Key takeaways for India from G20 Summit 2016

Hangzhou city in China has just concluded hosting the 11th G20 Summit that saw world leaders once again congregate to address matters of global concern.

For China, this summit came at a crucial time when it faces pressure on The Hague’s ruling against its position on the South China Sea.

But beyond the usual diplomatic posturing by countries, the 11th edition did offer some significant outcomes. After years of hard negotiations, both USA and China have finally agreed to ratifying the Paris Accord that stipulates nations to reduce carbon emissions and aims to end fossil fuel subsidies.

Both countries happen to be the world’s worst air polluters  and their coming to an agreement is a major step forward. Initially, it seemed that the final G20 Summit declaration would announce the same and assign a date to it, but some countries like India announced that they weren’t prepared to ratify the Paris Accord just yet and would need more time.

China and India have been on the same page at global climate talks but now that China has decided to commit itself, India has little choice but to follow through. India’s announcement that it needed more time also found resonance with several other countries and that is why the final declaration avoided any mention of a deadline.

The Indian Perspective

The Summit in Hangzhou was important to India for voicing its concerns and also for highlighting its position with China, with whom its relations have been sputtering.

In a tactical diplomatic move, PM Modi made an official visit to Vietnam on his way to the Hangzhou. China has been steadily increasing its presence and economic influence in South and Central Asia, and in a move to counter China, India announced a $500 million package in defence support to Vietnam, thus sending a strong message to China that Indian influence and involvement could also increase in what China considers its backyard of influence.

So when PM Modi stepped down in Hangzhou, he was well set with his agenda to discuss with President Xi Jinping. Both leaders had last met during the Shanghai Cooperation Organization (SCO) summit where India was formally admitted as a member but since then, bilateral relations between the two nations went cold when China refused to endorse Masood Azar’s name, the Pakistan based chief of the terror group Jaish-e-Mohammad, being added to the UN list of Terrorists.

This was followed by China opposing India’s entry into the Nuclear Suppliers Group (NSG). These moves went against the positive momentum that both leaders had established earlier and it remained to be seen how PM Modi would interface with President Xi Jinping.

The brief meeting in the sidelines between the two, however, resulted in China reiterating its commitment to maintain the “hard won” improvement in ties between the two nations, thus signaling its interest to bring bilateral relations back to the levels both leaders had committed themselves to. From an Indian perspective that is a positive outcome, since Chinese investment and project execution in India had slowed down considerably since the freeze in relations.

Right now, China needs India on its side as it stands isolated in the South China Sea dispute. India is a major nation influencing control over one of the busiest sea lanes in the world and were India to come out openly in support of the US stand and against the Chinese position, it would mark a major shift in strategic balance in the region.

Furthermore, China has $46 billion riding in planned investment in Pakistan where it plans to open trade connectivity from the Port of Gwadar in the restive region on Balochistan, through POK and onto China. This route is part of China’s grand plan of ‘One China, One Belt’.

It can’t afford to have a hostile India supporting a separatist movement in Balochistan and stoking civil unrest in POK, if it wants to make this investment a reality. And yet, it needs to keep its old ally Pakistan in good humour. So Modi’s meeting with XI Jinping at the G20 Summit was important for both countries.

Indian influence on the economic agenda

Arvind Panagariya, Vice Chairman of Niti Aayog and India’s chief interlocutor at the G20 Summit, spoke of the general sentiment prevailing at the Summit which against protectionism and in support of multilateralism. The G20 members were in support of regional trade agreements to be in line with multilateral trade liberalization.

The issue of excess capacity and resulting international dumping came up, with steel as a case in point. Without isolating China, countries were in favour of a multilateral approach to address the issue of excess capacity and preferred to set up a global body that would work under the Organization for Economic Cooperation and Development (OECD) with G20 members offering its full support to the proposed body.

Panagariya stressed that India had a major say in issues of global concern and played an active role in the wording of the final communique that also addressed other challenges like Brexit and its impact on global economy, the problem of rising immigration in Europe and the problem of Anti-Microbial Resistance (AMR) that deals with rising resistance of bacteria and viruses to present medical formulations.

Tax evaders taking refuge through tax havens is another matter of global concern and India took the lead to highlight the need to close such options and get member countries to close the doors on tax evaders.

India raises terror concerns

Unlike other G20 Summits, this one had global terror as one of its main agendas and the Indian Prime Minister made the best of it. Modi highlighted Pakistan’s role and support in financing and facilitating cross border terror and also alluded to China’s position on Masood Azar, without naming either country. But the message was loud and clear to the global audience of influential leaders, who now have little tolerance to terror since many are now in the frontline and feeling the heat. India drove the message home and hard.

India has a reason to smile

At a time when most countries are still grappling with recession, India’s economic performance offers the only ray of hope to international investors. The outcome of the 11th G20 Summit will give India a reason to smile as it was able to successfully push its voice into all major discussions on global issues and was able to proactively contribute to the final declaration.