Harness opportunities as India emerges as alternative to China: Sitharaman
Sitharaman said many global firms are looking at India as an alternative to China in terms of setting up a manufacturing base because of the recent conducive policy environment.
Union finance minister Nirmala Sitharaman on Tuesday encouraged businessmen to realise the scope of opportunities in the country — competitive tax rates, ease of compliance and production-linked incentive scheme — that have started attracting global multinationals which now India as an alternative to China.
“I want to hear from India Inc, what’s stopping you? When countries and industries abroad think this is the place to be in …,” she said at the Hero Mindmine Summit. She asked businessmen to aggressively participate in India’s growth story, with the country now surpassing the UK to become the world’s fifth largest economy after the US, China, Japan, and Germany.
According to a State Bank of India (SBI) research report, India had surpassed UK as the fifth largest economy “as early as December 2021 itself” and it is set to become the third largest economy by 2029.
She said this is the time for India Inc to realise its true potential. “Is it like (the story of) Hanuman? You don’t believe in your own capacity?” she said alluding to the Ramayana where Lord Hanuman had to be once reminded of his limitless strength t.
“I, equally, would want to know from the Indian industry, what is it that they are hesitant about? Since 2019, when I’ve taken charge of the finance ministry, I’ve been hearing the industry doesn’t think it’s (the environment is) conducive…,”
Sitharaman said many global firms are looking at India as an alternative to China in terms of setting up a manufacturing base because of the recent conducive policy environment created by New Delhi, such as the production-linked incentive (PLI) scheme. “I’m hearing a lot more companies moving out of China wanting to come [to India] because they find the policies a lot more attractive, not just the PLI, but overall the ecosystem is now far more facilitative of such companies coming out to locate themselves in India.”
The Union Budget 2021-22 dedicated an outlay of ₹1.97 lakh crore for PLI schemes for 13 key sectors under its ‘Aatmanirbhar Bharat Abhiyan’ (Self-reliant India Initiative) and to enhance India’s manufacturing capabilities and exports.
She said the Modi government’s calibrated approach during the pandemic , which was in contrast to the free-money policy announced by several countries has kept the Indian economy in better shape compared to even developed nations. “The credit goes to the people of India. People belonging to all levels of income and the leadership of the Prime Minister together gave us guidance, but also tenacity, endurance...also the spirit to fight.”
She said India’s youth power will be the driver to take India from the fifth largest economy in the world to the third and eventually achieve the goal of becoming a developed nation. “And when I say youth, I mean youth with all sets of skills,” she added, pointing to the fact that India has built capabilities in new technologies and skills such as the Internet of Things (IoT), digitisation and artificial intelligence in the last three-four years.
Sitharaman appreciated the Reserve Bank of India (RBI)’s decision to allow trade in Indian currency. Many countries have shown interest to undertake bilateral trade in the rupee after RBI announced the mechanism in July.
In principle, RBI’s decision also allows trade in rupee with sanctioned-hit countries such as Russia and Iran, the two oil-producing nations, a government official said requesting anonymity. “India’s economic fundamentals are strong. The rupee can be used for export and import with any country which accepts this arrangement. For example, trade with Iran,” the official said.
Speaking about the mechanism, the finance minister said, “I am glad RBI has come up (with this) at a time which was so critical.”
India imports 85% of its crude oil requirements and pays in dollars. At a time when international fuel price volatility is one of the major factors behind the country’s high inflation, both Russia and Iran are willing to supply energy to India at hugely discounted rates. While Indian refiners are buying Russian crude in significant quantities, the import of Iranian crude has not started yet.