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Informist, Thursday, Jul. 3, 2025

 

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--CII's Memani: India remains beacon of growth amidst global flux 
--CONTEXT: CII President Rajiv Memani addressing the media 
--CII's Memani: India must align itself with ongoing global race for FTAs 
--CII's Memani: Urgency for business reforms is very high 
--CII's Memani: Expect Indian econ to grow 6.4-6.7% in FY26 
--CII Memani: Keen to see at least a tranche of India-US trade deal signed 
--CII President Memani: Need to see some state-level fiscal reforms 
--CII: Govt must set up State Fiscal Councils to assess state budgets, debt 
--CII's Memani: Centre must institutionalise credit rtg system for states 
--CII's Memani: Govt should explore setting up sovereign wealth fund 
--CII Memani: Need a govt sovereign wealth fund for strategic acquisitions 
--CII Memani: India's GST system needs a simpler three-tier structure 
--CII Memani:Getting reasonably-priced land a challenge for global investors
--CII's Memani: Lack of skilled manpower not letting private capex pick up 
--CII's Memani: Rare-earth supply issue wake-up call for India 
--CII's Memani: India needs to cut external dependence for critical pdts 
--CII: Centre's fisc gap may be lower than projected on high RBI dividend 

 

NEW DELHI – The Confederation of Indian Industry expects India's economy to grow in the range of 6.4-6.7% in 2025-26 (Apr-Mar), the industry body's President Rajiv Memani said Thursday. CII's projection on economic growth is in line with that given by the government as well as the Reserve Bank of India.

 

Geopolitical uncertainties may pose a risk to economic growth in the current fiscal, Memani said at a press briefing. But strong domestic demand could be a driver for growth in FY26, Memani added.

 

Significant uncertainties emanate from the conflict in West Asia, as well a shift in the US' trade policy under President Donald Trump. New Delhi, to navigate this shift, is looking to sign a trade deal with Washington to insulate Indian exports from Trump's reciprocal tariffs. CII is also looking forward to the signing of at least a tranche of the proposed trade deal with the US, Memani said.

 

Both the government and industries expect strong domestic demand after the income-tax exemption announced by the government in the FY26 Budget. In fact, if the economic growth is unperturbed in FY26, the government may be able to bring its fiscal deficit below the year's projection, considering the fiscal cushion from the surplus transfer from the RBI, the CII president said.

 

The RBI alone transferred a record high surplus of INR 2.69 trillion to the government in May, against a revenue estimate of INR 2.56 trillion from the RBI and other financial institutions in FY26 Budget. The government has projected a fiscal deficit of 4.4% of GDP in the Budget for the current fiscal.  

 

However, Memani said that the additional money the Indian government earns through divestment and from the potential gains from lower-than-projected fiscal deficit this financial year must be deployed better. The Centre can use the extra money to support industries that will help India's growth in the long- erm, he said. 

 

As the global economy grapples with geopolitical and economic uncertainties, Memani said that India remains a beacon of growth. Multiple countries in recent years have turned to free trade agreements to cement economic relationships. Memani said India must align itself with the ongoing global race for these trade pacts. 

 

He noted that having already signed a trade deal with the UK, India is currently in talks with the European Union for a similar agreement. India's negotiations with the EU deal with non-tariff barriers, he said. 
 

The urgency to undertake certain economic reforms is very high, as these may help India capitalise on some of the opportunities available, Memani said. These reforms could be aimed at enhancing ease of doing business, and growing high-end and employment-intensive manufacturing, he added.

 

Memani, who is also the chairman and chief executive officer of EY India, stressed the need for State Fiscal Councils which would independently assess state budgets, debt sustainability, fiscal risks, among other issues. The industry body called for institutionalising credit rating systems for states by linking borrowing costs to fiscal performance in a bid to encourage prudent financial decisions by the states.

 

To further ease compliance, the industry body suggested that India's goods and services tax regime needs to move to a simpler, three-tier structure. In this structure, essential items must be charged 5% GST, luxury and sin goods should be taxed at 28%, and all other items should be charged at a single rate between 12-18%.
 

The CII has also floated the idea of India setting up a sovereign wealth fund, which could help fund certain strategic acquisitions. Among other challenges facing global investors, Memani said that companies looking to invest in India find it challenging to find reasonably priced land here.

 

While companies are looking to invest more in India, their capital expenditure plans are being held back by a lack of skilled manpower, he said. Memani lauded the government's recently launched employment-linked incentive scheme, which has an outlay of INR 994.5 billion, and the internship scheme announced during the Union Budget for 2024-25 (Apr-Mar). Memani said this scheme could go a long way in plugging certain gaps in employment and skilling. 

 

RARE-EARTH ISSUE
Indian automobile companies in the last couple of months have complained of issues created due to the curbs on export of rare-earth magnets by China. The Chinese government has put barriers on the export of rare-earth magnets to other countries, which particularly impacts the automobile industry.

 

Memani said that the concerns of Indian automobile companies are more serious than they appear to be right now, with some companies cutting production plans and their guidance for the fiscal year. However, he said that the rare-earth issue is a "good wake-up call" for India. 

 

The CII has called for the Indian government to take up policies aimed at cutting reliance on countries for critical products, in a bid to ease supply chain diversification issues.  End

 

Reported by Anand JC and Krity Ambey

Edited by Tanima Banerjee

 

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