CII President Rajiv Memani flags need for govt support in critical sectors

Rajiv Memani, president of the Confederation of Indian Industry and regional managing partner of EY Africa India region speaks on the challenges and opportunities facing India Inc

A day after the results of five Assembly elections were announced, Rajiv Memani, president of the Confederation of Indian Industry and regional managing partner of EY Africa-India region, speaks with Asit Ranjan Mishra in New Delhi on the challenges and opportunities facing India Inc. Edited excerpts:

 

How is the West Asia crisis impacting the cost structure of Indian companies? 

At the retail level, some of the cost pressures have been managed. But for corporates — especially those importing gas, liquefied petroleum gas, and related products — cost pressures remain, and expenses have risen.

 

The currency has also weakened, pushing costs higher. Industry will have to pass on some of these increases, as they have been significant. So far, there is no visible impact on demand, but we will have to see how numbers for April, May, and June pan out. Until the situation is resolved, and possibly for a few months after, there could be a short-term impact on demand.

 

We entered this period with strong tailwinds. Goods and services tax reforms had taken hold, sales of automobiles and two-wheelers were strong, consumer goods demand was very strong, and the capital expenditure cycle was picking up markedly. Investments were happening, particularly in energy, utilities, and manufacturing capacity.

 

Some of that momentum, especially on the consumer/demand side, may be affected. However, once the conflict is resolved, and it may take time for energy supply chains to normalise, I expect growth to recover fully within one or two quarters. Until then, growth will likely be slightly lower than it would have been otherwise.

 

The rupee has hit a fresh low. What should the government be doing? 

One key area India needs to address is the current account deficit. We must build manufacturing capacity quickly. If that requires incentives or some level of protection for certain industries, it should be considered.

 

We also need to move much more quickly in energy transition — expanding solar, exploring nuclear at an appropriate stage, and moving from coal to gas. These shifts take time. At the same time, India must integrate more deeply into global value chains by attracting large global manufacturers to set up operations here.

 

We should also work to attract more foreign direct investment, as that provides cushion to the currency.

 

The West Asia crisis poses a big challenge to the government’s fiscal arithmetic for 2026–27. Should it stick to fiscal consolidation or loosen purse strings to support industry and people? 

There will be added pressure on the fisc, as growth may come in slightly below projections. It would be prudent to wait until the end of the first quarter to assess how things evolve.

 

There are mechanisms for the government to raise more revenue through privatisation, disinvestment, or resolving long-pending disputes where large sums are stuck.

 

But the longer-term strategic interest of India, where we have to look at Atmanirbhar in terms of more strategic autonomy in manufacturing, more resilience from an energy standpoint. The government will need to back industry in investing in critical sectors. Many of these investments are long-term and may not be very viable, but they are necessary. This includes areas such as nuclear energy, coal-to-chemicals, and semiconductor.

 

Chief Economic Advisor V Anantha Nageswaran recently said that while profits of the top 500 companies have grown 30.8 per cent, private-sector capital formation has been underwhelming. Your response? 

I have a slightly different view. If we look at hard data for listed non-financial companies — available until March 2025 — gross assets grew by over 20 per cent in 2024–25.

 

Among new projects announced in 2025–26, more than 70 per cent are from the private sector. That indicates investment activity is underway, you wouldn’t see so many project announcements otherwise.

 

That said, developments over the past three to four months will likely slow momentum somewhat. But even with that, investment activity remains healthy, and once conditions stabilise, it should continue.

 

What do the Assembly election results mean for India Inc? 

A new government generally brings positive momentum. States may see fresh thinking and renewed energy. In some cases, stranded public infrastructure and railway projects could be fast-tracked, which would support growth.

 

Once the government outlines its vision for the state — its industrial policy, the incentives it can or cannot offer, and the sectors it aims to prioritise — private sector investment will pick up. By and large, the industry’s response has been very positive.