Challenges and Opportunities
India's export growth has gained momentum in recent months. However, Chief Economic Advisor V Anantha Nageswaran cautioned against excessive optimism, citing rising protectionism and de-globalization risks. He emphasized the need for human capital investment, research and development, and deregulation to boost domestic exports.
Nageswaran highlighted that India's export growth is heavily reliant on global export growth. While this has benefited India in the past, the situation is changing. The era of globalization is fading, and the new Trump administration in the US is likely to further intensify de-globalization trends.
He also pointed to the recent developments in Ukraine, which have added another layer of uncertainty to the global economic outlook. Trade restrictions and protectionism are on the rise, making it difficult for India to rely on global growth to drive its exports.
Despite these challenges, there are opportunities for India. Nagesh Kumar, Director of the Institute for Studies in Industrial Development (ISID), highlighted the growing importance of industrial policy in the global economy. The US, a champion of free markets, is now actively pursuing industrial policies to revive its manufacturing sector. This trend is likely to gain further momentum under the Trump administration.
For India, with its large and youthful workforce, industrial policy and the manufacturing sector are critical. Investing in human capital, research and development, and deregulation can help India overcome the challenges of de-globalization and achieve sustainable export growth.