Continued growth hinges on big-ticket reforms: CII President R Dinesh

Dinesh said that it was imperative for the Indian industry to invest given high capacity utilisation and its resilience

Confederation of Indian Industry (CII) President R DINESH, in a conversation with Ruchika Chitravanshi, says the Indian industry must invest, citing high capacity utilisation and resilience. He underscores the necessity for the next government to prioritise land, labour, and agricultural reforms. He stresses the need for Indian multinational companies (MNCs) to venture into global markets. Edited excerpts:

Do you believe the private sector is ready to do the heavy lifting following the government’s sustained push on capital expenditure (capex)?

The private sector’s contribution to total capex has hovered between 36 per cent and 37 per cent, a trend expected to continue in 2023-24.

Our CII survey reveals capacity utilisation ranging from 75 per cent to 95 per cent, signalling readiness for investment.

Sectors like cement and steel are already seeing such initiatives, indicating green shoots are there.

Despite global economic volatility, the Indian industry has the strength of balance resilience with high capacity utilisation. It should prioritise investment, complementing the government’s infrastructure efforts.

Are the animal spirits back?

The Indian industry exhibits optimism about the future and foresees opportunities, evident in the upward trajectory of the confidence index from 67 per cent to 68 per cent in the last quarter.

What should top the agenda for the next government?

Continued growth, with an inclusive approach, hinges on big-ticket reforms in land, labour, and partially in agriculture. The implementation requires alignment between the central and state governments.

Additionally, initiatives like the Emergency Credit Line Guarantee Scheme for micro, small and medium enterprises (MSMEs) need extension and formalisation, supplemented by rating support. Job creation, especially in logistics and tourism, should be prioritised.

Reflecting on the past five years, what were the major challenges?

Economic turbulence, exacerbated by the pandemic, characterised this period. India’s adept management of these challenges underscores its resilience.

While big strides have been made in the ease and the cost of doing business in terms of compliance and decriminalisation, there’s room for improvement. The cost of doing business has been a huge focus and it was a very big weak link for India.

We have significantly improved in creating India as a competitive destination for manufacturing and services, an evolving journey with moving benchmarks.

How do you envision India Inc’s role in achieving the Viksit Bharat 2047 goal?

While achieving this goal earlier would be welcome, 2047 seems realistic. The Indian industry must scale up, enhance competitiveness, and build capacity to become a global MNC. Specific implementation strategies will be outlined to support this vision.

How do you perceive the manufacturing versus services debate?

We should not worry about which sector grows. What is important is that we grow. Manufacturing has to grow but it doesn’t have to grow at the expense of services. Manufacturing is a focus area for India and scale, capacity, capability of technology, and sustainability in its growth.

Unless you become cost-competitive across every factor, manufacturing is not going to grow. This will benefit services as well. I am not saying the share of (manufacturing) must change. Share may change but it is not a target.

How has India benefited from the US-China trade dynamics and the competition from Vietnam?

While India competes with other Asian markets, expecting a mass exodus from China might be unrealistic. Foreign investments in India primarily target the domestic market, with exports increasing as a byproduct.

All global majors here today have 20-25 per cent exports taking place. Enough case studies are saying I choose India for its domestic demand and then leverage it for the global market. For the Indian industry, cost competitiveness must improve. Only then investments will come in.

What efforts is the private sector making to bolster the employment quotient?

Aspirations have shifted. The household survey report shows a shift in spending from food and shelter to education and transportation. Simply put, should we create jobs? Yes.

Some sectors are highly job-intensive. From our side, we are saying please provide more support from the government. Is the Indian industry going to provide jobs? 100 per cent, yes.

In sectors such as logistics, every player is promising to increase jobs. Our survey shows people are very positive for 2024-25.

How can India Inc contribute to healthcare and education?

India Inc is actively involved in skill development, particularly in the digital realm. Enhancing access to health care, especially in Tier-II and -III towns, is crucial.

Startups play a pivotal role in remote diagnostics and treatment. Increased government spending in these sectors would be welcomed.

Should there be a greater focus on exports to achieve 5x growth?

Encouraging Indian MNCs to explore global markets is essential. While the domestic market remains lucrative, expanding exports is crucial for growth. Investments geared towards global competitiveness are necessary for scaling up.