Fix land acquisition, cut bureaucracy: Gita Gopinath's prescription for India to become industrial power

IMF's former Deputy Managing Director Gita Gopinath on Wednesday outlined the steps India must take to establish itself as a major player in global supply chains. She said that while improvements in infrastructure are vital, India's ability to compete on the global stage is hindered by persistent issues in land acquisition and excessive bureaucracy.

"What India needs to do in terms of tapping into the global supply chain is continuing on the path of all the big reforms that it needs for its own internal growth. The improvement that we've seen in physical infrastructure and in digital infrastructure in India is super helpful and that should continue," she said while speaking at the Economic Times' India Economic Conclave. 

However, she noted that these improvements must be complemented by more targeted reforms. "One big hurdle for India to be a big industrial power is land acquisition, which remains very complicated. Land titling is not clean. It's very hard to acquire land in India. That is an important constraint on how fast you can build out and that is an important constraint on growth."

Gopinath highlighted that while some states like Andhra Pradesh are trying innovative policies to address land acquisition, such efforts need to be expanded across the country. "States that are actually doing innovative things, like Andhra Pradesh, have some very innovative policies in being able to hasten land acquisition, and policies of those kinds can be helpful everywhere else."

She also underscored the need for further deregulation, stating that while things have improved, India still remains a tough place to do business. "There is still a lot of regulation, a lot of bureaucracy. Corruption is still an issue, a big issue, and so addressing all of that is going to be critical if India 
has to become a major player on the global stage in sub-global supply chains," she said. 

Earlier this month, Niti Aayog, in a report, said that India has seen limited success so far in capturing the 'China Plus One strategy', while Vietnam, Thailand, Cambodia, and Malaysia have become bigger beneficiaries. The think tank noted that factors such as cheaper labour, simplified tax laws, lower tariffs and pro-activeness in signing Free Trade Agreements (FTAs) have played a critical role in helping these countries expand their export shares.