CUTS International Washington DC Center
Monthly Brief #67, October 2023
Economic Fallouts of the Israel-Hamas War
The Israel-Hamas war has resulted in significant human casualties, heightened geopolitical uncertainties, and is creating challenges for the whole world economy. Its effects are not limited to Israel and Gaza but are also being felt in neighbouring countries like Syria and Yemen. This geopolitical unrest in West Asia poses an additional obstacle to the global economy, which was already grappling with the adverse impacts of COVID-19 and the Russia-Ukraine conflict.
The region is home to major oil-producing countries, including Saudi Arabia, the UAE, Iran, Iraq, and others. The energy market is still recovering from the repercussions of the Russia-Ukraine conflict, and any escalation in the West Asian situation could trigger significant instability in the oil market, leading to higher prices. Sustained increases in oil prices contribute to global inflation, which, according to the IMF, had already reached multi-decade highs last year.
The World Bank, in its Commodity Markets Outlook, notes that the West Asian conflict can deliver a dual shock to commodity markets, as turmoil in the energy market can intensify food insecurity. Food security is already under threat due to climate pattern variations, excessive use of fertilisers, soil degradation, desertification and armed struggles. Rising food inflation further exacerbates the risks to global food security, particularly in African countries. Moreover, countries have resorted to inconsistent export policies, such as export bans, to combat food inflation and ensure food security. This further jeopardises food accessibility in food-importing nations.
One major fallout of such wars is a widening gap in financial assistance to achieve sustainable development goals, including ending poverty and hunger, as funds are redirected toward conflicts. This situation also hinders multilateral cooperation on critical issues like combating climate change, providing financial and technical assistance to developing countries, and addressing non-tariff barriers to global trade.
The Israel-Hamas war, if prolonged, will hamper international trade and connectivity. The region is essential for the transit of goods, and any instability in the region will negatively affect the movement of goods and services. The conflict in West Asia also has the potential to exacerbate supply chain disruptions and casts a shadow over the India Middle East Europe corridor (IMEC) proposed at the recent G20 summit.
In summary, the Israel-Hamas war has triggered significant economic challenges on a global scale, impacting energy markets, food security, and international trade. To address these issues and promote global stability, nations must prioritise diplomacy, conflict resolution, and collaborative efforts to restore economic growth. At the recent G20 Summit, India has put forward the concept of One World, One Family, One Future (Vasudhaiva Kumbukam). This has to be actuated.  Only through such measures can we hope to overcome the economic fallout of conflicts and work towards a more prosperous and secure world.
Pradeep S. Mehta

P.S.: U.S. withdrew its proposals on data flows, localisation and source code under the Ecommerce Joint Statement Initiative (JSI) at the WTO in order to preserve necessary policy space. What does it imply for data governance internationally? Is it in line with India’s long standing views on e-commerce and data privacy?.
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U.S. emerges as India's biggest trading partner during April-September this fiscal; China at second
The U.S. has emerged as India's biggest trading partner during the first half of the current financial year despite global economic uncertainties and declining exports and imports, according to government data. According to the provisional data of the Commerce Ministry, the bilateral trade between India and the U.S. has declined by 11.3 percent to US$59.67 billion during April-September 2023 against US$67.28 billion in the same period last year.

India, EU discuss progress in the Free Trade Agreement negotiations
Union Commerce Minister Piyush Goyal on October 29, 2023 discussed progress in India-European Union (EU) Free Trade Agreement negotiations with Valdis Dombrovskis, Vice President, European Commission's Executive. Piyush Goyal on October 28, 2023 participated in the G7 Trade Ministers' Meeting in Osaka, Japan, and urged governments of G7 nations to collaborate on a regulatory framework to ease the movement of supply chains and facilitate cross-border trade.

Trade transformation: India’s journey up the global value chain
Trade is the cornerstone of a nation’s development, a truism underscored by the economic triumphs of countries such as Japan, South Korea, and China. Historically, India’s economic policies leaned towards protectionism, but the winds of change are blowing, and the country is now actively embracing trade and strategic partnerships to unlock the full potential of globalisation.

U.S. withdraws proposal on digital trade at WTO
In a leg-up to India’s consistent stand against global rules on e-commerce, the U.S. has decided to withdraw its proposal on digital trade at the WTO to retain the policy space for regulating big-tech firms. The U.S. proposal on e-commerce rules, withdrawn at the WTO’s Joint Statement Initiative (JSI) on e-commerce meeting on October 25, 2023, was made in 2019 by the Trump regime. The 2019-proposal called for free cross-border data transfers without data localisation requirements and restricting mandatory software source code disclosure.


India and U.S. have great potential to cooperate on green hydrogen
India and the U.S. are important for each other, and have the gravitas and immense potential to cooperate on green hydrogen, said Hardeep Singh Puri, Minister of Petroleum and Natural Gas. Speaking at Public Affairs Forum of India’s 10th Annual Forum 2023 in New Delhi on October 26, he said India will be doing 20 percent ethanol blending by 2025. India and the U.S. can work together on the plan to make ethanol from agricultural waste.

Green energy push: India’s challenge and responsibility
However, this rapid growth in renewable energy brings with it an impending issue by 2050, we may be faced with millions of tonnes of discarded solar Photovoltaic panels. While India marches forward on its path to achieve carbon neutrality by 2070, with a strong focus on embracing renewable energy sources, a critical issue remains unaddressed by the union government: disposal of aging solar panels and wind turbines. Solar and wind energy dominate the renewable energy landscape. Currently, India boasts of a combined installed capacity of 100 GW in renewable energy generation, accounting for 22.5 percent of the nation’s energy, in contrast to the global share of 1.733 Terawatts, which is 12 percent.
U.S. Energy Transition needs to avoid China dependence
Emerging U.S. businesses in the energy transition supply chain such as hydrogen and wind power should act fast to avoid being dominated by China. Geoffrey Pyatt, Assistant Secretary for energy resources at the State Department, said the U.S. needs to ensure that China does not dominate wind power, small nuclear power and hydrogen, an emerging fuel that could help mitigate carbon emissions from hard-to-abate industries like cement and aluminium smelting. China has enjoyed "essentially a monopoly" on solar wafers and solar cells that has prevented robust domestic solar manufacturing. he has been engaging with industry in Australia, the European Union (EU), and Japan to ensure the energy transition in Europe does not simply swap a dependence on Russia for China.

G7 nations back strong supply chains for energy and food despite global tensions
Trade and economy officials from the G7 wealthy democracies strengthened their pledge on October 29, 2023 to work together to ensure smooth supply chains for essentials like energy and food despite global uncertainties. The nations promised to maintain “a free and fair-trading system based on the rule of law and enhancing economic resilience and economic security," officials said in a joint statement. Foreign minister Yoko Kamikawa, who co-hosted the two-day event in the western city of Osaka, pointed to Russia's invasion of Ukraine and the Israel-Hamas war as the latest threats to stable energy and food supplies.


Collective solutions needed to combat security threats in the Indo-Pacific region
The Indo-Pacific Civil Society Forum (IPCSF) is hosting this issue-specific webinar. A track-two dialogue forum founded by CUTS International, it is a coalition of civil society organisations (NGOs, think tanks, academia, etc.) that collaborate with government organisations to achieve a shared vision of peace, security, stability, and prosperity in the Indo-Pacific region.

U.S. is working with Indo-Pacific partners to boost economic resilience, Katherine Tai says
The U.S. is working very closely with its trading partners in the Indo-Pacific region to help build economic resilience, said U.S. Trade Representative Katherine Tai. The Indo-Pacific Economic Framework (IPEF) initiative, launched in May last year by U.S. President Joe Biden, is looking to announce a number of initiatives soon, she told CNBC’s Martin Soong on the sidelines of the G7 trade ministers’ summit in Osaka, Japan.

India, France looking to take defence ties to newer heights
India and France have decided to further enhance their defence industrial cooperation, while they also explored collaboration, in niche areas like space, cyber and artificial intelligence. "India-France strategic partnership has deepened over the years and is more relevant today than ever. We look forward to taking this partnership to newer heights," said Defence Minister Rajnath Singh, after holding delegation-level talks with his French counterpart Sebastien Lecornu in Paris.

U.S. seeks industry feedback on defence procurement agreement with India
The U.S. government on October 10, 2023 sought feedback from its defence industry community on the reciprocal defence procurement agreement it is planning to have with India. “On behalf of the U.S. government, the Department of Defence is contemplating negotiating and concluding a new Reciprocal Defence Procurement Agreement with the Republic of India,” said a notification issued in the Federal Register on October 10, 2023.


U.S.-India Technology Cooperation: A Strategic Partnership for the Future
The recent months have seen the establishment of the U.S.-India Initiative on Critical and Emerging Technologies (ICET). Technology-related matters have played a significant role within the QUAD, leading to the recent release of principles concerning crucial technology supply chains. Additionally, there has been a strong emphasis on utilising technology policies and trade to propel economic growth within the Indo-Pacific Economic Framework (IPEF).

Limited resources used effectively in India to develop technology: U.S. Ambassador to India Eric Garcetti
India is a force for good as it is a place where artificial intelligence platforms, ideas and intellectual property are being generated, rather than just consumed, and where initiatives like the Unified Payments Interface (UPI) and other digital public infrastructure (DPI) help people access capital and health solutions, U.S. ambassador to India Eric Garcetti said. The U.S. no longer just leads from the front but also follows, Garcetti said, while visiting Artificial Intelligence (AI) research institute Wadhwani AI, which is funded by the U.S. Agency for International Development (USAID).

India’s Defence Sector prioritises Indigenisation and Innovation
The Naval Innovation and Indigenisation Organisation (NIIO) convened the second annual ‘Swavlamban Seminar’, echoing a fervent call for domestic innovation and defence industry self-sufficiency. Defence Minister Rajnath Singh, presiding over the gathering held at Pragati Maidan’s Bharat Mandapam, shed light on ‘Swavlamban 2.0’. This revamped indigenisation roadmap set forth 76 challenges for the defence community as a part of the 10th Defence India Start-up Challenges (DISC 10). Eric Garcetti, the U.S. Ambassador to India, marked his presence, highlighting two joint challenges set up in collaboration with the U.S. Department of Defence.
U.S., India share vision around technology, AI
On October 12, in the U.S., Arvind Krishna, CEO of International Business Machines Corporation (IBM) had met with the U.S. President Joe Biden and his senior leadership team for establishing guidelines for deployment of Artificial Intelligence (AI) to boost both productivity and economic competitiveness. Just a day later, in India, seven working groups of Ministry of Electronics and Information Technology (MeitY) submitted the first edition of India AI report to Rajeev Chandrasekhar, Minister of State of Electronics and IT.


Pharmaceutical and Medical Devices Sector in India
The developments in the pharmaceutical and medical devices sector have experienced a steady growth in the first half of 2023 with trends indicating an increased focus on research and development and innovation in these sectors. CUTS International Washington DC Center has included Pharmaceutical and Medical Appliances as its fifth focus area. This has been made possible with the sound advice of Nishith Desai Associates. Nishith Desai is our founder's circle member and founder of Nishith Desai Associates. We extend our sincere gratitude to him.

The Foreign Investment Outlook of India’s Pharmaceuticals Industry
India’s pharmaceutical industry is currently ranked third globally for pharmaceutical production by volume and 14th by value. The country has a well-established domestic pharmaceutical industry, featuring a network of around 3,000 drug companies and approximately 10,500 manufacturing units. The future of this industry appears promising, with the Indian pharmaceutical products market projected to achieve a value of approximately US$130 billion by the end of 2030. Concurrently, the global pharmaceutical products market is expected to surpass the US$1 trillion mark in 2023.

Regulation and certification remain key for medical devices manufacturing in Africa
Africa imports more than 90 percent of the medical devices and consumables it needs, despite having a 125-year history of making medical devices, researchers said during economic research institution Trade and Industrial Policy Strategies (TIPS) Development Dialogue on medical devices on October 23. The vulnerability of countries in Africa, and worldwide, to disruptions in medical devices supply, such as personal protective equipment and ventilators, was highlighted during the COVID-19 pandemic.
Research Grants and Funding in Pharmacy opportunities in India
In a significant move to bolster the pharmaceutical sector, various educational institutions and funding agencies across India have rolled out a series of research grants and funding opportunities for the academic year 2023-2024. These grants are designed to serve as a launchpad for groundbreaking research, offering a myriad of opportunities for pharmacy educators and researchers to make substantial contributions to the field.


Indian-Americans have made a mark for themselves in U.S.
Indian-Americans have made a mark for themselves in the U.S. and under president Joe Biden the community members are throughout the administration. "We have such a strong person-to-person, community-to-community leader relationship based on the strength of the diaspora," Neera Tanden, the Director of the U.S. Domestic Policy Council, said at an event held at India house - the official residence of India's Ambassador to the U.S.

India Canada relations: Amid speculations, U.S. maintains strong relations with India
The meeting between External Affairs Minister S Jaishankar and U.S. Secretary of State Antony Blinken last month, followed by the 2+2 Intersessional Dialogue, laid the agenda for what lies ahead in the bilateral defence cooperation (Paywall). While these meetings were happening in Washington, the armies of both countries started the 19th edition of the joint exercises in Alaska. Since launching the 'Initiative on Critical and Emerging Technologies' (iCET) in January, India and the U.S. have sought to elevate themselves from a buyer-seller relationship to co-develop projects.

U.S. will continue to foster stronger defence partnership with India
The U.S. will continue to foster a stronger defence partnership with India. "We very much appreciate our relationship with India on a defence level. We continue to foster a stronger defence partnership with India and that is something that I think you will continue to see us do going forward," Pentagon Press Secretary Pat Ryder told reporters at a news conference. In 1997, defence trade between India and the U.S. was almost negligible, today it stands above US$20 billion.

Why India abstained in UN's Gaza resolution
In a special session of the United Nations General Assembly (UNGA) on October 27, 2023, India stressed the need for explicit condemnation of the terrorist attacks by Hamas on October 7. The UNGA adopted a resolution on the same day, calling for an "immediate, durable, and sustained humanitarian truce" between Israeli forces and Hamas militants in Gaza. The adopted resolution, initially moved by Jordan, did not contain explicit condemnation of the October 7 terrorist attacks, but an amendment was introduced to include this condemnation before the main Resolution's vote.