Risky to rely on only a few nations for mfg, supply chains: CII President

CII president Rajiv Memani says China's Foxconn exit signals the risk of over-relying on a few countries for manufacturing and supply chains, and outlines India's growth prospects for 2025-26

Referring to the recent decision by China to pull its staff out of the Foxconn plant in Tamil Nadu, and block supplies of rare earth metals, newly appointed Confederation of Indian Industry (CII) President Rajiv Memani on Thursday said that this is a signal to countries to not have their manufacturing and supply chains concentrated in a few nations.

 

“I think these things are very layered, and it's actually very difficult for us to find out, you know, what is the trigger. It’s like homoeopathic medicine — you don’t know where the trigger is and where the pain is. So, you have to do root cause analysis. If you look at the history of all these, whenever a quad meeting is happening, there is some action. These are messages in a way. It is a signal to India, and all the other countries that if you have manufacturing and resources very concentrated in a few countries, you run this risk,” said Memani in a press conference held in New Delhi. 

   

Memani also said that the Indian economy is expected to grow by 6.4-6.7 per cent during the current financial year (FY26) driven by strong domestic demand, even as geopolitical uncertainty poses downside risks. He observed that factors like a good monsoon forecast, and enhanced liquidity emanating from the Reserve Bank of India's (RBI’s) cash reserve ratio (CRR) cut and interest rate reduction will support the country's economic growth.

 

Last month, the central bank announced slashing the CRR by 100 basis points (bps), which will unlock ₹2.5 trillion liquidity to the banking system for lending to productive sectors of the economy. Benchmark interest rate was cut by 50 bps to 5.5 per cent.

 

"We expect (economic growth in) a range of 6.4-6.7 per cent," Memani said in response to a question on CII's gross domestic product (GDP) growth forecast for India during FY26.

 

Observing that there are some obvious risks, he said: "A lot of these relate to external trade. I think a lot of them have been factored in, and also there are some upside. So, hopefully, they should get balanced out. From a CII standpoint, we're looking at 6.4-6.7 per cent growth.”

 

Memani further underlined the need for a "balanced and reasonable" bilateral trade agreement (BTA) between India and the US in the initial phase, saying the tricky areas having political ramifications could be tackled at a later date. 

 

India is negotiating a BTA with the US, and a team of commerce ministry officials is currently in Washington trying to secure an early agreement ahead of the July 9 deadline set by President Donald Trump for imposition of higher tariffs.

 

Industry lobby CII is expecting a balanced and reasonable BTA, which will be done in tranches. Those tricky areas, which require more consultation, have greater political ramifications, maybe dealt with later on, said Memani.

 

India is reluctant to open access to sensitive agriculture and dairy sectors to the US industry, as opening the farm sector could jeopardise the interest of farmers. Also, India does not want to open the dairy sector because of religious sensitivities.

 

"Also, from an industry standpoint, there are issues and concerns that have been raised, in all these things you will not always have 100 per cent winners," the CII president said.