India will become the third-largest economy in the world in a few years, but it's important for the country to continue reforms, build better infrastructure, and invest in education, World Economic Forum (WEF) President Børge Brende said.
Brende, who was speaking at the B20 Summit in New Delhi on August 25, highlighted the pivotal nature of India's G20 presidency, emphasising its growing global significance.
“There's a great deal of optimism in India, which is also the foundation of India’s Presidency of the G20. India has been the fastest-growing economy for three years in a row amid sluggish global growth. India will be the world's third-largest economy in a few years, and it is vital for India to continue reforms, build better infrastructure, and invest in education," he said.
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Meanwhile, B20 India Chair N Chandrasekaran cited a conversation with Brende, where the WEF head said India will contribute to 16 percent of global economic growth in 2023-24.
While introducing Finance Minister Nirmala Sitharaman before her address, Chandrasekaran mentioned that Brende had acknowledged that India was amongst the fastest-growing large economies in the world.
Brende made these comments while speaking at the session on “Inclusive GVCs for Resilient Global Trade and Investment” at the B20 Summit.
He said that global economic growth is expected to be in the range of three percent in 2023-24 and emphasised that future prosperity and poverty eradication will rely on open trade and strong global value chains (GVCs) that must be inclusive and adjusted for climate change.
Brende also said that the complete decoupling of world economies from GVCs would lead to an 8–10 percent fall in global GDP.
"This is more than what the worst depression has led to," he said, adding, "So, there's a lot at stake, and India, during its presidency, should look at how to secure the global value chains, a key engine of future growth."
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Brende asserted that countries should be allowed to be competitive and buy what is most relevant for their businesses, and future prosperity and poverty eradication will be based on open trade and strong global value chains.
"Global value chains are at the core of future growth and have to be inclusive and adjusted for climate change," Brende said.
Commenting on the complex dynamics between the US and China, Brende noted the ongoing efforts to manage their relationship.
Despite the competition between these two economic giants, accounting for over 40 percent of the global economy, he expressed hopes that the consequences of their rivalry on global value chains would be mitigated.
Concerns about new tariffs, reshoring, nearshoring, and decoupling were raised, with Brende cautioning against actions that could lead to a significant decline in global economic growth.
Sultan Ahmed Bin Sulayem, Group Chairman and Chief Executive Officer of DP World, UAE, also spoke about India's potential to become an export country. He mentioned that India needs to be more liberal, allowing people to export and fast-tracking exports, and removing many restrictions and customs barriers.
“Customs (Department) is key today, and improvements are needed. Procedures must be digitised. If customs can coordinate with customs departments in other countries, it will be even more beneficial than free trade," he said.
Raj Subramaniam, President and Chief Executive Officer of FedEx, USA, highlighted that the resilience of the global value chains must be backed by efficiency, or it could lead to inflationary costs. He added that this can be achieved with the aid of technology and by making supply chains smarter.
“Diversification of supply chains is quite nuanced and complicated. There is an opportunity to increase global manufacturing in India, further reducing logistics costs due to the benefits of scale," he added.
Subramaniam also said that India represents around 2–3 percent of the global manufacturing industry, but added that the way the country is growing expectations are that it will soon represent around 6–10 percent of the global manufacturing industry.
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