India’s former Reserve Bank governor, Raghuram Rajan, emphasized that India’s growth path lies in leveraging its intrinsic strengths and becoming a crucial player in global supply chains. He highlighted the importance of building on India’s historic culture of tolerance and respect for all, while strengthening the country’s liberal democratic values as an economic necessity to earn the world’s trust.
Rajan suggested that India should focus on the service component of manufacturing, rather than directly competing with China’s cheap manufacturing sector. He argued that India could benefit from positioning itself as a trusted global supplier of services, particularly in the services industry. Rajan emphasized that India’s independent judiciary and liberal democracy are critical advantages in earning the world’s trust in this endeavor.
To illustrate his point, Rajan used the example of 5G technology. He stated that the world would be reluctant to trust critical infrastructure sold by an authoritarian country due to concerns about potential backdoors. Rajan highlighted the importance of convincing other nations that India abides by the rule of law and respects data protection, which would give it a competitive advantage over Chinese, Vietnamese, and Russian firms.
Rajan stressed that India’s focus should be on its human capital and moving beyond manufacturing products that are already abundant, such as chips. He suggested that India should concentrate on value-added chip design and aim to produce a high number of quality engineers each year. By doing so, India could establish itself as a global presence in chip design.
When asked about the ongoing free trade agreement (FTA) negotiations between India and the UK, Rajan reiterated the significance of capitalizing on services sector exchanges beyond just agriculture and manufacturing. He urged India to seize opportunities in the services industry and leverage its strengths in order to foster growth and development.
In conclusion, Raghuram Rajan believes that India’s growth path lies in leveraging its intrinsic strengths, particularly in the services industry. He emphasized the importance of strengthening India’s democratic institutions, rule of law, and data protection measures to earn the world’s trust. By focusing on value-added services and investing in human capital, India can position itself as a trusted global supplier and take a leadership role in the global economy.