India’s long-term growth prospects will remain limited unless the country accelerates infrastructure development, simplifies approvals and reduces the cost burden on industries, according to Nilesh Shah, Managing Director of Kotak Asset Management Company and part time member of the Economic Advisory Council to the Prime Minister. He said India’s fragmented governance, slow project execution and high real interest rates are major hurdles to achieving double digit growth under the current policy environment.
Shah said India needs to move with the speed seen in China’s infrastructure expansion, where projects are completed rapidly and efficiently. He compared delays in projects such as Mumbai Metro and the reconstruction of the Gokhale Bridge with China’s ability to build a major bridge in Beijing in only 43 hours. He added that India also lacks a true single window clearance system, as investors still face inconsistent processes between central, state and local authorities. At the same time, industry continues to face high borrowing costs, power cost burdens due to agricultural subsidies and logistics costs influenced by passenger fare subsidies.
Speaking on the China plus one agenda, Shah said India has not benefited fully because China continues to restrict machine supplies and uses arrangements that allow most of the manufacturing to remain in China. While Apple and Samsung have expanded production in India, he noted that most other mobile brands remain Chinese owned. He stressed that manufacturing must become the second engine of India’s economy alongside services, as services alone cannot match the scale China achieved through manufacturing.
Shah said India can attract more companies shifting from China by ensuring fast land allocation, smooth power connections and strong infrastructure, similar to what Gujarat provided for the Tata Nano project. He acknowledged the rise of global capability centres in India, saying they create high paying jobs and strengthen India’s position in technology, research and AI. On IPOs as exit routes, he said market forces should decide outcomes. He also said labour reforms are a positive step but remain insufficient, noting that MSMEs continue to face complex and outdated regulations that slow growth.
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