Big time growth in middle class by 2030, Sitharaman tells industry in a bid to spur investments
- The minister’s appeal to the industry to look at domestic opportunities comes at a time the government is keen to see private investments take off, adding new jobs and giving a fresh momentum to economic growth
NEW DELHI: Seeking to coax a risk-averse domestic industry to take bold investment decisions, finance minister Nirmala Sitharaman on Friday told business leaders that middle income households would see a major expansion by 2030, offering a market of scale that will support demand generation unmatched by several other markets put together.
Sitharaman told business leaders that they should brace for tariff walls introduced in certain countries in the name of climate action tax and also urged them to explore supply and production opportunities from investors in Europe as a recession threat there could offer opportunities for Indian businesses: a Europe plus one strategy.
The minister also said the Union Budget for FY24 would follow the template of making India a developed nation in 25 years.
Speaking to business leaders at the annual convention of Federation of Indian Chambers of Commerce and Industry (FICCI), Sitharaman said that data from World Economic Forum about the expected growth in middle income households in India indicates the domestic economy’s strength.
“..the World Economic Forum telling us that there shall be a 140 million middle income households added to India’s economy by 2030 and 14 million high net worth individual households by 2030 again. That set of data tells us where the market and its potential lies,” the minister said.
This, in addition to India’s macroeconomic fundamentals gives us strength, the minister said.
Sitharaman suggested that this offers unparalleled opportunity for demand generation more than several markets put together.
“Industry after all will have to look at where it expects demand to generate from…Most often, industry wonders where market of a scale exists. Market of a scale is very difficult to obtain by sheer aggregation from ten different jurisdictions. But here is one in India…,” the minister said, adding that it was data from WEF where both the government and the industry engages with one another.
“That is something which I think India’s Amrit Kaal is waiting for you to optimally utilise. That is very directly linked to what you are looking for demand generation,” Sitharaman said.
The minister’s appeal to the industry to look at domestic opportunities comes at a time the government is keen to see private investments take off, adding new jobs and giving a fresh momentum to economic growth.
Official data for the first half of the fiscal that was out last month showed that fixed investments and private consumption were better than what was reported in the same period a year ago, but more recent data showed that factory output contracted 4% annually in October and capital goods showed a 2.3% contraction.
Sitharaman told the Industry that it was time to think of a Europe plus one strategy, suggesting that Indian industry could explore supply and manufacturing deals with companies headquartered in Europe as the western world is preparing for a long-drawn recession.
“The suspected long drawn recession which is likely to affect Europe is not just going to affect your exports. It gives us an opportunity for many of the investments which are there now looking for a different place from where activities can continue to happen,” Sitharaman said.
“So as much as you are preparing for long drawn recession in the western world, the developed world, I would think it is also the best time for you to work out strategies for drawing those manufacturers from there to India even as they are head quartered there, it might be useful for them to think of sourcing many things from here and producing from here, at least for markets which are in this part of the globe,” the minister said.
Sitharaman also brought industry leaders’ attention to climate change related policies coming up in other countries including tariff measures that could impact Indian industry.
“A common concern for all of us is climate change. There are countries that would want to fund their climate transition from not so green to green production of materials and items like steel, by raising tariff walls against countries which send their products as a matter of normal exports,” the minister said. At least in some items like steel, Indian industry would be facing tariff walls in the name of climate action tax, the minister cautioned.
“This is going to affect us and this is not something which I am speculating on. There are measures announced by countries,” the minister said, suggesting the government and the industry could work together in meeting India’s nationally determined commitments and for the industry to be ready for such tariff walls coming up newly in the name of climate change.
She also said that India should focus on both manufacturing as well as on newer areas of services.
Sitharaman said the Union Budget for FY24 will follow the spirit of the earlier budgets, so that by 2047, India will be far developed “where the young and old can live in comfort.”
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Business NewsEconomyBig time growth in middle class by 2030, Sitharaman tells industry in a bid to spur investments
First Published:16 Dec 2022, 03:30 PM IST
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