Tag: Amitabh Kant

India needs to scrap old labour laws, make infrastructure more accessible to create large scale companies, says Amitabh Kant

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

India’s G20 Sherpa and former NITI Aayog CEO Amitabh Kant on Friday stressed the need to scrap old labour laws, decriminalise them and make infrastructure far more accessible to ensure Indian companies penetrate the global markets and succeed in scale and size.

Speaking during the launch of his book Made in India: 75 Years of Business & Enterprise, Kant emphasized that the growth of MSMEs (Micro, Small, and Medium Enterprises) in India is contingent upon having very large companies.

During the book launch event, Kant also talked about India’s potential in the field of green hydrogen. According to him, green hydrogen is the area where India has the potential to become a world leader. Today, the cost of producing green hydrogen is $4.5 per kilogram, but Kant believes that India has the potential to bring it down to $1 per kilogram. Achieving this would require significant investment in technology and infrastructure.

Also Read: Amitabh Kant: Centre did its bit, now states need to buck up

Here are excerpts from a panel discussion at the book launch which also had N Chandrasekaran, Chairman of Tata Sons, Uday Kotak of Kotak Mahindra Bank and Falguni Nayar, founder and CEO of Nykaa, hosted by CNBC-TV18’s Shereen Bhan.

Q: How do we actually get India to export more, how do we get India to take more share of global trade? In your book you address the issue of the fact that we only got a handful of large conglomerates, so how do you ensure that that number moves up? How do we ensure that we have thousands of scale enterprises and not just small enterprises because that is going to be responsible for the kind of growth aspirations that we have?

Kant: If you look back at the years when India has really grown and India has grown at 8-9 percent for four to five years, but it hasn’t grown for decades like other countries have done. However, every time we have done that, it’s because our exports have grown. So exports are the key to growth. And that really means that you need companies who will penetrate global markets, you need size and scale of manufacturing. And that’s why we brought in the PLI scheme.

The production linked incentive scheme was very simple. Many people mistake it for subsidy, it’s not. It says we want you to every year keep raising your production. You fix your targets and achieve them. If you don’t achieve them, you don’t get it. But in five years’ time, it gives you the opportunity to become global in size and scale. And once you have companies of that global size and scale, you will have tier-II manufacturers, tier-III manufacturers, like Maruti came in and then all these MSMEs came in the automobile sector because of Maruti, it’s an automatic backward-forward linkage.

Therefore you need large companies for MSMEs to flow. I mean MSMEs will grow if you have very large companies and then they will penetrate global markets. It’s very important. So I think for large companies to also happen in India, we need to scrap a lot of labour laws which were made a long time back, we need to decriminalize a lot which the Prime Minister is pushing for, you need to make your infrastructure far more easy because your logistic costs are high, that’s what Gati Shakti is doing. So a lot of that work is in action right now.

I think in the next 2 to 3 years, you’ll see India becoming more and more efficient in many of these areas to enable large scale and size. Look at the sectors where India has the potential. I think to my mind, green hydrogen is the area where India has the potential. Today the cost of producing green hydrogen is $4.5 per kilogram. India is the only country which is climatically blessed, it has top class entrepreneurship, it is possible for it to bring it down to $1 per kilogram. You can be the biggest producer and exporter to the world, but it will not happen without size and scale. So size and scale is really the key to it.

Q: At the Delhi launch of the book, external affairs minister said India is uniquely positioned, uniquely poised, but let’s not go around looking for the China fix of efficiency. If we don’t go looking for the China fix of efficiency, what is the India Fix going to be over the next 25 years?

N Chandrasekaran: It’s definitely a very, very unique opportunity for India for multiple reasons. There are three transitions and there are moving geopolitical situations. From the transition’s point of view, the first is digital and AI, second one is energy and third one is supply chain. In all the three transitions, I would say that India is probably the best placed country in the world.

First on the digital. Just two primary reasons. First, there is no country in the world which has demonstrated a large scale digital intervention and digital platform for public services delivery, which is transformative at scale, whether it is the UPI, Aadhaar or the Jan Dhan Yojana, we can go on an on.

The second thing on the digital side is it’s no secret that we have the best talent available from a digital point of view for the future. The scale and the depth that India has, again, it is unparalleled. You can add all the talent that’s available from next 10 countries but still they will fall short. So these two are big tail winds.

If you take the energy transition, India is probably the only country in the world which has to achieve the energy transition, purely only accounting for growth. Most other people, whatever be the country you take, their energy transition to renewable or new energy, what have you has to be substitution. Whereas in India, if whatever be the doubling, tripling, whatever is the GDP number you take by 2047, the needs of growth that we have between now and 2047 or 2050 is at least three times more than what we have.

And all of this will be new energy and we will do renewables, we will do wind, we will do solar, we will do 10 other technologies and that is a unique opportunity because with growth, you can fix anything. Priority should be growth, growth, growth.

And when you do something for growth, you are not so much under stress like when you do it for substitution.

Thirdly, the global supply chain is going to be rebuilt and it is being rebuilt as we speak. It is not that it is going to happen, it is happening. We are in the middle of that. Any supply chain is an ecosystem play. So I keep referring as India plus, I never use any other example of saying that we are replacing somebody, we are not replacing anyone. We have an opportunity to create a global alternative supply chain base, which I call it as India plus because India can’t do it alone. However just the sheer size, scale and everything else that we have positions India to be the lead in this alternative supply chain, somebody else cannot take the lead, it has to be India and India is taking the lead and the supply chain will get built over the next 10-30 years.

But above all of this, under the leadership of Prime Minister Modi, what has fundamentally changed is the belief and the aspiration of every Indian and every sector. You can feel it in the urban, you can feel it in the rural, you can feel it in poor people, rich people educated, uneducated, it is there everywhere.

As a country, we had the audacity in the middle of the COVID — when every other nation was going after Pfizer and Moderna, which normally we would have done how to find the money, run helter-skelter to see how to get Moderna Pfizer or which country we can import from, instead of all that to say that we will build our own vaccine in the middle of a crisis, there is something to be said about that.

So this whole Make in India, started as a campaign or a slogan. The slogan became a movement, movement became a belief and now we are in the execution phase. So I really believe that we should give ourselves the chance and we had to make bets. We have to take risks. Everything we do will not work, but it’s ok.

Q: You know, you’re right in pointing out that we are currently in the execution phase as far as Make in India is concerned. And in your words, the global supply chain is being rebuilt and India stands to gain from that rebuilding, so to speak. But you straddled both software services, which is where you spent a large part of your career and now outside of that as well, that has been the big India growth story that has been our engine of growth for several decades now, the aspiration of becoming the factory floor of the world, how easy or challenging will that be?

Chandrasekaran: Nothing is easy in life. All the business people will tell you that to make Rs 100 crore profit, even to become EBITDA positive is not easy. So we are not doing these things because something is easy. And if you are doing easy things, why we will succeed, everyone else will do the same thing. So I think we have to do things where we have a chance.

What is going for us? The geopolitics is going for us. It’s clear the current geopolitics, I think we are uniquely positioned and this will last for a few years. I don’t know, it will last for three years, five years, six years, I don’t know. And you cannot miss the moment.

So the geopolitics allows you to form partnerships – technology partnerships, finance partnerships, supply chain partnerships, customer supplier partnerships, all this is possible because the timing is there.

Second, we have the talent, yes, they are not skilled. We are putting together a complete value chain in the electronics. We are doing the precision manufacturing now. We are slowly moving into packaging, assembly, then getting into semiconductor testing, then we had to put a fab design, then eventually to vertically integrate, we had to put a fab – that’s the whole chain.

We have a lot of skills in India on the fab design, but we don’t have skills in precision manufacturing and it’s hard work. Some of us are working on a quality model also, but we have scale. So if we have the vision to do this, time is now, money will come.

While I am not going to say that it’s easy to get $10 billion-$50 billion, but money is available once you have the right project and right management team.

Q: Everyone is talking about how we can double as an economy by 2030 and so on and so forth. One issue I think we need to be mindful of and I think Amitabh Kant mentions that in his book very specifically, is let’s not get carried away with five to number three in the world, but let’s focus also as far as per capita is concerned and there is a big difference there, there is a big difference between us and some of the countries that we just spoke of. The other issue is the issue of financing. We have this aspiration, what will it take to finance this aspiration? Where will the financing come in from? And what do you believe will need to be done in terms of capacity and capability building specifically from that perspective?

Uday Kotak: Congratulations to Amitabh Kant, I think it’s a fantastic book. If you read the whole book, you must not miss the last chapter. The last chapter is about our future. It reminds me of a simple line- let’s not keep the baggage of history but learn from the lessons of history. And that’s in my view, what Amitabh Kant’s book highlights.

I have seen Amitabh in his own career, he has always explored the art of the possible and he is now mastering the science of execution because both going together is what is going to make it happen.

India stands out as one of the most stable financial systems in the world today. I want to publicly congratulate the RBI and the government for an outstanding job of making India stand out.

When I look at every night or every morning, one more bank in the US is in trouble or somebody in Europe is in trouble, I say we’ve got something right. We have got our act together, we have created a stable financial system, well capitalized and it’s a goldilocks time – lowest non-performing assets, clean credit, reasonable growth in the book, and none of these risk issues like we are seeing in the developed nations. So I genuinely feel very good about the stability and the solidity of the Indian financial sector.

Having said that taking a cue from Amitabh, where do we go from here? And how do we take this wonderful situation we are in? I think we need to be feeling good about ourselves, but always introspecting, what is it that we can do better? So if I think about capacity building in the financial sector, we really need to get some of the important guardrails in place. I think the concept of IBC was a great concept, it really was the basis of creditor being in control but I think there is work to be done. I think we really need to fix the judicial system which is consistent with a bankruptcy law because at the end of the day, if banks lend money, we must be able to recover the money. If we have a problem there, it constrains our ability to take better risk.

In the same context, I think we must now get this balance right between the needs of the corporate sector.

When N Chandrasekaran tells me that he wants to buy a Rs 50,000 crore company in India, I will have to tell him, please go to a foreign bank and get it funded outside because I cannot fund you in India. If we have to grow forward I think these are risks, I think Indian banks have to be able to understand and manage these risks like acquisition financing, project financing. We got into trouble on infrastructure financing. If you look at 2008 to 2018, it was a year when we did not get infrastructure financing right and banks took the wrong risks because the guard rails of the system were not in place. Therefore, we need a unified well-coordinated system.

I do believe India has the brain power and the risk management to be able to manage a financial sector which meets the aspirations of all of India’s growth as we go forward.

Q: Has N Chandrasekaran been talking to you about making a Rs 50,000 crore acquisition?

Uday Kotak: N Chandrasekaran doesn’t talk anything below Rs 100,000 crore.

Q: As you look at where we are today and as the landscape plays itself out, what are the big bets that you’re willing to make on the power of consumption and technology?

Falguni Nayar: I want to go back to the history that everyone is talking about. Being a startup representative, I want to just say that just around the time when Startup India movement started and I think that big photograph of PM Modi on a stage with a lot of startup entrepreneurs gave a lot of credibility to startup businesses.

In 2015, our turnover was about Rs 20 crore and from there, we’ve grown about 300 times and that is what gives us confidence that tomorrow is also there for our platforms. As I travel and meet our brand partners all over the world in beauty and in fashion, what I can say is that they are noticing India and they are noticing power of Indian millennials, power of GenZ, which is coming of age and they are very excited about what India has to offer.

I think India is becoming one of the top markets for all these players. And I’m convinced that the next decade will be the decade for Indian consumption. Obviously consumption is driven by income, so first incomes have to go up. But I’m very confident that the young India with the power of their enterprise will take India into a generation where both income and consumption will grow.

Talking of the platforms, I think Chandra already said that we are very aware that our platforms are some of the best in the world. When we meet against these, these global partners, they compliment us for having one of the best platforms. It’s not just about coming from India, but it’s in the world one of the best platforms are coming out of India because of the sheer talent that is available and ability to do complex task.

So I think if we were to marry technology with problems that we need to solve in the country, which is what most of the startup entrepreneurs have addressed, I think the sky is the limit in terms of driving our Indian consumption and attracting many of the global players to come into India to address those markets.

Of course, that doesn’t mean we can’t export. So beyond that, we would of course like to dream how we can take our Indian brands into global markets.

Q: Whether it’s banks, world-class and world-size banks, which is what you were talking about, or it is world size and world-class companies that are exporting to the world, and of course, he highlights the Korea example several times over in the book to make that point. What will it take for us to be able to build size and scale, this missing middle has been one of our perennial problems, how do we address that? Are we at an inflection point of being able to address it?

Kotak: I think the mindset is positive. The mindset is about reform, taking the country forward. What we need to keep in mind is that as we go down this, we want many, many cars to run on the roads. And the more the cars are, the risk increases, there is of course, risk of accidents along the way. The answer to that is for us to get better road regulation, get our systems, our signals and all that in place. Rather than taking an approach that we have taken historically. Because there are accidents we don’t want so many cars on the road. Let’s encourage more cars, let us encourage and build more roads, traffic and congestion is an inevitable part of it, we will manage it. But we will have to take the risks of potential accidents along the way and manage those accidents, rather than saying we don’t want accidents.

Q: You have talked about bets and risks. What are the big bets and big risks that you are willing to make at this point in time?

Chandrasekaran: We were already doing a number of things, we are doing huge transitions in automotive, we have pivoted to electric vehicles, we have pivoted to fuel cell in commercial vehicles, then renewable power, both size and transition we are doing. We are working on carbon capture. We are putting together the electronics vertical, we are putting together the mobile telephony infrastructure, whether it’s 5G, 6G, and 6.5G. They are getting into batteries, lithium batteries, so I think we will do whatever is needed. And whatever we can do, we will do.

However, the point fundamental point is the opportunity is huge. If India has to realise its potential, forget about whether we will grow 6 percent 6.5 percent- 7 percent – it is good for some headlines every other week. I think the opportunity is even double-digit. But that doesn’t mean that it’s easy.

I think what opportunity is not there – you take consumption. I think the trends are very clear. India is becoming a formal economy. The aspiration of the people is increasing, the per capita income is going to increase. The affordability for spending is increased and then once we cross – I think there is enough theory that the 3,000 mark, once it crosses, then you see a hockey stick in consumption. Whether it is $3,000, or $3,500 we don’t know.

But at the same time, we have a lot of disparity, one state is at $8,000 and another state is $800. So, we got to figure out a way to fix it, if you want to really capture the true power of consumption.

The second thing is demography, I think Amitabh Kant talked about age and so on so forth. So we have got do skilling, and we have to do 21st-century skilling. We have to differentiate between what is industrial skilling we need to, and what is digital skilling we need to do.

Similarly in the whole infrastructure, B2B side all these industries, everywhere there is so much growth opportunity. But it’s going to be a lot of hard work. It is going to be a little bit chaotic. Because order doesn’t come and Indians by general we like clarity out of chaos. So we will come through, but the point is we have to work at it.

Q: Let us address one of the issues because Mr. Kant brought up the demographic advantage and I think that gets held up very often, it is one of the critical advantages that India enjoys as the world ages. But where will the jobs come from? Skilling is one aspect. But where will the jobs come from? Especially as we are now talking about AI being the next disruption in India, leading in the AI war, and so on and so forth, where do you create the jobs for this demographic?

Chandrasekaran: I want to, first of all, tell you that the creation of all these industries are going to create a very strong MSME ecosystem. India needs 100 million jobs, and probably now 90 million jobs, whatever is the number, all of this is not going to come from big companies. So it’s going to come across sectors. There is going to be a huge amount of jobs that’s going to come in the consumption, hospitality, healthcare, and services sector can explore. The services sector, not only for India, and for the rest of the world.

There will be a remote healthcare, services sector, which in my opinion, can be another IT industry. Okay, if you are creating 10 million jobs and 10 or 15 million jobs in IT, but BPO, we can create a similar number of jobs in the healthcare sector, that is a potential. Will it happen tomorrow, it will not happen tomorrow? Will it happen over the next 10 years? Yes.

The hospitality sector is a big thing. Entire MSME ecosystem, if you are going to develop an electronic semiconductor base, the number of companies you will create is just enormous. Each of those companies will have 50, 100, 150, 200 people. And all of this will mushroom, wherever these companies are housed, all those companies will come.

There is no reason for the electronics manufacturing semiconductor, not to repeat the IT industry, why not. We can repeat the whole model again, it’s just not that it is exactly a copy of the same thing. But the potential is the same thing because the world needs it. The world is going to need chips. There will always be volatility, this year they will say, no, no, now there is a glut. But it will change because there is no way technology and chips are going to disappear. So I think the opportunity is there, but it’s just that we try to capture it in one spreadsheet, it is not possible.

Q: Speaking of capturing in spreadsheets let us address this issue with you as well. Chandrasekaran was talking about the opportunity of creating another IT services sector in India, it could be remote health, for instance, as an example that he held up? This aspiration, of moving from having been the back office of the world and that is the experience that we have had for over two decades now and we have delivered on that successfully, to being the front office of the world, and the potential that that holds up?

Kotak: COVID has opened our eyes to the new vistas of opportunity. What COVID did is you could be in any part of the world and virtually operate in any other part of the world. This is India’s biggest opportunity. We have thought about most of our software services as significantly back office. We have to change our mindset that an office for somebody in America is operating out of Chennai, or Calicut. We have got to make that change in our minds. And I think the world is much more open to having a lot more jobs happening from anywhere in the world in the virtual dynamism which we are seeing post-COVID.

COVID has really opened up huge possibilities for India to have the front-end office jobs, combine it with AI and various other opportunities India can be the leading office of the world front or back. We need to take that opportunity now because that’s where Chandra, we can create a lot of jobs. I agree healthcare is another big one. And again, there will be out-of-the-box areas for jobs. Sports, you are talking about IPL, Kabaddi, so many games, sports is going to be the next big thing.

We happen to be as a family, we associated with a Kabaddi team, Kabaddi players who barely had enough subsistence or today making a crore, Rs 2 crores of. Those jobs did not exist. So we have a whole new generation and imagination.

Leisure is going to be a big industry. So let’s not sort of restrict our imagination of the future of jobs. Let us open our vista and we will create a completely new paradigm of opportunities across the board.

Chandrasekaran: Another sector is tourism, and it is a huge sector. So, it is a question of identifying and the devil is in detail; each of these must be mapped and each one of these has huge potential. So, the opportunity is there, but there is no easy picking.

Q: Let us address, some of the other untapped opportunities that we just spoke of. I think one of the things that both we heard from Mr. Kotak, as well as Chandra, was this ecosystem effect, as far as small businesses are concerned. Platforms like yours give air to a lot of private labels, what has been the experience of seeing this ecosystem being created? And where do you see this going? My second question to you is because if India has to grow at 10 percent, or 10 percent plus, which is what everybody here is talking about, it cannot do it without its women. Unfortunately, we have seen a not-so-great trend on that front, whether it’s labor force participation or women in entrepreneurship. I mean, even today to hear you being called out as a woman business leader, I mean, that tells us the story as well, doesn’t it? So what will it take to create this ecosystem of enterprises at the small and medium level that will have access to platforms like yours? And how do we just get more women to work?

Nayar:  I will first address the first question and I think, again, small is beautiful is always what I will have to say. If you look at the global supply chain and fashion, the company that is doing well in the US and giving a run for its money to all of the US fashion labels is someone who believes in small lot production that they do in China. And through that, because I think today’s consumer wants a lot of, newness and stuff like that so through that they are addressing the needs of the entire country like the US.

I think India is very well suited for that and I think platforms like ours, what we do is that we have more than 6,000-7,000 brands, and each of them is getting size and scale in India because when you want to become an exporter, the home market size and scale is important. So when you have size and scale in the country, and on top of that aspire for exports, so at least in beauty and fashion, where even small is beautiful, I see a lot of brands coming out of India meeting like about direct to consumer stories.

There are so many brands that have sprung up and when you give, foreign brands run for its money by being as popular as an Indian brand in the country that itself is the replacement of jobs that would have otherwise gone abroad. So I think replacing international production in the country, as well as having a strong base that allows you to export and aspire to export is great.

I personally feel that the MSME component is going to be very strong going forward, thanks to platforms, which will take away a lot of headaches. We say that will take away your supply chain headaches, we will tell you how much you should produce, and how much we will buy. We will take away your sales and marketing headache. So I think that allows them to use this skill on innovation and marketing.

Talking about women, I have always said that I don’t like to compartmentalize women and I personally feel that since women hold half the sky, I won’t be satisfied till I really see equal numbers. So I mean, seeing small numbers is not really worth talking about till we get there. But my only thing is that I think empowerment begins at home. And I would like to see each of the men empowered, closest to their home for women to make progress. With that, I think it also comes from confidence. I am just fortunate to have Nykaa stand for women’s empowerment.

As we started building a brand, a lot of women came up to us and said we really love the fact that you are asking us to dream, because for too long, women have not even dared to dream. I think if they can only dream for themselves, the world will be theirs. So with that, I think we have a long way to go. So with that, I hope for the best.

But I think India has a very fortunate place and this is a very fortunate century decade, whatever you say for women, and it will only be positive from here that also I can predict.

Q: Falguni talked about the ability to dream, and I know that all of you sitting here on this stage have always believed in dreaming big. What’s the next big dream that you have for the bank but more importantly for India?

Kotak: I would love to see a financial institution from India be amongst the top two or three in the world.

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India’s exports and the PLI scheme: Key to unlocking growth, says Amitabh Kant

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s exports are the key to unlocking the country’s growth potential, according to former Niti Aayog CEO Amitabh Kant on Friday, May 12. Speaking during the launch of his book, Made in India: 75 Years of Business & Enterprise, Kant stated that India had experienced growth rates of 8-9 percent for four to five years but had not seen sustained growth for decades like other countries.

He emphasised that every time India had experienced growth, it had been due to the growth of exports. Kant believes that to achieve growth, India needs companies that can penetrate global markets and achieve size and scale of manufacturing.

“Exports are the key to growth. And that really means that we need companies who will penetrate global markets, we need size and scale of manufacturing. And that’s why we brought in the PLI scheme.”

Also read: Amitabh Kant: Centre did its bit, now states need to buck up

To support this, India has implemented the Production Linked Incentive (PLI) scheme, which Kant says is not a subsidy but rather an incentive for companies to increase production every year.

The scheme gives companies the opportunity to become global in size and scale over five years, creating a ripple effect that allows for the growth of tier-II and tier-III manufacturers.

However, Kant says that for large companies to happen in India, many labour laws that were created a long time ago need to be scrapped, decriminalisation needs to be increased, and infrastructure needs to be improved. He believes that with current initiatives such as Gati Shakti, India is taking steps to make these changes.

“So I think for large companies to also happen in India, we need to scrap a lot of labour laws which were made a long time back, we need to decriminalize a lot which the Prime Minister is pushing for, you need to make your infrastructure far more easy because your logistic costs are high, that’s what Gati Shakti is doing.”

Kant also highlights the potential for India to become a leading producer and exporter of green hydrogen, as it is the only country climatically blessed with top-class entrepreneurship. However, he stresses that this will only be possible with size and scale.

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Cooling inflation very satisfying, shows monetary policy on right track: RBI governor

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday, May 12, said the cooling off in headline inflation to 4.7 percent in April is very satisfying and it shows the monetary policy is on the right track.

“A short while ago the April inflation numbers came out and it was very satisfying to note that the consumer price inflation which in the month of March was 5.7 percent has come down to 4.7 percent. So it gives me and my colleagues in the RBI to say with reasonable amount of confidence that the monetary policy is on the right track,” Das said

The Consumer Price Index (CPI) eased to 4.7 percent in April from 5.66 percent in the previous month. Also, industrial production growth slipped to a five-month low of 1.1 percent in March from 5.8 percent in February 2023.

Speaking at the book launch of G-20 Sherpa Amitabh Kant’s Made in India: 75 Years of Business & Enterprise, Das declined to comment on the next monetary policy stance or rate cuts, quipping instead: “10 am on June 8 you will know what the monetary policy is.”

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The governor said the RBI is quite optimistic and confident about the country’s 6.5 percent real GDP growth rate in FY24 even though other analysts are not so sanguine.

In this regard, he said that the private sector has to drive growth and investment and the government will play the role of facilitator. He pointed out that private investment in steel, cement and petrochemicals has seen a growth recently.
The government’s capex has been high over the last two years. If RBI projections are met 15 percent of the world’s growth in the current financial year will come from India, he said, adding that this is no mean achievement.

According to data, India contributes close to 14.6 percent to the global economic growth currently. China leads the race with 31.7 percent contribution and US adds 9.7 percent to the whole.

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Das also said that the Indian government has ensured the stability of the Rupee despite the Covid-19 pandemic and Russia-Ukraine war.

Unless the currency is stable, investors will not be confident in investing, he said, adding that the Indian Rupee has been the least volatile currency among peer currencies over last one year.

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Amitabh Kant: Centre did its bit, now states need to buck up

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The private sector needs to be the wealth creator for India if the country wants to achieve its $10 trillion economy dream, former NITI Aayog CEO Amitabh Kant, currently India’s G20 sherpa, said on Wednesday. Kant, speaking during the launch of his book, Made In India, added that the government too needs to become a facilitator to achieve the $10 trillion target by 2030.

The book was launched in the presence of Sanjiv Bajaj, President of CII; Naina Lal Kidwai, Chairperson, India Sanitation Coalition; TV Narendran, MD & CEO, Tata Steel; and Mallika Srinivasan, CMD, Tractors and Farm Equipment Limited (TAFE). Made in India focuses on how the private sector should flourish and the government too must pick up pace in many areas.

During a panel discussion following the book launch, Kant stressed on the fact that India needs to to fire on all cylinders, including manufacturing and agriculture, to achieve this target.

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He added if states like Uttar Pradesh, Rajasthan, Chhattisgarh, Bihar, and others grow 10 percent for the next two-and-a-half years, then India is bound to grow. He said “the central government has done its bit and it’s time for states to get active … even if India has 10 state champions, India is bound to grow”.

Kant further emphasised that states need to buck up to support India’s growth. “We are accelerating growth now and we will see Tier 2 and Tier 3 cities growing too,” Kant said.

Commenting on the challenges India faces, Kant added, “India needs to industrialise without carbonising.” India is growing at a time when the world has begun to look inward following the coronavirus pandemic, Kant added.

Meanwhile, Bajaj said, “Leveraging the capability of our youth is (our) big strength.” He added that entrepreneurship and research and development (R&D) will burgeon into massive industries and stressed on the importance of upgrading skills in both public and private sectors.

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Concurring with Bajaj’s point, Narendran it’s time India shifted its focus from academics to skilling. “A lot needs to be done on skilling,” Narendran said, adding, “For the last 75 years, India has focussed on education; it now needs to focus on skilling over the next 25 years.”

Further, Bajaj said the need of the hour is consistency on the part of the government where regulations are concerned. “If you add risk to business, we tend to become conservative.” He said India’s continued growth is a testament to “resilience and quality”

“The quality of growth is unparalleled right now, especially in insurance, MSME (micro, small, and medium enterprise) sectors,” Bajaj added.

Mallika said she strongly believes that R&D and deep tech can make a huge difference for India. Lauding India’s role in manufacturing, she said, “Today, the world’s confidence in India as a manufacturing centre is high.” She said India needs to absorb deep tech in existing businesses as well, and not just startups.

Meanwhile, Kidwai said India Inc’s dependence on subsidies needs to come down. In fact, she is in favour of doing away with subsidies entirely. “We don’t need an industry that is incapable of standing on its feet; we need to do away with subsidies in the long run.” She added that this subsidy-dependent approach will come in the way of attracting foreign companies to set up shop in India.

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PLI schemes to help India become world’s most efficient economy in 5 years: Amitabh Kant

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India is looking to become the world’s most efficient economy, and production-linked incentive (PLI) schemes are a key component of that strategy, according to Amitabh Kant, former Niti Aayog CEO.

At the HSBC India SME Summit on May 4, Kant said: “PLI was designed so that we create large companies — we will make things bigger in five years’ time. And in five years we will make India productively the most efficient economy in the world. So we were giving ourselves five year to make India more competitive than China is right now.”

Kant emphasised the importance of large companies and their relationship with micro, small, and medium enterprises (MSMEs) in boosting India’s economy. By creating backward and forward linkages with MSMEs, large companies can help increase production, generate employment, and expand business opportunities, benefiting both parties.

He stressed on the importance of prompt payments by large companies to MSMEs.

Backward and forward linkages with MSMEs

When a large company buys goods or services from an MSME, it creates a backward linkage. This, in turn, enables the MSME to increase its production, generate more employment, and expand its business. Similarly, when a large company sells its products to consumers, it creates a forward linkage, which can also benefit MSMEs by creating new market opportunities and increasing demand for their goods and services.

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Kant emphasised the need for large companies to supply MSMEs and promptly pay them. He said India requires more large companies and PLIs were designed to create larger firms and make India’s economy more efficient in five years.

Kant stressed that these linkages between large companies and MSMEs are crucial for the growth of the Indian economy. By supporting and promoting these linkages, the government can foster an environment that encourages entrepreneurship, innovation, and job creation, which can contribute to long-term economic growth and development.

He added that India is giving itself five years to make its economy more productive and competitive than China’s, emphasising the challenge that lies ahead.

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The creation of larger companies through PLIs will contribute to the growth of MSMEs, creating a more productive and efficient economy that could compete with China’s, Kant added.

India’s PLI scheme, which offers financial incentives to promote domestic manufacturing in key sectors such as electronics, pharmaceuticals, and automobiles, has already attracted significant investment from major companies such as Apple and Samsung.

The HSBC India SME Summit focused on finding solutions for SMEs facing challenges in the post-COVID world, and Kant’s remarks highlighted the role of large companies in the growth of SMEs.

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Former NITI Aayog chief Amitabh Kant highlights MSME sector’s critical role in India’s economy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Micro, Small and Medium Enterprises (MSMEs) are responsible for over 40 percent of the country’s exports, making them vital contributors to the Indian economy, as per Former CEO of NITI Aayog Amitabh Kant.

Kant, speaking to CNBC-TV18 at the HSBC India SME Summit, emphasised the need for India to grow with equity, meaning that economic growth must be accompanied by job creation. This is especially important considering India’s large population and the need to provide employment opportunities for the growing workforce.

Here is is a transcript of the interview, edited for style.

Q: Many things are looking strong at this point in time. There is of course the issue of deleveraging that has taken place, corporate balance sheets are looking better, banks’ balance sheet are looking better, but so is the government’s balance sheet. We have come off a record GST collection number, direct taxes are looking strong as well and the hope is that, because we are less exposed to the global market, we are less vulnerable to the global uncertainties at this point in time. How do you see where we are poised today? What do you see as our biggest advantage?

 A: First is that during the COVID period, we managed to digitise our economy in a very big way. Secondly, we carried out vast structural reforms, whether it was IBC, RERA, GST, lowering the corporate tax rates, redefining MSMEs, all this. We also used that opportunity to provide a huge impetus to our startup movement. I think all these structural reforms will give you results in the next decade-and-a-half.

Actually, in contrast to what is happening, what happened in the western part of the world where they gave big (bailout) packages, leading to inflation, then tightening of interest rates and — if you look around the world — what’s happening as a consequence is that resources have flowing from emerging markets to the developed world.

Whereas for future growth, if you look at the global economy, the share in the global GDP of developed world is coming down, and the share of emerging markets is going up. And the future of growth, the future of job creation will all happen in emerging markets.

Therefore, resources must flow to emerging markets. The opposite is happening because of policies pursued by the developed world. And therefore it’s very, very important that our banking system remains structurally very strong so that we continue to lend to our MSMEs. And it’s important to say this, because the debt ratio — the government debt-to-GDP ratio is high. The private debt to GDP ratio is low, it’s only at about 55 percent.

The private debt-to-GDP ratio in USA and China is at about 140-150 percent, so this ratio must rise in a very systematic manner. This digitisation process we have done, the account aggregator system that we have built up, we have linked it up to the bank, we have linked it up to insurance, and now, we are linking it up to the GST and flows — once it starts flowing, you will see a lot of more credit flowing from banks to MSMEs and that will boost the MSME sector.

MSMEs are very, very important because this sector is responsible for over 40 percent of our exports. This is a sector that creates jobs for India. India has to grow with equity if India has to grow with jobs. All these people present here are the key drivers of that growth and job creation.

Q: I want to talk to you about this revolution in the context of size — you often lamented about the fact that India has some world-size companies, but nowhere enough, and for the Indian SME and MSME sectors to grow and flourish, we need a larger ecosystem, a much larger universe… Now the government in the last few years has done things like the production-linked incentive schemes, ostensibly to build national champions and also to draw in foreign investment and build international champions who build in India. Is that enough? Do you also believe that we are on the cusp of a revolution? Is this an inflection point for the Indian SME?

A: I am a great believer that we are on the cusp of a revolution because India has to grow at high rates in the next three decades. But for that to happen, the MSME sector must grow and for that to happen, three things have to occur. One is MSMEs must focus on quality, quality and quality; they must make quality products to penetrate global markets. We are not selling in India alone, we are a part of a global value chain. The value you get by exporting and becoming a part of the global value chain is about 7x more than what you will get domestically. So you must make top-class quality products to penetrate the global market — never compromise on quality.

Number two, we have done a lot of work on ease of doing business, but we need to scrap all rules, regulations, and procedures for MSMEs. There should be no human interaction with any government official; it should only be digital interaction — make this the easiest, simplest way for MSMEs to grow and prosper. Make India the easiest place to do business in like Singapore. New Zealand.

Number three, to my mind we, have access to data of banks, insurance, etc. but soon we will have access to data, through the account aggregator system, of the invoices and the waybills and therefore, greater credit in a transparent manner will start flowing to the MSMEs because, for them to grow bigger and bigger and bigger, they need greater credit.

Fourth, I am a believer that MSMEs will mushroom only if India has a vast number of large companies because how did MSMEs come up? When Maruti came in and became a large company, you had Tier-2 producers, Tier-3 producers, and Tier-4 producers. So we need a vast number of MSMEs. After all, whom will they supply to? They will supply to large companies, which will then sell in India or abroad or wherever.

So you need large companies you need backward-forward linkages with MSMEs — they should supply and they should then be paid promptly.
And therefore India needs very many large companies and when we conceptualised production-linked incentives (PLIs) — the PLI was designed so that we create large companies, we make things bigger and bigger and bigger and bigger in five years’ time. And in five years’ time, make India productively the most efficient economy in the world. We were giving ourselves five years’ time to make India more competitive than China is right now. That is the challenge before the country, to make ourselves — in logistics, through Gati Shakti, through a whole range of schemes, through better roads, better ports, providing linkages — in five years’ time, more productively efficient than any other country in the world, and then make these MSMEs grow and prosper.

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Q: We might rank better on ease of doing business indices, etc. This room seems to be telling you a different story. Where do you believe the missing gaps are? Where do you believe we need to do the work?

A: The Government of India has become very easy and simple. A lot of homework needs to be done by the states — most MSMEs get in touch with the state governments — we need states to become even more competitive by scrapping a law. So we have done this exercise on rules regulation, most of them relate to the states now, and therefore, a lot of rules, and regulation procedures need to be scrapped by the states.

Therefore my view is that we need about 10-12 Indian states to grow in about 10 percent-plus. And if they grow 10-12 percent-plus, then India will grow at high rates for the next decade-and-a-half or two decades, which is important. The real energy has to be brought into the states.

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Hope serenity of Kumarakom Backwaters will resolve differences, says India’s G20 Sherpa Amitabh Kant

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s G20 Sherpa Amitabh Kant exuded plenty of confidence as he walked down to settle himself in a chair overlooking the magnificent Kumarakom backwaters in the early hours of the morning.

Kant showed no signs of stress over the hectic deliberations of the past 3 days with over 120 delegates from G20 countries, 9 invitee countries, and regional and international multilateral organisations at the second Sherpas meeting under India’s G20 Presidency.

“Hope you had a word with the Sherpas? Didn’t they sound very positive?,” he asked as he adjusted his microphone to get ready for the interview.

“Everybody was clear that this is the opportunity to push economic reforms… The talks have been very positive and constructive. I tell you I haven’t seen the level of positivity that I’ve seen in Kumarakom,” Kant said, as he looked back at the Vembanad Lake half-smilingly and added, “probably has to do with the serenity of the backwaters!”

“Everybody wants India to be very ambitious..Everyone is clear this is a very turbulent time whether it is the economy, global debt, or the post-covid impact on the world. Everyone realises this is a critical moment and G20 must cease this opportunity..It is very clear we must be decisive as far as economic action is concerned,” Kant told CNBC-TV18.

When asked if he was confident that the Sherpa talks have been fruitful, and if we may have a communique and not just a Chair statement from the leaders summit to be held later in New Delhi in September, Amitabh Kant said all issues were discussed in great detail among the Sherpas in a relaxed manner. “In Bali, we formalised Paragraphs 3 and 4 of the declaration. Para 3 clearly says G20 is not a political body, but a body for economic progress and financial reforms. The contention of some countries was that the Ukraine War is causing a huge impact on economies when it comes to food, fuel and fertiliser costs… While G20 is not a political body, the UN General Assembly is, and the UN General Assembly already passed a resolution about the war. We just took that resolution and summarised it as Paragraph 3…Para 4 was about pushing for multilateralism, growth etc and I don’t think people have objections to Para 4 but it needs to be read with Para 3,” explained.

“There is a change in scenario on the ground since the Bali declaration, and there has also been a new UN resolution. I think Paragraphs 3 and 4 need some technical updation as we go along,” he added.

At both the G20 finance ministers and foreign ministers’ meetings held under India’s Presidency this year, Russia and China were against the condemnation of the Russian invasion of Ukraine, and its effects on the global economy. With both countries not agreeing to the inclusion of these points, the G20 leaders failed to come out with a joint communique both times and only released a Chair summary and outcome document.

The contentious Paragraph 3 read, “Since February 2022, we have also witnessed the war in Ukraine further adversely impact the global economy… We reiterated our national positions as expressed in other fora, including the UN Security Council and the UN General Assembly, which, in Resolution No. ES-11/1 dated 2 March 2022, as adopted by majority vote (141 votes for, 5 against, 35 abstentions, 12 absent), deplores in the strongest terms the aggression by the Russian Federation against Ukraine and demands its complete and unconditional withdrawal from the territory of Ukraine. Most members strongly condemned the war in Ukraine and stressed that it is causing immense human suffering and exacerbating existing fragilities in the global economy.”

Paragraph 4 read,” It is essential to uphold international law and the multilateral system that safeguards peace and stability…The use or threat of use of nuclear weapons is inadmissible. The peaceful resolution of conflicts, efforts to address crises, as well as diplomacy and dialogue, are vital. Today’s era must not be of war.”

India’s G20 Sherpa said that the finance ministers and central bank governors’ meeting in Bengaluru did not get into these discussions, and the foreign ministers had very little time during the meeting last month to be able to arrive at a consensus on the matter. “There is a challenge, but I think the Sherpas will rise to the occasion We’ll discuss this again in the third Sherpa meeting, and we are hopeful India will being everyone together..The war is not our creation; we can be very ambitious about everything else but geopolitics in Europe is not our creation,” Kant told CNBC-TV18.

“Since Bali, there has been a new UN resolution on the war. Hence the language of the declaration needs some updation which everybody agrees on,” he added.

Kant also said that there was a clear vacuum when it comes to the governance structure for Digital Public Infrastructure. “We need to create a global governance structure for public infrastructure so we’re able to define its principles…DPI has a layer of public interest on top of which we have allowed private sector to innovate,” Kant said, adding that India could play a key role in helping countries adopt a framework for digital identities and real-time payments using its own experience and success in the field.

On the key priority agenda for the G20 countries relating to reforms in Multilateral Institutions to make them relevant for the challenges of the 21st century, Kant said there was a need for larger resources to flow in for countries to achieve Sustainable Development Goals and Climate Action.
“Resources can flow in only if World Bank is not a direct lender, but is able to use various resources like debt, first loss guarantee, etc..The risks of lending to Asia are very different to risks of lending to Africa for instance.. We need to de-risk Asia, Africa etc to ensure a larger pool of funds are flowing there,” he told CNBC-TV18.

“India can offer the world its unique model of Digital Public Infra..India can offer to the world what it did as the pharmacy capital of the world..Today India can offer a very progressive, forward-looking, action-oriented agenda for the world.. The emerging markets are facing challenges largely on account of policies pursued by the developed world.. We need to set things right through our Presidency,” India’s G20 Sherpa said.

“India’s legacy would be a progressive, forward-looking agenda for the world which would have made a huge impact on the lives of citizens across the world with outcomes that would include better health, better opportunities, better livelihoods and better economic policies across the world.”

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G20 Sherpa Amitabh Kant showcases India’s Digital Public Infrastructure

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s G20 Sherpa Amitabh Kant on Thursday, March 30, said open standards, open API, and interoperability are the hallmarks of India’s Digital Public Infrastructure (DPI).

Speaking at the first day of the second G20 Sherpa Meeting, Kant emphasised the achievements and huge strides India has made in the past few years in the digital domain and highlighted the potential benefit of adoption of DPIs globally, especially in developing countries and the Least Developed Countries.

Kant, along with NASSCOM President Debjani Ghosh, inaugurated the DPI Experience Zone in the presence of sherpas and delegates from G20 members, invited countries and international organisations.

Demonstrating India’s DPI success story, the immersive Digital India Experience zone highlighted key DPIs developed by India for addressing crucial issues such as digital identity, financial inclusion, and equitable access to education and health.

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Various population-scale DPIs of India stack such as Aadhar, Co-Win, UPI, DigiLocker, BHASHINI and others were showcased in the experience zone. The experience zone also saw the presence of private sector enterprises such as Google, Microsoft, PayTM, Fractaboo, AWS and TCS, which showcased the innovation potential of DPI.

The special session, ‘Why DPI?’ started with virtual messages from eminent global leaders Nandan Nilekani, Co-Founder and Chairman, Infosys; and Thierry Bretton, Commissioner for Internal Market of the European Union, who addressed the participants on the utility of DPIs and India’s ambitious DPI agenda during its G20 presidency.

The special address included a joint presentation by Priya Vohra, Managing Director of Digital Impact Alliance, Washington, D.C., and Pramod Varma, ex-chief architect of Aadhaar and India Stack, CTO EkStep Foundation, who explained to the audience the transformational role of DPIs in diverse sectors and its architectural and economic aspects.

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The day-long session ended with a closing by Joint Secretary G20 Nagaraj Naidu, who highlighted the tremendous promise that DPI holds in accelerating the achievement of the sustainable development goals — from cash transfers and food distribution to e-commerce and innovative models of education and healthcare delivery.

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G20: Second Sherpas meet to start from March 30 in Kerala’s Kumarakom

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The second G20 Sherpas meeting under the chairmanship of India’s G20 Sherpa Amitabh Kant is set to take place from March 30 to April 2, 2023, in Kumarakom, Kerala. 

Amitabh Kant will meet with G20 Sherpas and Heads of Delegations of members countries and other invitees from the Emerging Market Economies (EMEs) to deliberate on issues pertinent to the Global South, as well as from the Advanced Economies (AEs) on shared priorities and mutually beneficial ways forward. Kant will also lead discussions with the G20 Troika comprising India, Indonesia and Brazil.

Ongoing deliberations during India’s G20 Presidency include Inclusive Growth, Accelerating progress on Sustainable Development Goals (SDGs), Green Development, Climate Finance & Lifestyle for Environment (LiFE), Technological Transformation & Digital Public Infrastructure, Women-led development among others.

The four-day gathering will witness over 120 delegates from nine invitee countries, and various international and regional organisations. The invitees hold multilateral discussions on G20’s economic and developmental priorities as well as on addressing contemporary global challenges.

“In this context, India’s G20 theme “Vasudhaiva Kutumbakam” – “One Earth. One Family. One Future” aptly encapsulates the shared vision of the G20 for galvanising wide support and arriving at decisive, ambitious, inclusive, and action-oriented outcomes. Such outcomes require the G20 to come together and act as one family to instil hope,” the press release added.

“The delegates will also be hosted for ‘Charchayum Aaharavum’ (Conversations over Dinner) and cultural programmes, a mini Thrissur Pooram experience, a traditional Onam Sadhya lunch, and Chaya Vallom (Tea on Boat) among other experiences, giving them the unique opportunity to enjoy the rich cultural heritage and diverse cuisine of Kerala, curated in close cooperation with the State Government.”

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Without women, India cannot be $10 trillion economy, says Amitabh Kant

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Amitabh Kant, G20 Sherpa of India, on Tuesday said India cannot be a $5 or $10 trillion economy without women being a very major player in the Indian economy.

Speaking at the “Future Female Forward – A Women’s Collective” event hosted by CNBC-TV18, Kant said the latest National Family Health Survey (NFHS) shows that there are 1,022 women for 1,000 men. Most people do not know that there are more women than men in India.

“Similar is the case with the world. The world cannot grow. If you want inclusive, resilient, sustainable growth, then women-led development will have to be a very critical player. Therefore, the Prime Minister said women-led development has to be a key priority for India,” he said.

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“So we are saying that you have to push for financial and digital inclusion of women. Earlier only 17 percent of women in India had bank accounts, but today 76 percent of the women have bank accounts. So bringing women into financial inclusion and digital inclusion will be transformational,” Kant said.

The other panelist includes Auguste Tano Kouame, country director to India at World Bank; Hitendra Dave, CEO of HSBC India and Suresh Narayanan, chairman, and managing director of Nestle India.

Kouame said there are more than 150 countries that still have barriers to women’s ability to work, to have assets, and to make use of their god-given talent.

However, India is doing very well. For example, on opening access to bank accounts to women. Many countries are not doing that yet in the South Asia region.

“Among emerging market economies, when it comes to female labour force participation, we are not doing great, in fact, India is doing less than the average. So it is not enough to give just access to bank accounts to women, it is a good step but you have to bring them into the labour force,” Kouame said.

“The world could increase its per capita by 20 percent just by allowing women to work as much as men. India could grow at 1.2 percent more than what it is currently growing just by catching up with emerging market economies in terms of women’s ability to work,” he said.

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Dave said, “You cannot have 50 percent of the population not getting an equal opportunity or being deprived despite having the merits. So we felt that giving equal opportunity to women is not a CSR activity and as the CEO we have a job to make sure that the company performs to the best it can.”

“The only way it will perform the best it can is when you get the full quality of ideas, a better quality leadership, a better quality workforce. So giving women equal opportunity is the right thing to do,” Dave said.

Narayanan said in our company, we are always been friendly and always prided ourselves in being one of the best workplaces for women to be in.

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“I started with a simple vision that, can I start with the board at 50 percent? And we achieved it. What I am most proud about is that we have a factory in Sanand in Gujarat where 60 percent of that factory are women,” he said.

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