G-20: The US offers cheaper capital and more investments for India’s energy transition
Virendra Pandit
Gandhinagar: US Treasury Secretary Janet Yellen said on Monday, in the presence of Finance Minister Nirmala Sitharaman, America could offer cheaper capital and increased private investment to India for its ambitious plans for energy transition.
“We look forward to working with India on an investment platform to deliver a lower cost of capital and increased private investment to speed up India’s energy transition,” Yellen said in a joint statement after a bilateral meeting with Sitharaman, on the sidelines of the Third Finance Minister-Central Bank Governors’ meeting being held in Gujarat’s capital under India’s presidency of G-20 this year.
Yellen said that collaboration between the two countries spans a wide range of economic issues, including commercial and technological collaboration, strengthening supply chains, and catalyzing the clean energy transition.
Finance Minister Sitharaman expressed the hope for further boosting the bilateral relationship through new investment opportunities.
“I also look forward to furthering our bilateral interests through development cooperation and new investment opportunities through Alternate Investment platforms for renewable energy.”
Currently, the US is the third largest source of Foreign Direct Investment (FDI) in India with an equity investment of USD 59.1 billion (between April 2000 and December 2022), representing 9.45 percent of the cumulative inflows received in the country.
The US accounted for 18 percent of the gross FDI inflows into India during 2021-22, ranking second behind Singapore which stood at 27 percent of the gross FDI. Computer software and hardware, the services sector, and the automobile industry attracted the maximum FDI equity inflows. Gujarat, Karnataka, and Delhi were the top states receiving FDI from the US.
Yellen said the US and India are among the closest partners in the world. “Bilateral trade between our two countries reached an all-time high last year, and we expect it to grow further in the years to come,” she said.
The Indo-US bilateral trade shot up by 72 percent between 2017-18 and 2022-23. During 2022-23, the USA was the top destination of Indian exports, worth USD 78.5 billion, and the third largest source of imports into India, at USD 50.2 billion.
Sitharaman said the bilateral discussion highlighted the two nations’ commitment to actively further the G-20 agenda. These include: addressing critical global issues, like strengthening the Multilateral Development Banks (MDB) and taking coordinated climate action, facilitating consensus to intractable issues associated with rising indebtedness of low- and middle-income countries, and, harnessing opportunities presented by crypto-assets and digital public infrastructure for financial inclusion.
Appreciating India’s focus on advancing the evolution of MDBs, Yellen said this could unlock USD 200 billion over the next decade just from the measures already being implemented or under deliberation as part of this process. She also applauded India for finalizing the historic Two-Pillar global tax deal in the Inclusive Framework. “I believe we are close to reaching an agreement.”
The global minimum tax under Pillar Two seeks to establish a floor on corporate tax competition which will ensure a multinational enterprise (MNE) is subject to tax in each jurisdiction at a 15 percent effective minimum tax rate regardless of where it operates. It will create a level playing field.
With over 50 jurisdictions taking steps toward implementation, this global minimum tax framework under Pillar Two is already a reality. The Inclusive Framework is finalizing the work on Pillar One and has completed the work on the development of the Subject to Tax Rule (STTR) and its implementation framework.
