Despite clocking GDP growth of 8.2% in the first quarter of FY19, India’s economy has been grappling with a host of global headwinds in the form of higher crude oil prices, tariff wars between the U.S. and China and a weakening rupee.
However, Aditya Birla Group chairman Kumar Mangalam Birla is confident that these global factors don't pose a threat to India’s growth story. Speaking at an event in Mumbai on Tuesday, Birla said domestic consumption, increased government spending on infrastructure along with the NPA clean-up bode well for growth going forward.
“I don’t think there is any legitimate reason why you wouldn’t want to invest in India,” he said adding that there are several positives for the economy which is projected to grow 7.5% this fiscal year. “You can’t ignore India if you want to be a top global player,” he said.
Birla also said the tariff war between the U.S. and China will not affect India’s growth. “I don’t think the trade war can derail India’s growth because it is propelled by domestic consumption and very large government spends on infrastructure,” he said. However, he raised some concerns over Chinese goods coming in to economy as a result of the trade war.
Aditya Birla Group’s Hindalco is a global heavyweight in the aluminium industry. Birla explained that with the U.S. imposing tariffs on Chinese aluminium exports, more material from China is coming into India which is already an oversupplied market.
“One hopes that these tariff wars don’t last for very long because it is not in any economy’s interest,” he said.
On the depreciating rupee, Birla expressed confidence that with large forex reserves of over $400 billion and strong GDP growth, the impact can be countered.
Commending the government’s efforts on tackling the bad loans menace, Birla said the IBC could help give investments a much needed boost. “As banks clean out their toxic assets, credit from them will go up, which we require very much in the country today. Investment into new projects should start to look up and assets that have been there for a long time should become productive again,” he said.
However, the implementation of the IBC has been anything but smooth, with the government tweaking and re-tweaking the law and several cases - including Binani Cement which Birla’s Ultratech Cement has been eyeing- caught up in a legal wrangle. But Birla is confident that the future of IBC will be a much simpler one. “With any deep reform of this kind it takes some time before the rough edges get evened out. I think we’re in the process of that learning curve,” he said, adding that in a year or so, he sees the learning period coming to an end.
Birla also spoke about the telecom space, saying that he doesn’t see the price war coming to an end anytime soon. However, he maintained that the merged entity post the Idea-Vodafone merger is poised for growth with an impressive customer base and deep-pocketed investors.
