India

India bans more Chinese apps; Beijing complicates potential TikTok sale; Hackers target Trump websites; Norwegian parliament suffers cyberattack; and Facebook steps up efforts against election interference.

Aarogya Setu, India's coronavirus contact tracing app, raises numerous concerns around transparency, privacy, and governance.

TikTok sues U.S. government; New Zealand stock exchange disrupted by cyberattacks since Tuesday; India to phase out Chinese equipment from telecommunications networks; and Federal agencies release advisory on North Korean targeting of banks.

Beijing blasts Israel for moving to ban Chinese equipment from 5G networks; Commerce Department restricts Huawei’s access to global chip market; Indian lawmakers call on Facebook to answer questions over hate-speech policies; Taiwan accuses China of cyberattacks against government agencies and official email accounts; and EU regulators clash during first major test of GDPR enforcement.

Experts continue to be concerned about low levels of COVID-19 testing across South Asia.

Prior to the COVID-19 pandemic, India was moving to the forefront of the global energy transition, with plans to reach 175-gigawatt (GW) of renewable energy by 2022. Prime Minister Modi’s decisive electoral win in May 2019 seemed to have secured continuation of India’s ambitious solar energy goals, but now the COVID-19 outbreak of early 2020 is slowing and delaying new solar energy construction on top of other challenges the sector faced. The fate of India’s push to clean energy has global implications, since India is a major economy and lowering its carbon emissions is important to global efforts to address climate change.

India’s relationship with Nepal is at its lowest point since the five-month “Indian Blockade” of 2015. The gap between Kathmandu and New Delhi is widening as India has not been able to keep up with transformations in Nepal and uses old lenses to view its neighbor.

China and India’s border dispute turned deadly for the first time in more than four decades. Indian Prime Minister Narendra Modi’s response will be critical to de-escalation.

COVID-19 cases continue to rise rapidly in South Asia. For months, South Asia was spared the worst of the pandemic.

On June 2, Indian Prime Minister Narendra Modi and U.S. President Donald J. Trump spoke by phone. According to the Indian government’s call readout, the president “conveyed his desire to expand the ambit of the [G7] grouping beyond the existing membership, to include other important countries including India. In this context, he extended an invitation to Prime Minister Modi to attend the next G-7 Summit to be held in USA.” This confirmation from the Indian government builds upon the president’s remarks, reported on May 30, about his plans to convene a larger G7 summit including Australia, India, South Korea—and Russia; in his words, to “discuss China’s future.” Predictably, Trump’s invitation to India has generated substantial interest within India, as has the invitation to Australia similarly received coverage there. In the United States, more attention appears to be directed toward the president’s plans to include Russia in this enlarged grouping. There’s little economic logic to a grouping that would include Russia, no longer among the world’s top ten economies at market exchange rates, while excluding China, the world’s second largest economy (largest if using purchasing power parity terms). But the G7 has never professed to be a gathering of “developed and developing economies from every continent” along the lines of the G20. The G7 was created as a consultation of industrialized economies, all of which have been democracies since the grouping’s origins in 1975. The original G6 included the United States, Japan, Germany, France, the United Kingdom, and Italy, with Canada joining to make the G7 by 1976. Russia participated in the G8 from 1998 to 2014 until its invasion of Ukraine’s Crimea caused the group to eject it. In the decades since the G7 formed, emerging markets have grown to become far more important to the global economy—and large emerging markets like China and India have become crucial to every issue of collective action that the G7 is preoccupied with, such as climate change, clean energy, and health pandemics. Both countries participate in the G20 but have not been part of the G7. Should the criteria of “advanced industrialized” still apply as a threshold for G7 inclusion when countries still in the middle-income or lower-middle-income categories have become so central? My answer to that is no, and I argued in my book that it’s time to consider Indian membership in an expanded G7 given the size of its economy and the fact that, for all its troubles, India is a democracy. Democracy sets India apart from China, so it could be a conceivable and logical expansion to include India in an enlarged G7, but not China. But using this yardstick, the selection of Australia and South Korea spurs questions about other democratic economies around the same size not on the list. What about Brazil and Mexico? Or Indonesia? A ranking of the ten largest economies that are also democracies—using market exchange rates—would suggest inclusion of Brazil, India, and South Korea in a “D10” grouping along with all members of the existing G7. That same ranking using purchasing power parity would include India, Indonesia, Brazil, Mexico, and South Korea—but not Italy and Canada, core G7 members. All of this is food for thought on the purpose and design of any expansion of this consultation. Countries in bold are current G7 members. Sources: Market exchange rate data (2018, latest available) comes from the World Bank. Purchasing power parity data (2020, estimated) comes from the IMF. Most of all, it’s clear that the twentieth-century institutions of global governance have not reformed to reflect the established importance of emerging economies to the world. In his own way, Trump was right to call the G7 an “outdated group of countries,” because it is. What we need, however, is a logical and consistent way to create a more relevant group for the challenges currently facing us. The invitees to the Trump G7 summit do not, as a group—and especially with the inclusion of Russia—provide that clear, coherent case for an enlarged institution.

I had the opportunity earlier this week to take part in a fascinating webinar discussion, hosted by Brookings India, on India’s foreign policy strategy. The anchor for the conversation was a new paper by Ambassador Shivshankar Menon, who served as national security advisor (NSA) (and foreign secretary prior to that) in the previous Indian government. His paper, “India’s Foreign Affairs Strategy,” walks through a logical progression of Indian national interests and priorities on the path to get there. Foremost among these priorities, in Ambassador Menon’s view, has been and should remain “the transformation of India into a strong, prosperous, and modern country” (pp. 5). Menon also reaffirms the view that India can best protect its national interests through the pursuit of strategic autonomy, not through alliance relationships. This perspective has a long history in Indian foreign policy, and had its most recent expansive articulation in the 2012 publication NonAlignment 2.0 when Menon was serving as NSA. My own view is that the Modi government, while coming closer to the United States for its own reasons, has shown no interest in moving toward a formal alliance relationship with Washington, as some have advocated. It’s worth noting where Ambassador Menon places great emphasis: India’s economic linkages with the world. He underscores the importance of being open to the world to create economic growth, writing, “If India is to transform, it cannot be insular” (pp. 7). Menon sketches how India’s economic interests have become more deeply tied to the world beyond its immediate region, as its major trading partners are now beyond the “Suez to Malacca” neighborhood. Looking at the transformation of India’s trade, he observes that in 1991, goods trade accounted for 18% of India’s GDP, primarily to the west and through the Suez Canal. But by 2014 things looked quite different, with goods trade comprising almost 50% of India’s GDP and primarily traveling in large part via India’s east. This has elevated New Delhi’s interest in freedom of navigation in that direction, including in the South China Sea (pp. 17). There’s much to reflect upon in this thoughtful paper, which was written prior to the impact of the coronavirus pandemic and therefore not designed to address the global (or India’s) economic crisis. But the emphasis on deepening India’s economic relationships in order to realize faster economic growth, job creation, and prosperity for Indian citizens could not be more urgent. In this context, the Indian government’s recently announced goal of increasing “self-reliance” while also better embedding India within global supply chains calls for more scrutiny. Many of the reforms announced in the past week emphasized domestic market liberalization, such as in agriculture and coal. They included an increase in the foreign investment limit in defense production, to encourage more foreign investors to come “make in India.” But if the idea is to expand India’s role as a manufacturing power linked to global markets, someone will have to address the tariff hikes the Modi government has resorted to in recent years, which undermine its stated mission to place India in the midst of global supply chain flows. Someone will also need to address the fact that India remains outside regional trade blocs, such as the Regional Comprehensive Economic Partnership grouping it bowed out of last fall. At the time, Indian leaders explained this decision in terms of protecting Indian farmers and Indian market access interests abroad. The idea appeared to be that India’s own economy remained insufficiently competitive to benefit from membership in a larger trade grouping, and that it needed more time to develop its domestic industries. How well the new reforms will spur the economy to growth and job creation—the need of the hour, and a sensible cornerstone of India’s foreign policy—remains anybody’s guess.

On Tuesday, May 12, Indian Prime Minister Narendra Modi delivered a primetime address to the nation on the coronavirus (Hindi text released here, and English here). With India in a national lockdown since March 25, many awaited his word on the country’s next steps. Modi announced a much-needed second relief package of around $266 billion, which he said would bring the government’s overall stimulus to around 10 percent of the country’s GDP, including the previously released package back in March, and central bank liquidity measures. This relief, with details to be announced later by the finance minister, represents a significant expansion over the first relief package of March 26 that allocated around $23 billion, or 0.8 percent of GDP, to cash transfers and food rations for the poor. In the intervening weeks it has become painfully clear how India’s safety net—even with technological advances like Aadhaar, the national biometric ID linked to bank accounts—has gaping holes. The stories of migrant laborers with no work and no way to pay rent in big cities, trudging hundreds of kilometers back to their villages, have brought attention to issues like interstate portability of ration cards, for example. And with the first relief tranche targeted at the poor, businesses—doing their best to stay afloat in an economy that had stopped moving—found themselves adrift. As a result, the Indian government has been preparing for weeks a second package that would address relief for business owners. In his May 12 speech Modi presented this new package as one that would address the needs of businesses as well as workers, and would furthermore enable India to become more self-reliant. This new program, dubbed “Atmanirbhar Bharat Abhiyan” (Self-reliant India Scheme) would, according to Modi’s speech, cover five pillars: “economy, infrastructure, technology-driven system, vibrant demography and demand” and would involve “land, labor, liquidity, and laws.” He gave the example that India’s production of personal protective equipment (PPE) earlier in the pandemic was limited, but now more than 200,000 PPE kits and N95 masks are made in India daily. In the absence of further details—Finance Minister Nirmala Sitharaman is supposed to provide more clarity on May 13—it’s hard to assess what this plan will mean. Will it be a further boost to the Make in India scheme with more incentives? As I have written earlier, Make in India harnessed a standing Indian plan to increase the manufacturing sector’s contribution to the economy. Unfortunately, this laudable goal (one supported by successive Indian governments) has simply not resulted in significant change. In fact, manufacturing’s share has actually fallen. Modi spoke about better integration in global supply chains. This is a similarly laudable goal. Without further details, it too is hard to assess. In recent years, the Indian government’s approach to trade has become more—not less—protectionist, with tariff increases targeting imports that the Indian government sees as too competitive with domestic industry. Will the new self-reliance put up more barriers? In his speech, Modi appeared to say that was not the goal—that this version would not be “exclusionary or isolationist”—but the past six years have shown that the Modi economic philosophy is not premised on free-trade instincts. Coronavirus and the understandable lockdown that the Indian government has implemented have severely hurt the Indian economy—as lockdowns have done all over the world. With unemployment hovering around 23 percent (per Center for Monitoring Indian Economy), and banks and ratings firms revising their forecasts for the Indian economy at recession-level figures, the details of what the new self-reliance scheme will entail are eagerly awaited.