Rajiv Memani wears many hats. Until this May, one of the more demanding roles was leading India’s largest industry chamber, the Confederation of Indian Industry (CII), as its president for 2025–26. It was, in his words, a role for which “nothing truly prepares you”. He had to balance it with his day job as Chairman and CEO of EY in India, where he is better known as a suave, smooth-talking chartered accountant and dealmaker.
Memani’s year at CII came at a time when India’s economic fundamentals remained strong, but uncertainty gathered at the end of March. Since then, energy security, supply chain disruptions, and currency volatility have become immediate operational challenges and longer-term strategic questions for Indian industry.
In an interview with Siddharth Zarabi, Group Editor of Business Today, Memani argues that India must build greater resilience in energy security and supply chains. It must also develop domestic capacity in import-dependent products linked to data centres, AI and advanced technologies. He sees unfinished work in reforms too. Land, electricity and logistics markets need to become more competitive, and we need judicial reforms and faster dispute resolution—steps that are important for building investor confidence, he says.
CII was busy through the year. It submitted nearly 1,200 policy recommendations to the Centre, states and autonomous bodies. Several were accepted, while many remain under consideration. In the Union Budget 2026–27 alone, 79 of its recommendations were accepted. Edited excerpts:
Q: What is your assessment of the West Asia crisis and its impact on India’s economy?
A: The past 12 months have been dominated by geopolitical tensions. India has responded very well, especially to the tariffs imposed by US President Donald Trump [in 2025]. We used that as an opportunity to double down on reforms, like diversifying our trade relationships through free trade agreements (FTAs).
Then there were the reforms to the goods and services tax (GST), and ease of doing business. You saw consumption picking up after that; the investment cycle was looking up, the IPO market was booming, the fiscal deficit was under control, remittances were growing. It was a very positive scenario. That is, till we suddenly got hit by the war in West Asia.
The government really followed the lessons from the Covid-19 pandemic response. Immediately, we saw it working across ministries. At CII, we saw that there was daily coordination between the government and various businesses. The speed at which the government responded was very good.
The strategy was very clear. Firstly, the government wanted to ensure that there was adequate supply. We were exposed in some areas because our strategic buffers were not as high as they should have been. I think the government has done a very good job of trying to secure fuel supplies.
The second was to ensure that those most in need should not be impacted. That was done by absorbing some of the pricing shocks, either through the government’s or oil marketing companies’ balance sheets. So, we didn’t see the pinch of inflation immediately. (Editor’s note: India raised petrol and diesel prices by `3 per litre on May 15.)
Third, there have been measures for sectors that have been impacted the most, like exports, micro, small and medium enterprises (MSMEs).
Till now, those industries that are very dependent on inputs from the affected areas have been impacted a bit. Fertiliser producers are among them. But, by and large, we haven’t seen any significant impact on domestic consumption so far.
If you talk to most companies, they would be very cautious right now because they feel if this continues for longer and as strategic (crude oil) reserves deplete, there could be a jump in crude prices. What happens in the future will really depend on how soon the Strait of Hormuz opens. For India, what we need to look at is the currency, the current account deficit, and how that impacts imports and exports.
Q: Are there any sectors that require government support?
A: In terms of short-term responses, most of the requests have been addressed. Yes, there are some sectors, particularly MSMEs and logistics, that have been hit. Some other sectors like airlines are also asking for relief.
The government has to manage the fiscal balance. So, while it has provided massive relief in one area, it is also waiting and watching to see how long the crisis lasts. They don’t want to expose the fisc beyond a point because it could come back and hurt us as interest costs and other prices rise.
The real ask from industry has been how do we address the issue of longer-term reforms. I would say the area that really needs to be looked at is non-merchandise imports, which grew by almost 35% last year. This is not sustainable.
To be a strong $10 trillion economy, we will have to start focusing far more on manufacturing to make India really Aatmanirbhar.
The strategy for that must be product by product. In coordination with the Department for Promotion of Industry and Internal Trade, CII put together a list of 70-80 items where we have manufacturing potential but are reliant on imports. It may require technology tie-ups, some level of protectionism, incentives, but we need to move on items where we know future demand is going to be very high, like data centres.
Likewise, the energy situation is not sustainable. We need to shore up our oil and gas production and look at alternative sources. We have lots of coal reserves. What do we need to do there? How can we move faster on implementing the new nuclear law? How do we expedite the time taken to open a mine? Otherwise, there will be vulnerabilities. It opens massive economic opportunities once we address that.
Q: Why has private investment not increased?
A: I have a slightly different view on this. A prominent research agency looked at the balance sheets of all non-financial listed companies in India. In FY25, 20% additional assets were put on ground. Another agency said in FY26 there was a 50% increase in projects announced by the private sector. Its share in new projects is more than 70%. The data indicates that there are investments. Could they happen faster? Yes.
If the government feels that the private sector is not investing, what are the areas where it is not happening? If I was to look at it carefully, first, things slowed down a bit after the tariff shock. But they started picking up once the government’s response was clear. Now with the West Asia war, it’s natural to assume that many companies are seeing if they need to build more buffers. You will see a slowdown for a few months. But, if you look at the long-term trend, there’s certainly an acceleration in investments.
Second, there are some sectors where cash generation or profit generation will be very high, but you may not have a commensurate increase in capex. Let’s take IT services as an example. You could see companies making $1 billion in profit after tax, or $5-6 billion. They may not be investing $8-10 billion. They may instead be acquiring foreign firms to gain intellectual property, market share. In such sectors, it may not be possible to have capex at a high rate, unless these companies diversify and enter other areas, which is today not rewarded by the capital markets.
But if you look at the top five to ten conglomerates, a majority has significant investments. The capex is very visible, and you can see that increasing almost every year.
I do think that the approvals process must be faster. If that happens, we will see a further acceleration in investments. However, since there is so much of uncertainty, and given the Indian entrepreneurial mindset, they also want to be slightly conservative because if something goes wrong, you may lose complete control of your business. At some level, conservatism has crept in, which is probably good for the longer term.
Q: Is there also a generational problem with Indian capitalism? A gen-next that really doesn’t want to get its hands dirty and would rather manage the family office?
A: In some instances that may well be the case. But I am sure most of them are smart enough to realise that one of the reasons valuations are high here is because of the anticipation that India will grow faster than other large economies. For that to happen, you either invest significantly more in R&D to innovate at a very rapid pace and capture markets or you increase capex to expand capacity to address domestic needs. Most firms in India are following the latter path. There will be enough businesses, multi-generational or first-generation, that will make the most of the opportunities.
Besides, it’s not that easy to invest outside India. Most of family offices are largely investing in India.
Q: Is it time for India to take stock of the critical import dependencies and prepare a strategy to mitigate them?
A: Outside of AI, this has to be our biggest focus. In some ways it’s reflected in the currency movement. It means we are not creating enough value in the economy. We are importing a lot more than what we should be doing.
It comes down to looking at alternative energy sources, whether that’s solar, wind, compressed biogas, nuclear, or coal gasification. There are lots of options and they require policy changes, incentives.
@szarabi
