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Uday Kotak, President, CII

India’s economic journey expected to reach newer heights

The past year has been like no other in recent history with the advent of a devastating pandemic that has upended normal life and economic activity across the world. With unprecedented lockdowns at different times in different countries, the tentacles of recession hit most economies. Researchers raced to develop vaccines and as we step into 2021, many large economies including India have commenced the process of inoculating their populations, which is likely to take months.

Positive signs and new trends characterise the new world that we now find ourselves in. The key imperatives today are normalising lives, restoring livelihoods and reviving growth. Healthcare for all has gained mindspace with nations increasingly cognisant of the need to develop strong and inclusive systems to protect their citizens. Equally, digitalisation has emerged as the platform for many economic activities, be it to facilitate working from home, enabling e-commerce to supply goods and services, driving fintech or making machines more intelligent. Sustainability too is on the top of the agenda of nations now, with energy transitions and green business creating new value.
With rebalancing of economies, businesses are seeking new sources of growth. In this scenario, India has attained a viable position as a reliable and stable partner of choice. Bolstered by far-reaching new reform policies over the last few years, its economic journey is expected to reach newer heights as it recovers from the pandemic-induced growth contraction.

To counter the slowdown, India instituted a stimulus package amounting to 15% of its GDP through targeted measures for vulnerable sections of society, stre enterprises and liquidity infusion. This has had the impact of curtailing economic contraction and the economy is set to recover strongly in 2021.

India today embodies an amalgamation of the imperatives that are redrawing global equations. In healthcare, its innovative companies truly showed their competitive advantage, transforming to include personal protection equipment, ventilators and other medical supplies in their repertoire within a short time. While India was importing these products earlier, it has now turned into an exporter and supported almost all countries with its medical goods and drugs.

Always an IT hub, India’s startups are converging innovation with entrepreneurship and technology, making it one of the largest hubs for new tech-based enterprises including in areas such as artificial intelligence, healthcare, ed-tech and fintech. Eleven more unicorns crossing $1 billion in valuation were added to the ecosystem, the second highest number of additions during this crisis year.

In sustainability too, India’s renewable energy achievements have impressed the world. With multiple policy reforms, the country is one of the fastest-growing renewable energy markets and on track to achieve 175 GW of capacity by 2022 as planned.

Recently announced policy reforms cover a spate of areas. India has slashed corporate tax rates and lowered them even further to 15% for new manufacturing investments. Simplification and faceless procedures are being implemented for ease of paying taxes. In the area of investment climate, India has achieved a rank of 63 in the World Bank Doing Business list, up from 142 just a few years ago. It has further taken the effort down to the provincial governments and aims to weed out multiple outdated laws and regulations. Digitised processes, time bound clearances and deemed approvals are gaining pace.

Four labour codes have been enacted in consultation with industry and worker unions to improve conditions for workers and encourage employment. Privatisation is high on the anvil and the government has pledged to retain only a few public sector enterprises in each sector. Small enterprises have been given a big boost with support and incentives for a larger base through a redefinition of such enterprises. To attract FDI, the government has fully opened up almost all manufacturing sectors including sensitive ones such as defense production, space and nuclear energy.

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A landmark strategy for promoting manufacturing under the Make in India rubric was introduced with the production linked incentive scheme for 13 sectors, which will greatly boost production in select areas. This is coupled with the National Investment Pipeline which proposes a spend of $1.4 trillion over the next five years in roads and highways, railways, power and other infrastructure projects.

These measures enhance India’s attractiveness for overseas investments which remained robust in the first half of the financial year. Placed on a strong reforms path with a proactive government, dynamic entrepreneurs and young and productive workers, the country is set to emerge as a growth hotspot, aiding in global recovery as the world comes out of the pandemic year.

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