India eyes bigger share of global supply chains, says Gita Gopinath

India is working to capture a larger share of global supply chains as companies diversify away from traditional manufacturing hubs. Speaking to Times Network, IMF Chief Economist Gita Gopinath said, “India has made improvements in physical infrastructure, but that needs to be complemented with other ongoing reforms. One big hurdle for India to be a big industrial power is land acquisition. That remains very complicated. Land titling is not clean. It's very hard to acquire land in India.” She noted that some states are implementing innovative policies to tackle these issues, which could be helpful nationwide.

Gopinath added that labour reforms and skill development are also critical. “Even though the population is big, the workforce is big, it's still only about 30% of the contribution to growth,” she said. She added that increasing labour market flexibility and raising skill levels are both necessary: “There is evidence that if you could increase one more year of schooling for a person, you'll end up with their incomes going up by six or 7%. Very substantial improvements. Both of those are needed.”

On AI’s impact, Gopinath highlighted that “the estimate is about 26% of India's workforce is exposed to AI. The average for the world is about 20%. Over half of that will benefit from AI, the other half will suffer. In terms of Indian digital public infrastructure, more build out is absolutely critical. AI can also help expand access to healthcare and raise the quality of education to improve skill gaps that exist.”


India faces competition from countries like Vietnam and Mexico, but Gopinath stressed that reforms, deregulation, and investment in skills are key to making India a major player in global supply chains.