In an interview with ET, he said that the tariffs announced by US president-elect Donald Trump may have a positive effect on Indian industries but issues like tariffs are “beyond our control”.
Agarwal, who is the vice chairman & managing director of Emami Group, also said that the consumption growth slowdown that India is witnessing at present is likely to reverse in the coming quarters.
Private final consumption expenditure moderated to 6% in the second quarter of FY25 from 7.4% in the trailing quarter amid concerns around slow urban demand, high food inflation and muted real wage growth.
Highlighting that a slowdown in consumption is led by food inflation because Indians spend a higher share of their earnings on food and grocery, he said: “On an average, 75% of the spend in India goes into food and grocery, balance 25% is discretionary. Comparably in countries like the US and China, the grocery and food spend is only around 40% of total expenditure”. Retail inflation was 5.5% in November and food inflation was 9.04%.
“There are some challenges of inflation, particularly vegetables and oils… Going forward, we see consumption picking up with improvements visible from November itself,” Agarwal said.He also said that the Reserve Bank of India has a tough balancing act to maintain, as it has to control inflation and maintain growth.Tariff war advantage
On the impact of Trump’s plan to impose tariffs, Agarwal said: “We are also hopeful that maybe some of the measures, because he is not only talking about tariffs for China… might have a positive effect for industries in India as well”.
However, the Ficci president cautioned that measures like tariffs are beyond the control of the industry, so resilient supply chains need to be established. “We have to increase our competitiveness. But at the same time, I think we need to wait and watch as to what Trump administration does.”
Manufacturing, capex
Commenting on the impact of production-linked incentives (PLIs), Agarwal said, “Some sectors like electronics and mobile phones have done quite well. The government is considering extending PLIs in a few more strategic areas. We need to wait and see which are they”.
India has rolled out Rs 1.97 lakh crore worth of PLI schemes for 14 sectors, including white goods, electronics, pharmaceuticals and food processing.
Spelling out his budget wish list, the Ficci president said: “Government has been very consistent in their budget policies over the years. As an industry, we have also given our recommendations”.
According to Agarwal, the industry is expecting a 15% higher spend on capital expenditure to develop crucial infrastructure. “Apart from that, we have recommended a few things on ease of doing business, tax reforms and simplification of tax deducted at source rates,” he said, adding that suggestions to increase allocation for green energy and circular economy have also been made.
Agarwal also said Ficci has received representations from the steel and chemicals industry that are facing threat of dumping from China. “Government is very serious about looking into this, and we are very hopeful they will take measures,” he said.