New Delhi has objected strongly to the curbs imposed by the US and European governments on their banks, restricting them from lending to emerging economies including India. The banks, having benefited from multi-billion dollar government bailouts, have no choice but to agree to the conditions.

In its position paper for the Group of 20 meeting in London on April 2, India has also voiced concerns about protectionism — both in goods trade and in terms of the curbs put on labour mobility by developed countries. India’s IT and BPO sectors have been hit hard by the raised barriers abroad for low-cost skilled workers.

Since the onset of the global financial crisis, foreign debt inflows into India have been reduced to a trickle. During April-September 2008, India Inc’s external commercial borrowings dropped to a mere $3.3 billion compared with $11.12 billion raised over the same period the previous year. With foreign banks and institutions forced by their governments to lend domestically, the situation is unlikely to improve.

“There is a need to eliminate all traces of protectionism from financial rescue packages,” an official involved in drafting the Indian position paper told The Indian Express.

“Banks were given official support on condition — implicit or explicit — that they focus on domestic lending. This is inconsistent with managing a globally integrated economy and is particularly harmful to developing countries such as India,” another official involved in the sherpas meeting on March 11 said.

Sherpas are aides to G-20 leaders, and do all the background work, including preparing the draft communication. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, is Prime Minister Manmohan Singh’s Sherpa for the April 2 meeting. Ahluwalia will leave for London with a team of key finance ministry officials on Monday; the PM follows on Tuesday.

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