Finance Minister Nirmala Sitharaman on July 26 said that India is moving steadily on bilateral trade negotiations, particularly with the United States and the European Union, even as global consensus on multilateralism continues to weaken.
“I can’t comment if bilateral trade is good or bad,” the Finance Minister said, “but we are moving forward on bilaterals. Negotiations with the US, EU are progressing well.”
She was speaking during a book release “A World in Flux: India’s Economic Priorities. Essays in Honour of Dr. Shankar Acharya” event in New Delhi.
Her remarks come amid a rapidly evolving global trade environment where countries are increasingly prioritising direct trade engagements, even as traditional multilateral platforms struggle to stay relevant.
Jigsaw Puzzle
Sitharaman described the current global landscape as highly fragmented and complex. “The global challenges are like a jigsaw puzzle. How does India fit in the jigsaw puzzle, which is getting redefined? Every piece is dynamic,” she said, referring to the geopolitical realignments shaping trade and investment flows.
“The world is in a flux, it’s getting more complex. It’s there even for a layman to see how complex it’s becoming,” she noted. The Finance Minister emphasised that multilateral institutions are now “wondering about their immediate future” and are “left in a limbo.”
She reiterated that during India’s G20 presidency, reforming multilateral financial institutions was placed at the forefront of the agenda. “Now, new redefined multilateral institutions are needed,” she said, calling for frameworks that reflect emerging economic realities and address long-standing governance gaps.
Crypto: Still a Policy Grey Zone
Sitharaman also flagged unresolved challenges posed by digital assets. “With crypto, it still has questions to answer for central banks, governments,” she said, highlighting the lack of consensus on regulatory treatment for cryptocurrencies across jurisdictions.
While discussions have intensified globally, a unified approach continues to remain elusive, adding to the complexity of monetary and financial governance.
Press Note 3 Relaxation?
The minister acknowledged issues arising from Press Note 3, which mandates government clearance for FDI from neighbouring countries sharing land border with India.
Press Note 3 refers to a policy clarification issued by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry, Government of India, on April 17, 2020. It introduced a mandatory government approval route for foreign direct investment (FDI) from any country that shares a land border with India – namely China, Pakistan, Nepal, Bhutan, Bangladesh, Afghanistan, and Myanmar.
Prior to this, such investments could be made through the automatic route in many sectors.
Sitharaman said the restriction has posed hurdles in renewable energy projects that require technical inputs from Chinese experts.
“In some renewable energy projects, because of Press Note 3, there was difficulty in getting technical experts from China. That was relaxed to some extent,” she said.
Sitharaman noted that there have been increasing requests from stakeholders for further access. “It’s not only from our side but also from China. There is some work on that front with External Affairs Minister S Jaishankar visiting China recently. But I can't say how far it will go. It might help the economy, but a sense of caution will have to be built in.”
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