Business - Q&A Global CEO Deloitte USA

In an interview, James Quigley, the global chief executive officer of Deloitte, USA, outlines his views on India’s future growth direction and the risks involved.

Given the current economic climate, where do you see opportunities with respect to India’s future growth?

The manufacturing, services and agricultural sectors supported by infrastructure enhancements will positively impact India’s future growth. The relatively low-cost manufacturing environment, coupled with its investments in productivity improvements, should lead to much stronger manufacturing growth.

The services industry should benefit from its competitive cost advantage, but a close eye will need to be kept on increasing labour costs. Improvements in the agricultural sector should also bring about growth. The rate of economic growth in general is dependent upon further development of India’s infrastructure, as well as enhancements to the energy and financial sectors.

What do you see as the major global shifts which could present a risk to securing India’s future growth?

A significant risk to India’s future growth is the current global financial crisis. A severe or prolonged recession in the US and Europe will impact demand for both goods and services produced in India, resulting in much slower than anticipated economic growth. This will also impact India’s access to credit and capital, and its ability to invest in domestic infrastructure improvements.

What sectors will shape India’s future competitiveness?

Manufacturing is likely to determine long-term competitiveness. While the service sector is strong it is also fluid and more amenable to relocation within a short span of time. Therefore in the long term, as cost advantages in services dissipate, other countries will be better positioned to effectively compete with India.

Continued investment in manufacturing sector will generate a more stable engine for growth by creating employment for the over 15 mn people entering the workforce each year. Underlying all of this is banking sector modernisation to enable supply of cheap credit and the development of a robust debt market.