PLI schemes a well-thought-out plan to encourage industry: KM Birla

Aditya Birla Group chairman Kumar Mangalam Birla on Sunday termed the production-linked incentive (PLI) schemes designed by the government as pathbreaking and interesting as they sought to create global giants in chosen sectors.

This seems to be a well-thought-out, long-term plan for encouraging industry, he said. “We see the strong influx of investment dollars,” Birla said.

He said it was more important to get the private sector to make capex investments than getting foreign investments into India. India is much closer to becoming a global hub for manufacturing, has had a history of building global-size businesses in software, pharma, metals and auto, and has a track record of global excellence and scale, he said.

Birla was speaking at a fireside chat at the three-day Asia Economic Dialogue 2021 organised by the Ministry of External Affairs and the Pune International Centre.

About the prospects of GDP growth of 7-8%, Birla said there should be no doubt or apprehension about the growth momentum in India. The plumbing is already done and the country had undertaken bold reforms to push it to a high trajectory, he said. He predicted a sharp recovery with double-digit growth, with consumer and business confidence coming back.

After turbulent times, crazy gyrations in economic variables, high price volatility and commodity prices on a roller coaster, Birla said there is no long-term structural setback to the Indian economy. His group is quickly moving from resilience to renewal as he sees a lot of buoyancy and business optimism, with most of their businesses reporting growth in the third quarter, he said.

Enthused by the national infrastructure pipeline, he predicted an investment boom and multi-decadal growth. His group is making new bets with investments of around $2.8 billion across businesses in the last two months. These include $800 in the UltraTech cement business and $1 billion for doubling capacity at Hindalco in downstream part of the business. Flagship Grasim has identified paints as a new sector of growth. Novelis has completed a $2.8 billion acquisition right in the middle of the pandemic, he said.

The earlier government stimulus, topped with an even stronger fiscal stimulus in the Union Budget, will fire up risk capital and energise the private sector, he said. Birla said he has not seen such a sustained euphoric reaction to a budget, weeks after the Budget was presented. “The year 2021 is the new 1991 in terms of the impact of reforms and I think the 2020s will be India’s decade,” Birla said.

On the global front, Birla said regionalism is becoming more of the norm than globalisation, and national concerns are coming to the fore, he said. So instead of the traditional wisdom of one large capacity, there will be smaller capacities build across continents and nations, Birla said.

About India staying away from the RCEP trade agreement, Birla said groups like theirs and many others will not quibble over free trade or opening up of borders. However, he said there is a need for a sense of equity among players, and when there is large-scale dumping below cost, free trade is subverted. He cited the case of dumping of copper in the country. The RCEP will not be effective if these concerns are not addressed and there is no safeguard against malpractices, Birla said.