Union Finance Minister Nirmala Sitharaman addresses the 2023 Edition of the Indo-Pacific Regional Dialogue on the theme 'Geopolitical Impacts Upon Indo-Pacific Maritime Trade And Connectivity', in New Delhi.
Credit: PTI Photo
New Delhi: Finance Minister Nirmala Sitharaman on Wednesday said India is expected to overtake Japan and Germany to emerge as the third largest economy in the world by 2027.
Addressing the Indo-Pacific Regional Dialogue here, Sitharaman said India's economic growth is estimated to be just under 7 per cent during the year, the highest among major economies, despite global headwinds.
The Indian economy is therefore on the right track and is heading towards a bright future, she said.
Amidst supply-chain disruptions and economic turbulence due to contemporary conflicts that impact the Indo-Pacific, irrespective of whether they are occurring in relatively distant Ukraine or in relatively-proximate Israel or Yemen, and despite the palpable tensions prevalent in the South- and East China Sea, the Indian economy stands out as a bright spot, she said.
'Even according to the usually conservative estimates of the IMF, the Indian economy is set to emerge as the world's third largest economy by 2027, hopping over Japan and Germany, as its GDP crosses the USD 5 trillion level. By 2047, India aspires to be a developed economy,' she said.
Talking about India's 'Blue economy', she said, it accounts for roughly 4 per cent of the GDP and represents a sea of opportunities.
India has 9 states and 4 Union Territories situated on the coast, 12 major and 200+ non-major ports situated along its coastline, and a vast network of navigable waterways for international and domestic trade, she said.
According to the UNCTAD, India was the 2nd largest exporter of ocean-based goods and services among developing countries in 2020.
Observing that Indo-Pacific is undoubtedly the world's most economically dynamic region, Sitharaman said it encompasses 60 per cent of global GDP, and almost 50 per cent of global merchandise trade.
On the other hand, the Indo-Pacific is also a geopolitically contested space that is being roiled by great power competition, she said.
'One draws its legitimacy from an internationally accepted and consensually derived rules-based order. India stands firmly and proudly in the vanguard of this system,' she said.
While the other seeks to discredit and disrupt this consensually derived rules-based order and supplant it with an international order whose rules are generated in an exclusive State, she said.
As India accelerates its economic growth and uplifts its teeming masses, moving them from poverty to prosperity, she said it is registering impressive gains in its comprehensive national power as well as in terms of its international stature.
'Today, Indians 'whether at home or abroad' stand, walk, talk, and act with their heads held high... even as the world appreciates India's achievements and successes and lauds it for its demonstrated resilience amidst multiple crises, we are very clear that we cannot afford to be an inward-leaning power,' she said.
'Our focus on transitioning from a 'brown' economic model to a 'blue' one and thereafter extrapolating this blue transition across the length and breadth of the Indo-Pacific demands that we shoulder greater and heavier regional responsibilities, and this is precisely what we are doing,' she said.
India has significantly improved its position as a well-governed and innovative country with a conducive environment for business, as reflected in several global indices.
Noting that the country's comprehensive national power is going to remain inextricably linked to the ocean, she said India is seized of the pressing need to grow the maritime sector as a whole and the government is determined to provide the requisite support by way of fiscal policy and financial outlay.
'We seek to position India as a hub in new and diversified supply chains and value chains across the Indo-Pacific and, indeed, across the world.
'Towards this end, I am happy to inform you that all sectors of the government are responding exceedingly positively to our new financial policies,' she said.
In terms of international shipments, she said India's global ranking has risen from 44th place in 2014, to the 22nd rank in 2023.
Similarly, as per the World Bank's Logistics Performance Index report 2023, she said, the 'turn-around time' of Indian ports is now just 0.9 days, which is lower than ports in established maritime centres such Singapore, the UAE, Germany, the USA, Australia, Russia, and South Africa.
'Our experience of the maritime manifestations of the Covid-19 pandemic has led to shipping insurance, too, becoming a particular area of policy focus,' she said.
On the one hand, a 'Marine Cargo Pool' has now been created with the full support of the Insurance Regulatory and Development Authority of India and domestic insurance companies, to support maritime trade on the other hand the country is improving its strength in shipping arbitration, and in order to reduce India's vulnerability to international sanctions.
To provide greater strategic flexibility in shipping operations, she said 'we are setting up a full-fledged Indian-owned and India-based Protection and Indemnity (P&I) entity that will additionally provide protection to coastal and inland shipping.' On the capacity building front, she said, as many as 31 projects have been identified in 9 major ports for monetisation under the National Monetisation Pipeline (NMP) launched in 2022, with a total estimated CAPEX of 14,483 crore rupees (1.74 billion US dollars) for FY 2022-25.
Terming the India-Middle East-Europe Connectivity Corridor (IMEC) as one of the most promising connectivity projects, Sitharaman said it will be a win-win situation for all states involved, as it enhances transportation efficiency, reduces logistic costs, increases economic unity, generates employment, and lowers Greenhouse Gas emissions, contributing to a cleaner, safer, better world.
'However, it is not without its geopolitical challenges and the ongoing conflict in Israel and Gaza is a worrying manifestation of these,' she said.
The IMEC was signed at the 18th G-20 Summit held in New Delhi in September.
It is a multimodal economic corridor that incorporates multiple networks of shipping, railways, and roadways and will also include electricity cables, high-speed data cables, and a hydrogen pipeline.
The corridor is expected to create a reliable and cost-effective cross-border, ship-to-rail transit network to supplement existing maritime and road transport, and facilitate trade and connectivity, leading to the economic integration of South Asia, West Asia, Europe, and the Middle East.