CII president R Mukundan projects 7% growth for India, seeks GST Council-like body to drive reforms

New Delhi: The Indian economy is likely to expand about 7% this fiscal year as most companies are seeing growth opportunities despite cost pressures due to the West Asia crisis, said R Mukundan, who took charge as the new president of the Confederation of Indian Industry (CII) in May.

Speaking to ET, he urged the establishment of a body similar to the Goods and Service Tax (GST) Council to drive reforms. He suggested a 16-point reform agenda bucketed under foundational reforms, factor reforms, future-ready reforms, and fiscal reforms such as speed of doing business and import substitution.

Mukundan-also the MD and CEO of Tata Chemicals-said that more than free trade, it is vital to encourage further technology infusions from China in sectors like battery storage on a case-by-case basis. "GST has been a great reform, but other reforms, if they are to come through, because of centre-state coordination, we need to form a council where these things are discussed and ready to be resolved."

CII suggested GST Council-like bodies to enact reforms in sectors like agriculture, power, land, education, and health, besides building a nationwide consensus and a governance model through a National Industrial Land Council to enable harmonised rules, time-bound processes, and integrated clearances across states.

"I can tell you most companies are seeing growth," Mukundan said. "They may have cost pressure because of this West Asia crisis. I think we will probably grow around 7%. It may not go to 7.5%."

Mukundan added that some of the inflation is imported, whose shock can be tempered for the common man. The Reserve Bank of India expects the economy to grow 6.9% in FY27 and retail inflation at 4.6%. "And we have to, along with the government, absorb some of the shock," he said.

China, import substitution, PLI

Stressing on taking technology from China on a case-by-case basis, Mukundan said, "They have good technologies, for example, in battery storage... If that comes along with investment as strings attached, we should not be against it. But this must be done on a case-to-case basis."

India had issued a press note in March notifying changes in the foreign direct investment (FDI) policy to ease investments from countries sharing land borders. Moreover, foreign companies having up to 10% Chinese shareholdings will now be eligible to invest in India under the automatic route across sectors.

Mukundan also pushed for production-linked incentive (PLI) schemes for electronics parts and intermediates for bolstering local manufacturing and lowering the import bill, while linking the incentives to domestic value addition, export performance, and job creation. Aerospace, toys, defence, furniture are some sectors that could be considered for PLI 2.0, he said. "What is happening is we have set up the first phase of investment in electronics, which is assembly of the final set," said Mukundan. "Many of the components come from there (China). We now need to roll out for the components, for the intermediate, whole PLI scheme," he said. India currently has 14 PLI schemes.

Reforms

The CII chief noted that the economy can grow close in double-digits if the Centre initiates certain reforms.

Among the foundational ones, he suggested retrospective application of Jan Vishwas Acts, a National Compliance Grid with Unified Enterprise Identifier on PAN 2.0, and innovative employment incentive schemes for corporates to generate employment in rural areas.

"Constitute a special body to focus on sub-surface level exploration (as done in Australia) to understand the sub-surface availability of oil, gas and critical minerals across the country," he said. Implementing a uniform stamp duty of 3-5%, phasing out industrial cross-subsidies and moving towards cost-reflective tariffs to improve industrial competitiveness such as in China and the US are key factor reforms.