“Relative to what’s happening in the rest of the world, the India story is becoming more and more resounding,” said Rajiv Memani, chairman and CEO of EY India and president of Confederation of Indian Industry (CII), pointing to India’s strong macro numbers, expanding trade agreements and geopolitical positioning. He said India’s growing engagement with Europe, Asia and West Asia is building confidence beyond tariff-driven relationships.
Manufacturing
The panel-which included Godrej Industries chairman Nadir Godrej, Bharti Enterprises vice-chairman Rajan Mittal and Tata Steel managing director TV Narendran besides Memani – was unanimous that India can build world-class factories. However, to scale manufacturing, the country must fix capital inflow, logistics, protect priority sectors for decades, and build component ecosystems to ensure growth is value-added and not just assembly-led manufacturing.
“We have made a good start, but we have to move much faster,” said Mittal. The share of manufacturing in the country’s gross domestic product (GDP) must rise to 25% from around 16-17% now, he said.
Global Supply Chains
In today’s tumultuous landscape, Indian companies find their greatest strength in realising that they can build global scale within the country. “In this world of geopolitical uncertainty, it’s good to have a large domestic market. That’s the best insurance you can have,” said Narendran. Godrej said global trade disruptions are creating new opportunities for India. “Every time there is a threat, someone in India sees an opportunity and the net result is ‘no harm done’ to the Indian economy,” he said.
Mittal said the global political order is going through a trust deficit even among traditional allies. “If Europe and the US can be at so-called loggerheads…that becomes a challenge,” he said. But Prime Minister Narendra Modi has built credibility for India on the global stage. This diplomatic capital gives India an edge in navigating shifting alliances, he added.
Speed of Doing Business
Godrej pushed for migration in governmental efforts from ‘ease of doing business’ to the ‘speed of doing business’.
Memani said the disconnect between state and central governments is the primary impediment to speed.
“Something that worked very well was the GST Council. It is a forum where the states and the Centre work together, and despite the constraints, it has worked well,” Memani said. “I wonder if it would be possible to have a similar council for other reforms as well, where the Centre and the states work together.”
World-class MSMEs
When spoken to about the structural divide between large conglomerates and MSMEs within the country and the disproportionate advantage of the former, Narendran emphasised the importance of “inclusive growth” for a resilient economy. “There is no large economy which doesn’t have a strong MSME sector, particularly a large manufacturing economy,” he said.
While there are regulations and subsidies for the MSME sector, the problem lies at the bottom of the pyramid, the panel said. “I think the real challenge is to change the mindsets of the bureaucracy down the line,” Memani said. Financing is another headwind. “Regulation has grown a lot, so we have to find a way to increase the risk appetite and reduce the regulation if you really want the MSMEs to flourish in a significant way,” Memani said.
AI and capital flows
“India was not seen as the leading edge on AI, and that’s why a lot of the foreign direct investment (FDI), a lot of that money shifted to the US and some of the other markets,” said Memani. India is now trying to close the gap by building domestic AI infrastructure such as data centres, a sovereign AI cloud, and broader vernacular support so usage scales up and more data feeds the ecosystem, he added.
