Indian manufacturing should aim for export-led growth: Jamshyd Godrej

Says India must come up with a similar scheme as EU's CBAM to help industry become more carbon neutral

The Indian manufacturing sector should aim for export-led growth driven by climate-friendly processes and see regulations like the Carbon Border Adjustment Mechanism (CBAM) as an opportunity to have a global footprint, Jamshyd Godrej, Chairman, CII Sohrabji Godrej Green Business Centre and Chairman, Godrej & Boyce told Business Standard in Delhi on Wednesday.

Godrej, who has been one of the founding members of the centre, said CBAM was a good idea for every country, asserting that it will encourage the industry to improve on the sustainability front while giving protection against cheap imports.

 “What we are doing is we are giving protection to Indian industry against cheap imports such as steel from China. But we are not doing the other part. India should have something like CBAM. Anyone can offer me a cheap product. But if our tariff regulations state that you can't just bring something cheap here. You also must bring something which has a better carbon footprint, else pay higher tariffs,” Godrej said.

CBAM is a carbon tariff imposed on carbon-intensive products like steel, cement, and certain types of electricity imported into the EU. It will come into effect from January 1, 2026. During the trial period, which began on October 1, 2023, companies from seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products, have to share emissions data with the EU.

Godrej said there is a prevalent view that CBAM will be hit but he believes it will be short term.

“When Europe thought of CBAM we should have also thought of our own CBAM and gone in tandem. But it is not too late…, we should also come up with a similar scheme which gives a boost to the Indian industry to become more carbon neutral. They will benefit when they export and they will build a climate resilient supply chain as well,” he said.

He said once the leading players will reorient their manufacturing with greener options, it is bound to have a domino effect on the supply chain.

“If a truck maker like Volvo says all the parts that go into my manufacturing will be green, the supply chain would also reimagine its business,” he said.

Godrej also talked about the slowdown in consumption in the Indian economy and why it has come at the cost of putting too much focus on building self-sufficiency.

“If we had export-led growth, the economy would be in a different situation now. If given the right policies, opportunities, and infrastructure, manufacturers can be big players globally. That is where the growth will come from. The buying power in India grows as a function of the GDP,” Godrej said.

“If you do not export, you are at greater risk because you depend on the Indian economy only. Whereas if you have 20 markets and five of them tank, at least 15 are doing well,” he added.