US volatility reminded India of need to integrate with Asia: Erik Berglof

Lot of green mobility possibilities if there is more openness to Chinese tech

Amid a rapidly changing world order, the volatility of India’s relationship with the US with tariff and non-tariff disruptions has reminded India of the need to integrate with the Asian region, according to Asian Infrastructure Investment Bank’s (AIIB) Chief Economist Erik Berglof. 

“The raised tariff levels are not good – they are prohibitive, and so we need to find ways to hopefully get rid of some of them and then eventually maybe work around them. But we're talking a lot about investments here and investments are really suffering from this kind of uncertainty, ultimately undermining growth,” he said in an interaction with Business Standard on the sidelines of the Kautilya Economic Conclave in New Delhi. 

“But again, it has opened up conversations that I didn't think I would see in India in the near future. It has reminded India of the need to integrate with all of Asia. Many of us are learning the same lessons. Also in Europe, there are specific concerns around Ukraine and so on, but fundamentally, what Europe's takeaway is that we need to coordinate more strongly among ourselves, we need to integrate even more and make ourselves more coherent,” he said.  

Berglof said that better India-China relations would be better for Southeast Asia, calling for a “more objective, less emotional” view on curbs on Chinese investments, and seeing the relationship not just in isolation but as all of Asia coming together for trade and investments. 

“Everyone who looks at the Chinese and the Indian economies will understand the complementarity and the possibilities. India obviously needs a lot of capital and technologies and China has that. India also has a lot of things that China needs. As for the consequences for the rest of Asia, better integration between India and China will also help Asean,” he said. 

Berglof referred to a broader need for regional integration in the context of a better trade relationship between India and China and said that he senses a greater openness towards integration with Asean countries through blocs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). “I still think that RCEP would be good for India, but the kind of issues that would be addressed in the process of joining CPTPP would be even more transformative. Even if India, in the end, does not join RCEP or CPTPP, the process of thinking through what has to be done would already help to address some issues,” he said.