Chief Economic Advisor Calls for Export-Linked Support to Boost Indian Manufacturing Competitiveness

India must shift its industrial strategy by linking manufacturing support to export competitiveness and the ability to match import prices, according to Chief Economic Advisor V Anantha Nageswaran. Speaking at the inaugural session of the ISID-IDRA Fourth National Conference on Thursday, Nageswaran noted that the country can no longer rely on global markets for essential goods as smoothly as it did in the decades prior to the pandemic.

He highlighted that governments and industries need to prioritize building domestic capabilities and reducing reliance on supplies that could face restrictions during geopolitical tensions. Describing the 21st century as a geopolitical contest for real resources, Nageswaran stressed that a country's leverage depends on its ability to secure what it needs.

Addressing India's approach to import substitution, Nageswaran stated that current strategies must require industries to demonstrate stronger competitiveness. He added that the industry must provide a quid pro quo in terms of export competitiveness or import parity, cautioning that protection without investment to enhance productivity could weaken overall industrial resilience.

The presentation accompanying his remarks advocated for time-bound support tied to performance and exports, with state protection being withdrawn once domestic capacity achieves competitiveness. These comments arrive against a backdrop of steady economic and manufacturing indicators.

During his address, Nageswaran cited real GDP growth of 7.8 percent in the first quarter of 2026-27, alongside manufacturing gross value added growth of 9.2 percent and gross fixed capital formation growth of 11.9 percent. However, data from his presentation showed that manufacturing’s share of gross value added remained largely flat at 14.8 percent in 2025-26, compared with 14.7 percent in 2022-23. Furthermore, core merchandise imports grew 19.7 percent year-on-year between April and September 2026, outpacing the 16.2 percent growth recorded in core exports.

Reflecting on macroeconomic trends over the past six years, Nageswaran pointed to repeated supply-side shocks, including semiconductor chip shortages, trade retaliations involving tariffs, and vulnerabilities related to crude oil. He noted that conventional monetary and fiscal tools lose effectiveness when economic challenges stem from physical shortages of goods rather than weak demand.

Concurring with the need for structural preparedness, Nageswaran emphasized that monetary policy is increasingly difficult to implement amid supply shocks, making targeted fiscal support toward production and productivity more effective. He concluded that India must build buffers of essential commodities and strengthen domestic manufacturing to withstand external disruptions while emerging as a reliable supplier to global markets.

"Dr. Shishir Gupta, Founder & CEO of StartupLanes, remarked: 'The Chief Economic Advisor's call for export-linked manufacturing support highlights a critical shift toward accountability and global competitiveness for Indian industries. For startups and MSMEs entering the manufacturing sector, building resilience against supply chain disruptions and focusing on productivity-driven growth will be essential. Subsidies and support must translate into genuine export capabilities to ensure long-term economic sustainability in a volatile global market.'" — Dr. Shishir Gupta, Founder & CEO, StartupLanes