A leading economy must have a bigger and major role in the private sector, and the industry must take this responsibility hands-on in order to drive progress, said Naushad Forbes, Co-Chairman, Forbes Marshall, in an exclusive interview with Tanya Krishna of FinancialExpress.com. Forbes recently launched his book ‘The Struggle And The Promise: Restoring India’s Potential’, wherein he talked about the potential of the country to become ‘the world leader’, the opportunities, and the challenges that restrains the growth movement.

Forbes believes India can live up to its potential (the promise) by taking full advantage of its huge young population, culture, tourism sector and a strong private sector. He believes that these combined will help India overcome the challenges (the struggle) of low skilled workforce, availability of quality jobs and education, a not-so-independent private sector, and a state that does not overstep on areas in which it works. Here are excerpts from the interview.

What are the biggest economic challenges facing the nation currently? What can the government do to better the situation?

I think the best way of thinking about the biggest challenge is to think in terms of time frames. In terms of the immediate short term, it is to get back on our earlier trend line of growth which has slowed due to the pandemic. While we have recovered from the pandemic and the effect of the pandemic, we are still back to where we were two years ago. So we have, in a sense, lost two years of growth. The first thing that we need to do in the short run is to get back on our pre-pandemic growth line.

The longer term task is how do we put millions of people to productive work in good quality jobs. I think if we can move people out of low productivity jobs in agriculture and informal services and into more productive formal sector jobs, that will trigger a growth miracle for India for 30 years.

Which sectors do you think have the maximum potential to create more jobs? How can we put India in the group of high income group nations?

We have a huge unskilled workforce. Less than 4 per cent of our workforce is formally skilled. Today, out of a workforce of 400 million, only 30 million people are employed in manufacturing firms. If we can get labour intensive manufacturing moving in the country, that would mean a more successful, vibrant and supported garment, footwear and food processing industry. Another sector that has the potential to employ many people is the services sector. Tourism has the potential to create millions and millions of good quality jobs for many years to come.

Is India’s manufacturing really gaining traction? Can India actually dream about becoming a manufacturing hub, going forward?

Yes, absolutely. We already are doing great in certain product ranges. For example, specialty chemicals, pharmaceuticals; auto components is also an area where we are starting to make a mark. We have the potential to emerge as a major auto manufacturer and auto exporter as well. There are other sectors where we struggle, for example, textiles and garments, where we have traditional strengths as a country but we are a very small player, when we compare it to China, Vietnam and Bangladesh.

You have quite openly addressed issues such as the relationship between industrialists and government, and around how the government takes criticism. What are your expectations from the corporate houses of the country?

So the role of the state is to enable. My concern lies with things like the PLI scheme wherein it’s the state deciding which are the right products to make for the country. Deciding which products to make is a commercial discretion. It’s a decision that should be taken by industry and not by the state. Furthermore, I believe very strongly that we need a private sector that is completely independent. Independent means that it’s willing to praise the government when praise is called for and is willing to criticize the government when criticism is called for.

You talked at length about India’s potential to become a world leader. But given the geo-political situation and the economic uncertainties, how practical an approach is this?

The term ‘world leader’ involves different principles. There’s without question, a need to have the qualities of economic leadership, you need economic success, because without economic heft, you will not be taken seriously. Now, how do we have a really vibrant and successful economy? For a country to lead, it needs to be private sector-led. Currently, India is seen as a more benign attractive presence, a country that is welcomed around the world; we are not seen with suspicion. Indian industry is welcomed; its actively sought in countries around the world. We have to use that ‘Welcome’ to be much more active in what we do around the world. There is also a real need for industry, to invest in international markets and to invest in technology, so that we can participate in those development processes. And the last thing is recognising our culture as a great strength. We have an open, tolerant culture, relatively speaking, where we have something that everyone finds attractive. We need to use that to the maximum possible.

You have said, in your book, that India needs another reversal in its trade policy from protectionism to an outward-looking policy. What kinds of steps are we looking at or expecting from the government on this front?

From 1991 to 2017, the trade policy in India kept improving, we kept becoming more and more open, terrors were coming down, more and more items were freed for imports. As economists argue, a tax on imports is actually a tax on exports. So as import tariffs came down, exports also boomed and between 1991 and 2012, trade imports plus exports went from 15 per cent of GDP to 55 per cent of GDP, which is huge. Since 2012, trade is falling back as a percentage of our GDP, but it’s not as much higher as it used to be in 2012. And today, it’s about 40 per cent of GDP now, which is still decent, but the slowdown we have seen in the economy in the last 10 years or so, can be almost entirely explained by the decrease of exports in our GDP. Since 2017, we have seen an increase in tariffs and sometimes repeated increases in tariffs. And many of these increases in tariffs seem somewhat, capricious or random and it’s those increases in tariffs that need to now reverse again.