After several years of disturbed conditions and volatility in the global economy, signs of growth and stability are visible. The International Monetary Fund has forecast global growth to strengthen to around 3.5% for the next couple of years, led by the emerging economies. At the same time, political conditions seem to be changing, and there is a distinct negative sentiment regarding globalization.
In recent years, the global trade architecture too has been shifting. Mega Free Trade Agreements like the Transatlantic Trade and Investment Partnership (TTIP) of the US and the EU, and the Regional Comprehensive Economic Partnership of ASEAN plus 6, including India, are proof of WTO plus and WTO extra commitments. The issue is how to continue on the growth path and make sure economies do not come to early stagnation points.
For India, global growth conditions have become a vital factor for its own progress. The subdued environment of the last few years has had a direct impact on our growth story. This is indeed a challenging time for Indian industry, which is looking at overseas markets for both trade and investment opportunities. Indian industry, despite all the hurdles on the domestic front resulting from infrastructure gaps and problems of financing, is eager to integrate itself into the dynamic global value chain.
After two years of downturn, India’s exports finally expanded in 2016-17 cover story India and the world 6 | July 2017 Communiqué by 5.3% to $276 billion. However, this is still below the level of exports in 2011-12, which was well over $300 billion. The top five export destinations for the country in 2016-17 were the US, UAE, Hong Kong, China and Singapore. Foreign direct investment (FDI) has emerged as a vital success story for the country in the last three years, which witnessed about $160 billion flowing in, a third of the cumulative FDI since April 2000. With about 30 sectors being liberalized, and the abolition of the Foreign Investment Promotion Board (FIPB), India presents an open and attractive market for overseas investors.
The Government is keenly promoting India’s overseas relations. Prime Minister Narendra Modi has himself visited over 50 countries, and has signed a number of agreements for greater trade and investments. The ambit of economic relations is widening to include energy, climate change, urbanization, technology and R&D, and space, among others. Defense has emerged as a key sector of cooperation as India has liberalized its defense manufacturing sector and is encouraging the participation of global majors to help it develop into a manufacturing hub for defense equipment, with the relevant technologies.
CII engages strongly with key economic partners of India through different platforms. This past month, a strong 54-member CEOs delegation led by the President, CII, participated in the St Petersburg International Economic Forum 2017 (SPIEF) in Russia for the ninth consecutive year, to engage with leading decision-makers of emerging economic powers to forge solutions to drive the growth and stability agenda. At the Horasis India meeting at Interlaken, Switzerland, top investors came together to learn more about recent reforms and new opportunities in India. CII also traveled to Germany with the Prime Minister, on his second visit to the country, and had useful interactions with German industry. In the UK, CII’s annual CEOs’ mission met with a range of senior Government, industry, and academia members to understand the implications of Brexit for India. Alongside, CII facilitated missions for State Governments such as Chhattisgarh, where the Chief Minister led a Government and industry delegation to South Korea and Japan.
Such interactions deepen the overseas footprint of Indian industry. As the world realigns with emerging realities, India has the opportunity to capture more space in multiple manufacturing and services sectors.
Source: CII Communique