Mastercard’s president and chief executive officer (CEO) Ajay Banga took over as chairman of the International Chamber of Commerce (ICC), which helps businesses operate across borders, in June — a difficult time with the covid-19 pandemic halting economies and with many countries indulging in protectionist posturing. In an interview, Banga spoke about the need to strengthen the World Trade Organization (WTO), what India must do to integrate with global supply chains, and the path to economic recovery. Edited excerpts:
What would your priorities at ICC be?
The global pandemic has shown the inescapable mutuality of our world. We are so deeply intertwined in so many ways, from the virus and its ability to go global all the way to supply chains. We have to build it back better looking at people, planet and prosperity. At the ICC, we have got a few clear priorities. The first is to save our SMEs. We believe that small businesses are critical. They represent 90% of all businesses and employ 65% of all workers globally. In the pandemic, they got hurt enormously. The agenda is to keep trade finance going, to ensure a regulatory framework where SMEs can compete for a level playing field. A level playing field requires harmonization of regulatory standards around the world. That requires engagement with global institutions. It requires us to double down on strengthening institutions like the G20, the WTO. Then there is digital. AI (Artificial intelligence), data privacy, data security, digital taxation are issues that could become contentious. After the last financial crisis, the G20 created the Financial Stability Board (FSB), which was designed to help navigate the regulatory regimes for financial services. They did well over the last decade. We need to create something similar for AI, data and digital. We could call it the data and technology board. We also need to help the SMEs digitize.
You mentioned the importance of global institutions but bodies like WTO have taken a back seat.
Their prominence and their ability to play an influencing role has certainly reduced over the last decade. But the fact that trade grew so well over the last three-four decades was not by accident. It was by harmonization of standards, by arbitration systems of the WTO, by the creation of level playing field rules, by the blocs like the G20 collaborating during the great financial crisis. We got to be a little careful. India has a stated aim to be strong in manufacturing. A version of that is Atmanirbhar Bharat. You can make in India for domestic consumption but the bigger prize is to make in India for the world. How do you make in India for the world if you do not submerge yourself in the supply chains of global companies? To do that, you have to do a few things. Very often, in a supply chain, a product will go in and out (of factories) five or six times before it’s fully made. You need custom rules that enable that, infrastructure, skilled labour, the right cost of production, subsidies and tax benefits. You also need participation in trade agreements, a degree of assurance around taxation systems. India has made enormous progress in trying to improve the ease of doing business because the prime minister and the government is focussed on this. It doesn’t happen in one year. It takes years for the ship to change in direction. But time is of the essence here and anything you can do to strengthen the movement is a good thing.
Isn’t there a contradiction in the call for self-reliance and saying you will be integrated to global supply chains?
Self-reliance defined after independence was of a different kind. It was about controlling the commanding heights of the economy. But what the PM is saying is something different. He is talking about developing Indian institutions, skills, manufacturing and innovation. Saying it is ‘either-or’ is one argument. My point of view is it is not either-or. You can develop local capabilities but you can develop them so that you are part of the global system. Doing nothing locally and taking everything from overseas —that’s not a strong economy either. This is the fine art of threading the needle that governments and economists are trying to do.