India must become cost competitive to penetrate global markets: Kant

India must focus on scale, competitiveness and lowering the cost of doing business to successfully integrate into global markets, former G20 Sherpa Amitabh Kant said on Tuesday.

Speaking on the topic ‘Aligning India with evolving geopolitics’ at BS Manthan, Business Standard’s flagship event in New Delhi, Kant said India must recalibrate its policies to reduce credit costs, improve infrastructure and attract foreign investment to become globally competitive.

Scale, competitiveness key to global market penetration

Kant said the global economic order is not witnessing complete deglobalisation but rather a shift toward trusted partnerships. “To penetrate global markets, you need ‘scale and competitiveness’. This is not complete deglobalisation; it is re-globalisation,” he said.

He pointed out that while global goods trade has been disrupted, other areas such as services and capital flows have strengthened, creating opportunities for India.

“Services, data flows and capital flows have not been impacted. In fact, they have risen. The goods component of global trade has been badly impacted -- and that is where the opportunity lies for India,” Kant said.

However, he cautioned that India’s high cost of doing business remains a major constraint. "India must realise that it is not just ease of doing business; it is the ‘cost of doing business’ that is high. Credit rates are high," he said.

Kant further said that India's statutory liquidity ratio is among the highest in the world, at 18 per cent. "This needs calibration. Priority sector lending, while important, must be more targeted.”

“We must become cost competitive. That means lower credit rates, cheaper power, long-term access to land, and a shift in focus from ease of doing business to cost of doing business," Kant said.

Supply chain disruptions offer major opportunity

Kant said global supply chain disruptions, while challenging, present a major opportunity for India to emerge as a manufacturing hub. “Global supply chains have been disrupted. But in the midst of these disruptions, we are at a point when the world is going to see the biggest rise in productivity ever,” he said.

“We are living in an era of growth and prosperity because of data, machine learning and artificial intelligence,” he added.

The former NITI Aayog CEO described artificial intelligence (AI) and related technologies as transformational, similar to electricity in their impact across sectors. Kant further emphasised that disruptions in global value chains create rare opportunities for emerging economies. (link Barkha's copy here)

US tariff unpredictability poses challenge

Kant said unpredictability in US trade policies, particularly tariffs announced by President Donald Trump, has created uncertainty for global businesses. “What is announced today may be modified tomorrow. There is also the likelihood of judicial challenges. Everything is subject to negotiation," he said.

In this context, Kant said India should stay the course on its US policy. "Business requires predictability and consistency over a long period. We should wait and watch rather than rush into decisions,” Kant said.

Credit expansion and foreign investment critical

Kant stressed that improving credit availability to the private sector will be essential for sustained growth. “Private credit to GDP is only about 50 per cent in India, compared to 220 per cent in the US and much higher levels in China and Europe,” he said.