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India Today Conclave: South's contribution to $5 tn-economy could be much higher, say experts

Experts says south India has always played an important role in India's economic growth and manufacturing, IT, pharma, edtech and healthcare could drive the country's growth engine to realise $5 trillion economy dream

twitter-logoBusinessToday.In | March 12, 2021 | Updated 15:05 IST
India Today Conclave: South's contribution to $5 tn-economy could be much higher, say experts
Dr Sangita Reddy, Joint MD, Apollo Hospitals Group; R Seshasayee, Vice Chairman, Hinduja Group; B Santhanam, Chairman and MD, Saint-Gobain India, and K Ullas Kamath, Joint MD, Jyothi Laboratories

Panellists at India Today Conclave-South 2021 on Friday discussed how South India could play a significant role in realising the country's $5 trillion economy dream. Speaking on the topic 'Self-reliant South: Cultural Capital or Ease of Business?', Dr Sangita Reddy, Joint Managing Director, Apollo Hospitals Group, said for South India to play a leading role in contributing to India's $5-trillion goal, it has to focus on building infrastructure, continue its digital push and provide a pervasive environment to do business.

"If we speak sector-by-sector, manufacturing has the potential to refine the resilient global supply chain and with government policy matching the aspirations, Tamil Nadu has become a manufacturing hub. Karnataka and Telangana are also catching up," said Dr Reddy, adding organisations emerging from South India are setting the country on the right track.

R Seshasayee, Vice Chairman, Hinduja Group, said the South's contribution to India's $5 trillion-dream could be much bigger as it already contributes about 24-25 per cent to its GDP so it ought to be higher than $1 trillion.

"The South should not be looked at as a separate engine for India, and need to look holistically. As far as advantages in the South are concerned, it has the strength of IT," he said.

B Santhanam, Chairman and Managing Director, Saint-Gobain India, said to reach a $5 trillion economy, the South's contribution has to be more than 25 per cent in GDP. He said manufacturing plus construction will need to play a bigger role.

"South has an incredible infrastructure and a large base of companies. We need to inspire MSMEs to drive the economic growth engine. The government can do whatever it can but aspiration must be there to go beyond," he said.

K Ullas Kamath, Joint Managing Director, Jyothi Laboratories, said South India stands out from the rest of the country. "We have 27 factories here. Quality and productivity both are amazing. Infra is unthinkable," he said, adding that South could lead the country in providing the best education, high tech facilities.

On the impact of the Modi government's PLI (Production-Linked Incentive) scheme, Dr Reddy said the aspiration of boosting manufacturing contribution to 25 per cent of the total GDP is the basis of the scheme but there are problems such as land issues, ease of doing business, and logistics, which need to be solved.

Seshasayee said if there should be an exit clause to the policy. "The initial years, it is important to provide nourishment to the baby to help it stand on its feet but it has to be for a certain period."

Santhanam said he was in favour of the PLI scheme and that it was being implemented well. "SEZ in Chennai attracted a lot of electronic industries, including Nokia. If you go there, over 100,000 people have been reemployed, thanks to the PLI scheme," he said, adding that if handled well, states and the Centre can work together to take advantage of the scheme.

Kamath said the PLI scheme was a welcome step but it needs to be time-bound. "It can benefit forever. The PLI scheme has been defined nicely. There needs to be a greater partnership between the government and private sector," he said.

On increasing competition among states to garner more investment, Dr Reddy said there's adequate scope for growth in all areas. "There's enough capital coming to India. There's great potential in choosing areas where they can excel. For example, Andhra is focussing on leveraging pharmaceuticals. If each state could find their cluster, scope and scale, it can win global opportunities. Disruptive competitiveness is a few years away in India," she said.

Seshasayee said states should make promises that they can keep. "Affordability checks are critical. States have to be responsible while seeking investment. It's important to have a national benchmark," he said.

Santhanam said from a firm's point of view, it's good. "States earlier used to give away future revenue but they have now shifted to classical investment subsidy. There is an investment related to the subsidy. That's beneficial. I am for states intensely competitive with themselves. With time, they will figure out what is going on. We should let that play and have a free market to attract investment," he said.

Kamath said states should have the ability to honour concessions.  In terms of ease of doing business Andhra and Telangana were doing a great job, while Kamath said Tamil Nadu, Maharashtra and Gujarat were leading the pack.

Seshasayee said though it's been figured out how to ensure ease of doing business, slow judicial decisions and environment clearances are still the pain points. "These situations must be tackled at the state level," he said. As per Kamath, Karnataka and Telangana give a red carpet welcome to investors. Seshasayee said the south is becoming Saas capital. "There are immense opportunities in teaching," he said.

Also read: India Today Conclave: 'Where is the V-shaped recovery,' asks Chidambaram

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