With Prime Minister Narendra Modi making his presence felt at the G7 summit in Germany, India can expect some collaborations with the G7 countries in investments related to two key areas—clean energy and infrastructure.
India was on the list of countries that the German Presidency had invited for the 48th G7 summit, along with Argentina, Indonesia, Senegal and South Africa. Led by German Olaf Scholz, the summit commenced on 26 June with representatives from G7 member nations—the United States, the United Kingdom, Italy, Japan, France, Canada, and the European Union—in attendance.
In addition to speaking at a session, PM Modi also held bilateral talks with the German Chancellor and Canadian President Justin Trudeau on the sidelines of the summit.
During the discussion with the German Chancellor, the two leaders spoke about cooperation over energy and commerce. Thanking Schloz after the bilateral meeting, PM Modi tweeted, ”Excellent meeting with Scholz. Thanked him for the warm hospitality during the G7 Summit. We discussed cooperation in key sectors like commerce and energy. We also had deliberations on furthering environmentally friendly growth for our planet.”
Interestingly, the talks came days after India faced heavy criticism from the West over buying oil from Russia despite the sanctions on the country following the ongoing war in Ukraine. The summit took place amid heightened geopolitical tension across Europe with the Russian invasion of Ukraine at a time the global economy is recovering from the onslaught of the Covid-19 pandemic. It also witnessed the virtual participation of the Ukrainian President Volodymyr Zelensky.
Clean Energy Commitment
Speaking at a session on ‘Investing in a better Future: Climate, Energy, Health’ at the summit, PM Modi emphasised the need for clean energy to counter the climate crisis. In doing so, he also asked the G7 nations to invest in India’s clean energy sector as it is an emerging market.
“Today, a huge market for clean energy technologies is emerging in India. The G7 countries can invest in research, innovation and manufacturing in this field. The scale that India can provide for every new technology can make it affordable for the whole world,” PM Modi said.
He reiterated India’s 2070 net zero commitment that he had made at the UN Climate Change Conference in Glasgow last year.
Talking about how the Russia-Ukraine crisis has pushed the energy prices to a record high, Modi spoke about the need for equal energy distribution amongst the population of rich and poor nations.
“All of you will agree that energy access should not be the privilege of only the rich. A poor family also has the same rights on energy. And today, when energy costs are skyhigh due to geopolitical tensions, it is more important to remember this,” Modi stated.
Incoming Infrastructure Investment
A key highlight of the summit this year has been the G7 nations’ commitment to invest $600 million in infrastructure under a special scheme across developing countries by 2027. The scheme, Partnership for Global Infrastructure and Investment (PGII), is being seen as a counter to China’s multitrillion-dollar Belt and Road Initiative which the communist country is using to finance ports, roads and bridges in emerging countries.
As part of the PGII scheme, in the next five years, the US will invest $200 million via grants, financing and private sector investments whereas the remaining amount will be invested by the six other G7 nations.
According to a White House fact sheet, the US International Development Finance Corporation (DFC) will invest up to $30 million in Omnivore Agritech and Climate Sustainability Fund 3—an impact venture capital, investing in enterprises focusing on agriculture, food security, climate and rural economy in India.
“The Fund seeks to invest in companies that increase food security and promote both climate resilience and climate adaptation in India, as well as improve the profitability and agricultural productivity of smallholder farms. The Fund is targeting a $65 million first close in September 2022 and a final close in 2023 to reach its target capitalization of $130 million. Through this investment, DFC expects to mobilize $30 million in private capital,” the fact sheet said.
Speaking about the PGII scheme, US President Joe Biden, in a tweet, said, “I want to be clear – the G7's announcement of a new global infrastructure partnership isn't aid or charity. It’s an investment that will deliver returns for everyone – including the American people – and boost all of our economies."