Five priorities for India Inc could help us reach ahead of the curve

Source: The post is based on an article “Five priorities for India Inc could help us reach ahead of the curve” published in Live Mint on 17^th January 2023.

Syllabus: GS 3 – Economy

Relevance: priorities need to be adopted by Indian private companies to make India a global leader

News: The article discusses the priorities which Indian private sector should have in order to make India the leader in the global economy.

What are the priorities which Indian private companies should focus on?

Take sustainability seriously: According to a McKinsey report, effective decarbonization would require India to spend $7.2 trillion on green initiatives.

This is a big amount but it would also offer an opportunity to build sustainably from the start as around 75% of the industrial capacity that will exist in India in 2050 is not yet built.

Moreover, businesses have the opportunity to become global leaders in areas such as green steel, hydrogen, carbon capture and clean tech because these all are at a nascent stage.

Further, India is a major exporter of two- and three-wheeled vehicles. So, it could also use this position to lead the change to electric vehicles (EVs).

Effective capital spending strategies: In recent years, most capital expenditure (capex) in India has been driven by government spending and by public-sector companies.

However, there has been low growth in net fixed assets along with little growth in the productive base of many large companies.

Therefore, companies that have proper spending plans can execute capex projects faster and more cost-effectively, positioning themselves for sustained growth.

Increase in innovation: India has improved its ranking from 81st in the 2015 Global Innovation Index to 40th in 2022.  However, there is room for even more improvement.

Indian companies account for less than 40% of total research and development (R&D) spending compared to more than 65% of large economies.

Therefore, Indian companies can examine themselves and learn their ‘innovation quotient’ (IQ), which evaluates their readiness, strengths and execution capabilities.

Further, large manufacturers could incentivize innovation among their suppliers by offering grants for breakthrough innovations.

Companies could also work together to create innovation clusters or economic hubs where capital, expertise and talent collaborate on nascent technologies.

Build digital technology capabilities: The global tech services market is expected to grow about 5% annually in the coming years. India’s digital consumer sector is also growing fast and India’s consumer digital economy could be a $1 trillion market in just a few years.

One of the efforts taken by the government is by bringing Open Network for Digital Commerce. It may help by cutting costs and enhancing interoperability. However, it will be upon businesses to make e-commerce and digitization a reality for most Indians.

Further, there is a need to re-skill workers in traditional tech services and take advantage of new opportunities. Creating industry-wide skills and certification would be of help.

Recognize that resilience and growth go together: Indian companies can strengthen their resilience by building stronger relationships with suppliers and localizing operations along with focusing on growth.

There is a need to build partnerships that prepare comapnies to address disruptions, such as energy security, cyber shocks and weather events.

Further, business leaders can build positions that would enable them to take advantage of new and emerging opportunities.

India could also use its low labour costs and manufacturing expertise to capture up to $1.2 trillion in global trade flows by 2030.