategic implications as it will likely result in closer ties between India, Europe, and the US. The solid economic relations that are expected to form as a result of this deal could eventually translate into political and diplomatic ties. While it may not be easy to replicate this kind of deal across other sectors, it could potentially provide inspiration for other companies looking to reverse globalize their operations.
Over the years, there has been a lot of debate on the dependence of emerging market MNCs by developed country MNCs that Vijay Pereira, a professor at France’s NEOMA Business School termed “reverse dependency.” In his research, he suggested that this reverse dependency could potentially benefit emerging markets, as it could lead to technology transfers and increased employment. “Reverse globalization is an idea that needs to be explored further as we look for solutions to our current global economic challenges,” he said in an interview. “If used wisely, it could be an effective way to drive growth and foster sustainable development for countries in the emerging markets.”
Thus, the Air India case clearly demonstrates the potential benefits of reverse globalization in terms of cost savings and strategic advantages. Moreover, with more companies turning to reverse globalization to improve their bottom line and develop closer ties with the developed world, it could be the start of a new trend in global business,” said Pawan Budhwar in an interview. The Aston Business School professor added, “This could be an opportunity for emerging markets to reduce their dependence on the developed world and use their resources more effectively.”
It is clear that reverse globalization has the potential to bring many benefits, both economic and strategic. It remains to be seen if this trend will continue in other business sectors as well, but Air India’s decision to reverse globalize could be a harbinger of things to come.
In the meantime, it is vital for all stakeholders involved in this trend to keep an open mind and explore the potential opportunities that reverse globalization can offer. With the right approach and resources, reverse globalization could potentially pave the way for a more sustainable and equitable world economy.
So, suppose you’re a leader looking to bring your business global. In that case, you may want to consider taking a page out of Air India’s playbook and exploring the possibilities that reverse globalization can provide. It could be the key to unlocking growth and development in your local economy. After all, the success of reverse globalization lies in its ability to bring together different countries and cultures in a mutually beneficial way. Thus, it is essential for businesses to recognize this potential and take steps towards making reverse globalization an accepted practice in the global business arena.