Print or Download the 2016 4th Edition Executive Summary

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ConfederationofIndianIndustry
FromLtoR:NaushadForbes,Co-ChairmanForbesMarshallandPresident,ConfederationofIndianIndustry;JamshydNGodrej,ChairmanoftheBoard,
Godrej&BoyceManufacturingCompanyLimitedandChairman,AnantaCentre; ArunJaitley,MinisterofFinance,GovernmentofIndia; NKSingh,
Chairman,SteeringCommittee,TheGrowthNet;SeniorMember,BharatiyaJanataParty(BJP)andFormerMemberofParliament,RajyaSabha;Claude
Smadja,President,Smadja&SmadjaStrategicAdvisory,SwitzerlandattheInauguralSessionTheIndianeconomy’splaceintheworld
THE
ROWTH
44 00
NET
..
RESTORING HIGHER GROWTH IN EMERGING MARKETS
7-8 APRIL 2016 | NEW DELHI
AN EXECUTIVE SUMMARY
ORGANISERS
An independent organization, Ananta Centre is registered under the Indian
Trust Act. It focuses on leadership development and encourages frank and open
dialogue on the most important issues facing Indian society, to help foster its
transformation.TheCentrealsoengagescivilsociety,business,governmentsand
other key stakeholders on issues of importance to India’s development, foreign policy, strategic affairs and
nationalsecurity.
The Centre serves as a convening body for exchange of ideas, broadening perspectives and enhancing
capacitytocreatesustainablesolutionsonawidevarietyofissues.
TheConfederationofIndianIndustry(CII)workstocreateandsustainan
environment conducive to the development of India, partnering industry,
ConfederationofIndianIndustry Government and civil society through advisory and consultative processes.
CII engages closely with Government on policy issues and interfaces with
thoughtleaderstoenhanceefficiency,competitivenessandbusinessopportunitiesforindustrythroughawide
portfolio of specialized services and strategic global linkages. It also provides a platform for consensus-
building and networking on key issues. Extending its agenda beyond business, CII facilitates corporate
initiativesforintegratedandinclusivedevelopmentacrossdiversedomains.Inits120thyearofservicetothe
nation,theCIIthemeofBuildIndia-InvestinDevelopment:ASharedResponsibility,reiteratesIndustry’srole
andresponsibilityasapartnerinnationaldevelopment.Foundedin1895,India’spremierbusinessassociation
hasover8000membersfromtheprivateaswellasthepublicsectors.
With 66 offices, including 9 Centres of Excellence, in India, and 9 overseas offices in Australia, Bahrain,
China, Egypt, France, Germany, Singapore, UK, and USA, as well as institutional partnerships with 312
counterpart organizations in 106 countries, CII serves as a reference point for Indian industry and the
internationalbusinesscommunity.
Smadja & Smadja Strategic Advisory was established in 2001 in Switzerland
andintheUS.Thefirmworkswithglobalcorporationsandgovernmententitieson
global trends and strategic issues. Our mission is to help our clients navigate and
leverageglobalization,providingthemwith“actionable”insightsanda“worldview”
tohelpthemmanagetheincreasingvolatilityandcomplexityofaglobalizedworld.Thefirmcreatesplatforms
ofcontents–fromstrategic,behindcloseddoors,seminarstohighprofileinternationalconferences–thatare
knowledge and networking intensive, with significant take home value for the participants. Smadja & Smadja
hasactivities,clientsandpartnersinAsia,NorthAmerica,Europe,LatinAmericaandtheMiddleEast.
7–8 April 2016 ~ THE GROWTH NET 4.0 | 01
INTRODUCTION
T
he Fourth Annual Growth Net Summit 2016
was a major economic meet, held in India
amidst gloomy global outlook and volatile
market conditions across the world. Focused on
challenges facing Asia, Africa, Latin America and
other growth economies of the world; the Summit
brought together stakeholders from both developed
and emerging economies on one platform to build
synergies for increasing business opportunities,
ArunJaitley,MinisterofFinance,GovernmentofIndiaattheInauguralSession
encourageinnovation,andenhancejobopportunities.
Launched in 2013, the Growth Net reflects the
new realities created by the emergence of new
growth countries, which are rapidly increasing their Americaandgrowtheconomiesoftheworld.
business, economy, trade, and financial Themed “Restoring higher growth in Emerging
interactions, and aspire to have a stronger voice in Markets”, the Fourth Growth Net Summit was
the global economy. It serves as a catalyst to convenedinpartnershipwiththeMinistryofExternal
develop fruitful dialogue among business groups, Affairs and Ministry of Finance, Government of India
government officials, and civil society, from the on 7 – 8April 2016 in New Delhi. The Summit
countries of the new constellation of growth, on brought together more than 67 speakers from 39
how to strengthen economic momentum and countries including business and political leaders,
generate new sources of growth, through the eminent media personalities, senior officials along
deepening of partnership strategies for rapid with thought-leaders who shared insights and best
sustainable development in Asia, Africa, Latin practices to build economic resilience and generate
FromLtoR:TomohikoTaniguchi,SpecialAdvisortotheCabinetofPrimeMinisterShinzoAbe,Japan;JacquesDemers,ManagingPartner,AgawaPartners,NewYork,Canada;
SureshPrabhu,MinisterofRailways,GovernmentofIndia;RakeshBhartiMittal,Vice-Chairman,BhartiEnterprises&Vice-President,CII;MemduhKarakullukçu,ViceChairman
andPresidentGlobalRelationsForum,TurkeyatthesessionEmergingEconomiesneedmuchmoreinfrastructuredevelopment:Howtoplugthecapabilitiesgap?
02 | THE GROWTH NET 4.0 ~ 7–8 April 2016
FromLtoR:BanmaliAgrawala,PresidentandChiefExecutiveOfficer,GESouthAsia;RalphVoltmer,SeniorPartner,Covington&Burling,USA;Shaktikanta
Das,Secretary,DepartmentofEconomicAffairs,MinistryofFinance,India;ChandrajitBanerjee,DirectorGeneraloftheConfederationofIndianIndustry;
HelenCai,ManagingDirector,InvestmentBankingDivision,CICC,China;NicholasStern,IGPatelChairofEconomicsandGovernment,LondonSchool
EconomicsandPoliticalScience,theUKatthesessionDoingwhatittakestobeonthewinningsideinthecompetitionforFDI
newbusinessopportunities. of Finance Rita Teaotia, Commerce Secretary,
The meeting featured keynote address by MinistryofCommerceandIndustry;andRamSewak
Tharman Shanmugaratnam, Deputy Prime Minister Sharma, Chairman, Telecom Regulatory Authority of
of Singapore and senior Government of India India(TRAI)amongstothers.
representatives, including Arun Jaitley, Minister of Among the international business and thought
Finance; Suresh Prabhu, Minister of Railways; leaderswholedthediscussionsattheSummitwere
Jayant Sinha, Minister of State for Finance; Piyush ToshiyukiShiga,Vice-ChairmanofNissanMotorCo.
Goyal, Minister of State for Power, Coal and New & Ltd, Japan; Stephen Biegun, Vice President,
RenewableEnergy;SJaishankar,ForeignSecretary, International Governmental Affairs, Ford Motor
Ministry of External Affairs; Shaktikanta Das, Company,USA;KevinRudd,President,AsiaSociety
Secretary, Department of Economic Affairs, Ministry Policy Institute (ASPI) and Former Prime Minister of
THE SUMMIT 2016 FOCUSED ON THE
ECONOMIC PROSPECTS OF CHINA,
INDIA, JAPAN AND USA AND THEIR
IMPACT ON EMERGING MARKET
COUNTRIES – AND THE WORLD
ECONOMY – OVER THE NEXT PERIOD
FromLtoR:NKSingh,Chairman,SteeringCommittee,TheGrowthNetSummit,Senior
Member,BharatiyaJanataParty(BJP)andformerMemberofParliament,RajyaSabha;
PiyushGoyal,MinisterofStateforPower,CoalandNew&RenewableEnergy,India;
7–8 April 2016 ~ THE GROWTH NET 4.0 | 03
Australia; Shane Tedjarati, President, Global High
Growth Regions, Honeywell; Tomohiko Taniguchi,
The two crucial orientations that
Special Advisor to the Cabinet of PM Shinzo Abe,
constituted the core of the agenda
Japan; Joseph Klafter, President Tel Aviv University,
of the 4th Annual Meeting of The
Israel; Nicholas Stern, IG Patel Chair of Economics
Growth Net were:
and Government, London School Economics and
Political Science, UK; and YaşarYakiş, President,
(cid:2)The countries of Asia, Latin
Centre for Strategic Communication (STRATİM) and
America and Africa are facing
FormerMinisterofForeignAffairs,Turkey.
similar challenges of development
The Summit reflected on growth strategies,
and growth sustainability, thus
employment and skills, finance, technology and
sharing, exchanges, brainstorming
innovation, entrepreneurship, FDI in emerging
and synergy building,are key to
markets, manufacturing, services, energy and
achieving higher rates of economic
infrastructure, geopolitics, and emerging trade
growth and consequential
blocks, which are some of the key issues for all
entrepreneurship, employment and
growtheconomies.
new energy.
A special feature of the summit this year was the
closed-door sessions over breakfast for select
(cid:2)The Global Economy continues to
participants to informally interact with senior officials
be volatile and subjected to
and experts on key issues facing the Indian and
headwinds, with developed as well
global economy; the essential practices and policies
as developing countries across the
for sustained growth; and the opportunities and
world facing huge challenges. The
challenges ahead. The speakers included Urijit
outcomes of The Growth Net
Patel, Deputy Governor, Reserve Bank of India;
Summit 2016 are expected to
Andrew M’wenda, Founder and Owner, The
contribute to a more stable and
Independent,Uganda;AshishKumarChauhan,MD
secure world.
andCEO,BombayStockExchange;RalphVoltmer,
Senior Partner, Covington & Burling, USA amongst
others.
TanTaiYong,ExecutiveVicePresident(AcademicAffairs)Yale–NUSCollege,Member,ManagementBoard,InstituteofSouthAsianStudies(ISAS)NationalUniversityofSingapore;
Tharman Shanmugaratnam, Deputy Prime Minister of Singapore; A K Bhattacharya, Editor, Business Standard; Jamshyd Godrej, Chairman of the Board of Godrej & Boyce
ManufacturingCompanyLimitedandChairman,AnantaCentreattheLaunchof“India–SingaporeCommemorativeBook”
04 | THE GROWTH NET 4.0 ~ 7–8 April 2016
KEY TAKEAWAYS
ON INDIA’S POSITION IN THE WORLD An important change that has taken place is the
ECONOMY newconfidenceinIndia’snegotiationsinworldtrade.
India will be able to maintain a 7 – 7.5% growth rate India is now seen as a key player which has led to
despite challenges in the global economy. The increased trade with several countries across the
success story of the Indian economy will depend globe. India has a strong position that the Doha
upon economic reforms such as Direct Tax reforms, DevelopmentRoundshouldbecontinuedandtaken
and other incremental reforms related to banking, toitslogicalconclusion.
insurance, mining and civil aviation sector. The
Government of India is committed towards creating ON INFRASTRUCTURE DEVELOPMENT IN
new growth centres to attract Foreign Direct EMERGING MARKETS
investment(FDI).TherebymakingIndiathenextbest Infrastructure is going to be the next growth engine
destinationforinternationalinvestment. that will drive up the growth rate. The challenge for
India’s aspiration to achieve higher economic infrastructure development is that it won’t pay for
growth can only be sustained through public private itself in 5-6 years, and thus, needs a long-term
partnerships and other economic reforms such as sourceoffinancingthattakesintoaccountthelifeof
implementationofGoodsandServicesTax(GST)bill. an infrastructure project itself and finances it
The government has enhanced its public spending accordingly. Another challenge is to match investors
andisabletomaintainstrengthintheeconomy.The and investment opportunities and this can be
industry should also share innovative ideas for a achievedbycreatingplatformsforengagement.
public-private partnership on reforms calling for For emerging economies, speedy approvals –
greaterparticipation.Indiahasbeenabletomakean whether regulatory or from local authorities – is the
impactinlow-costservicesacrossmanypartsofthe key for completion of infrastructure projects on time.
world. The regulatory mechanism must be simpler, fair and
FromLtoR:VipinSondhi,ManagingDirector&CEO,JCBIndiaLimited;ShaneTedjarati,President,GlobalHighGrowthRegions,Honeywell;JayantSinha,MinisterofStatefor
Finance,GovernmentofIndia;UdayKotak,ExecutiveViceChairmanandManagingDirector,KotakMahindraBank;ToshiyukiShiga,ViceChairman,Co-ChairofAsia/Middle
East-Japan Relations Committee, Keizai Doyukai & Vice-Chairman of Nissan Motor Co. Ltd, Japan at the
7–8 April 2016 ~ THE GROWTH NET 4.0 | 05
FromLtoR:MukeshAghi,PresidentoftheU.S.-IndiaBusinessCouncil(USIBC);RamSewakSharma,Chairman,TelecomRegulatoryAuthorityofIndia
(TRAI);StephenE.Biegun,VicePresident,InternationalGovernmentalAffairs,FordMotorCompany,USAandTarunDas,FoundingTrustee,AnantaCentre
andFormerChiefMentor,ConfederationofIndianIndustry(CII)atthesessionHowwill‘DigitalIndia’and‘MakeinIndia’helpmeetIndia’sgrowthchallenges?
transparent, and have to be a level playing field. It partially address some of the domestic political risks
cannot be different for public sector enterprises and thatmayarisewhenprivateinvestorsgetsinvolvedin
publiccompanies. infrastructure projects, they also risk getting into a
Public-private partnership is another crucial new trap – international political risks. It is important
component for efficient infrastructure development. for the new players like the AIIB and BRICS Bank to
Infrastructure creation will not happen only from keep a distance from political ends or becoming
public investment but needs private investments in economicarmsofglobalpoliticalstrategy.
public infrastructure projects. Harnessing private
capital, technology and management is the ON THE IMPACT OF NEW TRADE BLOCKS ON
centrepieceofthispartnership. THE EMERGING MARKETS
While the multilateral development banks may The world is becoming a more challenging place to
Priority areas for Emerging
Markets:
(cid:129) Infrastructure investment in
industrial sector
(cid:129) Corporate Sector accelerating
and leveraging technology
(cid:129) Assessing middle class
expansion over the next decade
ClosingsessionEnforcingthegrowthimperative:Whatgovernmentsandbusinesshave
todotomakehighgrowthTHEnationalpriority
06 | THE GROWTH NET 4.0 ~ 7–8 April 2016
FromLtoR:JoydeepMukherji,ChiefFinancialOfficerandVP-Operations,iMeritTechnologyServices;AtulJain,ChiefOperatingOfficer,SmartElectronic
Business, LeEco India; Soumitra Dutta, Anne and Elmer Lindseth Dean and Professor of Management Samuel Curtis Johnson Graduate School of
Management,CornellUniversity,USA;TanChinNam,SeniorCorporateAdviserandFormerPermanentSecretary,Singapore;SRamadorai,Chairman,
NationalSkillDevelopmentAgency,IndiaatthesessionLeveragingICTtoleapfrogeconomicdevelopment:Thisisjustthebeginning…
trade, especially in terms of all the regional trade that policy-makers intended, due to this difficulty of
blocs, multilateral agreements and FTAs – the navigation.
challengenowistomakethemworkeffectively.
The major impact of the rapidly evolving set of ON LEVERAGING ICT TO LEAPFROG
tradeliberalisationproposals–TPPandRCEPinAsia ECONOMIC DEVELOPMENT
PacificandTTIPinEuropeisanticipatedtobeinrule- In the fourth phase of industrial revolution,
making capacity of the emerging markets. With technologynotonlyactsasafacilitatingtoolbutalso
sevencommonmembercountriesinTPPandRCEP, asamonitoringtoolwhichisleadingtonewformsof
there is bound to be transfer of standard in some economicandsocialorganizationandiscontributing
manner. This transfer of standard is expectedly to tothefightagainstcorruption.Thereisanincreasing
happeninWTOaswell. gap between the nations that use technology more
When the TTIP will finally be concluded, despite
current delays, it will revolutionise the structuring of
world trade and its rules. Regulatory coherence,
making of laws, tariff rate legislation, all will be
rationalisedandclearedundertheTTIP.
Duetotheirlimitedmembership,theTPPandTTIP
cannotreplacetheWTOasaforumwherealmostall
countries are represented and engaged with. The
WTO’s significance arises out of both normative and
practical requirements. While TPP aims to set up its
own system and it eventually will, it is expected to
serve only its member countries. The future of an
equitableworldlieswiththeWTO.
Tradefacilitationagreementsareimportantasthey
offer opportunities to restructure supply chains,
increaseaccessetc.However,theseagreementsare
also very difficult to navigate, as there is a large
degree of overlap between them. A large number of
ASEAN countries use FTAs for more favourable
rates,butbusinessesarenotbenefitingtothedegree From L to R: Claude Smadja, President, Smadja & Smadja Strategic Advisory,
Switzerland; Toshiyuki Shiga, Vice Chairman, Co-Chair of Asia/Middle East-Japan
RelationsCommittee,KeizaiDoyukai&Vice-ChairmanofNissanMotorCo.Ltd,Japan;
7–8 April 2016 ~ THE GROWTH NET 4.0 | 07
effectively than others. For example countries like significant impact on the global economy and it
SingaporeandKoreausetechnologyasamediumto remains to be seen how the government in Beijing
monitor administrative services in cities but in will be able to tackle the challenge of sustaining a
developing countries the broadband access, 4G high enough growth level while sustaining the
services and internet facilities are limited only to necessary structural reforms required to go into a
urbanareas. new economic model. The low crude oil prices may
There’s been a lot of discussion in recent years lead to political and economic instability in countries
about how a large section of jobs are disappearing suchasVenezuela,Nigeria,andRussiawhiletheGulf
because of artificial intelligence and automated monarchies are struggling to diversify their
systems. However, if you look at the history, economies and reduce their overwhelming
technologyalsohelpscreatejobs. dependencyonoilrevenues.
There is a need to ensure that benefits of Serious ongoing economic and political
technology trickle-down to the deprived sections of challenges in the European Union such as enduring
the society as a powerful instrument for poverty low growth and high unemployment, the migrants
alleviation; integrate tens of millions of people in crisis,theterroristthreat,politicaldivergencesamong
national and international economic processes; members states, and the inability of European
boosting development; and helping society to political leaders to come up with appropriate
functioninamoreproductivemanner. solutions to these challenges will continue to affect
ICT is a critical enabler that plays a role in negatively European prospects and to impact on
transparency and efficiency. Financial inclusion, food countriesthatrelyontheireconomicinteractionwith
security, healthcare, education and so on are all theEuropeanUnion.
priority sectors that the government must focus on. With regard to Syrian civil war, Russia has
The number of technology enabled transformations emergedasamajorplayerandisexpectedtoprotect
isremarkable. theholdoftheAssadregimeonSyriaaslongasthe
regimetoesMoscow’slineorelseevenRussiawillbe
ON THE RISKIER GEOPOLITICAL temptedtopushforregimechange.
ENVIRONMENT AND ITS IMPACT ON The US-India relationship has experienced
GLOBAL ECONOMY radical transformation in the last 25 years.
The slowdown of the Chinese economy is having a Political and economic issues are the centrepiece
SJaishankar,ForeignSecretary,MinistryofExternalAffairs,GovernmentofIndia;NKSingh,Chairman,SteeringCommittee,TheGrowthNetSummit;SeniorMember,BharatiyaJanata
Party(BJP)andFormerMemberofParliament,RajyaSabha,India;JamshydNGodrej,ChairmanoftheBoard,Godrej&BoyceManufacturingCompanyLimitedandChairman,Ananta
CentreatthesessionatthesessionDiplomacyforhighergrowth
08 | THE GROWTH NET 4.0 ~ 7–8 April 2016
of this engagement. The relationship is more or situated in developing and developed nations will
less consistent; a change in administration is have to reduce their production pace until the
unlikely to result in any change in policy. The more Chinese economy reaches its stability point. The
India asserts its willingness to cope with nations exporting to China are already feeling the
problems, the more India’s voice would be pinchofthereduceddemand.
listenedtoinWashington.
ON JAPAN’S ENGAGEMENT IN EMERGING
ON THE IMPACT OF CHINA’S SLOWDOWN ON MARKETS
THE GLOBAL ECONOMY Over the last 30 years, the ODA program of Japan
Chinahaswitnessedhighgrowthrateinthelast25– has played a very important role in ensuring
40yearswithanaveragerateof8to10%.However, development and financing major projects in a
it is important to note that each economic growth numberofAsiancountries.
model has its limits and Chinese model has reached The rise of labour costs and constant changes of
itssaturationpoint. regulations in China have given a fresh thoughts to
While China have a globally scalable economic the industrialists in Japan to turn their attention to
strategy, they are experiencing a slowdown. Its other markets. The thrust for Japan’s involvement in
growth rate is down to 6 per cent and is unlikely to Africa is driven by the awareness to enrich and
rise above that in next 5 years. This makes China empower women in the region. The strategy is to
mostuncertaindriverofchangeintheworld. invest in the human capital and educate the local
At present, the Chinese economy is changing workforceimpartskillstoenablethembuildtheirown
its gears from mass production of goods to industrialbase.
manufacturing of high end technological products AlthoughmostoftheJapanesecorporationshave
with increasing investments in research and maderecordprofitsinrecentyears,thishasnotbeen
development. translated into surge in demand in the country. This
The restructuring of Chinese economy will have a missing link has been a major concern for Japan’s
humongousimpactonthesteelsectorashalfofthe economy. Nevertheless, ‘Abenomics’ have played a
world’s steel is manufactured in China. The collapse keyroleinenablingtheyouthinseekingemployment
oftheglobalsteelindustryisinmanywayattributable in corporates. Hopefully, the next generation of
to China slowdown. Therefore, manufacturing hubs Japanese entrepreneurs will be even more engaged
Mistakes to be Avoided:
(cid:129) Increased wealth gap
(cid:129) No distribution of growth
(cid:129) Neglect of Small and Medium
Enterprises
FromLtoR:PradeepMehta,SecretaryGeneral,ConsumerUnity&TrustSociety(CUTS)International;
LisaRobins,ViceChairofCorporate&InvestmentBank,AsiaPacific&HeadofGlobalTransaction
Banking,AsiaPacific,Singapore;JyotiradityaScindia,MemberofParliament,LokSabhaand