Partnership Summit Theme Document January 2015

1. Understanding ‘Shared New Realities’ 1
2. Emerging Economies Balancing Global Growth 3
Emerging Economies Advance Share in World GDP¾¾ 4
Emerging Economies Scoring High on Trade¾¾ 6
Emerging Markets Attracting More Investment¾¾ 9
3. Partnerships for Shared New Realities 11
G-20 Agenda for Shared Development 1¾¾ 2
UN Global Development Agendas Beyond 2015 1¾¾ 5
WTO Towards a Multilateral Trading System 1¾¾ 7
4. Rise of Regional Economic Integration 19
5. How Should India See the Rise of Trading Blocs 21
6. State of the Indian Economy 23
7. Domestic Reforms Would Take India Forward 29
Make In India – An Exciting New Initiative 3¾¾ 1
Path for Economic Reforms 3¾¾ 3
8. Preparing for A New World 35
Contents

The Partnership Summit 2015
Theme Paper 1
1. Understanding ‘Shared New Realities’
During the last few years, even while developed countries were struggling to recover
from recession and revive economic growth, a group of emerging economies
including India have continued strongly on the growth path and helped shift global
trade. Amidst this, the rise of Multi-National Enterprises (MNEs) changed the Global
Value Chains (GVCs). The new GVCs help MNEs break down goods and services
and locate them in different parts of an increasingly global production system. They
undertake different production stages in countries as per comparative advantage,
including services such as RD, design, marketing and branding.
During these years of tumultuous change in the global economy, there has been
a notable shift in global share of GDP, merchandise trade and flows of investment
among major countries. Advanced economies, especially the Europe, Japan and the
US remain leading contributors in all three areas but their share has been gradually
falling. When the world passed through two recessions in 2003 and 2009, robust
economic growth of South Korea, China, Singapore, Russia, Brazil, South Africa,
Hong Kong and India stabilized global growth. Declining demand in the North is
compensated for by growing consumption levels in emerging markets. On the
other hand, emerging economies look to the advanced economies for markets,
technology and investments. These developments are encouraging nations and
global institutions to share resources for shared growth and development.
In effect, the tilt in global economic balance has now gained momentum and new
realities are coming into play. The key to growth is now shared between the emerging

2 Theme Paper
markets and developed economies. The world needs to develop new strategies and
partnerships to lift global growth and support global rebalancing.
Within these global shifts, India stands at an exciting moment in its economic journey.
A renewed investor confidence is apparent after a historical majority attained in the
recent General Elections and the institution of a new Government led by Prime
Minister Narendra Modi. In the last six months, the Government has proactively
announced a slew of reforms aimed at reviving economic growth, targeting the
areas of manufacturing, investment climate, financial inclusion, urbanization and
others. The Indian economy is now universally viewed by analysts as a focal point
for expanding growth in a global economy that remains fragile.
India cannot underestimate or overlook the rise of these new developments. It
needs to take a considered view on the implications of their emergence. It should
adopt a balanced approach and calibrated strategy not only to cope up with the
changes but also to leverage these changes for its own growth and development
as well as for the benefit of the world.
To do that, India must be able to compete in a fiercely competitive global business
and economic environment. India needs to strengthen its manufacturing sector and
must relentlessly strive for manufacturing competitiveness by undertaking crucial
reforms in the areas of infrastructure development, internal tax reform, boosting
entrepreneurship, reducing transaction costs, skill development programmes and
others.

Theme Paper 3
2. Emerging Economies Balancing Global Growth
Increasing global economic interdependence calls for enhanced partnerships for
shared new realities. Isolation and protectionism are incompatible with growth and
development. The rise and leadership of G20 recognized the global power shift
of a multipolar world. The 2014 Brisbane joint communiqué reconfirmed G20’s
commitment for strong, sustainable and balanced growth. It demanded an integrated
policy approach to ensure inclusive economic growth, social development, peace,
security and environmental sustainability within a development agenda that responds
to the aspirations of all people for a world free of want and fear.
This global integration that we witness today is not sudden and accidental but a
very careful and progressive attempt by all countries - developed, developing and
least developed countries – to shape the forces of globalization and improve living
conditions of their people. As industrialized economies turned towards raw material
sources in developing economies, economic growth of the supplying economies
was bolstered. On the other side, witnessing the rapid progress achieved by the
advanced economies, developing and least developed economies have opened their
economies to overseas investment, technology and knowledge. These partnerships
have led to massive cross border trade and investments.
The rise of emerging economies has been well substantiated by the notable changes
in share of global GDP, merchandise trade and foreign investments by different
countries and regions especially over the last few decades. This trend is bound
to continue. Europe is stagnant and recovering slowly. Japan is still mired in near-

4 Theme Paper
recession. The US is recovering slowly but steadily and will take time to entrench
a stable growth path. As a result, contribution of emerging-market economies to
the global GDP and trade is fast increasing.
Realizing the importance of globalization, India embarked on economic liberalisation
in the 1990s, leading to significant rise in foreign investment, foreign technology
and knowledge share. Large-scale computerization and change in India’s education
outcomes helped grow its services, specially the ITeS to what it is today.
Emerging Economies Advance Share in World GDP
There has been a shift in the share of GDP by world’s major economies during
the second half of the 20th century and first half of the 21st century. Realizing the
speed and scale, WTO’s World Trade Report 2014 termed the rise of the developing
world as one of the four major trends that have characterized the last decade.
The report highlighted the rise of seven Asian economies including China, Hong
Kong, Malaysia, Singapore, the Republic of Korea, Chinese Taipei, and Thailand
in recent years. During 1980 to 2008, these economies have seen growth rate of
8% annually.
However, the picture was different in the developed countries. The GDP growth of
the US started slowing down to an annual rate of 2.4% since early 1970s. The scale
and speed of development that Europe and Japan witnessed during 1950s and
1970s due to rapid GDP growth and rise in per capita income concluded for most
of these countries by the 1990s. The annual GDP growth rate of Western Europe
was 4.8% between 1950 and 1972 but came down to 2.1% during 1973 and 1998.
It has further declined in the first decade of the 21st century.
The future projections by various global institutions indicate a sharp rise of the
emerging nations. According to the report ‘Global Development Horizons 2011 –
Multipolarity: The New Global Economy by the World Bank, the fast pace of economic
growth witnessed by six leading emerging economies including Brazil, China, India,
Indonesia, South Korea, and Russia will collectively account for over half of global
growth by 2025. The report says that America’s global share of GDP is expected

Theme Paper 5
to shrink from 25% in 2005 to 19% by 2025 and that of Europe will decline from
23% to 19%. On the other hand, China’s share of world GDP will increase from
7% in 2005 to about 16% by 2025.
Source: World Bank
China
India
Brazil
Russian Federation
Japan
United States
Euro area
Other industrial
Other emerging
Source: World Bank
China
India
Brazil
Russian Federation
Japan
United States
Euro area
Other industrial
Other emerging
An OECD report called ‘Looking to 2060: A Global Vision of Long-term Growth’
projected annual global growth rate of 3% where emerging economies are expected
to grow much faster than advanced countries which are expected to witness
decelerating growth rates. The table below shows the percentage contribution to
world GDP in both 2030 and 2060.

6 Theme Paper
The combined GDP of the two largest emerging economies, China and India, will
surpass that of the G7 economies and will exceed that of the entire current OECD
membership by 2060. Moreover, India’s per capita income will see over seven-fold
increase from its current level. While China will remain the fastest growing economy
until 2020, both India and Indonesia will assume that role after that.
Emerging Economies Scoring High on Trade
The shift in global trade is also an important indicator of shift in global economic
activity. Europe and America enjoyed leadership position in trade till the first half
of 20th century. Japan, South Korea, Germany and China joined the league in the
second half of 20th century following massive economic growth. Though the advanced
economies continue to score high on global trade share, emerging economies are
catching up and are substantially increasing their global trade share.
Global trade saw exponential growth preceding the 2008-09 economic crisis. The
US and European economies were hit hard by recession. This was reflected in the
declining growth of global trade. According to WTO’s World Trade Report, global
Source: OECD Economic Policy Papers No. 3

Theme Paper 7
merchandise trade growth was at 2.2% in 2013, nearly identical to the previous
year’s growth of 2.3%. However, this yearly growth trend is substantially lower than
the average merchandise trade growth of 5.3% recorded during 1993 to 2013. It
was even lower than the 6.0% average annual growth rate achieved during the 20
years preceding the 2008 recession. World trade growth continues to be sluggish
with a growth of 2.1% in the first quarter of 2014.
While the outlook for global trade growth seems to be becoming brighter, there are
however several downside risks. Slower recovery and falling demand in Japan, the
US and Europe is leading to deceleration in global trade growth.
There is a correlation between trade growth and GDP growth. Global trade growth
rate has been significantly better than global GDP growth pace. According to WTO,
while annual average world GDP growth was around 3% over the last decade, the
world merchandise trade growth averaged just over 5% annual rate during the
same period.
Growth in the Volume of World Merchandise Trade and
GDP, 2005-15a:
Source: WTO

8 Theme Paper
The future global trade also looks brighter for emerging economies. The Global
Connections Report published by HSBC in October 2013 covering 23 countries
showed how the participation of emerging economies in global trade could rescue
and balance global growth as the share of advanced economies declines. According
to the report, as barriers to trade are removed by countries and regions realizing the
need of greater transparency and support to boost trade, the global merchandise
trade is projected to grow at 8% per annum till 2030, outpacing the world GDP
growth rate.
As emerging countries are stepping up investment to strengthen their manufacturing
capacity and infrastructure development, trade in infrastructure-related goods is
expected to increase to 54% of total goods exports by 2030, from 45% in 2013.
India’s imports of infrastructure-related goods will increase from 67% in 2013 to
71% by 2030. According to the same report, India will overtake the US by 2020 to
be the largest importer of intermediate goods for infrastructure development. While
China will remain the largest exporter of both types of infrastructure goods, India
will become the third-largest exporter of intermediate goods by 2030.
Change in World Market Share
Source: HSBC Global Connections Report, October 2013

Theme Paper 9
Emerging Markets Attracting More Investment
Foreign investment and technology transfer are two critical priorities for growth
especially for emerging economies. Foreign Direct Invest (FDI) has close proximity
to GDP growth and merchandise trade. The rapid growth in emerging nations is
often due to free and rapid flow of capital and technology. Moreover, FDI flow has
positive correlation with economic growth. While high flow of investments boost
economic activities and thus economic growth, nations with higher GDP growth
and more liberal foreign trade policy attract higher FDI.
The flow of foreign investments has seen gradual rise over the last decade barring
the disruptions due to recessionary pressure first in 2003 and then in 2008 due to
recessionary pressure. This led to rapid economic growth and productivity rise. The
global FDI touched $1,400 billion in 2000 before it fell by 60% in 2003 following
the recession. FDI saw a peak in 2007 when it crossed $2 trillion line but fell by
45% in 2009 following another recession.
Though things started slowly falling in shape by 2014, previous trends have largely
continued with some evidences of weakening in outward investments. OECD figures
show that global FDI flows fell in the first quarter of 2014 before rebounding to
about $325 billion in the second quarter. In Europe, the outward investment in the
first quarter of 2014 was $6 billion only due to a very large transaction in which
Vodafone of the UK sold its interest in Verizon Wireless to Verizon Communications
of the US for a reported $130 billion. It has increased to $20 billion in the 2nd
quarter of 2014. This compares poorly to combined flow of about $92 billion in
the 3rd and 4th quarters in 2013. On the other hand, inward investment went up
to $152 billion compared to $114 billion in the first half of 2013.
Outward FDI in the US was $143 billion in the first half of 2014, substantially lower
than the $193 billion recorded in the first half of 2013. Inward investment in the
2nd quarter of 2014 was $64 billion compared to $57 billion in the 3rd quarter and
$72 billion in the 4th quarter of 2013.
In India, FDI inflows from April, 2014 to September, 2014 reached $21.5 billion as
against $36 billion during full year of 2013-14. FDI into China reached $106.24 billion,
up by 0.7% from January till November, 2014 while the ODI investment touched
$89.8 billion during the same period.

10 Theme Paper
It is quite difficult to draw a direct comparison of FDI flows across countries as
different countries follow different FDI measures. Keeping that aside, the US, Germany,
Japan, Switzerland, and China remain the top sources of direct investment and the
US, China, the UK, Brazil, and Canada continue to be the top destinations.
There are strong linkages between GDP, trade and investment flows. Increase in
foreign investment leads to higher GDP growth and higher GDP growth can attract
more FDI. Increase in investment flow also means greater chance to increase share
in global trade and vice-versa. Increase in trade often becomes an engine for GDP
growth.
Though high-technology remains the preserve predominantly of developed nations,
the above analysis proves that there has been a notable shift in global share of
GDP, merchandise trade and flows of investment among major countries. Europe,
Japan, and the US along with other OECD economies remain leading contributors
in all three areas. But recession has hit these economies hard. During the last two
recessions in 2003 and 2009, the robust economic growth of China, India, Singapore,
Russia, Brazil, South Africa and Hong Kong balanced and supported global growth.
These developments are promoting the efforts of countries and global institutions
to share resources for global growth and development. They are thus calling for
partnerships for ‘Shared New Realities’.
Global FDI Flows From 1999 to 2013 (USD billion)
Source: OECD and IMF. Data for 1999 to 2012 can be retrieved from OECD International
Investment Statistics database.

Theme Paper 11
3. Partnerships for Shared New Realities
Under the theme of partnerships for ‘Shared New Realities’, both the advanced and
emerging economies are looking for new ways to collaborate in order to achieve
common growth. Individual or isolated growth is no longer feasible. The last few
decades have seen some changes. Firstly, the world is no longer dependent on the
growth of advanced economies. Secondly, there is conclusive evidence that isolation
and restrictive trade policies will not help to bring about growth and development.
Thirdly, collaborations and open policies adopted by emerging economies lately are
resulting in robust economic growth. This increasing economic integration among
developed and developing economies is strengthening the need to share common
concerns and resources and develop shared goals.
The first decade of the 21st century saw remarkable progress towards collaborations
for shared new realities. Three important developments are testimony to this fact.
Firstly, the world agreed to replace the G-8 with a more participative G20 forum to
discuss and coordinate economic policies and conduct dialogue on global challenges.
This was a response to the 2007-2009 financial crisis and recognition of increasing
role of key emerging economies. The comprehensive 2014 G20 Brisbane Action
Plan further re-defined the role of the forum.
Secondly, the WTO has attained a new lease of life this year. With India and the
US agreeing on food stockpiling, full and prompt implementation of WTO Trade
Facilitation Agreement struck in Bali last year has made progress. By agreeing to
implement TFA, WTO re-established itself as the single stage platform for world
trade dispute resolutions.

12 Theme Paper
Third, the unmatched popularity and widespread acceptance of the UN Millennium
Development Goals (MDGs) to fight against world’s common challenges is a positive
example of global collaboration.
G-20 Agenda for Shared Development
The reshaping of G-20 has been the biggest development towards a multipolar world
in the 21st century. The 2014 G20 Brisbane Action Plan proved its commitments
towards ‘Shared New Realities’. It has prioritized agendas that matter not only to
the member countries but also to the Least Developed Countries (LDCs). Some of
the areas/sectors and pertinent commitments G-20 adopted at the Brisbane summit
are listed below.
Financing Growth
To lift the G20’s GDP by at least 2.1% by 2018 - equivalent of adding $2 trillion•
to global output
Committed to support recovery and address deflationary pressures when•
needed
Ensure work on infrastructure benefits low-income countries•
To take strong practical measures to reduce the global average cost of transferring•
remittances to 5% and to enhance financial inclusion
Financial Stability Board (FSB) proposal - requiring global systemically important•
banks to hold additional loss absorbing capacity that would further protect
taxpayers if these banks fail
Increased representation of emerging economies on the FSB and other actions•
to maintain its effectiveness.
Trade:
Reforms to facilitate trade by lowering costs, streamlining customs procedures,•
reducing regulatory burdens and strengthening trade-enabling services

Theme Paper 13
To ensure our bilateral, regional and plurilateral agreements complement one•
another, are transparent and contribute to a stronger multilateral trading system
under WTO rules.
Commit to implement all elements of the Bali package and to swiftly define•
a WTO work programme on the remaining issues of the Doha Development
Agenda to get negotiations back on track.
Continue to provide aid-for-trade to developing countries in need of•
assistance
Begin to exchange information automatically among countries by 2017 or end-•
2018, subject to completing necessary legislative procedures
Infrastructure
Global Infrastructure Initiative - a multi-year work programme to lift quality public•
and private infrastructure investment
The G20 Food Security and Nutrition Framework will strengthen growth by lifting•
investment in food systems
Human Capital
Reduce the gender participation gap by 25% by 2025 and to bring 100 million•
women into the work force in G-20 countries
Reduce youth unemployment - investments in apprenticeships, education•
and training, and incentives for hiring young people and encouraging
entrepreneurship
Address informality, structural and long-term unemployment by strengthening•
labour markets and having appropriate social protection systems. Improve
workplace safety and health.
Anti-Corruption
Endorse the 2015-16 G20 Anti-Corruption Action Plan that includes building•
cooperation and networks, enhance mutual legal assistance, recovery of the
proceeds of corruption and denial of safe haven to corrupt officials.
Commit to improve the transparency of the public and private sectors•
by implementing the G20 High-Level Principles on Beneficial Ownership
Transparency.

14 Theme Paper
Taxation
Actions to ensure fairness of the international tax system and to secure countries’•
revenue bases.
Committed to finalize the G20/OECD Base Erosion and Profit Shifting (BEPS)•
Action Plan work in 2015
To prevent cross-border tax evasion, G-20 endorses the global Common Reporting•
Standard for the automatic exchange of tax information (AEOI) on a reciprocal
basis
Will work with member countries to build their tax administration capacity and•
implement the Automatic Exchange Of Tax Information AEOI of developing
countries
Energy Climate Change
Endorse the G20 Principles on Energy Collaboration. Energy ministers to meet•
and report in 2015 on options to take this work forward.
Action Plan for Voluntary Collaboration on Energy Efficiency, including new work•
on the efficiency and emissions performance of vehicles, particularly heavy
duty vehicles; networked devices; buildings; industrial processes; and electricity
generation; and on financing for energy efficiency.
Commitment to rationalise and phase out inefficient fossil fuel subsidies that•
encourage wasteful consumption.
Encourage parties that are ready to communicate their intended nationally•
determined contributions well in advance of COP21 (by the first quarter of 2015
for those parties ready to do so).
During its Chairmanship of the G20 in 2015, Turkey has stated its intention to
implement the 2014 Brisbane commitments with a special focus on Infrastructure,
Food Security (sustainable food systems, food losses and waste), Financial Inclusion
and Remittances. While 2014 agenda was development, Turkey will aim to cover
other crucial areas to ensure inclusiveness in its approach. It will also aim to reach
out to non-G20 countries to communicate that the work of the G20 is relevant for
strong, sustainable and balanced growth for the world economy.
While G-20 growth strategy is expected to boost non-G20 GDP by over 0.5% by 2018,
Turkey will seek to conduct an impact assessment survey of ‘the implementation of

Theme Paper 15
2.1% collective growth on low income developing countries’. In order to promote
private sector engagement and inclusiveness in business, Turkey will attempt to
create G-20 Inclusive Business Principles/Guidelines. Focus areas will include
increasing awareness of successful private sector engagement in development,
local procurement and distribution, affordable products/services, training workers,
access to loans/finance and public-private partnership principles.
UN Global Development Agendas Beyond 2015
In 2000, the UN developed eight international development goals popularly known
as Millennium Development Goals (MDG) at the Millennium Summit and decided
that by 2015,the world would attempt:
To eradicate extreme poverty and hunger1.
To achieve universal primary education2.
To promote gender equality and empower women3.
To reduce child mortality4.
To improve maternal health5.
To combat HIV/AIDS, malaria, and other diseases6.
To ensure environmental sustainability7.
To develop a global partnership for development8.
The MDG goals have a full year to go but the world has made commendable progress
in the respective areas. This commitment of the UN has helped to create massive
awareness in the society. Moreover, this helped non-governmental organisations
(NGOs) to streamline their priorities. It also motivated corporates and other non-
government bodies to dedicate more funds to support the cause.
As a result, global poverty has halved ahead of the 2015 timeframe. About 90%
of children in developing regions now enjoy primary education with substantial fall
in gender disparities. An estimated 3.3 million deaths from malaria were averted
between 2000 and 2012 due to progress in medical interventions. The likelihood of
a child dying before age five has been reduced by 50% over the last two decades
which means that about 17,000 children are saved every day.

16 Theme Paper
India’s achievement in respect of the MDGs is mixed. India ranks well in some
indicators including arresting poverty target, Net Enrolment Ratio in primary
education, sustainable access to an improved water sources, the spread of HIV/
Aids, Malaria and TB. The all-India Poverty Head Count Ratio (percentage below the
national poverty line) has declined by 15 percentage points from 37.2% in 2004-05
to 21.9% in 2011-12.
In respect of some indicators, India is expected to reach close to the target level
by 2015 in sex ratio of girls to boys in schools. At an annual reduction by 3
percentage points in the Under Five Mortality Rate during the last 3-4 years, India
is expected to reach close to the target of 42 per 1000 live births by 2015 from its
52 per 000’ live births in 2012. The concerned areas are share of women in key
decision making platforms.
Keeping in mind the success achieved in MDGs, the Secretary-General constituted a
27 member UN System Task Team to design Global Development agendas beyond
2015. The Secretary-General has indicated to propose six agendas at the special
summit on sustainable development to take place in September 2015.
They include (a) Dignity: To end poverty and fight inequality; (b) People: To ensure
healthy lives, knowledge and the inclusion of women and children; (c) Prosperity:
To grow a strong, inclusive and transformative economy; (d) Planet: To protect our
ecosystems for all societies and our children; (e) Justice: To promote safe and
peaceful societies and strong institutions; and (f) Partnership: To catalyse global
solidarity for sustainable development.
This integrated set of six priorities is provided to help frame and reinforce the
sustainable development agenda beyond 2015. The change of priorities proves
that the approach beyond 2015 is progressive in nature. Initial MDG goals were
preventive. The new agendas are moving towards development for a world of
prosperity, equity, freedom, dignity and peace.
The UN now aims to redesign its development agendas beyond 2015. The UN
System Task Team is conducting a survey called My World Survey which has 14
priorities in its list:
A good education¾¾
Better health¾¾

Theme Paper 17
Better job opportunities¾¾
An open and responsive government¾¾
Affordable and nutritious food¾¾
Protection against crime and violence¾¾
Access to clean water and sanitation¾¾
Support for people who can’t work¾¾
Equality between men and women¾¾
Better transport and roads¾¾
Reliable energy at home¾¾
Freedom from discrimination and persecution¾¾
Political freedoms¾¾
Protecting forests, rivers and oceans¾¾
Phone and internet access¾¾
Action taken on climate change¾¾
The survey asks participants to vote top six priorities according to them. Based on
this survey and recommendations from the task force, it will set its new priorities
beyond 2015. The change of priorities proves that the approach beyond 2015 is
progressive in nature. Initial MDG goals were preventive. The progressive nature
of the new agendas also proves its success over the present MDGs and moving
ahead towards development agendas for a world of prosperity, equity, freedom,
dignity and peace.
WTO Towards a Multilateral Trading System
The Uruguay Round and its successful culmination in formation of a new global
trade body called World Trade Organisation (WTO) in 1995 raised a new ray of hope
for large number of poor and small countries, who were never active participants in
multilateral trading system. Their optimism got further boost when WTO members
launched a new Doha round of trade negotiations with an explicit mandate to address
the development concerns of developing and poor countries. However, their hope

18 Theme Paper
and expectations were short-lived as Doha round hit one roadblock after another,
taking unusually long time to conclude.
The Doha round addressed new agendas by slashing barriers and subsidies in
farming, further trade liberalization to make globalization more inclusive and help
the world’s poor, and more assistance to developing countries. However, Doha
Round remained uncertain until the Bali Package was adopted in December 2013
by the Trade Ministers of WTO Members. This was practically the WTO’s first major
success under the ongoing Doha round of trade negotiations.
According to the United Nations Conference on Trade and Development (UNCTAD),
the average cross-border customs transaction involves 20-30 different parties, 40
documents, 200 data elements (30 of which are repeated at least 30 times) and
the re-keying of 60–70% of all data at least once. This is not only burdensome
but also costly. The cost of complying with customs formalities often exceeds in
many instances the cost of duties. That is why global institutions are calling for
harmonization of documents, streamlining of customs procedures (such as pre-arrival
clearance), and transparent flow of information on what tariffs apply to specific
products or rules of procedure.
Some recent developments brought the WTO closer to success. The WTO Trade
Facilitation Agreement (TFA) protocol was finally adopted following India and the
US resolved their disagreements on food security issues in November, 2014. Once
two-thirds of the WTO’s Members ratify the protocol, TFA will come into force,
although the path may be complex. Trade ministers at the Ninth African Union
Conference of Trade Ministers held in Addis Ababa, Ethiopia in December, 2014
reiterated the concerns of LDCs. The Ministers requested WTO to prioritize work
on issues regarding duty-free and quota-free market access, Preferential rules of
origin and Cotton. They sought clarity on waiver decisions by developed countries
and indicate sectors and modes of supply where they intend to provide preferential
treatment to LDC services and service suppliers.
Though full implementation has a long way to go, the incremental steps forward are
helping WTO to create a conducive environment towards a multilateral trading system
by promoting multilateral trade and removing tariff and non-tariff barriers. All these
developments are also indications of the journey towards ‘Shared New Realities’.

Theme Paper 19
4. Rise of Regional Economic Integration
Today regional economic collaborations are taking economic relations to new
heights. Regions are making regional trading blocs for mutual gains. While bilateral
relations remain relevant for most countries, regional economic blocs like NAFTA,
EU, SAARC, ASEAN, etc. have enhanced economic activities exponentially and
emerged as bigger and better decision making platforms. The concern of smaller
member countries regarding economic dominance by larger economies was eclipsed
by the rise of many successful blocs which benefited them equally.
Transatlantic Trade and Investment Partnership (TTIP) is another proposed free
trade agreement between Europe and the US expected to be finalized by the end
of 2015. They together constitute 60% of world GDP, 33% of global trade in goods
and 42% of world trade in services. While the current trade volume stands at $964
billion, Europe believes that if it is signed, the treaty would boost trade by as much
as 50%. Even the present American foreign investment in Europe is three times of
its investment in Asia. Likewise, the EU investment in the US is eight times more
than its combined FDI in India and China.
In addition, 12 countries on two sides of the Pacific Ocean comprising Australia,
Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the
US and Vietnam are in talks to create another gigantic and powerful trading bloc
called the Trans Pacific Partnership (TPP). TPP represents 37.5% of world GDP ($28
trillion), 11.2% of the world population and a quarter of world trade. The Regional
Comprehensive Economic Partnership (RCEP) draws equal world attention. With

20 Theme Paper
ASEAN at the core, RCEP brings Australia, China, Japan, Korea, India and New
Zealand under one large trading bloc. As the agreement is scheduled to be signed
by 2015, it would bring 45% of the world’s population and $21.3 trillion global GDP
in a single market.

Theme Paper 21
5. How Should India See the Rise of Trading
Blocs
India certainly cannot underestimate or overlook the rise of these and dozen
other regional economic collaborations. It needs to take a considered view on the
implications of the emergence of these blocs. It should adopt a balanced approach
and calibrated strategy to expand economic relations with each of these blocs.
Each regional bloc promises to bring unique advantages for India.
India’s economic relations with ASEAN need continued special focus after the
implementation of the India-ASEAN Trade in Goods Agreement and the upcoming
agreements on services trade and investments. India’s trade with ASEAN has been
growing at a steady pace over the past couple of years. India’s export to the
ASEAN region witnessed a Compound Annual Growth Rate (CAGR) of 13% during
2009-10 and 2013-14. India’s imports witnessed a CAGR of 10% during the same
period. 2010-11 stands out in particular as both exports and imports witnessed a
massive jump. This can probably be attributed to the implementation of the India
– ASEAN FTA.
India needs to pay special attention at its trade relations with the RCEP. In spite
of the fact that India is a member country of RCEP, India has a trade deficit of a
whopping $63 billion which certainly raises some serious concerns. While the Indian
imports are at $125 billion (28% of total Indian imports), its exports remain lower
at $62 billion (20% of its total export).

22 Theme Paper
For the first time, RCEP will bring two largest emerging economies India and China
into one trading bloc. For a very long time, Indian exporters are facing Chinese
protectionist policies. RCEP would push towards lowering trade barriers which
would have positive impact on the $35 billion trade deficit exists between India and
China. While Chinese firms enjoy access to Indian markets, Indian firms still don’t
have the right push to venture Chinese markets. Coming under one FTA umbrella
can boost it.
India already has trade agreements with many of these blocs as well as member
countries. India has agreements with ASEAN, Japan and Korea. It is in negotiations
with Australia for an FTA. India’s foresighted approach would not only give it access
to the vast global market for its products and services but also provide balanced
and diverse import options apart from access to technology and investment.
India’s trade with TPP member countries totaled $148 billion during the period of
2013-2014 which comprises India’s exports worth $76 billion (24% of cumulative
exports) and imports at $72 billion (16% of the cumulative imports). TTIP will remain
a special trading partner as its export is heavily dependent on services export. India’s
trade with TTIP touched $163 billion. While India’s export value reached $91 billion
(about 29% of total exports) and import at $72 billion (16% of total import).
To be able to leverage forthcoming mega-trade agreements, India needs to initiate
massive economic reforms internally. Unless the economy is ready to compete
with the external business environment, India would not be able to meet its
growth potential to the fullest. India should relentlessly strive for manufacturing
competitiveness by undertaking crucial reforms like infrastructure development,
internal tax reform, boosting entrepreneurship, reducing transaction costs, skill
development programmes and others.

Theme Paper 23
6. State of the Indian Economy
The strong government has ignited hopes and excitements. Investors have driven
markets to new highs, believing in the compelling narrative of the India growth story.
In the last six months, the government is making a concerted effort for enhancing
the attractiveness of India as an investment destination. Efforts have been made
to improve the ease of doing business in India by measures such as digitization
of approvals and clearances, eliminating unnecessary laws and regulations and
making our policies transparent and predictable.
Several policy changes have been proposed. Restrictions on foreign direct investment
have been eased in key areas like railways, construction, defence and insurance.
The idea is to expand the engagement of overseas investors in the Indian economy.
Problems that had emerged in the fuel sector are being sorted out on an urgent
basis so that non-availability of power does not become a constraint to growth.
The government is following a multi-pronged strategy of improving access to fuel
supply, improving the bankability of projects in the power sector and improving the
electricity mix with greater focus on renewable energy sources.
Statistics provide a positive economic outlook. Despite the GDP slowing down
to 5.3% in the second quarter of the current fiscal (2QFY15) from 5.7% in the
previous quarter, the first-half GDP figure of 5.5% did seem to indicate that growth
has sustainably bottomed out. Deceleration in the second quarter was on expected
lines, and growth could have slipped further if it was not for surprisingly healthy
performances by agriculture and government spending components. The two key

24 Theme Paper
enablers of growth, viz, industrial output and investment spending, however, continued
to disappoint. The H1 growth at 5.5% has placed the economy on track to achieve
our expectation of full year growth of 5.5-6.0% given that the second half is likely
to be better. However, the mix in growth needs to change in favour of investments
going ahead in order to move to a sustained path of higher growth trajectory.
After remaining subdued for the last two months, industrial output growth accelerated
to 2.5% in September 2014 from 0.4 and 0.5% in July and August 2014 respectively.
After contracting for two consecutive months, manufacturing output improved to
2.5% in September 2014. Capital goods output too moved to the positive territory
after languishing in the red for the last two months. On a cumulative basis,
industrial output grew by 2.8% in the first half of the current fiscal as compared
to 0.5% in the same period last year. The sequential momentum as indicated by
the movement in the seasonally-adjusted month-on-month series too showed that
industrial output growth improved in September 2014 (from -1.0% in August 2014
to 2.0% in September 2014).
WPI based inflation moderated sharply to 5 year low of 1.8% in October 2014 from
2.4% in the previous month. The fall in WPI inflation was attributable to all round
moderation in all its sub sectors. CPI inflation too fell to 5.5% in October 2014 from
GDP at factor cost (y-o-y %)
Source: CSO

Theme Paper 25
6.5% last month driven by a fall in food inflation (fell to 5.6% from 7.7% in September
2014). Core CPI inflation remained broadly unchanged – falling slightly from 6.0%
last month to 5.9% in October 2014. This is the lowest core inflation recorded since
the beginning of the new CPI series. A significant decline in crude oil prices globally
contributed to the downward price pressures in transport and communication and
fuel CPI inflation. The moderation in both WPI and CPI inflation would give RBI the
necessary legroom to cut interest rates in its forthcoming monetary policy in order
to spur demand conditions in the economy.
The fiscal deficit in the first seven months of the current fiscal (April-October)
stood at Rs 4.75 lakh crore which translates into 89.6% of the budgeted figure
for the entire financial year. The jump in fiscal deficit was underpinned by rise in
expenditure growth and contraction in revenue growth. However on a monthly basis,
fiscal deficit declined by 19.4% to Rs.369.25 billion in October 2014 as compared
to the same month a year ago. This was the lowest level of the deficit in the last
three months. Both, expenditure and non-debt receipts declined on a y-o-y basis
in October 2014. However, a sharper fall in expenditure vis-a-vis non-debt receipts
led to the contraction in the fiscal deficit.
The government would need to tighten its purse strings and boost revenue growth
in order to meet the fiscal deficit target for 2014-15. To be sure, in order to lower
the fiscal deficit to 4.1% of GDP in 2014-15, the government is betting on both
revenue and expenditure growth of 12.9% as compared to the revised estimates for
2013-14. In order to achieve the revenue growth target, tax revenues, which form
around 80% of total revenues, need to prop up. Moreover, the nature of expenditure
compression needs to be kept in mind as trimming of capital expenditure will further
slow down the economic recovery process.
The state of Indian Economy can also be assessed by the CII’s Business Confidence
Index (CII-BCI). Indicating a sharp improvement for the second consecutive quarter,
the CII-BCI for July-Sept quarter FY15 has shot up to 57.4, up from 53.7 during
April-June quarter and 49.9 in Jan-March quarter this year. During the same quarter
last fiscal, the index had touched the all-time low value of 45.7. A score above 50
indicates positive confidence while a score above 75 would indicate strong positive
confidence. On the contrary, a score of less than 50 indicates a weak confidence
index.

26 Theme Paper
Continuing improvement in the index second time in a row can mainly by attributed to
the determination shown by the new government at the Centre to provide an impetus
to growth along with reviving the ‘feel good’ factor. The positive developments like
pick up in global economic recovery, reduction in current account deficit, buoyant
foreign capital inflows, stabilising rupee and moderating inflation have also been
supporting the upward march in business confidence index. In order to capitalize
on the early signs of improving business sentiments, it is imperative that this
momentum is maintained going forward.
The 88th Business Outlook Survey is based on responses from over 150 industry
members. Majority of the respondents (44 per cent) belong to large-scale sector,
while medium scale companies comprise another 12 per cent. Around 38 per cent
and 6 per cent respectively are from the small-scale and micro firms. Further, 60
per cent of the respondents are from manufacturing and 36 per cent are from the
services sector. The respondents in the survey were asked to provide a view on
the performance of their firm, sector and the economy based on their perceptions
for the previous and current quarter. The CII-BCI is then constructed as a weighted
average of the Current Situations Index (CSI) and the Expectation Index (EI).
The Finance Minister has assured that the government has just begun a long journey
of reforms. This would involve many areas including land, labour and taxation which
have emerged as key bottlenecks in the process of industrialization. Finding solutions
that meet the expectations of all sections of society is a challenge, for example in
areas such as land acquisition, mining, and others. Yet, this government has taken
up the challenge and encouraged state governments to go ahead with reforms.
It is encouraging that these issues are being addressed for the first time. Although
progress may seem to be slow at times, the direction remains constructive. The
forthcoming Union Budget is likely to be the next stepping stone for policy changes
including an overhaul of the taxation structure and restructuring of public sector
units. The indirect tax structure in India is fragmented across states and needs to
be unified under a single Goods and Services Tax (GST). Under direct taxes, the
government is working to make its transfer pricing regime more transparent.
In the infrastructure sector, plans have been revived to build new ports and airports,
lay networks of roads and gas pipelines and construct 100 new smart cities. One

Theme Paper 27
major project being developed by the Government of India is the Delhi-Mumbai
Industrial Corridor (DMIC). It is being developed as a global investment and
manufacturing destination supported by world class infrastructure and enabling
policy framework.
Greater connectivity not only through roads and highways but also through the
Internet and broadband makes it possible to develop newer markets. The Jan Dhan
Yojana, which has been launched in mission mode to provide bank accounts to the
unbanked is expected to improve access to credit, insurance and pension facilities.
A major initiative to improve India’s competitiveness is the Make in India program
launched by the Prime Minister by which he has invited global and domestic
manufacturers to set up facilities in India to service both the domestic and export
markets. India has a vast pool of labour that can be employed in the manufacturing
sector, which has a high propensity to absorb semi-skilled labour. It is a young
country with over 60% of the population in the working age group of 15-59 years.
Between now and 2025, India will have to create 220-250 million jobs if it has to
exploit its demographic dividend.
A key advantage for India is that it remains competitive in terms of cost of
doing business. Multinationals in a range of sectors including consumer
products, automobiles, capital goods, IT and IT enabled services, healthcare and
pharmaceuticals, banking and financial services have made India their preferred
destination. A large pool of skilled professionals is available in India at relatively
lower cost. For example, it is estimated that costs in the country’s IT services sector
is approximately 3-4 times less than in the US.
Similarly, in the manufacturing sector, businesses gain from the easy availability
of raw materials and the relatively inexpensive workforce, the ingredients for a
sound manufacturing ecosystem. The government is creating manufacturing zones
with quality infrastructure and a facilitative regulatory regime. With 100% FDI in
manufacturing, global players such as Toyota, Ericsson and Samsung are setting
up their manufacturing facilities in India.
Additionally as India becomes more integrated with the rest of the world with each
passing year, international trade has become very important today. It accounts for over
40% of India’s GDP compared to about 20% ten years ago. Hence, strengthening

28 Theme Paper
trade and commerce with every part of the world is important to us. In particular,
greater integration with the East Asian region is imperative for delivering the growth
that we seek.

Theme Paper 29
7. Domestic Reforms Would Take India Forward
Greater participation in global trade is pertinent for India’s robust economic growth.
Major economies of the world have been adopting manufacturing led growth as
manufacturing can create large-scale jobs and promote inclusive growth. The
historical electoral mandate of the present government raised some hopes. In his
Independence Day Speech, Prime Minister Modi announced a renewed focus on
manufacturing. “Come, make in India” was his clarion call. India has the capacity to
manufacture a diverse range of products such as electricals, chemicals, automobiles,
processed food products, pharmaceuticals, paper, satellites and submarines amongst
a whole host of other products.
For years, Indian manufacturing has been awaiting a major boost. Our share of
global manufacturing has grown from 0.9% to 2.0% during over last few decades
while our GDP share has grown from 1.2% to 2.5%. Despite this encouraging
growth, the relative share of manufacturing in the Indian economy has remained
unchanged, dashing hopes of an economy based on manufacturing-led growth. In
this context, the recently announced ‘Make in India’ policy by the new government
aims to push manufacturing growth to the next level.
India saw its foreign trade expand remarkably in the past decade. Although, the
pace of exports growth was punctuated twice by sharp slowdown in world economy
during 2008-09 and during the last two fiscal years, India’s trade prospects have
continued to grow over time. In fiscal year 2003-04, India’s exports were worth $64.0
billion. By 2013-14, they more than quadrupled to $312.6 billion. In the current

30 Theme Paper
fiscal, cumulative exports have reached $189.8 billion in the first seven months of
the fiscal (April-October 2014) as compared to $181.2 billion in the same period
last year, thus registering a growth of 4.7%. Going forward, the government’s new
foreign trade policy (2014-19) to rev up exports is expected to be put in place by
early next year and will have a strong thrust on manufacturing to bring it in sync
with the Prime Minister Narendra Modi’s ‘Make in India’ goal.
India sets an ambitious target that its manufacturing sector contribution to GDP
should reach 25% by 2030, create 10 million jobs each year and to have 5.2-6.1%
of world merchandise trade share. To achieve this target, manufacturing sector needs
11% growth rate per year. This is certainly not an easy task and India would need
to undertake domestic reforms as well as greatly strengthen its collaboration with
countries across the globe to meet the target.
Among the major reforms initiated by the new Government are a slew of new
campaigns and missions including:
Make in India to increase manufacturing presence in the GDP with special focus•
on attracting FDI
Digital India for delivery of major government services online and to extend the•
reach of the digital platform to each village
Prime Minister’s Jan Dhan Yojana to enhance financial inclusion•
Swachh Bharat Abhiyan to inculcate the systems and strengthen institutions•
towards a clean India
Smart City project to create 100 cities with smart infrastructure•
Clean Energy Mission to expand India’s renewable energy mix•
Shram Suvidha to facilitate labour reforms and administration•
Skill development through a new Ministry of Skill Development and•
Entrepreneurship

Theme Paper 31
Make In India – An Exciting New Initiative
The Indian manufacturing sector achieved high rates of growth since the turn of
century at close to 8.2 per cent annually till 2011-12. Since then, India has experienced
two years of slow growth, and this year, we are seeing tentative recovery.
However, manufacturing has emerged as the new buzzword in India today, after the
launch of the seminal Make in India campaign launched by Prime Minister Modi on
25th September. While manufacturing has always received high policy attention, a
new spin has been given to the endeavor by the new government.
There are several key pillars of the Make in India campaign. The first is fast-track
movement on industrial corridors, National Investment and Manufacturing Zones or
NIMZ and industrial parks which are expected to provide a complete and holistic
ecosystem for manufacturing.
A special authority for industrial corridors is being established. The identified
industrial corridors include Delhi-Mumbai, Chennai-Bengaluru, Bengaluru-Mumbai,
Vishakapatnam-Chennai and Kolkata-Amritsar. 17 NIMZ are on the drawing board,
and a renewed effort has been made by the PM personally to attract investments,
particularly FDI, into these dedicated manufacturing regions.
These industrial corridors will be linked to ports for rapid evacuation of goods
to designated markets. For this, the modalities for port development and railway
connectivity are also being addressed.
The second is to considerably improve and facilitate the business environment. The
architecture of procedures and regulations is being addressed to eliminate outdated
laws and regulations, shorten processes and place them online, and simplify forms
and use them for multiple purposes. The e-Biz platform launched shortly to bring
many procedures under the digital medium. Industrial Entrepreneur Memorandum
and Industrial Licenses for particular areas have been relaxed.
The Digital India mission would be synchronized with the Ease of Doing Business
indicators for industry so that a single window online platform is created. The e-Biz
digital platform is already underway, and the government has commenced the task

32 Theme Paper
of placing forms and applications online. For example, Industrial Entrepreneurship
Memorandum forms are accessible 24x7.
The third pillar is to attract FDI as a key participant in the manufacturing process.
Enhancing FDI limits in the defense sector and some segments of railways is a
major step forward. FDI is also expected to be a significant contributor to the Smart
City initiative which would be part of the manufacturing endeavor and for this, FDI
in real estate has been liberalized.
Four, labour reforms, skill development and research and development are also part
of this mission. The labour inspection system for SMEs has been rationalized to avoid
stressful inspections. Under the skill development endeavor, a new ministry is taking
charge of the mission and is addressing issues such as curriculum development
and upgradation of industrial training facilities.
In addition, the government has announced several new initiatives that present many
new opportunities for global businesses. The Swachh Bharat Abhiyaan for sanitation
and cleanliness offers potential for sewerage and waste management equipment
as well as construction equipment. The Clean Energy mission with a special focus
on renewable energy and energy efficiency opens the doorway to manufacturing
inputs and green goods. The water conservation program under the Clean Ganga
campaign likewise will be scaled up and require many more manufactured items.
Digital India promises to bring transparency and good governance. It also aims
to connect India by high-speed internet networks. Broadband connectivity will be
used to revolutionise health and education especially the rural India by broadband
enabled education in rural areas and telemedicine for the poor. A research paper
by McKinsey shows that Digital India could boost India’s GDP up to $1 trillion by
2025. The other social reform initiative called ‘Swachh Bharat Abhiyan’ also aims
to improve cleanliness of the country and boost tourism.
PM Modi’s ambitious project of financial inclusion is called the Pradhan Mantri
Jan Dhan Yojana (PMJDY) which provides zero balance bank account to Indian
households with no bank accounts. According to government figures, 85 million
accounts have already been opened under this scheme, which also offers credit
facilities and health insurance, and the target has been enhanced to 100 million
by end of January, 2015.

Theme Paper 33
A landmark reform has recently taken place in the introduction of the Goods and
Services Tax (GST) to replace the VAT system of indirect taxes. After many years
of deliberations, the central and state governments have agreed on the model
of the tax that would retain the federal character of the country while also make
it a single market. The relevant Constitutional Amendment Bill was introduced in
Parliament in December 2014, kick starting the process of introducing GST at
central and state levels to subsume most other indirect taxes, reduce administrative
procedures at state borders, and simplify tax payment. Widely touted as the single
most important reform measure in the last decade, GST represents a huge success
for the new Government and is expected to inject a boost of 1.5% points to India’s
GDP growth rate.
Path for Economic Reforms
However, to make India a manufacturing hub and economic powerhouse, it has to
initiate systematic reforms in varied sectors. Some of the areas that Government
has focused attention on include:
Labour Reforms: The launch of the Shram Suvidha portal has been a key initiative
to start the procedure of labour reforms. This portal aims to facilitate filing of
labour returns and make labour inspection more transparent, particularly for smaller
enterprises. In addition, the government needs to introduce a dialogue on labour
reforms expeditiously. Other reform areas include simplification of procedures, flexible
working shift for women, overtime work provisions, redefining small establishments
and most importantly flexibility in engaging contract labour in the workplace.
Focus should be given to improve productivity, easier compliance mechanism and
incentivizing scale of production.
Attract Investments: Separate strategies should be formulated to attract both
domestic as well as foreign investors. Unless domestic investors show confidence
investing in the manufacturing sector, foreign investors will remain speculative.
Critical areas of reform concerns include taxation, competitive regulatory efficiency
and promoting attractive zones for FDI. The Finance Minister has assured investors
that the government is working towards an Indian tax system that is stable, simple,
predictable and non-adversarial.

34 Theme Paper
Ease of Doing Business: The Government has committed to elevating India’s
ranking in the World Bank Doing Business Index from current 142 to 50 within
three years and is addressing multiple areas to ensure this. Some areas that need
attention are land acquisition, procedures for starting a business, payment of taxes
and trading across borders.
Infrastructure: It is perhaps the most important concern for India currently. India
needs to aggressively build basic transport infrastructure – Railways, roadways and
waterways. Energy should be made cost competitive. Government should encourage
greater private sector participation in infrastructure development. Clear focus should
be made over developing export-oriented infrastructure. New PPP projects should
be implemented to accelerate construction of rail and road connectivity to ports.
Ports are important centres for trade. Hence, enough attention should be paid over
ease of port administration.
Innovation Technology: RD investment is one of the key development areas.
SMEs should be encouraged heavily to boost RD investment. Active participation
of Indian SMEs is less than 10% of the total RD investment India should promote
and Incentivize patent commercialization.
A significant innovation of the ‘Make in India’ call by Prime Minister Narendra Modi,
given on August 15, was the addition of ‘Zero Defect, Zero Effect’. This translates
into a manufacturing mission that is high on quality as also environmentally
sustainable. In fact, the two goals are complementary - a nation’s development is
sustainable only when the producers of products and services deliver highest levels
of quality, at lowest cost, most efficiently, with minimum environmental impact and
most responsible use of resources.
A range of areas need to be addressed to make industry competitive and
quality-compliant. The use and adoption of proven and time-tested quality tools
and techniques, green technologies, management systems, excellence models,
fundamental concepts and innovative approaches, and coordinated and time-bound
processes using a defined roadmap with clear outcomes will be some of strategies
that Indian industry would need to deploy. Industry would need support in terms
of training, consultancy and advisory services that would assist firms in adopting
these proven methodologies. Multiple modes including awareness dissemination,
personalized interventions, audits, assessments and cluster mode would be required
to achieve the twin goals and build necessary internal capacities and capabilities
for vibrant and sustainable enterprises.

Theme Paper 35
8. Preparing for A New World
This is an exciting time for India and an interesting period for the world as a whole,
poised as it is on the cusp of a renewed thrust towards growth, development,
trade and global partnerships. It is a certainty that India would play a prominent
role on the global economic stage as a leading emerging economy, rich in talent
and resources and willing to drive partnerships with all regions and countries of
the world. Indeed, India’s own resurgent path to development opens up many new
horizons for the world as 1.2 billion consumers and 500 million workers, two-thirds
of them under the age of 35, enter more forcefully into the global platform.
As India embarks on its new growth path, growing multilateral and multidimensional
economic collaborations between nations and regions are not only bringing multiple
benefits to the world but also redefining the Global Value Chains. This new era of
globalization gave birth to the rise of multinational enterprises (MNEs). According to
UNCTAD, there were just 7,000 MNEs in 1969. The number has gone up to 111,000
in 2013 (16 times increase). According to WTO, the newest wave of integrationist
technologies like containerization, air freight, telecommunications and informatics is
leading to end of the need to perform most manufacturing stages near one country
to another. As a result, the cross-border-intra-firm trade between MNEs and their
affiliates gained largest share in international trade in goods and services.
Global reach of MNEs allows them to conduct different business activities like
research, development, design, assembly, production of parts, marketing and
branding activities in many different countries around the world. These global value
chains are offering different opportunities to emerging economics.

36 Theme Paper
Moreover, global economic collaborations also lead to technology and knowledge
transfer. Research shows that more than two-thirds of growth in emerging markets
arises from adopting technology, and acquiring knowledge from the advanced
countries. The GDP per capita gap between the advanced and emerging economies
reflects the gap in the technology levels, capital intensity, human capital and skills.
Thus, emerging countries including India should adopt innovative approaches to
harness available knowledge, technology and innovation. They will have to engage
all stakeholders like the private sector, civil society, academia, government institutions
and global institutions. As emerging countries assume a more defined role with
time, the world will face new challenges to ensure sustainable shared development.
According to OECD, education and productivity will be the main drivers of future
growth. Thus, these should be the policy priorities worldwide.
In this era of ‘Shared New Realities’, the world would also like to see an active
engagement and collaboration with India and stimulate discussions among key
stakeholders - political, institutional, business, media and academia - on the way
forward by looking at the best strategies for both developed and developing
economies to encourage and build new bridges which foster balanced and equitable
growth.

Partnership Summit Theme Document January 2015

Partnership Summit Theme Document January 2015

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