Nirmala Sitharaman attends her first G20 Finance Ministers and Central Bank Governors meeting

In her first multilateral meeting as the Finance Minister, Nirmala Sitharaman on Sunday attended the G20 Finance Ministers and Central Bank Governors meeting and associated events in Fukuoka, Japan. Accompanying her at the meeting were Subhash C. Garg, Finance Secretary & Secretary Economic Affairs, Dr. Viral Acharya, Deputy Governor of RBI and other officers. 

In the meeting, Nirmala Sitharaman called upon the G20 members to take up the issue of taxing profits made by digital economy companies in countries where they do not have a significant physical presence.

“In this respect, Smt. Sitharaman strongly supported the potential solution based on the concept of ‘significant economic presence’ of businesses taking into account the evidence of their purposeful and sustained interaction with the economy of a country. This concept has been piloted by India and supported by a large number of countries including the G-24. She expressed confidence that a consensus-based global solution, which should also be equitable and simple, would be reached by 2020.” the Finance Ministry said in a press statement.

Taking the agenda forward against economic offenders, the finance minister welcomed the commencement of automatic exchange of financial account information (AEOI) and also called for the development of defensive measures against non-complaint members. “This would ensure that tax evaders could no more hide their offshore financial accounts from the tax administration.” the Finance Ministry said. These steps forward towards a robust global information sharing framework can give a huge boost to anti-tax evasion efforts being led by India.

“Smt. Sitharaman also raised the need for international cooperation on dealing with fugitive economic offenders who flee their countries to escape from the consequences of law. She informed about the fugitive economic offenders law passed by India which provides for denial of access to courts until the fugitive returns to the country.” the Finance Ministry said.

Global trade imbalances were also on the agenda for the finance minister, she called for the members to keep a close eye on global current account imbalances and diffuse any excessive global volatility.

The Finance Ministry further added, “Smt. Sitharaman highlighted the need for the G20 to keep a close watch on global current account imbalances to ensure that they do not result in excessive global volatility and tensions. The global imbalances left a detrimental impact on the growth of emerging markets. Unilateral actions taken by some advanced economies adversely affect the exports and the inward flow of investments in these economies.” .

Nirmala Sitharaman also urged the members to be vigilant about the oil prices and push for measures that can be beneficial for both oil importing and exporting nations. India over the past few years has been proactively engaging with oil exporting nations with similar efforts to streamline oil trade.

The G20 is made up of 19 countries and the EU. The 19 countries are Argentina, Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, Mexico, the Russian Federation, Saudi Arabia, South Africa, South Korea, Turkey, the UK and the US.

Invited guest countries are the Netherlands, Senegal, Singapore, Spain and Thailand. Invited guest international organizations are the Economic Research Institute for the Association of Southeast Asian Nations (ASEAN) and East Asia (ERIA), Food and Agriculture Organization of the UN (FAO), International Fund for Agricultural Development (IFAD), International Food Policy Research Institute (IFPRI), Organisation for Economic Co-operation and Development (OECD), World Bank, World Food Programme (WFP) and World Trade Organization (WTO).