As global trade faces uncertainty from growing tariff pressures, India is taking a more proactive stance in pursuing trade agreements, a shift that Erik Berglof, chief economist at Asian Infrastructure Investment Bank (AIIB), sees as a silver lining in an otherwise-disruptive environment.
“India now seems much more open to thinking about joining various trade agreements,” Berglof tells Forbes India on the sidelines of the Kautilya Economic Conclave in New Delhi. “That's a very good conversation to have. If something has come out of this tariff uncertainty, it is that it has accelerated this conversation in India compared to just a year ago.”
India is currently pursuing a trade deal with the US, which has imposed 50 percent tariffs on exports from the country, and the European Union (EU). It recently inked a trade agreement with the UK.
Berglof says tariff uncertainty is bad for multilateral development banks as it has a chilling effect on investment appetite.
India is the second-largest shareholder of AIIB—China is the largest—and its biggest borrower.
“On the government side, it’s the states making investments, but we also work with the private sector. So, if there is uncertainty about tariffs, both states and private companies are going to be uncertain about making investments,” he says.
Institutions like AIIB, which have been in India for some time, will overcome this and stay engaged, adds Berglof. “We will try to work across traditional infrastructure but also increasingly in areas that are important to India but where it has been harder to attract investment, particularly private investment, like nature as infrastructure.”
The economist sees a lot of opportunities to “link this to human health and the issues that are immediate for people here like air pollution, heat and so on”. “AIIB very much wants to be part of that journey, particularly to help protect the most vulnerable groups,” he says.
AIIB recently announced plans to increase its India exposure from $12 billion to an estimated $20 billion over the next five years.
On the areas in focus, Berglof says the bank “wants to have more than 50 percent climate (exposure)”. “We want to have 50 percent private. We are now at 35 percent, but by 2030, we want the private sector’s share to be half,” he explains.
According to research firm Wood Mackenzie, India has emerged as the market leader with the lowest renewable energy cost in Asia-Pacific.The share of non-fossil power generation capacity rose to 44 percent in 2024, close to the country’s target of 50 percent by 2030.
“In India, we are excited about doing climate policy-based lending. We don’t have a specific loan yet, but we have had some early discussions. What we would like to do for climate policy-based lending is to connect nature, climate and human health—what we call planetary health,” he says.
On India’s developed country goal, Berglof highlights the low female labour participation, saying “greater involvement of women in the economy may be the single most important thing that could help India with its growth ambitions”.
According to the World Bank, India ranks lowest in female labour participation in G20 at 32.8 percent.
“The traditional infrastructure companies are quite slow to adopting new technologies. One potential role for us could be to try to create spaces or interfaces between the traditional infrastructure companies and startups and help with their integration,” he says.
AIIB can also help in sprucing up public-private partnerships “and when there are conflicts of interest, we can be part of resolving those”.
First Published: Oct 06, 2025, 19:02
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