India’s Prospects Amidst Global Uncertainty

The world has been grappling with unprecedented uncertainty brought about by a confluence of factors such as the Covid-19 pandemic, climate change, geopolitical tensions, and economic turbulence. While there was a noticeable impact on businesses worldwide, Indian industry showed remarkable resilience. Deft policy interventions by the government and Central Bank paved the way for businesses to bounce back from the pandemic effect, while sustained policy reforms have provided a foundation for growth.

According to the latest IMF projections, global economic growth is expected to slow from 3.4 per cent in 2022 to 2.9 per cent in 2023 before rebounding to 3.1 per cent in 2024. Though the Indian economy too was hit hard by the pandemic and contracted by a record 6.6 per cent in FY2021, its inherent resilience coupled with fiscal and monetary policy working in tandem,  saw it subsequently become the fastest-growing, large economy in the world. In fact, the IMF has referred to India as a “rare bright spot” with growth prospects supported by favourable demographics, a growing middle class, large domestic market unified by the introduction of GST, and ongoing economic reforms.

A confident ‘New India’ is marching ahead in its quest of Prime Minister Narendra Modi’s vision for Amrit Kaal, to become a developed nation by 2047 which is India’s 100th year of independence. The Union Budget 2023-24 is a visionary document which seeks to position India as a country primed for growth through initiatives like the Skill India Digital Platform, Centres of Excellence for Artificial Intelligence, National Data Governance Policy, etc. while also substantially increasing the outlay for public capital expenditure to a record Rs 10 trillion (3.3 per cent of GDP) so as to create infrastructure which will stoke and sustain the growth momentum. A focus on green growth, continued attention to digital public goods infrastructure, and policy interventions to attract global supply chains speaks of India’s commitment to sustainable, inclusive, and resilient growth.

The vagaries of climate change, evident from unprecedented weather conditions, underline the importance of sustainability. India has not only set aside large sums for energy transition but has also stuck to its commitment to increase the share of renewables by 2030. India is a Founding Member of the International Solar Alliance and has invested substantially in creating more than 64 GW of solar energy capacity out of a total portfolio of 175 GW renewable energy by February 2023 as part of the National Action Plan on Climate Change. Businesses must continue to build on these initiatives and work towards reducing their carbon footprint besides adopting sustainable practices relating to water, mineral resources, waste management, etc.

The digitalisation drive in the country has fostered inclusivity in many ways. Always known for its vast pool of engineers and a booming software industry, India has now crossed the Rubicon in terms of using digitalisation as a means of improving both Ease of Doing Business as well as ease of living. By incorporating digital infrastructure, Indian businesses, especially MSMEs, will be able to improve their efficiency and reduce costs, thus competing effectively in the global marketplace. At the same time, by providing internet access in even the most remote areas, as well as making it affordable for the common man, India has spurred a digital revolution, the likes of which has never been seen. The staggering scale is evident from the 91.9 billion digital transactions aggregating more than Rs 2050 trillion in the first three-quarters of FY2023 as well as the two billion Covid vaccine doses administered in the country which were tracked digitally by health authorities.

The world is increasingly looking to engage with India as worries mount about too much reliance on China. In this context, India is seen as a reliable partner – one which is ideal for “friend-shoring” critical and emerging technologies – with large domestic consumption to boot. As multinational companies look to de-risk their supply chains, India has a renewed opportunity to attract substantial investments in manufacturing even as the services sector continues to shine, thereby creating jobs. Ongoing waves of reforms, Production Linked Incentive (PLI) schemes for select sectors, and FTAs with consuming economies will all help India achieve its potential as a global player.

India and Indian industry demonstrated impressive resilience in the face of the pandemic. To continue to thrive in an uncertain environment where advanced economies are staring at a slowdown as they struggle to contain inflation, it must adopt a flexible approach much like the recent Foreign Trade Policy which has set an ambitious export target of $2 trillion by 2030. There will undoubtedly be several challenges along the way, but India’s inherent resilience is borne out of fortitude; ‘New India’ on the other hand has the confidence to turn adversity into opportunity much like what happened during the pandemic. The ability to adapt, innovate, and navigate choppy waters will be crucial in helping Indian businesses achieve a larger global footprint.

(The author is President of the Federation of Indian Chambers of Commerce and Industry and Managing Director, IMFA)

Subhrakant Panda

Guest Author Subhrakant Panda, Managing Director of the flagship company Indian Metals & Ferro Alloys Ltd (www.imfa.in) the country’s leading, fully integrated producer of ferro alloys and his current role is to define the broad strategic goals including growth & diversification plans.