India is taking an increasingly protectionist turn, with frequent and broad tariff hikes and discriminatory regulations against foreign-owned companies. Without a change in course, Asia's third-largest economy cannot modernize industry and remove structural obstacles to growth, such as supply limitations and low productivity.

India increased import tariffs on more than 50 items for a third straight year in its 2021-22 budget. The list includes a variety of automobile and electronic parts.

In its annual report on foreign trade barriers, the Office of the U.S. Trade Representative has repeatedly called India out for having an average applied tariff rate that is "the highest of any major world economy."

Discrimination against foreign multinationals also runs rampant. Except for single-brand retailers, foreign players are barred from entering its retail sector. Supermarkets and convenience stores across the country remain scarce and underdeveloped even in the biggest metropolitan areas, and protectionism has hindered modernization in logistics and overall consumer markets.

Even in e-commerce, a field that had been expected to help break the status quo and modernize Indian logistics and consumption, discriminatory regulations have emerged as a risk.

In 2016, India banned foreign-owned e-commerce platforms from selling directly to consumers from their own inventories. This means that players like Amazon.com can only function as marketplaces for third-party sellers.

In 2018, India barred foreign-owned e-commerce companies from providing platforms to sellers in which they have equity stakes. It proposed additional rules this June, including a ban on limited-time flash sales by online marketplaces.

After gaining independence in 1947, India in effect shut its doors to imports and foreign investment for roughly four decades, a period of economic isolation that hindered its development. Its gross domestic product per capita hovers around $2,000 -- about a fifth of China's, which has now topped the $10,000 mark. The contrast is all the more stark considering that in 1990, China's GDP was just $318, lower than India's $368.

It is tempting in a democracy to protect the smallest businesses, which in India account for a large voting demographic. But to maintain and improve living standards for a population on the brink of surpassing 1.4 billion, the country must embrace competition as well as foreign investment and know-how to foster industry and drive growth.