How Global Fragmentation Is Creating New Winners (and Where India Fits)

2025 looked like the year global trade would break down. Tariff wars, geopolitical rivalries, and record trade restrictions raised fears of de-globalisation. But the latest Global Value Chain (GVC) Development Report by the WTO, ADB and other institutions shows something different: global trade hasn’t collapsed — it has adapted. 📌 What’s really happening? Fragmentation, not deglobalisation: Trade between rival blocs (like the US–China) has slowed sharply, but global value chains remain resilient. GVC-linked trade still accounts for ~46% of world trade, close to historical highs. Rise of “connector economies”: Countries like Mexico, Vietnam and others are inserting themselves into supply chains as neutral intermediaries — through assembly, processing, or services. Services lead globalisation: Digital services, IT, finance and business services have proven far more resilient than goods trade and now anchor global integration. Industrial policy & targeted trade deals: Governments are pushing subsidies for chips, batteries, green tech, while narrow trade agreements (critical minerals, digital trade) are rising rapidly. 🇮🇳 Where does India stand? India now contributes ~2.8% of global value added in exports, ranking among the world’s top ten — driven largely by services. India is one of the few countries where value chains are steadily lengthening, meaning it is moving into more complex stages of production. Strengths: business climate, logistics, reserves. Weak spots: energy infrastructure, firm scale, and financial depth. 📈 Sectors Likely to Benefit IT & Digital Services – As services trade absorbs global shocks. Electronics & Manufacturing Platforms – As firms pursue “China+1” strategies with ready ecosystems. Logistics & Ports – As connector roles and rerouted trade grow. Capital Goods & Industrial Policy Plays – Benefiting from on-shoring and subsidies. Stocks to Track