“$14 trillion of trade is up for grabs over the next 10 years, which is about a third of global trade,” Kumra told ET on the sidelines of the World Economic Forum’s Annual Meeting in Davos, explaining that the starting and destination points of trade are likely to change.
Reshaping of global trade would give rise to several new corridors linked to India, connecting it with the Middle East, Japan, Southeast Asia and the European Union, he said. As global trade worth $12-14 trillion is rewired, he said India stands to benefit from these shifts.
“As the government has been trying to do (boost trade) through free trade agreements and by exploring collaboration opportunities, we should be even more decisive in forcing some of these collaboration opportunities,” he said.
As a result of geopolitical uncertainty which has turned into military uncertainty and security uncertainty, countries have spent about $2 trillion in the last five years in geopolitical tools, including investments in attracting domestic investment, he said. “People are realising that geopolitics isn’t just about tariffs. It is a combination of levers that include domestic investment policies, tax subsidies, investment screening and export sanctions,” he said.
While these forces are rewiring trade flows, he said the “safe corridors”-the highest in number in Asia-are those that are likely to grow under any of these scenarios. This is again “where economic reality comes in that you have to both defend but also be on the offence and see how I can tap into these new corridors”, Kumra said.
India’s fundamentals remain strong as it is one of the few large economies still delivering 6-7% growth, Kumra said. While the world ages and China’s population under 25 years of age halves, “India is the only country standing other than Africa that still enjoys the demographic dividend. And you combine that with the digitisation and access to talent and engineering skills, which should position it in theory well for AI,” he said.
India and AI race
India, which has largely been a domestic consumption story, must now pursue a stronger global engagement and investment narrative, he said. For India, a key question at Davos has been where is it in the artificial intelligence race, he said. “That is certainly a big question on people’s minds. Also, what will the impact of AI be in a country which has such a large part of its economy coming out of services?”
On AI, Kumra said it is a “force of gravity” pulling everything in, with the “cost of intelligence dropping one-tenth every 12 months and the cost of a token falling to one three-hundredth of what it once was”. He called out the “90-10-5 paradox”, where 90% of companies experiment with AI in one function, 10% scale it and less than 5% see a bottom-line impact.
Need more reforms
While strong public markets and attractive exits for investors have made the country one of the most vibrant IPO markets in the world, he said concerns remain around depreciation of the currency as well as anxiety around tax treatment and a lack of adequate risk capital for true innovation.