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Recently, the Peterson Institute for International Economics (PIIE) hosted India’s Finance Minister Nirmala Sitharaman for a Q&A discussion with PIIE president Adam S. Posen on the state of the Indian economy. During their conversation, Sitharaman called on global businesses to diversify their supply chains beyond China and take advantage of India’s young population and skill sets.
She emphasized the importance of our country for global value chains and manufacturing for export purposes, as well as meeting domestic demand. Sitharaman also acknowledged the need to import raw materials and intermediaries that are not available in India.
“We need value chains come to India and produce in India, not just for India, but to export from India. We have come up with a production-linked incentive schemes, in 13 areas, which are priority, sunrise sectors, where India didn’t produce at all earlier,”
Nirmala Sitharaman, India’s Finance Minister
The minister pointed out that India is not alone in seeking to diversify supply chains, citing changing views on globalisation and the global view of China post-pandemic. She also said that it will take a lot of investment and interest in restoring manufacturing activity in China. She noted that Vietnam and Indonesia are also vying for a place in global value chains for companies that are looking to diversify their manufacturing base.
Apart from that, Sitharaman said the WTO needs to be progressive and fair to all members and give voice to all, not just hear but also heed, thereby, suggesting that the World Trade Organisation (WTO) should be more open and give more space to countries with different viewpoints.
The minister expressed optimism about India’s bilateral free trade agreements (FTAs) with other countries, citing successful agreements with Australia, the United Arab Emirates, and Mauritius. Negotiations for FTAs with the United Kingdom, the European Union, and Canada are ongoing.
Sitharaman also spoke about India’s G20 presidency and its aim to develop a common framework for all countries to deal with the risks associated with cryptocurrencies. She stressed the importance of discussing cryptocurrencies given the many collapses and shocks in the market.
Overall, Sitharaman’s message was clear: India is ready and willing to play a bigger role in global supply chains and trade, and global businesses should take note.
