Speech by External Affairs Minister at the Future of Asia Conference organized by Nikkei

Thank you.
Mr. Naotoshi Okada, Nikkei Chairman & Group CEO,
Mr. Tsuyoshi Hasebe, Nikkei President & CEO
Distinguished Guests, Ladies and gentlemen,

1. I have great pleasure in addressing the 26th ‘Future of Asia’ Conference organized by Nikkei on shaping the post-Covid era with a specific relevance to Asia’s role.

2. A year and a half ago, as the enormity of the Covid-19 pandemic dawned on the world, we were truly confronted by a black swan event. Since then, even though we may have addressed some facets of a very complex challenge, it continues its devastating course across geographies. We, in India, are going through a particularly difficult situation right now. Understandably, the world’s attention is focused primarily on the public health response. The economic consequences of the pandemic were ofcourse immediately felt, though its social ones are now also starting to be realized. What perhaps is yet to be fully comprehended is its long-term impact on the global order, including on the future of Asia.

3. How is the Covid-19 reshaping the world? Amongst others, by changing the perceptions and calculations of nations about each other and the world. Specifically, by:

(i) Bringing out the value of trust and transparency and the importance of reliable supply chains,
(ii) Heightening risk aversion in a world now clearly more insecure and encouraging strategic autonomy to address over-dependence,
(iii) Focusing on the need to create greater global capacities so that pandemic-scale challenges are more effectively met, and
(iv) By doing so promoting decentralized globalization and establishing resilient supply chains to de-risk the world economy.

4. This pandemic may be the most serious in living memory; but it should be seen as a recurring challenge and not as a one-off. It demands international cooperation on a scale that could not have even be conceived of earlier. No national capacity, however large, can be adequate. And just overflows from such capacities are clearly not enough to address global needs. Even a collective response, by itself, could fall short if it is just an aggregate of the present capacities. What we will now have to conceptualize is re-engineering the way the world works to prepare for and mitigate such cataclysmic events. Covid-19 has certainly triggered debates on issues like supply chains, global governance, social responsibility and even ethics. But for many of us gathered here today, it equally encourages an objective assessment of the contemporary world so that we are better prepared for tomorrow.

5. As nations contemplate the world, there is no question that Covid-19 has moved the needle in the direction of risks as opposed to opportunity. This is reflected in national security acquiring a more expansive definition. In the past, defence, politics and intelligence drove calculations, with some extrapolation into domains like resources, energy or technology. With some notable exceptions, its demands were balanced out by the requirements of global exchanges, economic efficiency and perhaps by social habits. These trends, in fact, became stronger as the globalization mantra took deeper root. The pandemic, however, saw capabilities leveraged, commitments dishonoured, supply chains blocked, logistics disrupted, and shortages created, with all the accompanying anxieties. When this applied to PPEs, medicines or ventilators, we all woke up to health security. Those who saw their essential supplies under threat now realized the value of food security. When economies slowed down due to material disruptions, we now understood the need for manufacturing security. Call it buying nationally, middle-class concerns, dual circulation or self-reliance, there is no question that many polities are seeking to hedge against excessive exposure internationally.

6. In parts of the world previously more sanguine about their own globalization, the concept of strategic autonomy has started to gain more traction. The efficiency of others may have strengthened bottom-lines in good times; they are now seen as too vulnerable in difficult ones. Disruptions also raised natural concerns about long-term reliability and resilience. In many areas, it became apparent that the global economy was dangerously dependent on specific production centres. Even the world of services is understanding the consequences of over-reliance on limited sources. Whether it is tourism or travel, mobility or off-shoring, the value of multiplicity and redundancy is realized more than ever before.

7. The nature of the Covid experience has also brought to fore concerns of trust and transparency. Opacity can no longer be overlooked; it has real implications for the rest of the world. It was bad enough to be confronted with shortages and disruptions; worse that they could become pressure points. There are also worries that the financial distress caused by the pandemic could lead to new vulnerabilities. Consequently, strategic autonomy is now being debated as greater self-sufficiency, stronger partnerships and multiplicity of options – all of which are perceived as integral to risk mitigation. These ofcourse could have geo-economic implications in the days ahead.

8. Behavioural aspects have also played their part. Stresses induced narrower definitions of self-interest and departures from collective endeavours. Few practised what they preached; some even stopped preaching altogether. Inadvertently, insights emerged on the interplay of culture, interests and values. Pluralistic societies remained more engaged with the world and international solidarity was stronger in the South. Those who saw the world also as a work-place rather than just a market-place had a deeper interest obviously in remaining connected.

9. Given that interests are the primary driving force, global outlook of nations reflects their exposure to global supply chains. This holds true as much for priorities like vaccine production as for the larger economic routine. But somewhere, there are factors beyond comfort and gains at play. An outlook that envisages the world as a family - where exceptionalism is not the main prism - will encourage a shared approach. And that is important because the pandemic is a global challenge that requires nothing less than global solutions. If its overall result is to compel us to approach the big issues of our time with greater unity and cohesion, it may well have done us more than a small favour.

10. Changes within societies are also important to recognize. Many societies – and I can certainly speak for India in this regard – have discovered the real potential of the digital in this process. Whether it was in terms of government or business or indeed education and health, the digital medium helped provide better and more effective solutions. Few believe that they will come through the Covid experience unaffected in their decision-making or indeed in their debates.

11. But traumatic as it has been, the essential realities of our times cannot be denied. Our globalization is deep and pervasive and will continue to shape activities and strategies. What the Covid has brought out are some of the particular risks of its current incarnation. The task before us is therefore to de-risk that, even while pursuing other objectives, including rapid economic recovery. In doing that, we should take into account that this is both a more multipolar world and a more rebalanced one. In plain words, that means more players and greater capabilities whose full potential needs to be aggressively explored. It is only then that we can strengthen global resilience and confidence. Clearly, that means de-centralized globalization, with multiple supply chains and more engines of growth. It is only with such redundancy that the world can face the next pandemic better than we are doing the current one.

12. Making that happen requires decisions, initiatives and consultations at many levels. India, on its part, can help strengthen and de-risk the global economy through more effective partnerships. With Japan and Australia today, we are working on a Supply Chain Resilience Initiative. Where the Quad arrangement that also involves the United States is concerned, its agenda today covers vaccine collaboration, critical and emerging technologies, semi-conductors, supply chains, critical materials and ofcourse connectivity, amongst others. Recent Indian summits with the European Union and the United Kingdom, that saw advancement on FTAs, are also noteworthy in that regard.

13. Meeting the health and medical requirements of the world effectively requires a mature recognition of the global nature of the underlying supply chains. Barring a select few, it cannot be addressed purely nationally and in fact needs a collaboration of a very different order. The answer to the pandemic challenge is to expand and smoothen global flows, while creating confidence that its outcomes are for the benefit of the entire world.

14. Better international cooperation can also be facilitated by improved national capacities. So, if India is to make a real contribution to Asian and global economic recovery, it can start by helping itself. Even while the Covid-19 was ongoing last year, bold reforms were undertaken in industry, agriculture, labour and education. Perhaps most relevant to this audience are the Production-Linked Incentive (PLI) schemes to attract and encourage manufacturing in 13 sectors which include mobiles and electronic components, KSM and APIs for pharmaceuticals, medical devices, electronic and technology products, drugs, telecom and networking products, food products, white goods, high efficiency solar PV models, auto and auto components, ACC battery, textile products and speciality steel. We aim to make manufacturing in India globally competitive by removing sectoral disabilities, creating economies of scale and ensuring efficiencies. By creating a level-playing field and encouraging a component eco-system, it will integrate India deeper into the global supply chain. Already, the global response to the PLI initiative has been strong. Coupled with an improvement in India’s position in the World Bank’s Ease of Doing Business rankings – last year we were 63, we used to be 142 in 2014 – this would enhance our economic relevance.

15. But, beyond this, the world also has a natural interest in the direction, pace and quality of India’s development. Much of what India is to build still lies ahead of us. We thus have a unique opportunity to embrace a greener and more technology-driven future. But this needs the requisite global partnerships and resources. Let us appreciate the implications of 140 million households moving into the middle class, even as another 20 million reach the high-income bracket. The winds of change have been blowing harder in India, especially in the last seven years. They can make universal access to power, piped water and affordable housing realizable goals within a generation. As India urbanizes like the rest of the world, a Smart Cities Mission covering a hundred locations is addressing challenges holistically through retro-fitting, re-development, green field and pan-city development.

16. And as I have stressed, even as India builds more, it builds greener. A renewable target of 450GW by 2030 seeks to transform its energy profile. As one of the few G20 economies adhering to its Paris commitments, its 15% energy efficiency savings, its shift to LED lighting with more than 367 million bulbs, moving 80 million households from bio-mass to LPG cooking and being among the top three nations to expand forest cover in the last decade are examples of its seriousness.

17. The changes in the environment are paralleled by progress in human resources. National campaigns of financial inclusion, educating daughters, Digital India, Clean India, Skill India, Water Mission, etc. enable us today to directly fund 400 million vulnerable citizens and provide food support to 800 million during the Covid challenge. I would urge you to look at these trends not just as a national accomplishment in the making but as improving global human resources.

18. In ensuring economic recovery, Indo-Japan relations have a notable role, in fact one I would argue even beyond Asia. Our partnership is seen today as among the most natural in the region. Japan is a valuable partner in these national campaigns that I have spoken about. And consistently supportive of our infrastructure development, including through ODA loans. In fact, Japanese-supported projects are among the most successful infrastructure examples, most recently the Delhi-Mumbai Industrial Corridor and the Dedicated Western Freight Corridor. Its long-standing FDI footprint in India is steadily expanding, covering 1455 companies as of 2021, and more than half of them are in manufacturing. New industrial collaborations are in the making even as we speak. And Japan’s contribution in skills enhancements is visible in 16 Japan-India Institutes for Manufacturing and 5 Japan Endowed Courses.

19. Japan is ofcourse closely associated with the growth of our auto sector and in fact also with the introduction of Metros in India. The bullet train initiative is the current flagship project. Our cooperation reflects the needs of the time, whether it is through a fund to support start-ups or an agreement to receive skilled workers from India. Our strong strategic convergence is evident in our Annual Summit, 2+2 meetings, defence and military activities as well as cooperation at regional and multilateral forums.

20. Distinguished guests, the Covid challenge has certainly created a stronger case for greater international cooperation, be it in vaccine production or to facilitate economic recovery. Those with shared interests and common values will find it easier to forge stronger partnerships. To make a real difference, the global order must address the concerns and issues that the pandemic has thrown up. I thank this conference for the opportunity to share my thoughts in that regard and I am confident that its deliberations will help us find pathways to better solutions.