As India hosts the 2023 G20 New Delhi summit, a milestone event in South Asian history, the world’s attention turns to its evolving role in the global economic landscape. In this exclusive interview feature with Bridges, Deepa Kumar, Head of Asia-Pacific Country Risk at S&P Global Market Intelligence, shares the significance of India’s participation in the G20 and the impact of Japanese investment on India’s economic growth.
Bridges: The G20 has a significant impact on global financial stability and cooperation. How does India’s participation in the G20 contribute to the country’s economic development and global influence?
Kumar: India sees its presidency of the G20 as an opportunity to establish itself as an increasingly important geopolitical player, part of its intent to transition from being a ‘balancing power’ to becoming a ‘leading power’. Through the year of G20-linked meetings (not least the Sherpa-level meetings), India has attempted to leverage its presidency to speak of itself as a bridge between advanced and emerging economies — as some call it, the West and non-West, or the Global North vs. the Global South. What drives India’s current motivations to act as this bridge, especially through the G20, is the seemingly increasing divide between advanced and emerging economies at a time when the world grapples with several global, shared challenges. India’s agenda for the Leaders’ Summit in New Delhi in September 2023 will focus on driving consensus on these shared challenges – primarily climate change and climate financing, food security, and sustainable development goals. In all three spheres, India’s contribution and leadership will be important for problem-solving. India’s suitability to do so will be justified by its shared challenges and opportunities, as well as having a larger population and economy, and more diplomatic expertise. India’s sphere of influence is viewed as extending beyond APAC into Latin America, the Middle East, North Africa, Central Asia, and Sub-Saharan Africa.
India’s agenda for the Leaders’ Summit in New Delhi in September 2023 will focus on driving consensus on these shared challenges – primarily climate change and climate financing, food security, and sustainable development goals.
Deepa Kumar, Head of Asia-Pacific Country Risk at S&P Global Market Intelligence
Japan has been a significant investor in India, particularly in sectors such as automotive, infrastructure, and technology. How has S&P Global assessed the impact of Japanese investment on India’s economic growth and development?
India considers Japan to be one of its most strategic partners for the 21st Century. While Indian partnerships are not premised solely on a value-based alignment, the areas for cooperation between India and Japan have a wide remit, which drives momentum in bilateral ties. Japanese investment and development assistance in India’s infrastructure are pivotal. Infrastructure development is a key focus area for successive Indian governments, and S&P Global Market Intelligence identifies it as a key driver of future Indian growth. The Mumbai-Ahmedabad High Speed Rail Corridor, the Patna Metro Construction Project, and the Western Dedicated Freight Corridor are three diverse projects that serve different infrastructure needs for India’s future economic growth and development, for which investment from Japan has been crucial. Not only do these projects support domestic Indian needs, but the WDFC and promised Japanese investment to expand port infrastructure and connectivity between India and Bangladesh (for instance) are examples of Japanese support extending to India’s geopolitical ambitions of becoming a more embedded contributor to global supply chains.
Infrastructure development is a key focus area for successive Indian governments, and S&P Global Market Intelligence identifies it as a key driver of future Indian growth.
India’s external ambitions, in fact, underpin the extent of future India-Japan cooperation, particularly in defense and security, and in multilateral forums. Their joint participation in the Quad (alongside Australia and the United States) will offer significant opportunity for policy alignment on issues such as climate change, regional security, technology cooperation, and supply chain resilience. This is particularly likely as all four countries convey significant political momentum for the Quad to be a central figure of multilateral importance in the Asia-Pacific.
What are some key issues or topics that you believe should be emphasized in the G20 India Special? How can it potentially benefit India and other G20 members?
India’s growth and development now and going ahead have consequences not just for itself but also for the rest of the world. The key areas to highlight would include these specific issues that affect not just India’s trajectory but also the future of the world. The four issues would be: energy transition, demographic dividend, manufacturing and supply chains, and defense posturing.
On energy transition: any path to net-zero will have to travel via India. Therefore, how India navigates domestic climate risks and negotiates climate finance on behalf of itself and other climate-vulnerable emerging economies will influence energy transition pathways.
On the demographic dividend: hosting the world’s largest population, it will be important for India to pose growth that occurs alongside gainful employment, which will depend significantly on increasing female labor force participation and on upskilling.
The key areas to highlight would include these specific issues that affect not just India’s trajectory but also the future of the world. The four issues would be: energy transition, demographic dividend, manufacturing and supply chains, and defense posturing.
On manufacturing and supply chains: It is a significant opportunity for India as governments across the world and marquee companies are pursuing supply chain diversification strategies. Increasing the share of manufacturing in Indian GDP growth will not only benefit the Indian economy but also serve India’s geopolitical ambitions. Increased Indian participation in supply chains will be welcomed by international partners as well.
On defense posturing: The next few years will be highlighted by an overlap between national security strategies and global trade priorities. India’s attempts at this time to pursue joint ventures in defense cooperation to reduce imports, and increase joint exercises with other armed forces are important indicators of defense posture. Such posturing has particular influence within India’s immediate neighborhood and the broader Asia-Pacific region – a key area where India and Japan are in alignment.
