India seeks to be more involved in world supply chains and serve as an alternative to China through output-incentive plans and the growth of its domestic consumer market, Finance Minister Nirmala Sitharaman said.
So-called production-linked incentive schemes covering 13 manufacturing sectors including for semiconductors “are bringing in global value chains into India,” Sitharaman said at the Peterson Institute for International Economics. “By doing that, we hope to have production of many of these large, bulk-manufactured goods which can go from India” to meet both international and local demand, she said.
India last month laid out an ambitious target of hitting $2 trillion annually in overall exports by 2030 as the South Asian country makes a renewed push to become a top choice for companies shifting supply chains away from China.
On Monday, Sitharaman gave the example of mobile-phone manufacturing—the Asian nation in 2014 produced very few devices and the industry had grown to become one of the world’s biggest exporters.
She is on a weeklong trip to the US to attend the World Bank and International Monetary Fund’s Spring Meetings.
India over the past year has been pursuing bilateral trade deals with a range of countries, including Australia, the UK and Canada, shifting from the usual go-slow approach on such agreements. On Monday, Sitharaman said the nation of 1.4 billion people also is pushing ahead with a pact with the European Union.
G-20, debt
India holds the presidency of the Group of 20 intergovernmental forums of influential nations and is under pressure to show it can forge an agreement after major meetings this year ended with Russia and China objecting to language around the war in Ukraine.
This “is a great opportunity for India to prove and to work towards bringing all countries together on substantive issues,” Sitharaman said.
“It is time that the members of the G-20 sit up and take these issues on board,” she said, singling out the need to provide debt relief for more than 70 low-income nations facing a collective $326 billion burden.
More than half of the world’s low-income countries are at high risk of debt distress or already in it, and several have defaulted. But despite the G-20 largest economies having agreed in 2020 to a plan called the Common Framework to smooth the process of restructuring loans that governments could no longer afford to service or repay, not a single nation has actually gotten relief under it so far.
“This issue will be taken forward, and I hope to have some positive movements,” Sitharaman said.
A close ally of Prime Minister Narendra Modi, Sitharaman is also India’s first female finance minister and has been credited with supporting social-welfare programs during the pandemic and narrowing the budget gap to 5.9 percent of gross domestic product in the fiscal year starting April from a record 9.2 percent in 2021.
Image credits: Samyukta Lakshmi/Bloomberg
