August 23 2019: KPMG in India’s report titled – ‘India: Redefining its growth path’, which was launched to0day at the 13th edition of The Mindmine Summit 2019, analyses the key facets of six themes that are expected to propel India’s growth story: infrastructure, manufacturing, MSMEs and the start-up ecosystem, business-friendly policies, social uplift and taxation – across agriculture, healthcare, energy, financial services, tourism and education.
India is witnessing a rapid economic ascent as the geo-political and economic compass gradually shifts to Asia. Even against an uncertain macroeconomic backdrop globally, India’s influence has been spreading beyond its traditional sphere in the Asia-Pacific. Although, India’s economy witnessed a downturn during the second half of FY19, backed by political certainty it is pegged to push the capacity utilisation and private consumption. With a smooth runway laid down over the last few years, India aims to become a USD5 trillion economy by 2025.
Says Akhil Bansal, Deputy CEO, KPMG in India: “The country is at an inflection point as political stability, supportive demographics, technological leaps and enlightened policymaking converge to create a conducive climate for growth. India is headed in the right direction towards realising its true potential. However, for its economy to truly progress and evolve, a collaborative, flourishing and congruent ecosystem and framework has to be built as well as maintained to usher the country into a world of numerous opportunities.”
The core themes that are expected to propel India’s growth story:
Urbanisation and infrastructure push:
- Given the rise in urbanisation, there is significant need for India to make investments in basic services, transport infrastructure, supply chain and energy segments
- Planning the development of towns/villages as urban clusters/hubs could help bridge the rural-urban divide
- Despite the increase in infrastructure investments, there is further need for investments across areas such as housing, water, transport, and waste collection
Global manufacturing hub:
To achieve the vision of emerging as a global manufacturing hub, India needs to make further efforts towards strengthening infrastructure, building a digital ecosystem and integrating into global supply chains.
- In India, with Industry 4.0 and digitalisation gaining momentum, it will become vital to focus on upskilling and reskilling the workforce on emerging technologies
- It is through the convergence of digitalisation and manufacturing that can help India achieve the next phase of productivity increase
Promotion of the start-up ecosystem and MSMEs:
Enabling further support for start-ups and MSMEs could help create more jobs and drive inclusive economic growth in India
-With a target to establish 50,000 new start-ups by 2024, the Indian start-up ecosystem is receiving significant thrust from the government - easing regulatory requirements, setting up 500 new incubators and accelerators, creating 100 innovation zones, etc.
Further fomalisation of the MSME sector and continued focus on skill development can drive the contribution that MSMEs make to the Indian GDP
Bridging the social divide in the country is necessary to drive India’s growth story. - - Leveraging on technology such as predictive analytics can help the government create evidence-based policies
- Government support and policies in terms of land acquisition, budgetary grants and favourable PPP policies can boost the public service delivery, especially in healthcareTaxation:
The remodeling of the tax structure, through further simplification of the GST structure and promulgating a new Direct Taxes Code, is likely to make the Indian tax system more equitable for all classes of taxpayers
- India can benefit from a mechanism to mitigate tax litigation, which continues to be a hindrance for both Indian and foreign companies
As the country faces extreme climatic changes, it is critical to embed climate resilience when planning long-term projects
With rising pressure on natural resources, there will be significant emphasis on transitioning towards a more circular economy - developing new policies or enhancing existing policies, especially across mining, resources consumption, production efficiency, waste and water management and technology adoption
Opportunities in key sectors:
- Agriculture: Unlocking the full potential of the agricultural sector would depend on leveraging technology and creating opportunities across areas such as farm mechanisation, soil management and crop forecasting techniques, biotechnology, farming-as-a-service, e-mandis and usage of emerging technologies such as data analytics and AI
- Healthcare: Focusing on upgrading the healthcare and wellness infrastructure in India can translate into opportunities for the direct supply of high-technology, specialised medical equipment, new wellness products, thereby supporting the larger ‘Make in India’ initiative. Additionally, using technology in healthcare can not only improve diagnostics, but also ensure effective management of epidemics and help design precise-targeted wellness and care interventions.
- Education: The government has introduced various initiatives for the primary and secondary education sectors, to help reap the benefits of the country’s demographic dividend. The push towards technology through National Digital Library of India and smart classes provide tremendous opportunities for collaboration with the private sector and global players, especially within the online education space. Many technology start-ups providing courses on AI, VR, Big Data have entered the market, and there is scope for partnerships across the value chain.
- Power and energy: To support the country’s growing focus transitioning towards renewable energy and sustainability, developments and investment across areas such as smart grids, solar panels, efficient distribution and the adoption of emerging technologies such as AI, IoT, big data and machine learning are likely to gain traction
- Tourism: To foster the next phase of growth for the sector and to boost international traffic, there is a need to look at improving infrastructure and safety across the nation. Technology start-ups are key growth drivers shaping the tourism sector with various international and domestic firms introducing innovative services and products for personalised experiences. Given the growth potential of the country, huge tie-up opportunities exist for global firms as technology partners.
- Financial services: Recent initiatives to enhance financial inclusion have resulted in an 80 per cent banked population, however, there still is an opportunity to tap the remaining 190 million unbanked population. Thus, to build a robust ecosystem, several financial institutions are collaborating with start-ups across areas such as open banking, payments, lending and wealth management, etc. While immediate focus is addressing liquidity concerns, the Indian public and private sectors should continue to incubate the fintech ecosystem by providing funding support, industry collaborations and innovation zones.
- Trade: India has an opportunity to benefit from the ongoing trade war with various multinational firms looking to shift their manufacturing operations away from China. Further, expansion of India’s trade relations with emerging economies such as Africa, Latin America and ASEAN would help diversify its trade partner portfolio with focused region-based and product-based approach. Additionally, improving infrastructure and digital connectivity in Africa through the Asia Africa Growth Corridor, can help India get access to new markets and substantiate its role in international development