Indian manufacturing needs to develop greater sophistication in its products and the government will assess how to provide policy support in this endeavour, Finance Minister Nirmala Sitharaman said on May 17, dismissing “some economists’ advice that India should no longer to look to ramp up manufacturing”.
“Manufacturing must increase, and with the help of policies, India must increase its share in manufacturing and global value chains,” Ms. Sitharaman said, adding that this will also help India be more self-reliant. Citing a recent Capgemini Research Institute report, the Minister said that 65% of nearly 760 senior executives surveyed in the U.S. and Europe were planning to increase manufacturing investments significantly in India, with an eye on reducing their dependence on China.
Ms. Sitharaman, in an address at the annual business summit of the Confederation of Indian Industry (CII), also pointed to a S&P Global Market Intelligence assessment that the Indian market could throw up trillions of dollars of opportunities by 2031, with the consumer market expected to double by then.
While the consumer market presents a $2.9 trillion opportunity, spending on food is expected to rise to $1.4 trillion while financial services will climb to $670 billion by 2031, which together would create another $1.39 trillion of opportunities, the Minister said, citing the S&P report.
“Skilling is really being ramped up in India so the demographic dividend, which will persist for the next 30 years [and] comes with an added advantage of a historically lowest dependency ratio, means the net benefit is going to be towards more increase in consumption,” she said. She emphasised that investments and expansion plans to tap these opportunities can help push faster economic growth, especially with bank and corporate balance sheets “in the pink of health”.
Ascribing India’s consistent high growth to “policy stability, absence of flip-flops, corruption-free decision-making” combined with “facilitation in legislative and legal frameworks” based on industry feedback for rapid changes in the compliance regime, Ms. Sitharaman said the government looks at the private sector as a partner in development while acting as a facilitator and an enabler.
“We are confident that Prime Minister Narendra Modi is coming back with a good majority. And therefore, soon after the government is formed, we look forward to a more pointed engagement with the CII to see what best can be done in the July budget, which will be the full year Budget,” Ms. Sitharaman said.