India seems to have stepped up its relations with the G20 nations, even as 2018 became one of the rare years when Indian presented an affirmative agenda to the group and took steps to increase its stakes in the organization by convincing the group members, and primarily the scheduled hosts for the 2022 meet, Italy, that it would host the 2022 summit instead of the 2021 summit. The move to strategically coincide India’s hosting of G20 with India’s 75th Independence year underscores both domestic as well as international significance. Domestically, the year 2022 will be important from the point of view of political significance and stability. It would be extremely useful to recount the political, financial and international strides the country has made in the past 75 years.

As one of the fastest growing large economies, India is trying to bring a balance between its past inaction and present momentum. For a long time, despite having opened up, the Indian economy was not integrated with the world financial system in the best way. Trade with world’s major financial centres remained relatively low riding on an overall cautious foreign policy. However, particularly with the end of the world financial crisis and the G20 growing in stature after its inaugural leaders’ summit in 2008, there was an immediate need felt in India to streamline its financial growth with that of the world. A strong rationale for this was provided by the momentum of the Indian economy which it had gained especially since 2004, besides the fact that the Indian economy remained relatively shielded by the brunt of the global financial crisis emanating from the United States and subsequently affecting the whole world.

When India was faced with the dilemma of opening its economy in the early 1990s, there seemed only a few ways of integrating the Indian economy with the global financial circuit without exposing the domestic economy too much, while still benefiting from the hitherto absent seamless international integration. Increasing investments from outside, enhanced trade production at home while simultaneously enhancing commercial links with the world, and preventing a few important sectors like defence, insurance etc from substantial international influence were some of the important steps taken to maintain a healthy balance between a domestically-oriented protectionism and the need to have a Capitalistic outlook.

As India seeks to increase its stakes further at the international stage as one of the fastest growing economies and soon to be the fifth largest economy of the world, the G20 has emerged as a potent forum to integrate its economic growth with the world. The latest leg of the G20 summit in Buenos Aires proved to be an important opportunity for India to provide the necessary global confidence amidst trade tensions and financial instability. India’s increasing stakes in the G20 has been concomitant with the consolidation of G20 as leading global platform for international economic cooperation. The 2018 summit in Argentina has also reflected the sustained need for G20 as a forum for world leaders’ meetings.

There were three key issues that divided nations at the 2018 G20 summit: reform of the WTO, climate change and the issue of migrants and refugees. While these concerns dominated global anticipations around the 2018 G20 summit, the limelight was hogged by the ongoing US-China trade war and the much-anticipated meeting between the two sides. This perceptive deflection not only took away from the seriousness of the G20 as a multilateral forum but ate into the G20’s organizational aura as a globally integrative financial unit.

For India, besides the seemingly apparent challenge of getting its own domestic issues like financial accountability and the need for a robust global financial network accepted, the tacit challenge for it was to prevent the G20 forum from becoming a bilateral-dominated event. As various countries sought to meet bilaterally on the sidelined of the 2018 G20, India did well to preserve the multilateral essence of the organization by becoming part of two trilateral meetings at the summit. For one, this prevented a reductionist assumption about the G20, particularly in that it would have largely been seen as an event dominated by the G-2 (US & China). Secondly, for long, India was pulling its punches below its weight at G20 and its inclusion in two key trilaterals is indicative of its rising importance. Critically, India was part of the trilateral between Japan, India and America which was the first ever of its kind. The other trilateral that India was part of was Russia, India and China.

There is an important message for India’s balancing and hedging in the aforementioned at the international stage. By engaging China, Russia and the US at a leading world forum, India has consistently shown how it wants to navigate the current world order. More importantly, India’s engaging of China, Russia and the US at the G20 is symbolic of India’s stand in the current economic order where trade war between the US and China on one hand and West’s sanctions on Russia on the other threaten to stall the momentum of a rather healthy global economy. Both China and Russia are among India’s largest economic partners. China continues to be among the largest trade partners of India and Russia has dominated Indian defence sector trade for a long time with the potential to do so in the near future. Add to these, India’s increasing trade potential through defence trade and now increasingly in energy with the US.

The dynamics of this complicated relationship has created a deeply integrated and dependent system of financial obligations and compulsions which requires careful navigation as opposed to confrontational stance. Any disruptions in India’s ability to deal with its major trade partners would deeply impact its global financial flow and eventually its global standing. An important case in point has been Iran. With rigorous sanctions imposed on the Iranian regime by the West, financial exchange with Iran became very difficult, leading eventually to an agreement between India and Iran for payment in Indian Rupees as opposed to dollar. Safe navigation for India in the global financial flow matrix would require better relations with countries along with alternatives to high trade dependence on specific countries. The two G20 trilaterals could be perceived as important steps for India in the direction of ensuring a safe passage in the complicated global political and economic order with three major powers locked in horns with each other.

Besides the apparent aforementioned gains for India, there were some worries for India in the G20 meet. One of the most important issues that continue to affect the spirit of G20 is the relegated treatment of international trade. India did not make any attempt to accommodate the WTO among the mainstream concerns of the G20. While the director-general of the World Trade Organisation (WTO) is an invitee to the G20, multilateral trade has been consciously kept outside the G20’s ambit so that the G7 could continue to manipulate the WTO agenda. Another related issue is that of the IMF. The austerity-driven agenda of the IMF has been at odds with the G20’s agenda of financial inclusion. Besides, the IMF continues to depend on the G7 for the nature of its policies, often running against the agenda of the G20 which has quite a few developing countries in its ambit.

The G20 has emerged as a potent platform for India to take lead at the international stage. Outside the G7, India is the most prominent member by way of its political and economic stakes. India did good to draw trilateral meetings among two sets of three countries that are currently indispensable in the current world economic and political order, however, it failed in securing the discussion of important issues related to world financial system in these trilateral meetings. Often these important issues like world currency flow, trade and sanctions remain relegated to bilateral meetings even at mega multilateral forums like the G20. India’s caution to not displease the US or China also flies in the face of an anticipated leadership that India’s position in the global stage reflects. To that end, India failed to become the voice of the developing world at the G20 in the latest G20 summit. Although much of what India did and how it acted, reflected a safe, as opposed to consequential actions, the 2022 G20 summit to be hosted by New Delhi presents renewed opportunities to make up for the slippages.

It was also disappointing to see India not highlight the need for infrastructure and connectivity in South Asia – especially in the Indo-Pacific, despite the fact that India has taken a lot of steps in the recent past to connect South Asia with neighboring nations and regions. Since the 2018 G20 had ‘infrastructure development’ as a core theme, India ought to have played the connectivity card at the G20. This would have been handy as much in underscoring its own initiatives as it would have been to explain its non-acceptance of the Chinese Belt and Road Initiative in the region.

Way Forward

In the end, there are a few responsibilities staring at India in the next G20 summit when India will host the summit. First, India should play up the multilateral spirit of the G20 and prevent the focus from drifting to bilateral meetings being held on the sidelines. The bilateral agendas should never supersede the broader multilateral agenda of the G20 and India has an important task lined up in this regard. Secondly, India has an opportunity at hand in leading the climate change debate both through actionable derivatives. As the US has stepped back from leading the climate change debate and China has risen to be the number one polluter, India could rise to an envious spot of lead in the debate and implementation regarding the global climate change. Lastly, India should expand the scope of its expectations from the G20. While this year’s agenda of financial accountability, which India overemphasized, promises to benefit the global system, it was largely solipsistic. India should rise to the occasion in the 2022 G20 summit to help G20 to clarify its future role and eventually, in whatever form it may continue, to invite less opposition and enjoy more political acceptance, legitimacy and effectiveness.

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