‘India won’t have China’s luck’: Aswath Damodaran’s stark warning on global hostility and growth

As global markets turn inward and politics starts rewriting economic rules, India’s growth narrative may face stiffer resistance than expected. Valuation expert Aswath Damodaran warns that the global environment India is stepping into is far less forgiving than the one China once navigated.

“India will face much more hostility from the rest of the world, as it tries to grow, than China did during the last few decades,” he writes in his latest blog post, Investing Politics: Globalization Backlash and Government Disruption.

While China has become large enough to sustain growth through its domestic market, Damodaran suggests that India’s aspirations are unfolding at a time when globalization is no longer ascendant. “Globalization… has now, in my view, crested and is facing pushback,” he writes.

He traces the shift to the 2008 financial crisis, which he says shattered public trust in global institutions and expert-led systems. That erosion, he argues, paved the way for political upheavals—Brexit, the rise of nationalist parties in Europe, and Donald Trump’s presidency.

In Trump’s second act, Damodaran sees a more unrestrained approach. “He has wielded tariffs as a weapon and is open about his contempt for global organizations,” he observes. While economists worry about long-term damage, Damodaran says a large part of the public is “cheering Trump on.”

Damodaran, known for his valuation insights, also breaks down who gained and who lost from the globalization era. Among the winners: China, which now accounts for nearly 38% of global GDP growth (2010–2023); consumers, with more choices at lower costs; and financial markets, which became central to public policy. Also in the winner’s circle: global institutions, multinational corporations, and experts who shaped discourse in forums like Davos.

But there were clear losers. Japan and Europe lost economic ground. Small businesses and blue-collar workers in developed economies bore the brunt of competition and offshoring. “Manufacturing jobs peaked at close to 20 million in 1979 and dropped to about 13 million in 2024,” he writes of the U.S. experience. He also cites a broader democratic erosion, where voters, even when opting for change, saw policy dictated by “a global script.”

For Damodaran, these shifts are not abstract—they directly impact company valuation. “To value companies today, I have no choice but to bring in the economics and politics of the world that these companies inhabit,” he writes.

One company under that lens is Tesla. In 2024, he valued the stock at $182 and bought in at $170. But the last year changed the narrative. Tesla now faces a real rival in China’s BYD, hybrids are making a comeback, and CEO Elon Musk’s polarizing politics are impacting perception. “My estimate of value for Tesla stands at about $150 a share, about $30 less than my value last year, and about $70 below its stock price,” he notes.