G20: India gears up for trade, investment talks under shadow of Russia's war

A busy month for the commerce ministry will be capped off by the G20 trade and investment meeting that began on March 28 (Source: Press Information Bureau in Maharashtra).

It's been a busy month for India's commerce ministry. The first half of March saw US Secretary of Commerce Gina Raimondo visit New Delhi and participate in the 5th India-US bilateral Commercial Dialogue. Then came the meeting between the Indian and Australian trade ministers.

Capping it all will be the first meeting of the G20 Trade and Investment Working Group, which began today, March 28, in Mumbai.

The three-day meeting will see more than a hundred delegates from G20 member nations, invitees, regional blocs, and international organisations scratch their collective heads to figure out how global trade and investments can be accelerated.

The G20 meeting begins a day after the World Bank warned that the global economy faced the prospect of a "lost decade". Tellingly, the World Bank pointed out that growth in international trade is barely matching GDP growth and that international economic integration, which helped drive global prosperity for more than 20 years, has faltered.

"Restoring it is essential to catalyse trade, accelerate climate action, and mobilise the investments needed to achieve the Sustainable Development Goals," the World Bank said in a report on March 27.

If the first two major meetings of India's G20 presidency are anything to go by, restoring international co-operation is going to be a challenging task.

The Russian puzzle

The meeting of finance ministers and central bank governors, held in Bengaluru in late February, and that of foreign ministers in the Capital, early in March, were dominated by talk of the Russia-Ukraine war. Russia and China's opposition to the language around the war's characterisation and lack of criticism of the sanctions imposed on Russia saw both the meetings end with no joint statement.

Considering how Russia's invasion of Ukraine has impacted global trade over the last 13 months, it would be naïve to think this week's meetings would not see grumblings on the matter. And it would be a surprise if a joint statement is reached.

As with the meetings of G20 finance and foreign ministers, India will look to get work done where it can. And as Indian officials, including External Affairs Minister S Jaishankar, have said, there has been agreement on as many as 95 percent of the issues among G20 members in their meetings. It is the war-related 5 percent that has come in the way of a joint statement.

Issues on agenda

On its part, India will push for a rupee settlement of international trade. Speaking to reporters on March 27, Commerce Secretary Sunil Barthwal said India is interested in improving trade in rupees.

Earlier this month, the finance ministry informed Parliament that the Reserve Bank of India (RBI) had granted approvals to correspondent banks from 18 countries, including those from major nations such as the UK and Germany, to open Vostro accounts to settle international trade in rupees.

Under the RBI's mechanism to settle international trade in rupees, authorised Indian banks must open Special Rupee Vostro accounts of correspondent banks of the partner trading country to settle these transactions.

Rupee trade, however, is not the only item on the agenda. Two sessions will be held on March 28 examining the role of financial institutions and export credit agencies in closing the trade finance gap and how acceleration of digitalisation and financial technology solutions can improve access to trade finance.

Over the next two days, four closed-door sessions will be held on making trade work for growth and prosperity, building resilient global value chains, integrating micro, small, and medium enterprises in global trade, and building efficient logistics for trade.

"Instead of taking a zero-sum-game approach to trade that protectionism advocates, India believes that it is important to ensure that multilateral trade is free and geared towards ensuring global prosperity," an official from the commerce ministry said.

While the pall of Russia's war will hang over all the G20 meetings under India's presidency, it can only tackle the issues within its control.