Monday Morning Meeting on “India at G7: Challenges and Way Forward”

Mr. Pradeep S. Gautam, Research Fellow, Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), spoke on “India at G7: Challenges and Way Forward” at the Monday Morning Meeting held on 4 July 2022. The session was chaired by Dr. Swasti Rao, Associate Fellow. Ambassador Sujan R. Chinoy, Director General, MP-IDSA, Maj. Gen. (Dr.) Bipin Bakshi (Retd.), Deputy Director General, MP-IDSA, and scholars of the Institute were in attendance.

Executive Summary

G7 remains one of the most important multilateral bodies to set the global agenda and tackle emerging challenges. However, it is also faced with internal incoherence on certain issues. As its share in the global GDP has gradually declined, it has chosen to engage more and more with like-minded democracies such as India, in furtherance of its agenda.

India must use G7 and similar multilateral bodies, including World Trade Organisation (WTO), Organisation for Economic Co-operation and Development (OECD), and G20 to maximise its national interests. Although at the same time, it has increasingly become difficult to arrive at a consensus in these multilateral forums. Hence, there is a need to engage countries bilaterally and in smaller groups as well. This effort may only bear fruit if accompanied with necessary domestic reforms.

Detailed Report

Dr. Rao introduced the topic of the Monday morning meeting by underlining the values and attributes at the core of G7, particularly in the context of the Ukraine-Russia conflict. She also spoke about the group’s most recent meeting in June 2022 and the 28-page communiqué released by the participating leaders, which primarily focused on China and the Partnership for Global Infrastructure and Investment (PGII) programme to counter the Belt and Road Initiative (BRI).

Following the brief introduction, the chair gave the floor to Mr. Gautam.

The speaker initially delved into G7’s historical context, i.e., its emergence in response to the 1970s economic crisis and its evolution as a multilateral forum to address global challenges. He also delineated the grouping’s operational framework and its overlapping work with organisations, including the WTO, International Monetary Fund, World Bank, and G20.

Mr. Gautam further addressed G7’s meeting in Elmau, Germany organised between 26 to 28 June 2022 and laid out the empirical data concerning the inter-governmental forum’s share of the global gross domestic product (GDP) between 1975 and 2020. He mentioned that its highest share of the GDP was visible during the Clinton Presidency. He also examined how there exists an overlap between G7 and G20’s membership.

Moving further, the speaker elaborated on issues that have been of vital significance to G7 leaders, primarily taxation of e-commerce multi-national corporations, global infrastructure, global financial stress, and trade and supply chains. In that context, he looked at how the member states have responded to these challenges, the implications for India, and how the latter can move forward regarding these matters of vital concern. Finally, he flagged a few key issues specific to India, including how it requires more data-driven analysis on economic issues, the continuation of a balanced budget, and more reforms to attract global capital. In addition, India’s strength in its domestic economy may help it negotiate better internationally.

The speaker underscored the pros and cons of the PGII vis-à-vis the BRI. He also discussed economic distress in developing countries due to COVID lockdowns, the Ukraine war, increasing energy prices, and finally increasing interest rates in the US. While discussing that, he highlighted increasing inflation and interest rates, and the threat of recession in the G7 countries, limiting their bandwidth for international intervention for the next 2-3 years.

The speaker highlighted the need for capacity building in negotiating trade deals and effective use of non-tariff barriers (NTBs), trade, and industrial policy to attract international investment and become part of the global supply chain. In addition, the speaker raised other issues of primary importance centred around energy and food security, climate change, and sustainable development.

After the speaker brought his presentation to a close, the chair thanked him for his insightful remarks and opened the floor to questions and comments from the audience.

The question-and-answer session highlighted diverse perspectives rooted in a detailed analysis of the issue discussed during the meeting. Some of the crucial themes highlighted during the session are as follows: –

• The importance of exploring G7’s ties with the global south and the challenges emanating from this relationship.
• The need to examine the role of BRICS in economic and infrastructural development.
• The need to strengthen WTO’s dispute settlement mechanisms.
• The wave of protectionist trends is blowing worldwide.
• Each country is looking to preserve and promote individualistic interests.
• The COVID-19 pandemic, the United States of America’s unilateral withdrawal from Afghanistan despite a multilateral international coalition force in the country, and the Ukraine-Russia conflict are culpable for weakening the various multilateral platforms.
• The adverse impact of the Ukraine-Russia conflict on the Rupee-Dollar valuation, acute oil shortage, and food crisis worldwide.
• The World Bank’s June 2022 report and economic repercussions that are awaiting the world.
• The challenges of stagflation, i.e., the combined output of slow economic growth, steady unemployment, and inflation.
• The growing restiveness among the Indian youth due to the financial crisis.
• The need to cap the price of Russian oil exports and its implications for India.
• The obligation of Indian leaders to re-negotiate “smarter FTAs.”
• A comparative analysis of the BRI and ‘Build Back Better World Initiative’ announced in 2021 and how the latter has been subsumed in PGII and is focused on providing infrastructural and developmental aid for middle and low-income countries.
• The politicisation of oil production has been a visible trend, particularly in the past year.
• The European continent is experiencing a dichotomy regarding the issue of energy security.
• G7’s cooperation with China concerning change, despite the military and political conflict between the two actors.

This report was prepared by Ms. Saman Ayesha Kidwai, Research Analyst, Counter-Terrorism Centre, MP-IDSA.