India Wants Key Supply-Chain Role as Firms Shift From China

On Monday, Sitharaman gave the example of mobile-phone manufacturing — the Asian nation in 2014 produced very few devices and the industry had grown to become one of the world’s biggest exporters. 

She is on a weeklong trip to the US to attend the World Bank and International Monetary Fund’s Spring Meetings. 

India over the the past year has been pursuing bilateral trade deals with a range of countries, including Australia, the UK and the United Arab Emirates, shifting from the usual go-slow approach on such agreements. On Monday, Sitharaman said the nation of 1.4 billion people also is pushing ahead with a pact with the European Union and Canada. 

G-20, Debt
India holds the presidency of the Group of 20 intergovernmental forums of influential nations and is under pressure to show it can forge an agreement after major meetings this year ended with Russia and China objecting to language around the war in Ukraine. 

This “is a great opportunity for India to prove and to work towards bringing all countries together on substantive issues,” Sitharaman said. 

“It is time that the members of the G-20 sit up and take these issues on board,” she said, singling out the need to provide debt relief for more than 70 low-income nations facing a collective $326 billion burden.

More than half of the world’s low-income countries are at high risk of debt distress or already in it, and several have defaulted. But despite the G-20 largest economies having agreed in 2020 to a plan called the Common Framework to smooth the process of restructuring loans that governments could no longer afford to service or repay, not a single nation has actually gotten relief under it so far.

“This issue will be taken forward, and I hope to have some positive movements,” Sitharaman said. With Indonesia, India and Brazil each taking turns to chair the G-20 each year from 2022 to 2024, this will bring “views of emerging markets to the front,” she added.  

Sitharaman said a global consensus on cryptocurrencies will also be among India’s priorities. “We seek to develop a common framework for all countries to deal with this matter,” she said

Sentiment
A close ally of Prime Minister Narendra Modi, Sitharaman is also India’s first female finance minister. She has been credited with supporting social-welfare programs during the pandemic and narrowing the budget gap to 5.9% of gross domestic product in the fiscal year starting April from a record 9.2% in 2021. 

She brushed off a question from Peterson Institute President Adam Posen about the impact of reports detailing growing violence against Muslim minorities would have on capital flows and investor sentiment.

Emerging markets like India do carry a burden of proof, the minister said. “You have every business to ask us questions or every business to speak about every issue on which you need to play a constructive role. But yet the prescriptions are ours.”

The South Asian nation has seen rising anti-Muslim sentiment since Modi and his party have pushed ahead with their Hindu nationalist agenda. Since his reelection in 2019, Modi revoked Article 370 of the constitution that granted special autonomous status to India’s only Muslim-majority state, Jammu and Kashmir, and approved a citizenship law that discriminates based on religion.

“That is not to say or not to even imply that I accept the perception that you’re referring to,” Sitharaman said during the discussion. “India has the second-largest Muslim population in the world and that population is only growing in numbers.”

(Bloomberg)