India to leverage the global trend of de-risking from China to step up its manufacturing exports – BVR Subrahmanyam
Services to Drive India’s Growth Story in the Future – Prof. Richard Baldwin

“While manufacturing exports from India are currently higher than services exports, it is just a matter of time before services exports catch up. The growth in services trade currently surpasses that of manufacturing in India. India has set a $2 trillion exports target by 2030. A critical consideration is the looming question of where the manufacturing boom will originate and its anticipated timeframe.” This was stated by Mr. BVR Subrahmanyam, Chief Executive Officer of NITI Aayog.

He was speaking at a session on ‘Future of Global Trade and Impact on Emerging Economies’ at the Global Economic Policy Forum 2023 organized by the Confederation of Indian Industry (CII) in partnership with Department of Economic Affairs, Ministry of Finance in New Delhi on 8 December.

He highlighted that while global perspectives lean towards de-risking from China rather than outright decoupling, there exists a tangible opportunity for India to leverage this trend. Although geopolitical circumstances may be transient, demographic factors will continue to underscore India's potential. The migration of Chinese companies, grappling with issues like demand and labour shortages, presents an opportunity for India to position itself strategically.

He concluded his address by discussing certain issues such as Customs restrictions on importing second-hand goods that impede the relocation of factories. Navigating carbon taxes and adjusting associated costs is another challenge, the government is expected to address through policies.

Speaking at the same session, Dr Richard Baldwin, Professor of International Economics at IMD and Founder/Editor of the Economic Policy Portal, VoxEU.org said that “The Emerging Market miracle will continue & spread but based on services, not industry or commodities.”

A notable innovation he discussed is simultaneous speech translation (SimulST), enabling instant speech-to-speech translation and fostering a more natural flow of conversation. “SimulST will tap into vast online talent pools in non-English speaking economies. It will unleash a “Talent Tsunami” and massively boost international business” said Professor Richard Baldwin.

He also discussed Europe's use of the Carbon Border Adjustment Mechanism (CBAM) to encourage carbon savings on a global scale. The idea is to prompt individuals and nations, totalling a billion people, to consider and actively work towards reducing their carbon footprint.

The Professor highlighted the future of trade, emphasizing a paradigm shift towards services over manufacturing in the global economy. He also spoke about the challenges and opportunities posed by advancing technologies, with a focus on AI's profound impact on reshaping the world. Examining the trade dynamics in countries like China and India, the Professor forecasted a paradigm shift towards services-led growth for India.

Janmejaya Sinha, Chairman of BCG India, delivered the welcome and opening remarks. In his welcome remarks he brought up the topic of the carbon border tax and its potential impact on global trade, particularly for countries in the Global South.

8 December 2023

New Delhi