Conference

15 December 2020

The COVID-19 pandemic has presented a unique opportunity to India to lure global manufacturing giants, as companies look to diversify their supply chains. For India to emerge as the new manufacturing hub of the world, it cannot focus only on sectors where other countries have a strong manufacturing prowess. Instead, India should complement that approach with a focus on manufacturing goods of the future.

The Aatmanirbhar Bharat Abhiyaan would help India in improving its value addition in the manufacturing sector. For India, manufacturing value added (% of GDP) in India was reported at 13.72 % in 2019. The Government hopes to reduce the dependence on imports and improve the currently low localisation rate, which in turn will help enhance value addition in the country.

To attract global companies looking to de-risk their supply chains, India presents itself as an attractive destination, increasingly supported by business-friendly reforms. Apart from the labour cost arbitrage, India offers investors incentives to boost domestic manufacturing, a large talent pool, along with lower operating costs, and a business-friendly policy environment. The vast consumer market of India also positions the country as a preferred manufacturing destination. The strong emphasis of the Indian Government in transforming the domestic manufacturing sector is expected to progressively lead to enhanced technology adoption, large-scale employment creation, strengthened advanced manufacturing capabilities and improved competitiveness in the global arena.

The COVID-19 pandemic has presented a unique opportunity to India to lure global manufacturing giants, as companies look to diversify their supply chains. For India to emerge as the new manufacturing hub of the world, it cannot focus only on sectors where other countries have a strong manufacturing prowess. Instead, India should complement that approach with a focus on manufacturing goods of the future.

The Aatmanirbhar Bharat Abhiyaan would help India in improving its value addition in the manufacturing sector. For India, manufacturing value added (% of GDP) in India was reported at 13.72 % in 2019. The Government hopes to reduce the dependence on imports and improve the currently low localisation rate, which in turn will help enhance value addition in the country.

To attract global companies looking to de-risk their supply chains, India presents itself as an attractive destination, increasingly supported by business-friendly reforms. Apart from the labour cost arbitrage, India offers investors incentives to boost domestic manufacturing, a large talent pool, along with lower operating costs, and a business-friendly policy environment. The vast consumer market of India also positions the country as a preferred manufacturing destination. The strong emphasis of the Indian Government in transforming the domestic manufacturing sector is expected to progressively lead to enhanced technology adoption, large-scale employment creation, strengthened advanced manufacturing capabilities and improved competitiveness in the global arena.

The financial aspect of the COVID-19 pandemic and ensuing lockdown in the form of industry shutdowns, fall in demand numbers, reduced purchasing power due to loss of livelihoods among many other elements – left with lots of ground to be covered to revive the economic and industrial growth of the country reeling under an induced recession following consecutive quarters of negative GDP growth. As per the Ministry of Statistics and Programme Implementation, India’s economy contracted by 23.9% in the quarter ending June 2020, marking the worst decline ever recorded since the compilation of historic GDP statistics since 1996.

Consumers account for nearly 60% of India’s GDP (directly and indirectly) and the same declined by 27%. The private investments, another engine for country’s growth, saw a decline by 47% during the Q12020. The Government announced measures to support the Indian industry and unlock have displayed a positive uptick in many macro indicators, such as Purchasing Managers' Index, GST revenue collected, rail freight loading revenue, exports, etc. witnessed growth since the unlock.

The budget 2021 is key to revival strategy for the Indian economy. The government could boost growth by pushing for investments in infrastructure and manufacturing, to increase India’s participation in the global value chains. Improved capacity of personal consumption through income tax cuts would help with a demand boost, and kickstart industries. There is a need to boost investments by creating a facilitative environment, positioning India as a favoured investment destination.

16 December 2020

The journey towards becoming a US$5trillion economy will be based on a delicate balance between economic and social development. The unfolding pandemic has brought forth the need to focus on various social development facets.

A robust healthcare ecosystem is essential to support India’s economic growth agenda. By embracing technology and focusing on research, India has the potential to develop innovative care delivery models. India recognizes the need to strengthen its medical infrastructure and ensure that timely, high-quality health services are accessible throughout the country. Amidst the pandemic, as the world awaits the release of a successful vaccine against COVID-19, India is working towards developing an effective delivery plan, towards ensuring access for all. At the same time, India needs a robust skilling ecosystem to leverage its demographic dividend and create a workforce for the future. Rapid digitalization has been fast changing the future of work, with newer technologies requiring specific skills and training. India must focus on economic recovery and growth across industries and ensuring employment security for its large workforce. For India to become competitive, the country also needs to transform its labour code. The Government has been making steady progress on this front, with the recent labour reforms aiming to help both workers and industry.

The automotive industry as has reigned in every developed economy - can be the driver of India's growth through 'Atmanirbhar Bharat' when supported with creation of a business environment conducive to growth. The auto sector also drives growth supporting a large number of MSMEs as part of its production and maintenance supply chain, and supports livelihood (direct & indirect) of more than 30 million people across India. It is among the largest sectors attracting FDIs, with US$24.5 billion being the inflow in last two decades, accounting for 5.1% of the total FDI inflows. Leading global automotive manufacturers have a fair share of FDI in the Indian market and have contributed to the ecosystem in ways such as investing in a dedicated supply chain, generating hundreds of thousands employment opportunities, bringing in technological advancement through extensive R&D - highlights their importance with the intrinsic factors of industry being impacted by the global players. The sector has witnessed extended downturn that started in 2019 and has resulted in losses being accumulated due to slowdown of sales. The current pandemic - COVID19 further worsened the situation as the industry struggled with disrupted supply chains, lowering demand, transition to BS-VI, and the advent of e-vehicles.

The Commercial Vehicle segment is closely linked to the infrastructural development of the country in addition to supporting job creation. The automotive industry is volatile and is facing various challenging times due to market conditions and regulatory changes. While the unlock has improved the sales numbers for most players, the overall stress in the industry needs Government interventions to support revival and long-term growth. The recently announced Production Linked Incentive (PLI) scheme, with INR57,000 crore allocated to auto and auto components, will improve the competitiveness of the sector and help India become a crucial hub for global value chains.

Agriculture continues to play a critical role in the Indian economy, as a leading employer and custodian of food security and raw materials to various sectors. Therefore, enhanced and stable growth of the agriculture sector is essential for increasing purchasing power in rural India and maintaining price stability across the country. Positioning India as a key hub in global value chains required a consistent focus on boosting food processing and agricultural exports, supported by enhanced ease of doing farm business, development of farm infrastructure and skilling initiatives.

The increasing population and growing climatic concerns make it essential to scale up agriculture. The focus on enhancing crop productivity and farmer incomes can help manage the issues of decreasing arable land, limited natural resources and extreme weather conditions. Creating strong linkages between the farmer and food processing industry can go a long way in driving growth in India, as it can enable farmers to earn sustainable farm incomes and be globally competitive.

Development of robust agri-food value chains can help India to capitalise on the productivity gains achieved in recent years. The country’s commitment to doubling farmer income is underlined by a paradigm shift, from a production-focused to an income-focused agri-system approach. Recent reforms such as the Agriculture Export Policy, 2018, launch of the soil health card, setting up of an INR1.1 lakh crore agri-infra fund and measures to provide barrier-free trading platforms to farmers, aim to ensure better returns while addressing post-production challenges faced by farmers.

17 December 2020

Infrastructure is the foundation for a country’s development, as it fosters economic growth, employment generation, and alleviation of poverty. Adequate infrastructure in the form of multi-modal transport systems, warehousing ecosystem, power grids and gas pipelines, is essential for an effective and efficient domestic ecosystem. A robust infrastructure pipeline will also support India’s aspirations of embedding itself as a key hub in the global value chains.

In an effort to spur infrastructure development, the Government introduced the National Infrastructure Pipeline (NIP) which envisages infrastructure investments of INR111 lakh crore till FY25, from all stakeholders – Central and State Governments and the private sector. The infrastructure investment potential also presents a key opportunity to attract foreign investments in industrial and manufacturing facilities will continue to help drive growth in India's non-residential buildings sector.

The NIP includes economic and social infrastructure projects and aims to help India cater to the challenges posed not only by the COVID-19 pandemic, but also by the growing population and increasing urbanisation. The effective execution of the NIP will lead to the creation of new-age infrastructure, build investor confidence, increase revenue, generate employment, and improve the living standards of people resulting in a growing, sustainable, and inclusive economy.

Global energy demand has been consistently growing over the years, driven by increasing prosperity and living standards in the emerging world. As these regions develop, the energy demand is only going to increase. However, the structure of energy demand is likely to change over time as the declining role of fossil fuels, is offset by an increasing share of renewable energy.

The demand for clean energy has been increasingly gaining traction at the national and global agenda and ensuring that targets are achieved while managing the dynamic demand pressures would transform the Indian energy sector. India’s future energy demand faces substantial challenges in the coming years, as the country vies to provide 800 million people with clean cooking energy and 200 million people with access to electricity. As India becomes further urbanised and industrialised, the electricity demand could more than double in the coming next fifteen years.

A smooth energy transition is essential to fuel long-term growth in India. Over the past few years, the country achieved a significant reduction in its energy and peak deficits, by adding substantial electricity generation capacity. As the COVID-19 pandemic wreaked havoc around the world, it led to the demand for global energy to fall by 5% in 2020. Despite the disruption caused by the pandemic and the ensuing lockdown, India is on track to meet its energy commitments.

All sectors would have to transform and contribute towards economic growth, to achieve the Government’s vision of making Indian a US$5 trillion economy. While the pandemic impacted most sectors, a few were worse hit than the others. Even as economic activity picks up and macro indicators show signs of recovery, a few sectors continue to struggle.

With global borders sealed and local lockdowns in place, the tourism sector was among the first to be hit. However, even as the economic activity picks up, the industry continues to struggle. India needs a focused approach to leverage the potential of its vibrant tourism sector, which can help boost employment creation and have a cascading impact across sectors.

The civil aviation sector was among the worst-impacted with closed domestic and international borders. With the unlock, people have started taking flights for vital travel, though the essential safety measures are keeping capacity utilisation at bay. More innovative measures, such as the recent bilateral ‘air bubble’ arrangements, are needed to support the sector.

The gems and jewellery sector plays a significant role in the Indian economy, which is also impacted by the pandemic. International lockdowns and lowering consumer demand have significantly impacted trade in the sector. The sector has stabile long-term prospects, owing to enhanced consciousness of branded jewellery, rising purchasing power in Tier 2 & 3 cities, and the growing population of working females.

18 December 2020

The next phase of India’s growth will require the country to tap into its cultural heritage and leverage various segments which are increasingly gaining global traction. These segments can help increase India’s share in global exports and play a crucial role in global value chains.

The unfolding pandemic has brought forth the importance of boosting immunity, through Ayurveda, Yoga & Naturopathy, Unani, Siddha, and Homeopathy (AYUSH). The global recognition of these practices, provides India an opportunity to mainstream these practices and enhance brand value. The sector holds immense investment potential but will require more research and validation before it is accepted on the global stage.

The Indian textile market, despite its massive size, has continued to struggle in the global market as countries like Bangladesh and Vietnam are racing ahead. In its efforts to reduce imports, India has begun to gradually produce Indian silk yarn over the last five years. With proper government support and an embargo on Chinese textiles and apparel imports, India can begin to develop the domestic capacity for production of textiles for domestic consumption as well as export. Among India’s artisans, the tribal segment presents significant untapped potential. Mainstreaming tribal products, leveraging e-commerce can help enhance their economic contribution, also supporting social development of such communities.

The Micro, Small & Medium Enterprises (MSME) sector forms the backbone of the Indian economy and has contributed immensely to the growth and development of the country. The MSME sector contributes 29.7 per cent to India’s GDP and accounts for 49.66 per cent of Indian Exports and close to 45 per cent of the manufacturing output of the country. The MSME sector was one of those hit hardest by the COVID-19 pandemic, as supply chains disrupted across the world and trade came to an almost standstill. The essential lockdown imposed in late March to curb the spread of the virus led to many MSMEs shutting down and many others on the verge of extinction.

The measures announced as part of the Aatmanirbhar Bharat package aimed to help MSMEs survive the impact of the unfolding pandemic, by infusing liquidity and lay the foundation of a more robust MSME sector for the long-term. The Indian Government revised the definition of MSMEs, bringing it in line with global standards, a move that will help MSMEs to scale up and generate more employment.

While the Government works on creating a level-playing field for the Indian MSMEs, these players will have to embrace technology and focus on value addition to enhance competitiveness in the global arena. The global economy is set to undergo massive changes post the coronavirus shock and provides India with a lifetime opportunity to strengthen its manufacturing prowess and position itself as a critical hub in global value chains.

COVID-19 has upended the global economy, businesses and the way of life for people. Amidst these trying times, technology has turned out to be a saviour in keeping people connected and businesses operational. The crisis led to many physical dependencies being replaced by digital infrastructure, as sectors transformed business models. Adopting emerging technologies helped companies continue operations and cater to their customers at a time when lockdowns, social distancing and other safety measures, hampered traditional methods.

The unfolding pandemic has helped drive organisation across the world to focus on digital transformation. In India, too, the last few months have led to higher adoption of digital technologies and strengthening of transformational technology plans.

Digital transformation is crucial for economic growth and will act as a catalyst for India's dream of becoming a US$5 trillion economy. The Government's Digital India plan aimed to push India's digital transformation and empower citizens. This initiative supported the opening of more than 350 million verified Jan Dhan accounts in India, over 85% of which are used to access credit and savings products.

The digital economy alone can support millions of jobs in the future, fuelled by afacilitative policy and regulatory environment. In manufacturing and services, digitisation can help improve efficiency, productivity, transparency, and accountability. As technology pushes economic growth, it also has a crucial role to play in the social and personal areas of human life.

With an extensive digital consumer base, the country has a higher receptiveness of digital solutions. Digital payment adoption, which was traditionally low, is now fastchanging as the pandemic forces consumers to opt for contactless modes and transactions using digital payments are being preferred. This rising demand from consumers is also leading to retailers upgrading their point of sale infrastructure across the country.

The recently announced INR500 crore Payments Infrastructure Development Fund is supporting the Government's efforts to strengthen the digital payments infrastructure. The impact of digitalisation is visible across healthcare, financial services, agriculture and retail, wherein productivity gains and enhanced transparency and reduced costs, strengthen the segments.

India’s digitally-backed policy initiatives have facilitated the country’s ease of doing business, as getting construction permits and trading across borders became simpler through digitisation and associated structural reforms.

At a time when business operations and supply chains across the world were disrupted, technology helped maintain continuity and ensure that most services are provided to consumers, education continues albeit, through online platforms, telemedicine supports patients where possible. While a lot more needs to be done to bridge the digital divide, it is crucial for both the public and private sector to make concerted efforts.

As economic activity picks up, businesses and other stakeholders are acutely aware of the importance of digital technologies incoming times. While they long recognised the benefits of technology adoption, they now understand the need to embed technology as part of all strategic initiatives to ensure continuity. As more people prefer to work from home and businesses diversify and recreate risk management systems, the digital backbone would need to be enhanced. Additionally, policymakers would have to match the pace of changes in technology to ensure a comprehensive regulatory framework facilitates adoption, keeping in mind concerns around data privacy and security.

The journey towards becoming a US$5trillion economy will be based on a delicate balance between economic and social development. The unfolding pandemic has brought forth the need to focus on various social development facets.

A robust healthcare ecosystem is essential to support India’s economic growth agenda. By embracing technology and focusing on research, India has the potential to develop innovative care delivery models. India recognizes the need to strengthen its medical infrastructure and ensure that timely, high-quality health services are accessible throughout the country. Amidst the pandemic, as the world awaits the release of a successful vaccine against COVID-19, India is working towards developing an effective delivery plan, towards ensuring access for all. At the same time, India needs a robust skilling ecosystem to leverage its demographic dividend and create a workforce for the future. Rapid digitalization has been fast changing the future of work, with newer technologies requiring specific skills and training. India must focus on economic recovery and growth across industries and ensuring employment security for its large workforce. For India to become competitive, the country also needs to transform its labour code. The Government has been making steady progress on this front, with the recent labour reforms aiming to help both workers and industry.

19 December 2020

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