Editorial 1 : Bigger & better
Introduction: The GDP estimates released last week by the National Statistical Office showed that the Indian economy grew at a healthy 7.6 per cent in the second quarter of the ongoing financial year, surpassing expectations. This has reaffirmed optimistic assessments of the country’s medium-term growth trajectory.
The future of Indian economy
- A new report by S&P Global says that the country will be the fastest growing major economy over the coming three years.
- This relatively high growth, it says, will drive India, currently the fifth largest economy in the world behind the US, China, Germany and Japan, to become the third-largest by 2030.
- Some analysts, though, expect the country to achieve that mark sooner. These are good signs.
- Earlier, the International Monetary Fund, as per its October World Economic Outlook database, had pegged the Indian economy to grow at an average of 6.3 per cent per year between 2023 and 2028.
- This would translate in the Indian economy growing from $3.7 trillion in 2023 to $5.9 trillion in 2028.
- Alongside, the country’s per capita GDP is expected to rise from $2,612 to $3,985 over this period.
- In comparison, the Chinese economy is widely expected to slow down — the IMF projects the economy to average just about 4 per cent per year during this period.
- In fact, a few days ago, Moody’s Investors Service lowered its outlook for Chinese sovereign bonds to negative as it believes that financial support to regional and local governments and state firms poses downside risks.
- A slowing Chinese economy means that it may no longer be the driver of growth in the Asia-Pacific.
India and the global supply chain
- As per the projections in the S&P report, India, followed by Vietnam, will be the fastest growing emerging market between 2024-26.
- These countries, along with others like Mexico, are benefiting from the rearrangement of global supply chains.
- This ongoing diversification away from China is an opportunity for India to emerge as a major global manufacturing hub.
What India can do more to gain from the global supply chain diversification of world?
Enhanced Infrastructure:
- Modernization of physical infrastructure: Invest in high-quality ports, highways, railways, and digital infrastructure to ensure efficient and cost-effective transportation of goods.
- Creation of dedicated industrial zones: Develop Special Economic Zones (SEZs) with streamlined regulations and attractive incentives to attract foreign investment and boost manufacturing.
- Focus on renewable energy: Ensure a reliable and sustainable energy supply by investing in renewable energy sources like solar and wind power.
Strengthening Manufacturing Capabilities:
- Skill development programs: Invest heavily in training and upskilling programs to create a workforce equipped with the necessary skills for high-tech manufacturing.
- Technological advancements: Encourage research and development in key technologies relevant to global value chains, such as semiconductors, electronics, and advanced materials.
- Streamlining regulations: Simplify and harmonize regulations to reduce bureaucratic hurdles and create a more business-friendly environment.
Promoting Open Trade:
- Negotiate free trade agreements: Engage in free trade agreements with major economies to promote easier access to foreign markets for Indian exports.
- Reduce trade barriers: Implement policies that reduce tariffs and eliminate non-tariff barriers to trade.
- Invest in regional trade: Strengthen trade ties with neighboring countries and develop regional value chains within South Asia.
Building a Competitive Edge:
- Focus on high-value sectors: Prioritize attracting investments and developing expertise in high-value sectors like advanced manufacturing, pharmaceuticals, biotechnology, and renewable energy.
- Promote innovation and entrepreneurship: Create an ecosystem conducive to innovation and entrepreneurship by supporting startups and fostering a culture of collaboration between industry and academia.
- Enhance quality standards: Implement stringent quality control measures to ensure Indian products meet international standards and build trust among global buyers.
Partnership and Collaboration:
- Forge strategic partnerships: Partner with developed economies such as the US, Japan, and EU to attract technology transfer and joint ventures.
- Collaborate with global companies: Actively engage with multinational corporations and invite them to establish production facilities and integrate India into their global value chains.
- Promote international cooperation: Participate actively in international forums and organizations to advocate for India's interests and promote its role in the global value chain.
Conclusion: As per S&P report, there is a need to upskill workers, and increase the female labour force participation. This, as the report points out, will help India “realise its demographic dividend.”
Editorial 2 : Partners in the uncertain times
Introduction: The year 2023 has been a bright one as far as the relations between Italy and India are concerned. Italian Prime Minister Giorgia Meloni’s meeting with Prime Minister Narendra Modi during her visit to India in March marked a breakthrough in the relationship between the two countries.
Other visits of Indian and Italian office bearers in 2023
- PM Meloni visited India again in September for the G-20 summit.
- Deputy PM and Foreign Affairs Minister Antonio Tajani has been to India, and so have several other ministers and deputy ministers in the Italian government.
- India’s External Affairs Minister S Jaishankar, Defence Minister Rajnath Singh and Commerce Minister Piyush Goyal have visited Italy.
The basis of India-Italy relation
The partnership is rooted in a common view of the strategic challenges in today’s world and the approach to face them.
Geo-political:
- Italy and India share the need for a free, safe and open Indo-Pacific.
- Italy looks at the Indo-Pacific from the perspective of an “enlarged Mediterranean”, which forms a geostrategic unit with the Indian Ocean.
- Italy sits at the centre of the Mediterranean Sea and acts as a natural bridge towards the Indo-Pacific.
Maritime:
- Maritime security is a priority. In August 2023, during a tour of the Indo-Pacific, the Italian Navy scheduled a visit to Mumbai by the patrol vessel ITS Morosini, the first time in several years that an Italian Navy ship had docked in India.
- A common interest in maritime surveillance and containment of underwater threats, including those against pipelines and the network of digital interconnections, emerged during the event.
Defence:
- Cooperation in the maritime domain will also be central to the relaunched collaboration in the defence sector.
- The renewal of the cooperation agreement signed on October 9 during Defence Minister Rajnath Singh’s visit to Italy is a major development.
- It provides the framework for more concrete collaboration. Italian companies have excelled in devising cutting-edge solutions and are looking forward to increasing their presence in India.
Infrastructure and connectivity:
- This collaboration will also enhance the stability of the Indo-Pacific region.
- Italy and India are committed to strengthening infrastructure, both digital and physical.
- The Blue-Raman project (with an Italian company at its core) will bring the Mediterranean and the Indian Ocean — Italy and India — closer in exchange of digital data through a submarine cable system.
- The India-Middle East-Europe Economic Corridor (IMEC), launched during the G20 summit in Delhi also aims to open a new route between Asia and Europe.
Bilateral trade and commerce:
- The free flow of trade through the Indo-Pacific is vital for Italy, an export-oriented country with 58 ports.
- Italian companies, whose expertise in the maritime and railway sectors is recognised internationally are ready to play their part in the project, while Italian ports have the required characteristics to act as terminals for the IMEC and access points for Europe.
- The increase in bilateral trade is evident in the exchange of goods (and services), with Italian machinery, automotive products, and luxury goods finding a growing market in India, while Indian products, like aluminium, steel, and iron, contribute to the supply chain for Italian manufacturing.
People-to-people contact:
- India and Italy are also looking forward to people-to-people contact.
- During External Affairs Minister S Jaishankar’s visit to Italy, a Migration and Mobility Agreement was signed.
- Italy already hosts one of the largest Indian communities in the European Union and has been enriched by a growing number of students and workers.
- The agreement will provide a framework to improve mobility.
Space and technology:
- Space is another sector where noteworthy steps have been taken.
- Italy is looking with increasing interest at India’s space initiatives — the success of the Chandrayaan-3 mission has been recognised and celebrated by the Italian scientific community.
- There is also a growing Indian interest in deepening cooperation in this sector.
- Collaboration has been underway for some time between the space agencies of the two countries, ASI (Italian Space Agency) and ISRO, government institutions, university research centres and aerospace companies.
- A joint declaration recently signed between the heads of ASI and ISRO opens up new opportunities, particularly in earth observation, space exploration and helio-physics.
Partnership on global concerns
- Italy and India can also converge on multilateral issues because they share the need to frame and support a new global agenda.
- As EAM Jaishankar emphasised during his visit to Italy, the relationship between the countries is a “factor of stability” in “a volatile and uncertain world”.
- Italy and India can play a mutually reinforcing role in addressing the urgent contemporary issues that primarily affect the Global South but also have a major impact on the security, stability and environmental sustainability of the entire world.
- During its G20 Presidency, India demonstrated its proactive role on several issues such as debt relief for developing countries, reform of international financial institutions, sustainable development and climate change — this includes the Global Biofuels Alliance, which Italy has joined.
Conclusion: As it prepares to take over the Presidency of G7 in 2024, Italy recognises the worth of addressing the concerns of a large part of the world, following India’s example.