“I think all the indications are there that India will have the capability (to become a developed nation). That said there’s a perception that India has not embraced import liberalisation. There are reasonably decent sized tariffs on a number of inputs and companies in exporting sectors have complained that it’s hard to get access to cheaply priced inputs,” he told ET in an interview.
Noting that India is a beneficiary of ‘China plus one’ sentiment, he said the country needs to focus on an investment-friendly environment, infrastructure, logistics, deregulation and reduce red tape. “The China plus one strategy has had some benefits for other countries including India, but especially in Southeast Asia,” Park said, adding that most countries will not benefit from this policy but only those that have competitive production environments. “If India wants more of that business, they need to up their game and really create an investment-friendly environment, (no) red tape, infrastructure, logistics, deregulation, all the stuff that is going to affect the perceived costs of potential,” he said, explaining that India has an advantage of being a very large economy and market, which is growing fast.
Private investment, rate cut
“I think private investment has been very healthy,” Park said.
With the US Federal Reserve lowering benchmark interest rates for the first time in four years, he said this should lead to the Reserve Bank of India being able to ease interest rates, which “will be good for investment” and expects “food prices will continue to moderate”. “The path is going to be (that) all the central banks are trying to balance different things to get the timing right… the direction is now we’re in a different part of the cycle, because the US Fed has signalled very strongly that it’s going to continue cutting (rates),” he said.West Asia crisisPark said that an escalation of the conflict in West Asia will have a bigger effect on India than other countries in Asia as it is a large importer of oil. “The main concern for us in terms of how the escalation of conflict in the Middle East will affect economies in Asia is the oil prices… and it’s particularity a challenge for India because India is an importer of oil and oil price hike will probably have a bigger effect on India than the average effect on countries in the region and affect inflation, consumer spending power,” he said.
Shipping rates have already been disrupted by the Houthi attacks and more conflict there would not necessarily increase it because there are not many ships going through there right now, he said.
“Overall, we still don’t think that this is going to have a huge effect on inflation in Asia, because the shipping cost as a share of the typical consumption bundle of a household in Asia is still very small, maybe less than a percentage. So it’s not going to have a huge effect on how people do in terms of cost of living,” Park said..