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‘G7 is very outdated, need India in it,’ Trump postpones G7 meet as it does not represent world affairs

No decent transnational grouping makes sense without India!

Amit Agrahari by Amit Agrahari
31 May 2020
in Trending
Trump, Modi, USA, US, India, G7, G10,
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US President Donald Trump has postponed the G7 summit, which the country was scheduled to host in Washington in the second week of June. Trump called for the expansion of the “very outdated group” and said the meet would be now held in September or November where India, Russia, South Korea and Australia could be invited.

G7 is a group of seven largest advanced economies, high-income countries-  and constitutes the United States, United Kingdom, Japan, Germany, Italy, France, and Canada. The European Union also participates in the meet.

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Trump said that countries like India, Australia, South Korea, and Russia should also get representation in the grouping and it should be called “G-10 or G-11”. “I’m postponing it because I don’t feel that as a G7 it properly represents what’s going on in the world,” said Trump. “It’s a very outdated group of countries. We want Australia, we want India, we want South Korea. And what do we have? That’s a nice group of countries right there,” he added.

The representation of India in the existing G7 grouping is unusual, as despite being the fifth largest economy of the world, India is not an advanced economy or high economy country. In fact, with a per capita income of around 1700 dollars per annum, India is categorized among lower-middle-income countries.

All the other countries that Trump suggested including were Australia, South Korea, Russia and these are high-income countries. Moreover, India is already part of the Group of 20 or G20, the expanded grouping which includes 20 largest economics without any filtration based on per capita income. So if Trump wanted a broader representation he could have probably scrapped G7 and continued with G20 only.

But including India in the group of advanced economies serves to two things in Trump’s agenda, with the first being the sidelining of China- which despite being a middle-income economy is not in Trump’s Group of 10 but is part of G20; and the second being to promote India as a destination for investment and a manufacturing hub for the companies of the developed world.

The exclusion of China and the inclusion of India shows that Trump’s seriousness about decoupling China from the Global supply chain and pushing for India as the new ‘factory of the world’. The advanced economies which are members of the Group of 7 and the European Union are countries that have most factories in China. Germany, Italy, France, Canada, Japan, United Kingdom- all of these are very high-income countries where labor is expensive, therefore, the companies in these countries establish their manufacturing units in China or India.

Once India is part of this exclusive club of high-income countries along with Australia, South Korea, and Russia- it will be the only country with low income and cheap labor, with tremendous potential to grow and welcome investments from these nations. This would give the Indian government opportunity to attract the companies in these countries to set up businesses in India, dumping China.

Moreover, most of these high-income countries have a very old demography and their markets have saturated, so, India would be a manufacturing destination as well as a huge market for companies hence presenting opportunities to grow.

This would also serve as an instrument to decouple China from the global supply chain and isolate the country, which is the ultimate aim of Trump. Today, the world faces an increasing threat from an expansionist and invasive China which has caused a pandemic and continues to use wolf warrior diplomacy to intimidate nations that speak against is wrongdoings. It is wise for countries to reduce their trade deficits with China.

The United Kingdom also supported the expansion of the Group of 7 and suggested that a new grouping called D10 or 10 Democracies should be formed including India, South Korea, and Australia. The countries suggested  by the UK are the same as suggested by Trump except Russia. No matter which formation this high income and most powerful countries of the world go ahead with, India would be a part of this and would be only low-income country, which would ultimately help attracting companies from these countries for manufacturing.

Today, any grouping without India is irrelevant, because it has 4D- Democracy, Demography, Decisiveness, and Demand, as argued by PM Modi in Bloomberg Business Forum in the United States last year.

Tags: #USAG10G7IndiaModiTrumpUS
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