India's growth story, to some extent, is powered by the many multinational corporations (MNCs) that have been a part of the Indian economy, some for as long as a century. Over the years, MNCs have contributed to India in various ways, founding training and educational institutions, pioneering environmental and social initiatives, and working with the government to create more robust governance. MNCs, on their part, have benefitted from India's growth, its large market, and a robust talent pool.
CII and Deloitte collaborated to research, write and publish, ‘In India, for the world: The journey of multinationals in India’, an exploration into the impact that MNCs have had on India's social, economic, and cultural spheres. It comes as no surprise then, that CII and Deloitte had these discussions at the World Economic Forum at Davos.
CNBC's Managing Editor, Shereen Bhan, with CII leadership, Sanjiv Bajaj and Chandrajit Banerjee, Deloitte's Punit Renjen and N Venkatram, and Hon’ble Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution, Textiles, Piyush Goyal, to discuss India's growth story post the Russia-Ukraine war and the target of $1 trillion international trade by 2030.
Are the government and industry in agreement on Indian business needs?
Piyush Goyal expressed his confidence in Indian business' ability to perform and work well with the world, without the need for subsidies and crutches. "I don't believe you can artificially support a sector in the long run. Ultimately, sectors where we have strength will grow." He also alluded to the government's efforts to increasing ease of doing business in India. "The government is making it simpler to work in India by easing business processes, reducing regulatory burden, reducing compliance burden, easier land approvals, amendment of Indian laws—anything that makes business onerous."
As an example of a subsidy that works, he brought up the Production Linked Incentive scheme. "Subsidies can support one during the initial stages, but in the long run, they become very routine. Their virtue is only when it is swift, fast acting, and short lived, and then you can fly on your own."
India's alignment with the world on climate, food security, and clean energy
Punit Renjen highlighted the need to elevate nature-based solutions, as they tend to get lost among big ticket items, such as technological solutions, big investments, renewable energy, and green hydrogen. "It's nature- based solutions that will get us to where we need to be. For instance, we're working on afforestation projects with rural women: It's a twofer because you build the forest canopy in the state and employ local women."
Technology to our comparative advantage
N Venkatram touched upon using technology to our comparative advantage, particularly in areas such as healthcare, fintech, education, and tourism—India’s areas of strength. In agreement, Piyush Goyal talked about the excitement India's renewable energy program has generated. "We are being looked at as the future renewable energy capital of the world." He also congratulated big business houses on the large investment commitments they have made in technologies that make a greener tomorrow possible. He expressed his confidence in the increasing participation from India's Top 50 companies in the First Movers Coalition, by the time the next WEF summit comes around.
However, N Venkatram pointed out that the biggest stumbling block to progress in this regard is capital. "The issue is not just capital, but long-term capital and I think that’s where we need solutions. Be it for infrastructure, digital infrastructure, or climate change, we need capital that works for us in the long term."
Does India have enough capital for capex?
According to Sanjiv Bajaj, "Where large projects are concerned, there is no constraint of funding." He points out that the insurance industry has the wherewithal to begin utilising more capital to fund both, long-term infrastructure projects and start-ups. "This is a source that didn't even exist two decades ago."
Piyush Goyal expressed his confidence in the resilience and growth of Indian Banking.
Sanjiv Bajaj also expressed his optimism in the uptick in the private capex cycle. "I think the government has provided the tailwinds through the last few years when we haven't seen the private capex cycle. Now that the capex cycle began two quarters ago, not just with commodities but with construction, real estate, and even logistics, let's hope it continues. We are laying the foundation to make India more competitive and leverage these opportunities for the next three decades".
The mood was buoyant and Piyush Goyal aptly summed up the discussion with the quote of the evening, “This is not business as usual for the government, it is government as business that we are trying to bring in.”
For more insights on India's growth story from the best in the business, watch this episode of Davos Dialogues.
This is a partnered post.