Davos 2026: CII president flags China surplus, trade frictions as key risks to India’s manufacturing push

At Davos 2026, amid the din around artificial intelligence, Rajiv Memani, President of the Confederation of Indian Industry (CII), cut through the noise with a grounded message: for CEOs, the bigger concern isn’t just AI — it’s geopolitics, trade volatility, and tough investment calls in an unpredictable world.

“Every week has new twists and turns. So what does it mean for your business? How do you plan investments? How do you plan for the midterm and long term?” Memani said in an exclusive interaction with Business Today TV.

On the stalled India-US trade deal, Memani admitted expectations were higher last year. “If you would have asked me last year at this time, I would have said that that’ll happen,” he said. But any agreement, he stressed, must be “fair, equitable, transparent and respectful of all sides.” He added that India remains engaged and open to a deal on balanced terms, while progress with other partners—like the UK, Middle East, and EU — offers a solid cushion.

Despite the deadlock with the US on trade, investments are flowing in. “A market that they cannot ignore,” is how Memani described India, citing tech-led US investments in AI, data centres, and semiconductors. Yet he noted a clear split — services and consumption are thriving, but manufacturing exports remain vulnerable to external shocks.

“Open market access matters,” he said, especially if India wants a deeper seat in global value chains. Indian companies, he added, continue to prioritise domestic opportunities, with most major groups keeping capital allocation focused at home.

Memani dismissed the idea that Indian companies are holding back on investments. “Private investment has picked up,” he said, though global volatility and China’s surplus capacity are posing serious challenges. “The Chinese exports around the world have gone up massively,” he warned, pressing for quicker trade remedies and anti-dumping measures. “We have to play a faster game.”

On domestic reforms, Memani supported the intent behind quality control orders but urged smarter execution. “QCO per se was not the wrong thing to do,” he said, encouraging better alignment with export goals and local capabilities.

Labour reforms, while adding short-term costs, were described as necessary for long-term flexibility. He also offered a pragmatic view on the gig economy and delivery-time debates. Whether it’s 10 or 20 minutes, he said, the model will evolve as cities and consumers push for safer, cleaner options.

On AI, Memani highlighted visible productivity gains but warned against quick returns. “AI is a longer-term play,” he said, pointing to automation already underway in tax, audit, and legal services. “You have to move fast, but the returns will take time.”

Looking ahead, Memani called for a laser focus on boosting manufacturing in the upcoming Union Budget. With a $450 billion import bill and AI infrastructure poised to drive up imports further, domestic capacity building is now urgent. “We have to start very proactively working and saying that we have to bring that down,” he said, calling for clear strategy, cross-ministerial coordination, and a focus on building sectoral champions.

The Davos takeaway, in Memani’s words: India’s macro story is strong, reforms are real, and business sentiment is resilient — but to stay competitive, the country must move faster on trade, manufacturing, and policy execution.

Watch the full interview here