- 14 hours ago
This Special Report examines India's economic trajectory and its evolving role in the global value chain. Union Minister Ashwini Vaishnaw outlines the nation's path to becoming the world's third-largest economy, citing a 'Goldilocks phase' of high growth and moderate inflation. The strategy focuses on four pillars: infrastructure investment, inclusive growth, manufacturing innovation, and legal simplification. Vaishnaw confirms the removal of 1,600 antiquated laws and 35,000 compliances to improve the ease of doing business, projecting a nominal growth rate of 10% to 13%. Complementing this perspective, Ingka Group CEO Jesper Brodin discusses IKEA's long-term commitment to the Indian market, including investments in retail and renewable energy. The discussion, featuring IMF's Gita Gopinath and Sunil Bharti Mittal, analyzes India's resilience against global tariffs and its leadership in AI and sustainability. The report highlights the transition from traditional supply chains to strategic value chain partnerships, driven by digital infrastructure reforms and simplified regulatory processes for international investors.
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NewsTranscript
00:00Namaste and good morning.
00:03I'm so privileged to be leading a discussion on the future of India
00:09with those that have been deeply engaged with the India story
00:12and continue to drive it.
00:15Ashwini Vaishnav, Minister of Information and Broadcasting,
00:19Minister of Railways, Minister of Electronics and Information.
00:23He truly wears many hats.
00:26At the same time modernizing India's railway,
00:30shaping the country's information in broadcasting
00:33and also working on its digital ambitions.
00:36Geeta Gopinath, Gregory and Anya Coffey Professor of Economics at Howard.
00:41Geeta is someone who has shaped global economic thinking on growth and risk
00:46from her leadership at the IMF to now at Howard.
00:50Sunil Bharti Mittal, Chairman of Bharti Enterprises.
00:55Sunil Bharti Mittal is an entrepreneur who has helped define modern Indian enterprise.
01:01Bharti Airtel is a global communication giant
01:05and is responsible for India's mobile revolution.
01:09Mr. Herrera, CEO and President IKEA Group,
01:13one of the world's most recognizable brands.
01:16I'm sure all of us here have one piece of IKEA at some point in our life.
01:20As a CEO of the IKEA Group, you're looking at a deeper engagement in India.
01:24Welcome all of you.
01:26At a time when much of the global economy is grappling with uncertainty,
01:32India stands out as a rare bright spot.
01:36On Monday, in its World Economic Outlook report,
01:40IMF revised upwards its estimate for India's economic growth for 2026 from 6% to 7.3.
01:49The fund projected global growth at 3.3 while describing India as a key growth engine for the world.
01:59In fact, many describe India as having a Goldilocks phase, strong growth and moderate inflation.
02:06Many projections suggest India could overtake Japan and Germany over the next few years
02:13and move into the global top three.
02:16But momentum is not destiny.
02:19The real question is about timing, execution and choices
02:23and what does India need to do to convert this moment of opportunity into economic transformation.
02:30I'm going to start with you, Minister.
02:32When you hear this framing, can India become the third largest economy?
02:38Do you feel we're asking the wrong question?
02:40Should it really be when will India get there?
02:44And if so, how will we get there?
02:46What are the two things that will help us and what are the two things that could halt us?
02:51India will become the third largest economy in the coming few years itself.
02:56It's not a question of will it become, it's certainly, that's a certainty that will happen.
03:01It's a question of within the next few years, we will definitely become the third largest economy.
03:06What's working very well is the last decade of very transformational change which has happened in our country.
03:13And it's a very well thought through, well defined and very focused execution.
03:18It's built on four pillars.
03:20The pillar of public investment in physical, digital and social infra.
03:25The pillar of making sure that the entire society grows along with the growth of the country.
03:32So very inclusive growth.
03:34Third, the pillar of manufacturing and innovation.
03:36Fourth, the pillar of simplification.
03:38All this combined with the base of technology that we have put.
03:42We can very clearly say that India is going to grow with six to eight percent real growth.
03:48And a moderate two to four percent inflation.
03:51And a nominal growth of 10 to 13 percent.
03:54With 95 percent confidence interval in the next five years.
03:57So that's the kind of growth journey which is there, we can say with a lot of confidence.
04:02And what's working very well is that the entire society is seeing the benefit of it.
04:09When we look at 540 million new bank accounts opened.
04:13When we see 130 million toilets getting constructed.
04:17When we see 800 million people getting rationed every month, month after month.
04:22That shows that the security of the poorest comes as a priority for our government, for Prime Minister Modiji.
04:30And that has helped us bring 250 million people out of poverty.
04:34So these two factors are very well thought through.
04:38Growth path, very inclusive growth, are going to be very good for our country.
04:43What's really a matter of concern on our minds is the global debt which is there in the rich world.
04:53The huge amount of debt, the mountains of debt in the rich world.
04:58How that debt will unravel.
05:00What will be the impact?
05:01We saw yesterday in Japan there was a run on the bonds.
05:04So that kind of thing if it happens on a very large scale.
05:08What will be the impact on our country is a matter of concern.
05:12Otherwise everything else is in a very good shape that we will become the third largest economy in the coming years.
05:18Okay, so we'll talk a little bit later about what are the things that you are doing to insulate us.
05:24But now on to you Geeta.
05:25Do you agree with that?
05:27Is India's ambition to break into the top three a reality?
05:31What's your view?
05:32Without a doubt India will become the third largest economy of the world.
05:37It's a matter of a few years unless something catastrophic happens.
05:41Just if you just look at the math in terms of India's growth rate relative to Germany and Japan.
05:48It would be very hard to see how India would not get there.
05:51And based on current projections India gets there by 2028.
05:55Wow.
05:56It could be even sooner than that depending upon how the revision of the GDP numbers happens at the start of this year.
06:04I guess relatively soon what happens with the rebasing.
06:07So that is not the challenge for India.
06:10The challenge for India is not about becoming the third largest economy in the world.
06:13The challenge for India is about raising per capita incomes to higher levels.
06:19And indeed I agree with the minister that substantial reforms have been undertaken.
06:24The physical infrastructure build out is impressive.
06:27The digital infrastructure build out is impressive.
06:30What was done with the goods and services tax including the simplification recently.
06:36Extremely helpful.
06:37So to keep the momentum going and to keep raising per capita income.
06:41And getting to the 1947 sorry 20 to 2047 goal of Viksit Bharat.
06:48I think that's the challenge.
06:50And that will require keeping up with the steady pace of reforms to get there.
06:56And but again lot of positive developments in India.
07:00And very important is the macro stability that you have in the country.
07:06Not just with growth where it is.
07:08But also with inflation being at the low you know single digit numbers.
07:13That is a good spot for India.
07:15So you have said earlier that the two things that could hold us back.
07:19One is land acquisition is a little bit messy.
07:23Deregulation.
07:24And you have said we've not really used our demographic dividend to its fullest.
07:29So what are the things that you think we can do to fix some of those.
07:33Yeah.
07:34I think a little bit messy is probably an understatement.
07:36It is a tremendous challenge in India to acquire land to have clean land titles.
07:44And that is a constraint on growth.
07:47It is constraint on manufacturing.
07:49It's again there are states in India that experimenting with techniques that other states can also adopt.
07:56I think Andhra Pradesh is doing a good job in finding very creative ways of helping with selling of land.
08:03Shifting land from being agriculture to commercial land.
08:06Land titling again pushing on that is important.
08:09Judicial reforms I think are absolutely critical.
08:12That is a very important bottleneck for growth in India.
08:15And it's been there.
08:17I think people have seen it as a long-standing challenge.
08:19But we're not seeing many changes in that front.
08:24In terms of the labor force.
08:27You're right.
08:28We've been talking about the demographic dividend in India for a long time.
08:31But if you look at the contribution of labor to growth in India since the 1980s.
08:36Only about 30 percent of India's growth has come from labor.
08:40So it is a fairly capital intensive production structure that India has.
08:46Because of the rules and regulations that exist and the complications of hiring labor.
08:52Now it is a very positive step in terms of implementing the labor laws that were passed by parliament a few years ago.
08:59I think that's great.
09:00The states need to take that and go ahead.
09:02You know raising the number of the limit on the number of workers above which you have to.
09:07Your face higher regulation from 100 to 300 is good.
09:10Though if you want to be a part of the big global supply chain.
09:13You're going to have to be way more than 300 in terms of the size of the labor force that you have.
09:19So pushing on that front is important.
09:21Labor market flexibility is critical.
09:23On top of that is the skilling of human capital.
09:27I think that is a very important part of the solution too.
09:30It's not just about the fact the firms aren't creating jobs.
09:33There is a mismatch between what jobs can be created and the skill of the labor force in India.
09:40So pushing on that front in terms of the level of education and human capital and skilling.
09:45Super critical.
09:46Minister would you like to come in into any of the comments that Geeta has made?
09:50Anything you'd like to add?
09:52We follow a model of cooperative federalism where the central government and the state governments.
09:58We work together to bring out many of the reforms.
10:01And some of the reforms which are happening in Maharashtra, in Andhra Pradesh, in Odisha.
10:07Many of these reforms are now becoming the template for the states to follow.
10:11And the labor reforms implementation is a major, major, major step.
10:16GST simplification, labor reforms, opening the nuclear energy sector to private sector.
10:23And reforms in practically every sector.
10:26We have two groups of ministers which are working on half the ministries in one group,
10:31half the ministries in other group.
10:33Where we are going down to the procedural reforms, to legal reforms, to every possible reform that we can have.
10:41And I'll request all the participants present here.
10:43In case you feel there is any particular point which is hampering your growth in India.
10:50Do come out.
10:51We are here to listen to your problems and solve them.
10:54We are here to be the catalyst for your growth in India.
11:00Excellent.
11:01Mr. Mittal, you are a pioneer of India's digital revolution.
11:04Much of its growth would not have happened without you.
11:07You helped build the networks on which we are now growing.
11:11What do you think is the next thing we can do to turbo our growth?
11:15And what do you think is leashing us?
11:18Well, I think India is generally in a great spot.
11:21You already heard that it's a matter of numbers, mathematics.
11:25We will get there to be number three.
11:27And if I put a spiritual metaphor around it, I would say it's written in the stars.
11:31The question is six, seven trillion dollars for 1.5 or 1.6 billion people doesn't stack up.
11:39So we will get to number three, but we need to get to 25, 30 trillion dollars.
11:43And we can quibble about the year in which we will get there, but we have to get there and we will get there.
11:48What do we need?
11:49My tribe, the business community, needs an enabling environment.
11:53Need a committed government.
11:55Need stable, you know, situation in the country.
11:58All that is available now.
12:00One factor that is coming to challenge our growth that we are currently on is massive competition that has occurred in the world today.
12:10The U.S. was a huge market for China to grow itself.
12:13And they used 20, 30 years of that wonderful moment to build their factories, to build their manufacturing bases,
12:21go into deep tech, earn a tremendous amount of money to shore up the economy.
12:26That opportunity is not available for India.
12:29So we will have to find our own ways and means.
12:32Thankfully, we have a huge market.
12:34India, the continent of consumers, young people consuming more and more.
12:38We will be signing, hopefully, the EU trade deal very soon.
12:42UK is done.
12:43Australia is done.
12:44New Zealand is done.
12:45UAE is done.
12:46Many more than the pipeline.
12:47But the big one with the U.S. hopefully also gets done soon.
12:51We heard from Secretary Lutnik this morning.
12:53America must bring everything back to manufacturing in America.
12:57That's a change.
12:58We need to deal with that new shift in the global trading norms that we have to deal with.
13:06Give us more backing from the government.
13:09Give us more freedom.
13:10We have a prime minister who understands the power of business.
13:14He uses the industry and industry players to scale up the country, provide more employment.
13:20The PLI scheme that has come out.
13:22I never thought during my lifetime India will be a manufacturing destination for electronics or telecom equipment.
13:28All that has changed in the last five, seven, eight years.
13:30Just in the last five, seven, eight years.
13:32Massive amount of exports of Apple phones and many other products are happening now.
13:36I remain very, very confident that the energy that I see in India.
13:41And now I work in Europe.
13:42I work in France.
13:43I work in the UK.
13:44And I can tell you, we will continue to grow at the rapid clip of six, seven, eight.
13:50Hopefully in some years even higher.
13:52Whereas the world will be settling at half a percent, one percent or minus in certain years.
13:57We have a good future for us.
14:00What can derail us is only the competitive intensity of the world play now that we need to deal with.
14:06And that really lies in the hands of the able government, how they definitely deal with the trade deals.
14:11Okay.
14:13Mr. Herrera, you've seen India through many, many years and right now with IKEA on the ground.
14:20From a global CEO's perspective, how does the world view India's growth story?
14:27First, I have to say that I always make a disclaimer when talking about India.
14:33I am emotionally biased with India because we live in the family, my wife and the two children, for six years.
14:40And so I call myself an Indian ambassador in the business community.
14:45Unpaid as well.
14:47This is the best.
14:48Disclaimer made.
14:49Disclaimer made.
14:50Disclaimer made.
14:51No, of course, India, you have to be in India.
14:54There is an option.
14:55Well.
14:56Because it's a, you know, it's a big market.
14:59It's a young population.
15:02It's also a democracy.
15:04It's the English-speaking country.
15:07But also at the same time, India has had, is having, and will have the possibility to leaf rock.
15:14And from agriculture to the most developed AI much faster than any other country, you know.
15:20So we see, of course, very positive India in that sense.
15:24So, Minister, you said in the first question I asked you that one of the pillars is simplification, which is basically deregulation.
15:31And many times, whoever you speak to, that is one of the concern areas.
15:36So can you talk a little bit more about what are you doing to make ease of business happen in India?
15:42Absolutely.
15:43In the last 10 years, 1,600 laws, old, antiquated statutes, have been removed from the statute book.
15:52Can you give a similar example anywhere in the world?
15:541,600 laws have been removed.
15:5735,000 compliances have been removed.
15:59A big exercise is right now going to reshape the legal structure tuned to modern times.
16:09Because many of the laws were written in a time when the government and the political setup of that period, I'm saying of the early, from 1950 to 1990,
16:21that was a period when the governments were basically very inward looking.
16:26They were very protectionist.
16:28They were not looking at the energy of our people.
16:31They were trying to control that energy.
16:34So many of those laws are being rewritten now.
16:37So that's a major exercise which is going on.
16:39Second, many of the procedural things are getting changed.
16:43Mr. Mittal has witnessed to get a telecom tower permit.
16:48It used to take 270 days.
16:50Now it takes seven days to get a railway terminal connected to the railway network.
16:55It used to take six years.
16:57Now it takes just about two and a half months.
17:00So that is the kind of simplification procedural as well as legal is happening in the country.
17:06Our entire criminal justice system which was of 1800 some vintage.
17:12So that has now totally been transformed into a new structure.
17:16The telecom act was of 1854 vintage that has been replaced by a brand new 2023 act.
17:24So practically every sector we are trying to bring in a totally new legal framework or totally new procedural framework built on the technology stack that we have.
17:34Okay.
17:35So Geeta, I don't know whether you know, but there's a Rajiv Guava committee which is looking at deregulation.
17:41I want to ask you, is making another committee to get rid of bureaucratic red tape the best way forward?
17:49Well, I assume that this is not just a committee for its own sake, but the hope is that it's going to come up with actual actionable plans.
17:56Yes.
17:57Absolutely.
17:58I mean, India needs a lot more deregulation.
18:02It is still in terms of ease of doing business.
18:05It is still a challenging place to do business.
18:08I'd love to hear from you in terms of how, what challenges you face.
18:11So taking out more and more of the archaic rules that have held back businesses as absolutely critical.
18:21But then all other aspects of India will also have to continue in terms of the reforms.
18:26We'll have to continue the ones we talked about on land and labor.
18:29One of the areas I wanted to point out, which we usually don't talk about when you're talking about business development, is I want to talk about pollution.
18:37Mm-hmm.
18:38Pollution is a challenge in India.
18:40And if you look at the impact of pollution on the Indian economy, it is far more consequential than any impact of any tariffs that have been put on India so far.
18:51If you look at the annual cost to India's GDP of the level of pollution that you have.
18:56And it's not just the effect on economic activity, but it's also the loss in lives.
19:01I mean, the numbers are really large.
19:02Based on a World Bank study that was done, I think it was published in 22, about 1.7 million lives are lost every year in India because of pollution.
19:12That's 18% of the deaths in India.
19:15I think even from any international investor's perspective who's thinking of coming in and putting up a shop in India, if you have to live there and you have the environment is not of the kind that you feel that, okay, this is going to be consequential for your health.
19:32It holds you back.
19:33And obviously, not to say, but all the Indians that are living in this kind of pollution.
19:38So addressing that on a war footing is critical.
19:45I mean, this has to be a mission, a top mission for India.
19:48Along with deregulation.
19:49We're putting it right up there.
19:50Along with deregulation for India.
19:52Yes.
19:53So, Mr. Mittal, you work in other countries.
19:56You just mentioned in Europe and you've been working in the U.S. as well.
20:00What are the lessons that India can take from there for ease of doing business?
20:06You know, what are the things that we can adopt?
20:08Well, I can say certainly nothing from France or U.K.
20:13It's much harder.
20:15Much, much harder.
20:16Oh, really?
20:17Oh, my God.
20:18Oh, my God.
20:19It's much harder.
20:20And they also have the, you know, additional burden of the Brussels bureaucracy, which they have to deal with.
20:24There's just multiple layers there.
20:26I would say U.S. is a good model where business is really highly encouraged.
20:31And, you know, the ease of doing business, I would say, to a good level.
20:35And, of course, there are examples, fine examples in Singapore and, you know, UAE, et cetera.
20:40But I would echo Honorable Minister's point of view here.
20:44India has come a long way.
20:46I mean, I'm a product of, I started in 76.
20:49So I have seen.
20:50You're giving your age away.
20:51Yeah, that's fine.
20:52I am telling you, I've seen this plethora of books, handbooks, manuals, standing outside in DGTD, you know, CCIE, hundreds of departments getting one license to get something into the country.
21:05All that is gone.
21:061992 or 91, 92 was one big wave.
21:09And I would say in the last 10 years, a lot has been done.
21:12Can more be done?
21:13Yes.
21:14We, as business community, will keep on asking for more.
21:17Transfer more faith onto us.
21:19Have faith.
21:20We will do the right things.
21:21We'll be more compliant.
21:22Indian companies have much better governance standards today than they were in the 90s and early 2000s.
21:28I think this government is engaged.
21:30I hope and really I'm confident that this committee is set up for a real reason.
21:35Because the Prime Minister recognizes there is still much more to be done in ease of doing business.
21:40And I remain very hopeful something good will come out of this.
21:44Okay.
21:45So I'm adding on to the question Geeta kind of asked you about doing business in India.
21:50Is it easier to do business in India or in China?
21:53What would be your advice to a global CEO coming into India at this moment in time?
22:00At IKEA we are present in many different forms in India.
22:05IKEA is present in the sourcing side.
22:08Engaging with many suppliers.
22:10And not only producing in India for India.
22:13Producing in India for the global supply chain with export.
22:16We are present with the retail business where we are quite long.
22:20Where we really go full in with our retail business model.
22:25And we are present in many cities and we will grow significantly.
22:29We are also present from the energy sector.
22:32We are a big investor of renewable energy worldwide.
22:36We produce double than we consume globally from renewable.
22:41And in India we have recently announced investment of solar park in Maharashtra.
22:46But also we are present from the digital side which digital services for the global company.
22:52But also we are acquiring also investing in AI Indian companies especially in last mile.
23:00So we touch many parts of the governments.
23:03And we touch many parts of the different ministries and so on.
23:07So on that side doing business in India half full glass what is really good.
23:12And then what is the opportunity half empty glass.
23:15In the half full it is true that it is a process of simplification.
23:19And then what it is even more important when you face the blocks, you knock the door and you are hurt.
23:28One of the, I always praise the IAS officials.
23:32They are fantastic across the country because they listen to you, you meet them, you discuss.
23:38And then it is important.
23:40Sometimes things are a bit more complex.
23:42You need to find a way.
23:43But they are with you.
23:45So they don't ignore you.
23:46I think every time we have faced issues, we sit down.
23:50You have to invest time.
23:51But you sit down and then you share and then you are helped.
23:55And I see something that I really, really recognize from India.
24:00What is needed to do more in the future is try to find ways harmonization with global standards.
24:07If I take an example, production of furniture.
24:10Do you know how much India accounts for the global production of furniture in the world?
24:16One percent.
24:18Can we agree that India deserve more than one percent of the global production?
24:22Of course, we agree on that.
24:24That's why, for example, the new legislation on QCO, increasing standards and equality,
24:30we welcome very much the intent.
24:33We are really, really supporting that India increase the standards of quality,
24:38because that will help us, for example, to export globally.
24:42Then the implementation has to be done in a way that it is done in a smooth way.
24:49And it doesn't come as a low.
24:51It comes as a way to support the suppliers as well.
24:55So it is the implementation which is really important for the future when it comes to harmonization with standards.
25:03And then advice.
25:04The last question has come from the advice from the CEO.
25:07I don't want to be pretending that I know everything.
25:11But with the experience, I would say three things.
25:14Don't come to India for the short-term payback.
25:17If you come with short-term payback, India doesn't need you.
25:21Come with a really long term, and we are here for the really long term.
25:25We are owned by a foundation.
25:27There is no profit that goes to private shareholders.
25:29Everything gets reinvested into the business, and we have a super long-term approach.
25:34So long-term.
25:35The second one is that engage.
25:39Engage with the Indian stakeholder.
25:41Engage and in a true partnership, and invest time.
25:46And the third one, try to understand India from inside and not from outside.
25:51You cannot come to India with your prejudgment, your biases, and to pretend.
25:56You need to go.
25:57I invested a lot of time personally.
25:59We didn't take consultant company when we set up retail in India.
26:03I personally engage meeting customers on the shop floor, customers on the homes,
26:09meeting IS officials, listening.
26:12So you have to really come with a genuine interest of understanding India from within.
26:18And then things will work.
26:20That's really good advice, but I'm still going to put you on the seat and ask,
26:24India or China?
26:26What's easier doing business?
26:28You know, we are a global company.
26:29We need to operate globally, so we have to operate all over the world.
26:36And then the important thing is not choosing one or the other.
26:39The important thing is whenever you go, you have to go with your full set of values as a company.
26:44You have to go fully, and then you have to really find a partnership.
26:48I often say that we are in the, so home is the most important place in the world.
26:57Yeah.
26:58And we are in the life at home business.
27:00It is because of that, that we truly believe that we can help many Indians to have a better life at home.
27:05At the same time, I am saying quite often, India is helping IKEA to be better.
27:11We are learning massively from India, and we take this learning globally.
27:15Okay.
27:16I'm going to take that as India.
27:18Okay, going to come to a little bit on tariffs, sir.
27:22India currently has one of the highest tariffs imposed by the US to any country of almost 50%.
27:28How is India insulating its growth story from this?
27:32We are a very resilient economy.
27:35The fundamentals, macro as well as micro, are very strong.
27:39And that's really helped us through this turbulent period.
27:42Our exports have actually increased despite the tariffs.
27:46Our producers are finding new markets.
27:50We are growing our export sector in multiple ways.
27:56For example, electronics exports has now become the third largest exported commodity out of India.
28:03After, of course, engineering, engineered goods and petroleum products, which was like unbelievable even 10 years ago.
28:11Even five years ago, this was unbelievable.
28:13We are trying to expand the market going to new geographies.
28:17And also, simultaneously, we are engaging with many markets, many geographies for good, balanced, healthy, mutually complementary trade agreements.
28:29We have had with UK.
28:30We have had with Switzerland and two more countries.
28:35We have had with UAE, with Qatar, with Australia, with New Zealand.
28:40Another one is right now in works with Europe.
28:43So, lots of engagement globally and a fundamental change which has happened in the last 10 years is India has emerged as a very trusted value chain partner, not just supply chain partner.
28:58A supply chain partner would be manufacturing to your designs, manufacturing to your specs.
29:03A value chain partner will be partner to you in the journey of design, in the journey of understanding what the customers need.
29:12In the same room, three years ago, when we discussed semiconductors, people thought that India will never be able to manufacture semiconductors.
29:21And when I say the value chain partner, today, the entire semiconductor industry believes that India is the most important trusted value chain partner.
29:32Right?
29:33So, that feeling, that positioning of the country is very important for us in resilience, in managing the turbulence that we see.
29:41Okay.
29:42Agita, I don't know whether you caught Prime Minister Carney's speech yesterday in Davos.
29:47He basically declared independence from the American-dominated past.
29:53I want to ask you the question about dealing with tariffs in that context.
29:58I saw some of his, you know, what he said.
30:03It was pretty powerful.
30:05Indeed, it was a statement about the current global economic order and how that has basically ended and that we have to, you know, form new alliances.
30:14Yes.
30:15I think there was a big call to that.
30:16I mean, first of all, I don't think the movie's over.
30:19Right?
30:20I mean, one of the reasons that the tariffs that have been announced so far from the US has not been hugely consequential on the world is because the actual level of tariffs.
30:31And we, I did some research on this with the co-author last year, is the actual level of tariffs is a fraction of what the headline numbers and announcements are.
30:41Right?
30:42So, the statutory rate is about 24%.
30:44The actual rate is about 14%, right?
30:47Because there's so many exemptions and so many carve outs.
30:50So, every time I hear a number, I'm like, I want to wait and see exactly where something sticks.
30:56So, that's where my first piece is that we just don't know where all of this is headed.
31:01What I will agree with, and I think that we don't need to wait for, is that we have permanently moved away from the previous last 80 years of the global economic order.
31:12It doesn't matter what comes next, but we're not going back to the time when we had completely close to free trade across all countries in the world.
31:23I think national security considerations, economic security considerations have become important for good reason, I think.
31:32And therefore, the pure efficiency based model of we're going to buy from the cheaper source is not going to happen.
31:38And more countries are going to be looking inwards and building up their own shop, especially in sectors that are important for their security.
31:46So, I think that has changed.
31:48There is no one West anymore.
31:51There never was a one East.
31:54You know, there was always India, there was China, there was, you couldn't talk about a one East.
31:58But we used to talk about a one West, which was there was the US and Europe were always together and that's not there anymore.
32:04So, I don't think there is a one West either.
32:07That doesn't mean there's going to be a whole scale breaking up.
32:10But we're not going back.
32:13This is a shift that's going to last a long time.
32:17And like I said, the movie isn't over.
32:18So, keep watching.
32:19So, one of the things that the minister said actually that they are looking to do deals with other countries and trying to sort of insulate the impact of tariffs.
32:29Some people are saying this gunboat capitalism of the US is leading to mega, which is make Earth great again versus MAGA, which is make America great again.
32:41What do you think about that?
32:43Okay, so firstly, I do want to mention that what we saw in 2025 was that not just India, but China, pretty much every country in the world, found a different market to sell their goods to or found a different market through which their goods went back to the US.
33:00Right?
33:01I honestly don't think that's a sustainable strategy either.
33:04So, I don't think we are in a space where this can continue and everybody can have very high levels of tariffs and India can have 36% tariff rate.
33:14And somehow, you know, India would find new markets to send their goods to.
33:18There is going to be retaliation.
33:20Europe will retaliate to all the flood of goods coming from China.
33:24Other countries will too.
33:25Maybe India will be concerned about this, a point that Sunil made.
33:29So, it's not a viable strategy.
33:32But what is a viable strategy is indeed having more trade agreements with other countries, which India is doing right now.
33:39European Union is doing with Latin America, South America, Mercosur.
33:44So, those kinds of, I think, you know, agreements, moving on that front is important.
33:51In terms of, you know, making Earth great again, are you talking about the fact that we may be moving to something more sustainable?
33:56Yes, more sustainable, more markets not dependent on, you know, one country sort of bullying others into their way of thinking.
34:05I don't know why that becomes make Earth great again.
34:09But anyway, I do understand the sustainable part.
34:11So, I mean, I think a lot of things have taken a bit of a backseat and sustainability has taken a bit of a backseat.
34:22There is an inherent momentum in it that I think will continue in many parts of the world, including in India.
34:29That momentum exists.
34:31But if you look at what the trajectory could have been if the U.S. was also a part of all of the climate activity,
34:38there would have been a much more stronger transition path.
34:41But that said, again, I think that that, you know, train has left the station.
34:45I do think, and it's not just about sustainability and it's not just about the environment.
34:50For many countries, it's energy security.
34:53Instead of having to rely on fossil fuel imports, if you can rely on sunshine in your country and use that to produce energy,
35:00it's good for your, you know, your economic growth.
35:04It's good for job creation.
35:06So, yeah, so I think that that is going, that will continue.
35:11Among the risks that the planet faces are climate related risks.
35:15So that's not going away.
35:16You know, there's a lot of distraction right now.
35:19But we still have to deal with weather related shocks.
35:23So one of the things that Geeta said, and you've mentioned as well, is uncertainty.
35:28I mean, she's saying you have a headline.
35:30They say a particular tariff, but she still waits to see what is the effectiveness.
35:34You have dealt with uncertainty and very challenging situations.
35:38What would be your advice to CEOs in India and around the world that are dealing with this kind of a challenging situation?
35:45In the end, you know, you have to make yourself stronger to get the best deal.
35:50I mean, we have seen how China was not be, was not pushed back by the US the way they wanted to, and they quickly backed off.
35:58We have to make ourselves big.
36:01I think one great advantage that we have is we are a market for everybody in the world.
36:06It's 1.5 billion consuming hungry young Indians taking more products, more services every day.
36:13It's also producing for the world now.
36:15It will have a tremendous amount of leverage with many other parts of the world to have the right deals.
36:2283% approximately of the world trade moves away from the US between everybody else.
36:28I don't think so you'll ever come to that, that you will not trade with the US.
36:32But if it becomes completely untenable in terms of tariffs and all that, the world will react.
36:37And they will find ways, as rightly pointed out, in other markets, other places.
36:42What India really needs to do is scale.
36:45Scale its technologies. Scale its production.
36:48Get to a point where they have consumer surpluses so they can send to the world like China.
36:53That will take some time.
36:54The good news is that India recognized very early on that this is time consuming and capital intensive.
37:01You have to build more roads, more ports, more airports, more railways.
37:05This would have taken 10, 15, 20 years and hundreds of billions of dollars.
37:09How did India mitigate this?
37:11They quickly recognized, I would say, you know, credit to the government and the prime minister.
37:16Get a digital highway in place of world order, the best.
37:20Provide enough energy to fire it.
37:22Because there's no point having a digital highway with no energy.
37:25These two things were taken on a priority.
37:28Very high priority.
37:29And on that you dropped a digital stack to connect everybody.
37:33For banking, for health services, for everything else.
37:36This has provided us cushion to wait for the hard infrastructure that is being built up.
37:41In the manufacturing, in the real hard infrastructure.
37:45And you can see year after year after year, India is getting stronger.
37:49My own belief is, eventually India will get a fair deal, even from the US.
37:54I remain confident.
37:55Okay.
37:56So, how have the tariff tweets affected your assessment of doing business in India?
38:03Because you source and you have a marketplace as well.
38:07Yeah, I know.
38:08We have a big global supply all over the world.
38:10And then building on Gopinat, the trade is like water.
38:14If you close something, the water will find another way.
38:17But then the point here is that the point I'm building on Gopinat, the point is that I think there is too much noise now on the here and now on the short-term impact.
38:28And we are putting too much energy as a society on mitigating the pain.
38:33I strongly agree with you that these are the times, these are defining times.
38:37These are the times where you can build a new competitive advantage, where you can live rock as a company, as a country.
38:43Let's take one example, where we are heavily investing and at the same time we are advocating.
38:50It's the marriage between sustainability and affordability.
38:55We are investing in circularity.
38:58And you know, the more you invest there, the more you can secure.
39:02A, it's good for the planet.
39:04B, it's good for the wallet.
39:06Because people, many people today are struggling.
39:09So, day two of the month, almost the whole money is gone.
39:13It's gone.
39:14So, it's good for the people.
39:15But also, it builds independence.
39:17Independence not only on energy, but on trade.
39:20What does it take that India produce with the waste that is created in India?
39:26Because if you have that approach, you start to depend less on global trade.
39:31And the same will happen with other countries.
39:33So, we need to find win-win opportunities where we really decide not to put the money in mitigating the pain, but putting the money in really leapfrogging as a competitive advantage.
39:46And I think India is one of the countries where we can, India has proven.
39:51India impressed me.
39:52I was living in India when the other hard-card identity was implemented.
39:57More than 900 million people voted overnight.
40:00The election, 900 people voted in one month with no disruption.
40:05Doesn't happen in other countries.
40:06And then the interface payment, the demonetization.
40:09So, India has proven that when things come together, it can really leapfrog significantly.
40:17So, what does it take that India now takes the opportunity to really be the leader on sustainability and affordability because it comes with these three big benefits?
40:26Yeah.
40:27I have four minutes and I do want to get into AI, so you will have to keep your answers a bit short so that I can, you know, give everyone a chance on this.
40:36Right now, the AI race seems to be between the US and China.
40:41Do you read that correctly or does India have a place in this race?
40:45India is making very significant progress in all the five layers of AI stack.
40:51We have already become one of the largest AI-based services provider to the world.
40:57Entire IT industry has pivoted from software services to AI-based solutions.
41:03The second layer, the model layer, our stack of sovereign models is progressing very well.
41:10We must understand today that 95% of the work can be done with a small 50 billion parameter model.
41:16You don't require a trillion parameter model to do the things that you need in your day-to-day life and in your enterprises.
41:24Our focus on semiconductor industry, the third layer, is very strong.
41:28We are investing $70 billion in the fourth layer, the infrastructure layer, and energy, which is the fifth layer.
41:35We have opened it up.
41:36They opened the entire energy sector, the nuclear energy sector, to private sector, so that we can have a sustainable, clean energy for the AI world.
41:44Geeta, AI is affecting jobs in coding and call centers, which is very big for India.
41:51Do you think we can make this pivot like the minister is suggesting?
41:54It will take a directed conscious effort to make that switch happen.
42:01It's not going to happen very quickly.
42:03Indeed, you know, business process outsourcing, for which India was a big beneficiary of,
42:09that is going to be impacted by AI.
42:13These call centers, as you mentioned, coders and coding in general, are going to be heavily affected.
42:19Now, India does have the plus that it does have a good digital infrastructure, which it continues to build on.
42:26It has a lot of skilled engineers in an IT sector that supplies the world, so that gives it a good holding.
42:36But we're going to have to find ways of coming up with new kinds of jobs.
42:41That, again, comes back to the original point about scaling up the workforce, making sure that they are able to benefit from AI.
42:49In terms of, you know, if you look at the statistics about how much is India exposed to AI, how much of India's labor force is exposed to AI, it's about 26%.
42:58The average for the world is 40%.
43:00That's just a reflection of the fact that still a very large number of Indians work in agriculture, right?
43:06So that transition has still not happened.
43:09Productivity in agriculture has not gone up enough to push people out of agriculture into industrial and into services.
43:16So that transition is still ongoing.
43:19So there is less exposure to AI in that sense for the entire labor market as a whole.
43:26But like every country in the world, I think this is going to be an important challenge.
43:30India is already capital intensive for the reasons that I mentioned earlier.
43:34If we end up with services also becoming capital intensive in India, then there is going to be a problem with enough job creation.
43:43And here labor market flexibility is, again, super important.
43:47So we just have a few seconds, but I want to get into it because you offered perplexity free to your entire mobile network, right?
43:55I want to ask you what your view on AI is because we are offering pervasive access to our market to foreign AI players.
44:04How do you see that?
44:05Yeah, I think India will find this very frugal ways of getting to AI development side.
44:09I think we have the minds, we have the brains.
44:11And as the minister rightly pointed out, there will be new models which will not require trillion dollar commitment,
44:16but maybe tens of billions of dollars.
44:19India will do that, apparently.
44:20As user of AI, we have now injected in various form factors in our business.
44:28Spam is one, billions of messages, billions of calls from protecting our customers from fraud.
44:34Our whole network, you know, from design to management is run on AI now.
44:39Agenting AI is pervasive all over.
44:41Yes, some call centers are getting, you know, affected and some different, you know, jobs will need to be found for those.
44:48But as a country, I would say India is well positioned to make good use of AI for its productivity, automation and improvement in the economy.
44:58I'm sorry, I'm completely out of time.
45:01I'm not going to be able to give you the question on AI.
45:04I'm going to conclude.
45:05I think this has been a very good news session.
45:09I think everyone agrees that India is a force for good and it's written in the stars.
45:16And I hope that this Goldilocks fairy tale has a happily ever after.
45:21Thank you very much, all of you.
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