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Informist, Thursday, Oct. 29, 2026

 

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--CEA Nageswaran: 21st century will be marked by contest for real resources 
--CONTEXT: CEA Nageswaran speaks at event on industrial transformation 
--CEA Nageswaran: Key how much leverage India can use to get what it needs 
--CEA Nageswaran: We are in age of compounding supply-side shocks 
--CEA Nageswaran: Important how much world relies on what we produce 
--CEA Nageswaran:W Asia war exposed vulnerability to crude, other commodities 
--CEA Nageswaran: Can produce important items without tech sophistication 
--CEA Nageswaran: India able to source crude below Brent benchmark prices 
--CEA Nageswaran:If supply falls short, difficult to fix with fiscal policy 
--CEA Nageswaran:If supply falls short, difficult to fix with monetary policy 
--CEA Nageswaran: Low interest rates can't improve production, fix supply 
--CEA Nageswaran: Higher interest rates could slow normalising supply chains 
--CEA Nageswaran: China trade surplus with India set to top $1.2 tln FY27 
--CEA Nageswaran: 2025, 2026 an inflection point for Indian economy 
--CEA Nageswaran: We are at a moment of reckoning, need strategic rethink 
--CEA Nageswaran: Next phase of growth must be from mfg, energy 
--CEA Nageswaran: Next phase of growth must be from tech, agri 
--CEA Nageswaran: Capital formation seeing signs of picking up in pvt sector 
--CEA Nageswaran: Free trade pacts aiding labour-intensive sectors 
--CEA Nageswaran: Expect greater utilisation of trade pacts by exporters 
--CEA Nageswaran: India demography window to peak in next two decades 
--CEA Nageswaran:India must do import substitution, have strategic resilience 
--CEA Nageswaran:Must pivot to strategic indispensability with trade partners 
--CEA Nageswaran:Govt must have quid pro quo with industry, identify key pdts 
--CEA Nageswaran: India can be indispensable globally in agro-processing 
--CEA Nageswaran: Should export industrial workers with trade skills 
--CEA Nageswaran: Skilled India industrial workers could insulate us from AI 
--CEA Nageswaran: Don't have luxury of time for proposed industrial overhaul
--PM econ council head: Data shows India mfg can complete at global scale 
--CONTEXT:PM econ council head Dev speaks at industrial transformation event 
--PM econ council head:Global mkt access will not itself guarantee orders
--PM econ council head: Creating jobs, skilled labour still a challenge 
--PM econ council head:India well-placed to benefit from changing world order 

 

NEW DELHI – India must build itself as an indispensable trade partner and integrate itself into global value chains, Chief Economic Adviser V. Anantha Nageswaran said. It is important that the world relies on domestic manufacturing and India leverages that into securing the resources it needs to grow and develop its economy. It would also be key to withstand external shocks such as those from the ongoing West Asia war, he said.

 

The compounding supply-side shocks over the past few years will continue as the world competes over real resources in the 21st century. These will constantly threaten supply chains, especially for the manufacturing sector, and recent instances have shown that unilateral trade disruptions do not fade quickly, Nageswaran said. He was speaking at the Institute for Studies in Industrial Development's fourth national conference on reimaging India's industrial strategy.

 

"So I think the availability of commodities and supplies has become a critical binding constraint for many economies around the world," the chief economic adviser said. "...So it is not about producing the most technologically sophisticated thing, it is about producing the most important component."

 

The shortfall in supply, which would dictate the economic turmoil over the next 20-30 years, would make it difficult for monetary and fiscal policy to right the economy as it had done in the past. Supply-side shocks often lead to stagflationary pressures in the economy, while higher interest rates were only good at cooling high demand. Low interest rates do not necessarily spur consumption and interest rates cannot conjure up production.

 

"So it is actually, in fact, if you raise interest rates in a stagflationary world you may even undermine the supply coming on stream because the cost of capital will be high. So it is a tricky situation," Nageswaran said.

 

On the sidelines of the event, he said the comments were based on theory and not on the current economic environment in India. The Reserve Bank of India's Monetary Policy Committee earlier this month raised the policy repo rate for the first time in nearly four years. India's CPI inflation is expected to reach the upper end of the RBI's 2-6% tolerance band in the December quarter, well above the medium-term target of 4%.

 

 

Nageswaran identified the agro-processing industry as one where India has a good track record and export opportunity. Instead of just exporting agricultural products unprocessed, value addition must happen onshore, with the potential for 4-5% global market share and $100 billion in exports alone. Overall, India is set to cross $1 trillion in exports on a total GDP size of $4.2 trillion at the end of the year, which would be encouraging especially given the challenging global outlook.

 

The country should equip itself with a vast pool of workers with trade skills for India and the world. This will insulate the economy from artificial intelligence-linked risks, provide public-private partnership, while deploying the demographic dividend that will peak over the next two decades. For India, the period after Donald Trump became US President for the second time in 2025 had become an inflection point in the economy, sharing similarities with 1991, when the economy opened itself up to the globe, Nageswaran said. 

 

"...the similarity is that one, it is a moment of reckoning, the external stress of 2026 has brought India to a fork in its growth journey and invites a fundamental re-examination of strategy, can services continue to be your anchor of growth, that is the more important question," the economist said. "The difference is in 2026 the challenge is not only external, structural constraints in manufacturing, energy, agriculture and technology add to the pressure to change and change more rapidly."

 

For India, China being a large manufacturing powerhouse can curtail and restrict its own ambitions on the industrialisation path, especially with its later starting point, he said. Looking at the current pace, China's trade surplus with India is on pace to top the record $1.2 trillion recorded in 2025-26 (Apr-Mar), he said. The depedence has moved upstream--to raw materials rather than finished goods--but it makes downstream production domestically much more difficult.

 

The West Asia war had highlighted India's vulnerability to a shortfall in crude oil and other commodities. The artificial intelligence buildout will increase competition for resources such as metals and especially fresh water and power, making these key challenges to address, Nageswaran said. Even so, India managed to keep its cost of imported crude oil below the international Brent benchmark. India's landed crude oil prices averaged around $120 per barrel in October, which implied free-on-board costs from shipments were less than $100 per barrel, he said. Near-term Brent crude futures have averaged over $105 per barrel in October.

 

However, India had entered the time of crisis from a position of strength and the economy was showing its resilience, with broad-based growth in the June quarter, Nagesawaran said. India's GDP growth was 7.8% in Apr-Jun, according to latest data, blowing past economists' estimates. Capital formation was showing signs of picking up, especially with the private sector taking over recently from the government's spending patterns.

 

The trade pacts that India has signed with the UK, the European Union, and potentially one with the US soon were already improving the prospects for labour-intensive sectors, he said. While India ranked among the lowest in terms of ulilisation of free-trade agreements, the current deals are likely to be better welcomed. This is because there have been significant cut in duties this time, whereas earlier pacts had only a marginal cost benefit of of 1-2 basis points.

 

In all, the government should identify key industries and products and engage in quid pro quo with private-sector companies to create both buffers and improve export competitiveness, the chief economic adviser said. For India, it was key to pursue import substitution and strategic resilience while pivoting to becoming strategically indispensable for trade partners.

 

Speaking at the event, Chairman of the Economic Advisory Council to the Prime Minister S. Mahendra Dev, too, showed optimism on India's opportunity for export growth. The industrial and manufacturing sector had shown they could compete at the global stage, he said, highlighting the increase in electronics exports. India was well-placed to benefit from a changing world-order amid the geopolitical upheaval due to the West Asia war, he said.

 

At the same time, Dev also said that the government needed to and was working to tackle the challenge of creating employment and skilling India's labour force effectively. Moroever, he called on industries to become more global competitive and said the private sector would have to seize the opportunities that India's trade deals were creating. Having access to the global market would not automatically guarantee orders, the top economist said.  End                                                                                                                                                                                                            

US$1 = INR 95.22

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Aaryan Khanna

Edited by Akul Nishant Akhoury

 

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