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BS Manthan: Bilateralism now topping the agenda, says FM Sitharaman

2025-02-28 00:00:00.0 商业标准报-经济和政策原网页

Multilateralism is fading; India needs to place greater emphasis on bilateralism in trade, investment and strategic relations, Union Finance and Corporate Affairs Minister Nirmala Sitharaman said while delivering a keynote at the second edition of the annual Business Standard summit, Manthan, on Thursday in New Delhi.

The discussions on day one of the two-day summit, which coincides with Business Standard’s 50th anniversary year, focused on India in a new world order. While acknowledging that the world is going through a churn, and not a gentle one at that, the finance minister said, “In this global reset, we have to put India’s interests first and on the top.”

She also emphasised the need to reimagine the most-favoured-nation status, noting that “every country wants to be treated as special”.

Bilateral arrangements are going to be the order of the day as multilateralism is “sort of, out”, Sitharaman said.

The summit saw top minds from India and abroad coming together to deliberate on a range of subjects. Among them was Bhupender Yadav, Union minister for environment, forest and climate change; P K Mishra, principal secretary to the Prime Minister; Amitabh Kant, India’s G20 Sherpa; Uday Kotak, founder and director of Kotak Mahindra Bank; Chris Wood, global head of Equity Strategy at Jefferies, Ajay Bhushan Pandey, chairperson of the National Financial Reporting Authority (NAFRA), besides economists and defence experts.

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Technology and talent also had Sitharaman’s attention. “India’s leadership in technology will place us at the high table," she said, underlining the importance of investing in both technology and the people who drive it. Regarding talent, she advocated for India to become a magnet for global talent and adopt a more open-minded approach. Apart from these, debt management and fiscal prudence must remain priorities, she said while urging states to actively participate in these reforms.

Amid the push for bilateralism, there were conversations about the need for multilateralism, specifically when tackling climate change. Highlighting this, environment minister Yadav spoke at length on initiatives such as the Coalition for Disaster Resilient Infrastructure. Climate change, he said, is not just about the earth’s temperature rising. “It is also about loss of biodiversity, and the desertification of the planet.” India, he said, is working on all these aspects — from recognising the strength of the circular economy to trying to make agriculture climate-resilient.

He underscored that the climate change effect does not have borders and advocated for technology transfer and capacity building for developing countries or vulnerable nations, also known as Global South.

He noted that India has made significant strides in tackling climate change, achieving a substantial reduction in its emissions intensity of GDP by 33 per cent compared to 2005 levels, significantly exceeding its initial target, and increasing its share of non-fossil fuel based electricity generation capacity to 45 per cent by 2021, well ahead of its 2030 goal.

Agriculture came up during a fireside chat with Mishra as well. Speaking of its continued significance in India’s economy, he said, “It is a myth that as a country develops, agriculture becomes less important.” While its share in GDP has declined, the proportion of the workforce engaged in agriculture remains significant, and agricultural exports continue to be crucial, said Mishra, who earlier held the post of Union agriculture secretary.

He also underscored the importance of creating systems that are not just resilient but “anti-fragile”. And while atmanirbharta (self-reliance) is important, he clarified that it does not mean isolationism – that we cut ourselves off from the world – but rather the ability to supply in times of crisis. Scheme such as production-linked incentives (PLI), which are meant to encourage atmanirbharta, he added, aim to encourage manufacturing in areas where India currently lags, such as technical textiles rather than conventional textiles.

When asked on a lighter note what he did to unwind, Mishra shared personal anecdotes about why he is often seen working seven days – “when work doesn’t feel like work…”.

Amitabh Kant also weighed in on the work-life balance debate. “Indians must work hard to deliver. In the name of work-life balance, we must not send the message that hard work is unnecessary,” he said, adding that with good time management, one can make room for both hard work and leisure.

The G20 Sherpa made a strong case for free enterprise, advocating for a less interventionist government approach. “The government should get out of the way and let the private sector flourish,” he said, stressing that reform and deregulation should be the guiding principles.

Pushing for accelerating India’s renewable energy sector, he advocated a shift away from fossil fuels, suggesting that both central and state governments should exclusively purchase electric vehicles.

On economic growth, Kant urged policymakers to push the pace of implementation to achieve an annual growth rate of 8.5-9 per cent. He also emphasised the importance of systematic urbanisation. Addressing the role of the G20, he predicted that it would gain greater significance given the dysfunction within the UN Security Council.

A name that came up often during the deliberations was Donald Trump.

Uday Kotak, founder and director of Kotak Mahindra Bank, acknowledged the uncertainties of the current global landscape, particularly the shift brought about by the Trump era. "US exceptionalism is now a reality," he said. He added that the answer to reducing the current account deficit is domestic competitiveness. He also urged the Indian industry to aspire for a global consumer brand out of India in the next five years.

He observed that post-World War II, economic relations operated on the principle of "enlightened self-interest," but today, short-term selfishness dominates. He advised Indian businesses to build robust defence mechanisms while also unleashing the animal spirit.

Noting the trend of savers becoming investors, he said it was a positive development that banks need to be ready for.

Chris Wood, global head of Equity Strategy at Jefferies, also spoke at length on the matter of investing, and analysed India’s market position compared to other economies. Expressing surprise at the level of foreign selling in Indian markets, he said that sustained domestic inflows into mutual funds, though, were a positive long-term sign.

Despite his structural bullishness on Indian equities, Wood remained cautious in the short term due to foreign investor (FII) outflows and valuation concerns. Nevertheless, he expected the Sensex and Nifty to deliver a 10-15 per cent return over the next 12 months if FIIs return.

"If someone has no exposure to Indian stocks, they should start buying now. When the tide turns, the rally will be very sharp," he predicted. However, he categorised India as still being in a "sell on rise" market rather than a "buy the dips" one.

A panel discussion on India’s economy in a changing world had Laveesh Bhandari, president of the Centre for Social and Economic Progress, saying that India will have to become stronger internally. “The government needs to invest in itself – in the form of a stronger technocracy,” he said, while also making a strong case for primary school education. On the matter of regulation, he said one issue is that regulators work in silos and do not talk to one another.

Tushar Vikram, CEO and country head India, Mashreq, meanwhile, drew attention to the opportunities – India’s trade partnership with the United Arab Emirates (UAE) being one. This relationship, he said, will only get stronger with the UAE becoming an important pivot for India. Dharmakirti Joshi, chief economist, Crisil, spoke of the helplessness in dealing with food inflation given the kind of climate shifts taking place. Inflation, added Sundeep Sikka, executive director and CEO, Nippon Mutual Fund, is also changing the way people invest. “People, even in smaller towns, are beginning to understand the impact of inflation, courtesy awareness, and are investing accordingly,” Sikka said.

As the evening progressed, the defence and private sector’s collaboration came up for discussion. Samir V Kamat, secretary, defence ministry’s Department of Defence (R&D) and chairman of the Defence Research and Development Organisation (DRDO), was of the view that participation of the private sector was essential if India were to meet its defence goals. “By 2047, we will become an atmanirbhar force, if not earlier. All we need to do is harness the available talent and energy,” added Admiral (retd) R Hari Kumar, former chief of naval staff.

Adding to those thoughts, Rajinder Singh Bhatia, chairman, Defence Business, Kalyani Group, and president of the Society of Indian Defence Manufacturers, said, “India cannot be a net importer of security. Defence needs a whole-of-the nation approach… Break down the silos.” The funding issue was also raised as was the matter of having a level playing field.

The day concluded with a fireside chat with Ajay Bhushan Pandey, NFRA chairperson, who discussed the new paradigms in financial reporting, including the need to have an independent body to audit the auditors.

As India navigates a shifting global order, the discussions at Manthan underscored the importance of strategic recalibration, leveraging technological advancements, and fostering an environment that balances policy-driven reforms with private sector dynamism. Friday, the final day of the summit, promises to be an equally vibrant one.