Dr Sangita Reddy, President, FICCI
Mr Dilip Chenoy, Secretary General, FICCI
Distinguished members of FICCI and other participants attending the interaction

I would like to thank FICCI for arranging this interaction on the theme of the ‘New World Order Post COVID-19’.

We are all witnessing a major scale black swan event that is impacting most of our established practices, norms and regulations, and thus shaping to become the big disruptor. The primary impact of the disruption is economic. Global economic institutions put the cumulative loss from the pandemic in the range of USD 5.8-8.8 trillion or approximately 6.5-9.7% of the global GDP. The International Monetary Fund (IMF) predicts a 3% contraction of the world economy in 2020. This is the largest contraction of global output since the Great Depression of the 1930s. The Great Recession of 2008-09 and other lesser recessions did not reduce world output on this scale.

This is also the first economic downturn of this magnitude due to a non-economic cause. Quarantines, travel bans and lockdowns, important to control the spread of the Coronavirus, have expanded the economic impact to multiple sectors of the economy. The initial supply shock has been followed by a demand shock as both production and incomes have been hit. Whether the contraction will turn into a depression or not is unclear. The scale of disruption makes it a possibility. However, the primary cause of the disruption is the pandemic. The speed of resumption of economic activity will therefore be the key determinant in preventing the recession from growing into a depression.

The slowdown will impact all kinds of economies. Hydrocarbon and commodity dependent economies will be hit as badly as manufacturing, services, agriculture, mining and tourism dependent economies. Global poverty and unemployment levels will rise. Expatriate workforces will be negatively impacted. Remittances are already falling.

The pandemic is also expected to leave us with a thoroughly different world, with tightened global financial market conditions, behavioral changes and altered consumption patterns, such that our demand and supply chains no longer suffice to cater to the new demand emanating from a changed world. The economic order that existed in the pre-pandemic times will have changed significantly in the post-pandemic times. This pandemic has not just stressed our systems globally, but has also exposed the existing gaps in our systems, forcing all of us to identify the loopholes, regroup, reform and reinvent. This reinvention of the global economic order is something that we all must prepare ourselves for.

One particular aspect, highlighted by the IMF as important for the road to recovery, has been strong multilateral cooperation. This will continue to be critical in our collective fight against the pandemic as also for a global economic recovery. There are several emerging areas where international collective endeavor has gained prominence. Countries are coming together to develop vaccines and therapeutic treatments to contain the spread of the virus. We will also have to work together to ensure that the economic fallouts of the pandemic are evenly distributed so that no one country has to bear a disproportionate amount of economic recession triggered by the global pandemic. For countries in the global south, it becomes even more important to ensure that in our efforts to fight the pandemic, we don’t end up reversing the gains we have made on poverty alleviation and other socio-economic concerns.

The current crisis has also impacted the course of globalization. We are looking at what is being increasingly termed as the new normal. Yet, the contours of this new normal remain highly uncertain. It is, however, increasingly certain that at least in the short term, countries will look to localize their production and supply chains so as to mitigate the disruptive effects of a global calamity such as this one. In the medium to long term, however, as investor confidence improves and consumption goes up, we might witness resurgence in global trade, movement of capital and people across borders. The scale and speed of globalization will undoubtedly suffer in the short term. But its long term trajectory will depend on how quickly we are able to contain and control the spread of the pandemic.

Our global supply chains have been severely impacted by the COVID-19 pandemic. The risks of increased dependence of our supply chains on a particular country or region of the world have been exposed by the pandemic, and the need to de-risk and build resilience by increased diversification and innovation has made itself starkly evident. In the changed times, an integration of supply-demand basics with highly diversified value chains, emerging technologies and artificial intelligence, present us with an important opportunity. Conventional solutions to mitigating the risks of supply chain disruptions will need to give way to new methods which will involve increased use of innovative digital platforms and applications that have emerged in the last few years.

IT and IT enabled services have been the strong points of the Indian services sector. Innovation, low labor costs and a vibrant demography have also been the key strengths of the Indian economy. India has already proved its mettle in several critical sectors of the world economy. Our reputation as the pharmacy of the world and the source of low-cost generics and drugs is lost on no one. We are also the largest contributor to the global IT outsourcing industry. Agri-based food processing, textiles, automobiles, electronics are some of the fastest growing industries in our economy. Building on our strengths and enhancing our potential is, therefore, the key to our economic revival and growth, as well as, to positioning ourselves as the low-cost and efficient manufacturing destination of the world.

In his address to the nation last week, the Prime Minister identified five key pillars of our future economic roadmap, including economy, infrastructure, demography, democracy and supply chains. Successful integration and assimilation of all these factors will be crucial to achieve a quantum jump in our overall growth and development.

In India, there was already an ongoing thinking within Ministries and agencies on formulating a strategy which would position India as an alternate manufacturing destination of choice for global investors. The idea behind this initiative was to enable manufacturing and trading companies looking to diversify and de-risk their value chains to choose India as an alternate location for their operations. To speed this up, we are looking to address several bottlenecks and usher in reforms which would make Indian industries competitive and help them match up to the global standards of production.

The Government of India has been working from the beginning to assess our particular challenges in facing this pandemic. Saving lives has been our topmost priority. Our manufacturing of medical supplies and healthcare equipment has been ramped up significantly in the last few months to an extent that we are now mass producing PPE kits, masks, hand sanitizers and testing kits – items which we were importing from other countries only a few months ago. This demonstrates the potential in India which still remains untapped to a large extent, and is the key to our economic revival. From saving lives to saving both lives and livelihoods – "Jaan Bhi Aur Jahaan Bhi” as Prime Minister Shri Narendra Modi said – the policy approach of the Government of India, over the last few months, has worked to become all encompassing, stressing on the need to revive our economy within the constraints imposed by the pandemic, and in a manner which makes it fairly immune to the vagaries of an increasingly uncertain future.

To mitigate these uncertainties and instill confidence in our businesses and industries, to make our domestic manufacturers globally competitive, to integrate our domestic agriculture and small farmers with global food supply chains, and to open the markets to increased inward investments and technologies, the Government of India has announced a set of bold economic reforms under the AatmaNirbhar Bharat Abhiyaan.

This vision of economic revival aims to provide short term relief to our citizens impacted by the COVID-19 pandemic, while also defining a long-term economic roadmap to achieve the Government’s vision of a US$ 5 trillion economy by 2024. The AatmaNirbhar Bharat Abhiyaan takes into account the largely untapped domestic potential and the ever-growing domestic demand, which are the two key driving forces for the Indian economy, and builds on them to provide a new strategic roadmap for the growth of India’s agriculture, manufacturing and services sectors.

The idea behind self-reliance or Aatmanirbharta is not to turn the country inwards, or into an isolationist country, but to the contrary, it is to ensure that India can emerge as the global nerve centre of the complex modern multinational supply chains. As External Affairs Minister Dr. S. Jaishankar noted: "Foreign policy begins at home. A strong economy allows us to be heard in the world. A self-reliant India will have more to offer to the world”. It is in our interest to support the collective global effort to mitigate disruption in global supply chains by increasing supplies of products where we have available capacity, and develop capacities where we have the potential.

The sum total of all the economic relief and stimuli measures, including those announced since the very beginning of the lockdown, amount to Rs 20 lakh crore, equivalent to 10% of India’s GDP. These measures are broad-based and cover every section of the Indian economy including small farmers, labourers, MSMEs, middle class, migrant workers, start-ups, small businesses, healthcare, housing, education, among others. A big boost has been provided to private sector participation in eight sectors, including coal, minerals, defence production, civil aviation, power distribution, social infrastructure, space and atomic energy. These policies will open a large part of the previously restricted economic sectors to participation of private sector. The fundamental reforms in agriculture will empower our farmers, enable their integration in global agri-product value chains and significantly contribute to our national vision of doubling income of farmers by 2022.

The measures to provide economic relief and stimulus reflect the confidence the Government has in the capabilities of our private sector, and also the belief that increased collaboration between the Government and businesses will benefit the country at large. ‘Minimum Government and Maximum Governance’ has been our mantra and these reforms underline our broader agenda. All of these reforms will further improve the ease of doing business in India and level the field for Indian business and industry. The reforms aim to do away with some of the major bottlenecks in our domestic business environment. In addition, the Government has also made it easier for businesses to access capital at affordable rates, which will push up production, provide greater employment and aid consumption in the country. The reforms are also a roadmap for our economic revival and industries would do well to seize the opportunity presented by these announcements, and turn them to their benefit.

Indian foreign policy and diplomatic efforts will be in tandem with the domestic efforts of the Government to promote the country as the alternative low-cost manufacturing destination of the world.

The Ministry of External Affairs, with support from our Embassies and High Commissions, has undertaken a preliminary assessment of the impact of the current crisis on Indian industry’s prospects abroad, and also the opportunities and challenges emerging from the current situation. These are only preliminary inputs and assessments, but let me list a few important points emerging from this initial effort:

The record of managing the pandemic of this scale with decisive and early steps – and a low per capita incidence and death rate – has drawn favourable international attention to our resolve and capabilities. India has also simultaneously acted as the "pharmacy of the world” and healthcare supplier to all parts of the globe. These are critical elements in helping brand India’s disaster management and regional and global first responder capabilities. It will be seen as a developing country with a demonstrated ability to take the lead in evolving regional and global strategies for recovery.

A large number of our Missions have reported that there is a significant market for food, agricultural products and expertise in food-processing industries. Indian automobiles, particularly low cost automobiles, including 2 and 3-wheelers will have an augmented market in developing countries. Textiles, garments and consumer durable industries will have export opportunities as many markets look to diversify their sources of supply.

Indian e-commerce, IT and IT enabled service industries have also demonstrated that they can work through a crisis of this magnitude. These are obviously the businesses of the future.

Digital highways can be used to leverage our higher education capabilities through tele-education onto a much larger market.

Cooperation in healthcare – in pharma, in basic research, in vaccines, in diagnostics, in devices, in tele-medicine, in hospital administration, in healthcare supplies, in healthcare expertise – is a major opportunity for India. This is an area where India has the ability to be a bridge between the developed and developing world and facilitating a two-way flow of information, products and expertise. It has institutions that can be seamlessly plugged onto class-leading global healthcare systems. These institutions are also able to facilitate the flow, in the other direction, to our development partners.

There is also a significant and growing interest in yoga and holistic treatment. This is a sector where India has considerable strengths. Investments in Ayurveda and yoga during this time are expected to find a market. The soft power returns for such investments are also likely to be substantial.

A major economic opportunity for India will arise from the drive to diversify global supply chains. The attractions of investing in India are obvious. It is a major opportunity and needs to be grasped.

Our diplomatic Missions, in collaboration with the Department of Commerce, are also exploring sourcing and export opportunities in various countries, and guiding our exporters by putting potential suppliers and buyers in touch with our Export Promotion Council (EPCs) and industry associations. Accordingly, lists of product lines where Indian exporters can fill in the supply gaps to the world have been identified, with the request to our Missions to arrange B2B meetings of the potential buyers, in these countries with our trade bodies. The EPCs/industry bodies have also been requested to get in touch with our Missions directly and seek B2B meetings both to hedge the risks of supply disruptions and, wherever possible, to fill in the supply gaps. Support is also being sought through Ministries and agencies of the government in expeditiously reaching out to their industry stakeholders and ramping up production in areas where we need to fill supply gaps, both in new markets and existing ones.

Needless to add, this is an ongoing exercise. The recommendations being made by our Missions are continuously taken into account by the Government, and our policies are adjusted accordingly. In addition, we are in the process of identifying industries and businesses looking for alternative manufacturing locations. The idea is to provide such industries with a compatible business environment and a robust domestic demand which will aid investments into the country and generate local employment.

Let me also share with you a few ideas which could aid in restoring economic growth in the medium to long-term:

Connectivity initiatives in the neighborhood under our Lines of Credits can act as force multipliers to accelerate regional growth and development, promote people-to-people contact and encourage trade and commerce. Several cross-border connectivity projects in roads, railways, inland waterways, shipping, energy and aviation under Indian assistance are already under implementation, especially with Bangladesh, Myanmar, Nepal, Sri Lanka and Afghanistan. Enhanced connectivity provides a stronger foundation for pushing exports of goods, services, standards, and norms.

Our companies should participate in projects financed under Indian development assistance. These projects help successfully showcase India’s expertise in project planning, design and execution, and assist Indian industry in projecting itself as viable and technologically sound partners of developing countries in diverse sectors.

The pandemic has highlighted the global shortage of trained personnel in various sectors, especially in health care and the digital domain. To promote employment opportunities abroad for Indian nationals, bilateral Migration and Mobility Partnerships and Social Security Agreements are important as they facilitate orderly migration of workers and ensure seamless social security coverage and avoid double payments by Indian workers abroad.

We are sharing details of skill sets of Indian expatriates returning under the Vande Bharat Mission with the Ministry of Skill Development.

We need to focus on the promotion of the 3Ts – Trade, Tourism and Technology. I have already referred to the efforts to diversify our supply chains, promote foreign investment flows, and boost Indian exports. Growth in tourism in the current scenario depends on revival of confidence in travel. In the intervening period, we could proactively promote virtual tourism, so that there is a real market after travel restrictions are lifted and confidence is restored. There will also be an increased focus on promotion of medical, including AYUSH, tourism. Identification and promotion of frontline technologies, linking our start-ups with the foreign markets, their registration on various stock exchanges etc. will be important enablers of innovation and economic growth.

The pandemic has pointed out the need to strengthen the existing healthcare infrastructure and systems in India. Building preparedness to deal with such pandemics in the future will necessitate channeling of our resources to the healthcare sector, in the near and medium to long-term, for the development of hospitals, emergency rooms, provision of equipment and supplies (PPEs, ventilators, etc), and training of healthcare professionals. This will expectedly create opportunities for businesses and industries in this sector. Apart from this, we need to:

Utilize the ramping up of domestic capacity and production of PPEs, ventilators, masks, testing kits, etc. as a part of our export promotion efforts; these products can be customized and standardized as per the global standards and requirements;

Strengthen our position in the pharma sector for generics, APIs, biologics, clinical research and equipment, and ensure that our products meet global standards just as our pharma has done with numerous globally certified manufacturing facilities;

Facilitate a focused and concerted effort for collaborations in digital innovations in health (research, diagnostics, monitoring, epidemiology and insurance), in partnership with our industry, MSMEs and start-ups;

Renew our efforts towards regulatory clearances for modern and traditional Indian medicines;

Innovate to further consolidate India’s commercial presence in vaccines – we currently lead the world in supply of vaccines;

Focus on consolidating our presence in the generics segment, and enhance resources and focus on new drug development;

Strengthen the diagnostics sector to bring it on par with our drugs/vaccines industry.

We have to proactively develop export markets for agricultural products due to disruption in supply chains and the intent of many countries to diversify supply lines for ensuring their food security. This will also require investments in supply and cold chain. Some significant steps in this sector have already been announced by the Finance Minister.

Global energy partnerships with various countries in the areas of renewable energy, clean-tech, energy efficiency, and petroleum and natural gas will play an important role in economic recovery. Initiatives like International Solar Alliance and execution of solar energy projects in other countries under the Line of Credit of USD 1.6 billion can enhance India's international presence in new and renewable energy sector.

India has the potential to emerge as the preferred destination for higher learning. The Government has already taken some measures in this direction by launching Study in India initiative to help facilitate the foreign students to study in about 150 educational institutions in the public and private sector. There is also a tremendous possibility of attracting foreign students for pursuing school education in India.

India has rapidly developed, deployed and scaled-up a number of national digital platforms as part of the effort of taking governance directly to the people and the path towards digitalization. There are several digital services that have been developed by India over the last few years. These initiatives could be promoted abroad.

Our states play a pivotal role in attracting investments, and we, as a Ministry, have been working closely with them to bring in foreign investors. We will continue our collaboration with states to develop export strategies based on their sector competitiveness and material and human resource strengths.

We have repeatedly emphasized that every challenge comes with a hidden opportunity. This is not the first global disruption we are facing and this definitely won’t be the last. The COVID-19 disruption has given us the opportunity to do away with what has not been working and adapt our systems to a changed external environment, forcing us to be bolder in our outlook and firm in our economic choices.

Thank you.