To what extent has the ongoing West Asia crisis affected Indian industry, trade and investment?

The impact has been considerable. Import prices have risen because of supply disruptions and shortages, creating an imbalance between demand and supply. While India’s export volumes have remained resilient, the cost of exports has gone up as input prices have increased and availability has become tighter. Such disruptions cannot be reversed overnight. Even if the geopolitical situation improves, it could take another three to four months for supply chains and prices to stabilise.  India’s strong domestic consumption continues to support economic activity, but inflation remains a concern. On the investment front, India’s macroeconomic fundamentals remain strong and the overall investment outlook continues to be positive.

Now that there is an interim US-Iran peace understanding, are you optimistic that business conditions will return to normal?

We certainly hope so. Discussions between Iran and the United States have seen several ups and downs over the past few months, and uncertainty has been the biggest challenge for businesses. If the present understanding holds and the region stabilises, trade flows and supply chains should gradually normalise. 

India has recently concluded the FTA with the UK and is negotiating or finalising several others, including one with the EU. How do you see these FTAs benefiting Indian industry?

The government’s FTA strategy is opening significant opportunities for Indian industry. The India-UK FTA, for instance, provides duty-free access for most of India’s exports, creating tremendous opportunities, particularly for labour-intensive sectors such as textiles, leather, gems and jewellery, marine products and toys, besides engineering goods, chemicals and auto components. However, market access alone is not enough. Our biggest challenge is sustaining quality. Indian manufacturers will have to compete with developed economies and China on quality, cost, delivery commitments, innovation and product development. We also need to adopt artificial intelligence and affordable automation to improve productivity while retaining our strength in manpower. The objective should be to combine India’s labour advantage with low-cost automation so that we remain globally competitive even as imports become easier under FTAs. These agreements should ultimately help diversify exports, strengthen manufacturing and improve India’s position in global value chains.

What should be India’s approach in the ongoing India-US trade negotiations?

India needs to adopt a calibrated approach. The United States has highly automated manufacturing and competitive production costs in several sectors. Therefore, market access commitments have to be examined product by product, especially in agriculture and mass-market manufacturing, where cheap imports could adversely affect domestic producers. Consumers naturally focus on quality and price rather than where a product is manufactured. Therefore, India must ensure that sensitive sectors are adequately protected while allowing greater access in niche segments where domestic industry is unlikely to be affected. High-end automobiles or premium motorcycles, for example, cater to limited markets and may not significantly impact Indian manufacturers. The government is rightly evaluating products individually to balance consumer interests with the need to protect domestic industry.

Private investment and FDI have not accelerated at the desired pace despite India’s strong growth prospects. What more should be done to boost investment?

India’s investment climate has improved significantly due to policy reforms, infrastructure development and measures to improve the ease of doing business. Strong macroeconomic fundamentals and continued reforms continue to support investor confidence despite global uncertainties. To accelerate both domestic and foreign investment, the focus should be on further simplifying regulations, reducing compliance burdens, ensuring faster approvals and improving access to long-term finance, particularly for MSMEs. Continued investment in infrastructure, along with India’s strong start-up ecosystem and policy stability, will help attract greater investment, create jobs and strengthen manufacturing.

What should be the government’s key priorities to sustain India’s growth momentum?

India is expected to remain one of the world’s fastest-growing major economies over the next two years, supported by strong domestic demand, reforms and policy stability. To sustain this momentum, government and industry must work closely together to strengthen manufacturing, skill development, research and innovation, logistics and global value chain integration. Schemes such as PLI, PM Gati Shakti and the recently announced BHAVYA initiative can further strengthen manufacturing competitiveness. Industry associations also have an important role in providing practical feedback and policy suggestions. Stable policies, continued infrastructure investment and improved access to long-term finance will be critical for boosting investment, employment and sustainable economic growth.