Ha-Joon Chang on the Future of India's Industrialisation - Frontline
DIGITAL EXCLUSIVE
The Package<br>Between the numbers and the street
India hasn’t even experienced industrialisation in the first place: Ha-Joon Chang
The economist says the country skipped the hard work of building factories and skills, leaving the economy exposed as automation accelerates.<br>Published : Nov 25, 2025 22:29 IST - 22 MINS READ<br>Rohit Inani
COMMents
SHARE
Copy link
%20https%3A%2F%2Ffrontline.thehindu.com%2Finterviews%2Findia-industrialisation-ha-joon-chang-interview%2Farticle70321699.ece%3Futm_source%3Demail%26utm_medium%3Darticle_share" target="_self"><br>Email
Telegram
READ LATERSEE ALLRemove
Economist Ha-Joon Chang warns that India has never properly matured its infant industries—protection froze producers instead of making them globally competitive. Here, Ha-Joon Chang during a talk at the TERI complex, in Bengaluru, on January 8, 2015.<br>| Photo Credit: K. Bhagya Prakash
On April 2, when US president Donald Trump announced the “Liberation Day” tariffs, he upended a decades-old global economic order. To reignite manufacturing in the US and reduce trade deficits, Trump imposed a 10 per cent baseline tariff on all imports plus country-specific tariffs. India faced a 27 per cent tariff rate, which was increased to 50 per cent in August after Trump accused India of buying Russian crude oil and thereby funding the Russia-Ukraine war.<br>Union Commerce Minister Piyush Goyal has assured businesses and exporters of an imminent trade deal with the US that will bring down tariffs, but Ha-Joon Chang, one of the world’s leading economists, says that is just not enough.<br>In an exclusive interview with Frontline, Chang, who teaches economics at School of Oriental and African Studies (SOAS) in London and has authored more than a dozen books on global development and industrial policy, talks of India’s long-term economic development, its failure to industrialise, and how it can still do so in the face of automation, rising protectionism, and the threat of AI.
Earlier this year, responding to Trump’s “Liberation Day” tariffs, you told Jacobin magazine that “there should be no return to free trade”. For economists, policymakers, and a generation that came of age in India and Asia over the last three decades, free trade and globalisation drove growth. Why shouldn’t the world return to it?
In all of this, there are terminological confusions, if I may put it like that. Engaging in international trade, being able to export to global markets, is essential for economic development. Because as a developing country, you need to import advanced technologies whether it is in the form of machines, or intermediate inputs, or technology licensing, and you have to pay for them with foreign exchanges. You need to earn hard currency. Without international trade, there will be no economic development.
But that is not the same as free trade. Even if there is some degree of trade barrier, you can still export. For example, international trade as a proportion of GDP grew much faster in the 1970s than in the 1980s—[a time] when there was a lot of trade liberalisation—because trade barriers are only one of many things that determine the level of trade.
But more importantly, developing countries cannot develop with free trade. I mean this with historical records, from a theoretical perspective. South Korea was a very poor country until the early 60s. In 1961, India’s per capita income was $88 and South Korea’s was $94. Essentially, the same level of development. But South Korea wanted to be a serious player in all sorts of high-tech industries: automobile, shipping, electronics. Of course, when they started these industries, they had to protect them very, very heavily. Otherwise, they would have been wiped out.
For example, when South Korea started producing self-designed cars, the biggest company producing them was Hyundai. In 1976, Hyundai produced 10,000 cars. That year, Ford produced 1.9 million cars. General Motors was approaching 4.8 million cars. Now if South Korea had free trade in cars back then, Hyundai would have disappeared overnight. So until 1988, the South Korean government not only put up high tariffs, they banned the import of all foreign cars. And until 1998, they banned the import of Japanese cars. And they gave a huge amount of direct and indirect subsidies. This is what is called infant industry protection. They developed automobile, electronics, shipbuilding, all these industries through similar measures.
Before economic liberalisation in 1991, India, too, exercised strong protectionist measures. What went wrong with that approach?
In India, until the 1980s, protection was used to preserve existing producers rather than giving them the space to accumulate production capabilities and go out in the bigger world to compete. Look at the Indian car industry. Earlier, the Indian government...