Prime Minister Narendra Modi held talks Tuesday with economists and business leaders, seeking ways to protect India from volatility in global markets and capitalize on China’s woes.
Modi reportedly urged business leaders including Reliance Industries owner Mukesh Ambani, India’s wealthiest man, to take greater risks and scale up investments as concerns over China’s economy grow.
“[The] prime minister said this is an opportunity for us to take advantage and invest,” the Federation of Indian Chambers of Commerce and Industry (FICCI) president Jyotsna Suri said after the closed-door meeting. “But I don’t know how many people can go ahead to take risk and invest… many of us raised the issue of interest rates,” the Press Trust of India news agency quoted her as saying.
Modi has repeatedly urged global companies to set up factories in India, seeking to provide jobs for a growing young population. But India’s reputation for laborious bureaucracy and labyrinthine investment rules as well as weak infrastructure have so far deterred large-scale investment by foreign manufacturers.
Many of Modi’s key economic initiatives have hit roadblocks in recent months, with a national goods and services tax stalled in parliament and a land acquisition plan abandoned after mass opposition from farmers.
Industry body ASSOCHAM said India needed to do more to “bulletproof” itself from recent global market volatility as well as seizing the opportunities that emerge from a “changing world economic order.” Its recommendations included cutting interest rates, preventing the rupee from appreciating further and speeding up government clearance for large infrastructure projects.
The government’s chief economic adviser, Arvind Subramanian, told reporters after the meeting it was not India’s intention to “take advantage of another country’s performance.” But he said India was less vulnerable to a Chinese economic slowdown than other countries because its exports to the Asian powerhouse were low, while future cuts in oil prices would also help boost growth.
India’s gross domestic product increased by seven percent in last quarter, lower than analysts’ expectations but higher than other major economies. The International Monetary Fund said on Saturday India was one of a few bright spots in the global economy.
India’s stocks and currency plunged last month, along with those of other emerging markets, on global fears over a Chinese economic slowdown, but they have since made back some of those losses.