At the CNBC-TV18 Global Leadership Summit, Sajjan Jindal, Chairman and Managing Director of JSW Group, addressed the ongoing debate on India’s trade policies.

Responding to Uday Kotak, Founder of Kotak Mahindra Bank, who advocated for liberalizing India’s trade policies to foster competitiveness, Jindal stressed that India must first establish itself as a global manufacturing powerhouse.

“Let us first become the factory of the world, then we can open doors for competition,” Jindal remarked, firmly opposing the immediate liberalization of trade policies. He argued that the manufacturing sector in India remains underdeveloped and unprepared for the pressures of unregulated global competition.

The Current State of Manufacturing in India

Jindal highlighted that manufacturing accounts for only 17% of India’s GDP, a stark contrast to the significantly higher contribution in countries like China. He emphasized the need to increase this share to 25-30% to achieve sustainable growth and global competitiveness.

Drawing parallels with China’s economic rise, Jindal explained that the country implemented protectionist policies in the 1990s to shield its industries, enabling them to grow. Only after solidifying its position as a global manufacturing hub did China open its markets to greater competition.

“Once China became the factory of the world, they opened up,” Jindal pointed out, suggesting India adopt a similar strategy. He added that premature liberalization could hinder the country’s industrial growth.

Balancing Growth and Liberalization

Jindal’s comments also addressed the broader question of balancing economic growth with free trade. He noted that even developed nations like the United States, which have had over a century to establish their industries, continue to impose tariffs to protect domestic sectors.

He argued that heavy industries like steel require substantial investment and time to mature. Without profits and returns, companies would struggle to reinvest in expansion and innovation. “If you don’t make profits, you can’t reinvest. My shareholders will not give me money to invest if I can’t make money,” Jindal said, underscoring the need for profitability before liberalization.

A Divergence in Perspectives

Uday Kotak had called for a reduction in protectionist measures to make Indian businesses more competitive globally. However, Jindal countered that such views often overlook the challenges faced by manufacturing industries, particularly in a developing economy like India.

While Kotak’s focus was on boosting competitiveness through trade liberalization, Jindal argued that fostering a robust manufacturing ecosystem is a prerequisite for competing effectively in global markets.

India’s Path Forward

The discussion at the summit highlighted a crucial policy dilemma for India—whether to open its economy further or focus inward on developing its manufacturing base. Jindal’s remarks resonate with the government’s recent push for self-reliance under the “Make in India” initiative, which aims to boost domestic manufacturing capabilities.

As India aspires to become a $5 trillion economy, the path it chooses will have significant implications for its long-term economic strategy. Jindal’s call to prioritize manufacturing growth serves as a reminder of the importance of building a strong industrial foundation before fully embracing global competition.

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