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India’s G20 balancing act between geopolitical tensions and economic challenges

Executive Summary

  • India will hold the G20 presidency until November 30, 2023, focusing on creating consensus around contentious geopolitical issues while remaining neutral itself.

  • In particular, Delhi aims to de-politicise the global supply of food, fertilizers and medical supplies to prevent humanitarian crises caused by armed conflicts.

  • Further, it will promote an energy transition based on technology and knowledge sharing, and international collaboration to boost solar and renewable energies.

Implications for

International Businesses

  • A push for renewable energy and technological advancement in green techno­logies will drive investment opportunities and incentives for joint ventures in research and development and the implementation of renewable energy projects.

  • India’s National Green Hydrogen Mission aims to build five million metric tons of hydrogen capacity by 2030, offering joint ventures in technology, investment, infrastructure, and R&D via private-public partnerships.

  • Digital transformation will be a key priority. India is rapidly digitizing, particularly in retail, fintech and education, allowing global firms to expand inside the country, capture a larger market share, and better understand Indian customers' needs.

State of Play India assumes G20 Presidency to lead global recovery and promote unity among the group

When India took over the G20 presidency from Indonesia at the Bali summit in mid-November 2022, the group staged an impressive demonstration of unity and determination to tackle global challenges. All leaders bar one condemned Russia's war in Ukraine, a move Delhi helped shepherd after insisting on its own neutrality for months. Also, India announced two new working groups as part of their 2023 presidency - the Disaster, Risk and Resilience Group and the Startup20 Engagement Group - to address the growing economic downturn and the cascading risks and impacts of climate change. Being at the group’s helm for this year, New Delhi has the chance to play an important role in shaping and strengthening global architecture and governance on all major international economic issues. On the sidelines of the Bali summit, the US and Chinese Presidents, Joe Biden and Xi Jinping, held their first bilateral meeting, an effort to reduce tensions between the two countries.

India is planning to leverage its G20 presidency to promote equity and inclusion in global governance systems with its motto "One Earth, One Family, One Future" – a very difficult task in an era of heightened international tensions due to the war in Ukraine and a more assertive China. From a geopolitical perspective, however, it also means that India could use the opportunity to leverage its ties with Russia, considering that security issues have significant consequences for the global economy. Moreover, Prime Minister Narendra Modi aims to showcase India's global reach to his domestic audience in advance of the 2024 general election, when he is expected to run for a third term. To this end, he moved the annual leaders' summit forward to September to coincide with the start of the election campaign in India. Modi’s stance at home was boosted in early December 2022 when his BJP party managed to retain power in his home state of Gujarat. Despite the party’s right-wing populism and divisive communal policies, Modi is still popular with the West and big businesses: Projected to be the world’s fastest-growing major economy until 2026, India is seen as a key regional partner to counter China.

Key Issues Building consensus as the Global South’s voice

India sees its chairmanship of the G20 as an opportunity to move out of ‘crisis mode’ dominating global governance since the start of the COVID-19 pandemic. It also plans to use the presidency to bring in the perspectives of the Global South in response to escalating geopolitical events, such as the Russian invasion of Ukraine and US-China tensions. As evidenced by the G20 compromise statement on the war, India will invest in increased consensus building. Without openly trying to broker a deal between Russia and Ukraine or the West, Delhi will strongly advocate for peacebuilding and open lines of communication while maintaining its traditional position of non-interference. However, it will highlight that the war’s impact – and that of many pressing geopolitical challenges – is felt very differently outside of Europe or the United States. It therefore intends to utilize its presidency to bridge the gap between the West and the global South and to focus on critical topics such as resilient and fair food supply, innovation in agriculture, a clean, sustainable, and inclusive energy transition, digital goods and digital infrastructure as well as health security

To this end, India has invited countries and international organizations based in the Global South as observers to the G20. These include Egypt, Mauritius, Oman, Singapore, the International Solar Alliance, the Climate and Development Research Institute, and the Asian Development Bank. Delhi has also organized the January Global South Summit to further this cause. Regarding urgent environment­al challenges, India initiated Mission LiFE, or Lifestyle for the Environment, which it hopes to turn into a global mass movement to promote climate-friendly behaviors among individuals and communities. At national level, the government aims for Parliament to pass the National Green Hydrogen Mission in early 2023, which complements India’s commitments to the International Solar Alliance and the Coalition for Disaster Resilient Infrastructure. Finally, India will push to fortify international co­operation on access, availability, and affordability of pharmaceutical products and medical services.

The G20: Still (un)able to address macroeconomic dilemmas?

To support global economic growth, India is working towards creating a fairer multilateral trading system that better considers local and regional realities. Under the umbrella of Data for Development (D4D), it explores strategies to use data to accelerate work on the UN’s sustainable development goals. For example, the targeted use of data has enabled over 400 million people globally, of which 56% are women, to open bank accounts in less than a decade. Over the next year, the G20 Finance Track will focus on creating resilient global value chains, addressing the global skills gap, and finding stronger financing for the gig and platform economies - all of which will benefit developing economies in the Global South. Moreover, financial inclusion is a top priority, and India is taking steps to fund tomorrow's cities, climate action, and the goals set by the Bali energy Transition Roadmap. Drawing on domestic plans such as Mission LiFE, India aims to move to renewable energy with its Green Hydrogen Mission. This includes blended financing, subsidies for electric vehicles, and public-private partnerships to scale up hydrogen, battery storage, and low-carbon steel, cement, and fertilizers.

Independent of its G20 presidency, India has made strides recently in its economic relations with countries worldwide. In April 2022, it signed a free trade agreement with Australia, to enter into force by the end of 2023. Trade talks with the UK are also progressing, with a deal expected to be concluded by March 2023. In addition, India strives to advance on trade talks with the European Union that have been ongoing for more than a decade. German Foreign Minister Annalena Baerbock's visit to India in early December 2022 is indicative of this renewed interest, with bilateral agreements on migration and mobility with Germany likely to also strengthen India-EU relations as a whole. International businesses stand to benefit from India's efforts to expand its economic relations by gaining access to new markets and opportunities to expand their operations.


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