Diversify manufacturing, supply chains after China's Foxconn exit: CII Prez

Business Standard

a day ago

Referring to the recent decision by China to pull its staff from the Foxconn plant in Tamil Nadu and block supplies of rare earth metals, newly appointed Confederation of Indian Industry (CII) president Rajiv Memani on Thursday said that this is a signal to countries not to have their manufacturing and supply chains concentrated in a few countries.
'I think these things are very layered, and it's actually very difficult for us to find out, you know, what is the trigger. It's like homeopathic medicine—you don't know where the trigger is and where the pain is. So, you have to do root cause analysis. If you look at the history of all these, whenever a Quad meeting is happening, there is some action. These are messages in a way. It is a signal to India and all the other countries that if you have manufacturing and resources very concentrated in a few countries, you run this risk,' said Memani in a press conference held in New Delhi.
Memani also said that the Indian economy is expected to grow by 6.4-6.7 per cent during the current financial year, driven by strong domestic demand, even as geopolitical uncertainty poses downside risks. He observed that factors including a good monsoon forecast and enhanced liquidity emanating from the Reserve Bank's CRR (Cash Reserve Ratio) cut, as well as interest rate reduction, will support the country's economic growth.
Last month, the central bank announced a reduction in the Cash Reserve Ratio (CRR) by 100 basis points, which will unlock Rs 2.5 lakh crore liquidity to the banking system for lending to productive sectors of the economy. The benchmark interest rate was cut by 50 basis points to 5.5 per cent.
"We expect (economic growth in) a range of 6.4 to 6.7 per cent," Memani said in response to a question on CII's gross domestic product (GDP) forecast for India during 2025-26.
Observing that there are some obvious risks, he said, "A lot of these relate to external trade risks. I think a lot of them have been factored in, and also there are some upsides. So, hopefully, they should get balanced out. From a CII standpoint, we're looking at 6.4 to 6.7 per cent growth."
Memani further underlined the need for a "balanced and reasonable" free trade agreement (FTA) between India and the US in the initial phase, saying that the tricky areas with political ramifications could be tackled at a later date.
India is negotiating an FTA with the United States, and a team of commerce ministry officials is currently in Washington trying to secure an early agreement ahead of the 9 July deadline set by President Donald Trump for the imposition of higher tariffs.
Industry lobby CII is expecting a "balanced, reasonable FTA, which will be done in tranches. Those areas which are more tricky, which require more consultation and have greater political ramifications, may be dealt with later on," said Memani, who took over as CII president recently.
India is reluctant to open access to sensitive agriculture and dairy sectors to the US industry, as opening the farm sector could jeopardise the interests of farmers. Additionally, India does not want to open the dairy sector because of religious sensitivities.
"I do know that the level of preparation that the Ministry of Commerce has done, and the engagement that they have had with industry, the engagement that they have had with various industries, in Ministry of Agriculture has been very limited, and I feel very confident that the challenges that Indian industry, and particularly some sectors mentioned, agriculture, those will be adequately addressed," said Memani.
"Also, from an industry standpoint, there are issues and concerns that have been raised; in all these things, you will not always have 100 per cent winners," the CII president said.