Building trust has been an article of faith for all of us at CII. I've had the pleasure of leading this institute in 2007–2008, and I can say with a great deal of authority that this is one institution that is built on the foundation of creating trust between all stakeholders. Today is a very special time in the life of a nation that rarely comes, when almost all positive influences that can create the right momentum and pressure are available on our country today. Everything like confluence is coming together to really assist and give us the tailwinds that our country needs.
I have been in business and industry for nearly 49 years. I entered my 50th year, and I have therefore seen the cycles that the country has gone through, right from those days of a great deal of shortages to one of great abundance, from limited and incremental ambition to an ambition today which is almost difficult to contain. I have seen these changes from very close quarters, and I've had the privilege of working through these changes in the country. Today, we are blessed to be in a country which is going to be the third largest economy in the world. And we can quibble about which year—whether it's '27, '28, or '29, or '30—in the destiny, in the fortunes of a country, a year here or there should not really matter. But what is important is that we are now on the cusp of becoming the third largest economy in the world. And all of us know what it means for a country when it grows economically strong. No one knows it better than our political leadership, which is trying very hard to ensure that India becomes economically strong so that it can have a voice on the big table where the global leaders and powers sit together to shape global affairs. I personally feel we are all truly blessed to be building along with the government in India during these wonderful times that we are blessed with.
I will speak about a few pillars which are important, but before that, let me talk about the role of our industry—its role in creating that necessary trust that we need to create for all our stakeholders and ensuring that we keep, in all our decisions, in all our directions, India first at the very core of it. Industry has a very important role to play, yet I don't think we have earned the complete trust of all stakeholders. Many a time, it is seen that we approach issues from our individual or at times sectoral interests and may have taken our eye off the larger national interest, or India first as the theme here is today, and that's what I'll talk about today. Our industry plays a very vital role in moving the economic agenda of the country forward. That one job that we give to an engineer, or a technician, or a delivery boy, the salary check that he takes with him in that month creates the spending power, creates savings, gives momentum to the economy. And that flywheel of more momentum into the economy generates more demand for products and services. And the second job, and the millionth job, and the 10-millionth job just creates a huge momentum that is so important for any virtuous cycle that is to play out in any economy. We have witnessed that in mobile phones, where one begets another one, and a million begets another million, running up to a billion mobile phones in the hands of Indians. I've seen that from very close quarters. We are therefore a very important part of this mission of making India a very strong nation, the third largest economy in the world.
Let me turn my attention to the four pillars that I'd like to talk about. First and foremost is talent dividend, and I'm moving away from demographic dividend, which we are blessed with: 1.4 billion people, aspirational, young, wanting to have a better life, wanting to have a stake in society, consuming more products and services every day, and superior products and services every day. Within that demographic dividend and the huge markets that we are creating, we need to focus on the talent dividend. As CII President, when at that time Tarun Das—he's here today, I'm glad to see him after a long time—he was the Director General at that time, the government started to talk about affirmative action. I was in the middle of it, and we were talking to the government that industry will play its role in creating the right employment generational opportunities, it'll create the right talent, it'll work towards skilling, it will try to create job-ready people through education and skilling. How have we succeeded in that in the last 15–17 years? I think the industry has played a role. But have we done enough? Perhaps the answer is no. Even now we hear some voices coming from some parts of the political spectrum about some form of reservation in the private sector. And we all know that debate can continue, but how we can completely avoid the debate is by creating a workforce, creating a talent dividend that this country needs today.
We all know the world is aging. Most of the developed nations have very aged workforces; they're short of people. Yet the walls on immigration are rising every day. Our young people, our engineers, our trained people, our nurses, our doctors, our teachers are not going to get as easy access as they have had in the past. Thankfully, the world has moved to a digital medium. Today, from the comfort of their homes in urban areas or villages, they can serve the globe. It is therefore no surprise that we are seeing the growth of GCC centers here in India in a dramatically large way. A million people coming and knocking at the doors of society for a job every month. 1.5 million engineers being produced in the country every year, more than the US and China put together. All of them need to be harnessed. This energy needs to be harnessed. There is so much potential out there, there's so much talent out there, but it's not necessarily job-ready. That is where skilling and the right kind of engagement of the industry with academia becomes vitally important. We need to do much more. I think we are still working on the fringes of collaboration between industry and academia. And that is one place where I would like my industry friends, industry players, to lead the charge and work more with academic institutions to create job-ready talent for the country. We need it for our own needs, we need it for the globe. It's absolutely an imperative and essential, importantly, to take away the debate on whether industry is creating employment or not. There are new areas which we need to focus on: AI, green energy, spacecom, next generation of connectivity and telecom technologies—all this needs to be focused upon.
The second pillar I would like to turn my attention to is R&D. India spends less than 1% of its GDP on R&D. This has been almost always woefully inadequate for a country of our size. China does 2.5% of its large GDP, Korea does 5%. And yes, countries which have small markets like Taiwan, Korea, Israel, and many others need to do that because they have no choice, because they have no local markets. They have to create innovative, new, cutting-edge products to go and serve the globe. Yes, we have the advantage that we have a large domestic market, but should we not spend more on R&D, more on innovation, and no more just pure frugal innovation? We should do that, but going into really meaningful, deep scientific, deep technological advances that India needs to make for ourselves and for the world. Indian industry needs to step up its spending on R&D. Are there any obstacles? Do we need more tax breaks for R&D spending? Do we need incentives from the government? I know that in the past, R&D expenditures were encouraged. There were incentives, there were tax pass-throughs. Many of those were taken away because the government felt the industry was not utilizing it well or doing enough. I think here we come back to the point of trust. Let's do and demonstrate what is required from us in terms of R&D spending so that the government can also step up its game and encourage more R&D spending. The government themselves are doing a lot. Just three days back, ₹1,000 crores was announced for R&D efforts towards future space and telecom technologies. So the government is putting up ₹1,000 crores. The industry needs to, with academia, take advantage of that, contribute its own money into the pool, and create a larger R&D ecosystem. This will be my second point.
The third point is really on a trade reset. We need to have a mindset in which products and services are purpose-fit for today's world. We need to diversify the export basket. We need to focus on what is required in the world, create industries, factories, and capabilities to serve the world in the areas that are much required. We are good on exports, but are we doing enough? The answer would probably be no. And this is where I think CII, chambers, and we as industry players need to work with the government and create policy frameworks to ensure that we are diversifying our export basket. No raw material should really leave our shores without being processed and value added. That should be an article of faith with all of us in the industry. And the more we can do locally here by adding value, the better off we will be.
Import substitution will be another area. We import over $600 billion worth of electronic goods and components. The PLI scheme that the government launched has made a dramatic difference in seeing manufacturing coming to India. And I honestly hadn't thought during my lifetime we'll see electronic manufacturing coming here—not just electronic manufacturing of smartphones, mobile phones, washing machines, refrigerators, televisions, etc., but we are also now launching, as you know, a semiconductor mission where the government is laying out very large amounts of money in support of the semiconductor mission in the country. It will not happen overnight; it will not happen in the next two or three years. But in 10 years' time, the seeds that we are sowing today in this country will start to flourish and show us the advantages, because semiconductors will become an important area, and it does consume a lot of money. In every import substitution that we do, we create more foreign exchange reserves. The dollar that has to leave our shores stays with us, goes straight into our reserves. Importantly, it retires the serious import issues that we may have. Hydrocarbon imports are another area. We hear the Northeast is floating in oil and gas. We as industry players who are in that space, and the new players who want to enter the space, need to go and exploit our own mineral resources to get them out at the service of the nation. We need to reduce our imported oil and gas. We are doing a dramatically good job in the area of renewable energy—solar, wind, all of that is doing well. But add to that hydrocarbons from domestic sources, and that will be a game changer for us.
The fourth pillar, to my mind, is one of the most important pillars and relevant for a chamber like CII, and that is really in the area of policy framework. Industry, the country, the stakeholders, society, all of us assembled here today need to put our minds together to figure out how do we get a policy framework that creates velocity towards our efforts of building India. That Viksit Bharat, the dream that our Prime Minister has, needs further acceleration. And I know the government is doing enough and more, but perhaps there are areas which we know are better or missing where the government needs to provide some more relief to the industry. And that is the job of CII as a chamber: that we work with the government to co-create these policies. There are also needs of the government; the government also has certain expectations from us. We need to engage with the government to hear their views, seek their inputs, ask what is needed from their side to build the country. 5G was a fine example where industry would have taken a few more years. The government engaged with us, gave us a very clear message that India would like to see 5G much faster than is currently being planned. The government moved quickly in allocating the spectrum. Industry showed amazing urgency in building and rolling out the world's fastest 5G network. That is the power of collaborating between the government and the industry, where you fuse thoughts and co-create something that is good for the nation.
CII during my time played a seminal role in supporting the government's efforts towards the Indo-US nuclear deal. Tarun and I, Chandrajit was very active at that time as well, played a small but a meaningful part in doing back-channel diplomacy, flying into the US, meeting all the stakeholders, meeting Indian politicians across the spectrum, and trying to get a buy-in. While we cannot claim credit for that Indo-US nuclear deal, I'm sure our contributions made some difference. Increase in FDI in insurance, FDI opening up in multi-brand retail—the industry played a fantastic role there as well. One area where I would ask CII to get more engaged would be something that CII has been pushing since 2012, and that is ON/OE: One Nation, One Election. I know it's a touchy subject. It could also be termed outside the boundaries of industry. But no, my own belief is this is a job collectively for all of us here. Earlier this year, late January, early February, CII presented to President Kovind's committee a strong recommendation for India to move towards One Nation, One Election. The reason is very simple: there are far too many disturbances during elections in terms of economic activities. The Model Code of Conduct is ushered in fairly early, everything stops, government contracts stop, government payments stop, a lot of restrictions come on economic activities, and our elections are repeatedly happening every few months, every other year. These multiple elections do create a slowdown in our economy. I think the ruling party, the Prime Minister himself, they've all analyzed this and realized the importance of having One Nation, One Election. And if you can't do it in one step, perhaps it happens in two steps in the first time. But eventually, my friends, we really need to get there. And this is where I would say CII should probably form a committee, talk to political parties across the spectrum, show them the benefits that will give to the country and how they will not be compromised, and hopefully we may again have contributed importantly to an issue which is very key for our country's growth. And if not, at least we would have not been found wanting of trying; we would have done our very best to do that. That will build trust. That will show that the industry looks beyond just their profitability, their balance sheets, their revenues, and everything else.
Let me, before concluding, turn to the government. Industry will do its job. Industry will do everything possible to generate more employment, spend more in R&D, create import substitution, and expand its export basket. We need your help. We need enabling policies, especially in the area of ease of doing business. And I know for this government, ease of doing business is important. They continuously track areas where there are bottlenecks; they release those pressure valves to let industry and business move forward. I think we need more of it. And this is again where CII should put out a position paper in giving, every year, a few low-hanging fruits where the government can move quickly to allow the industry to have a much easier runway to take off. That could be in the area of corporate affairs, could be the area of listing of companies, could be in the area of floating bonds in the international market—a plethora of things that can be looked at. Tax policies, which continuously are getting better, need to be further demystified and simplified. The movement towards a 25% corporate tax, to my mind, was a fine example by the government where they said, 'Give up all your exemptions and move to a flat rate of 25%.' I'm surprised the entire industry has still not moved there. Let's also get rid of the old fascination with those exemptions and move on to a simplified, flat 25% tax rate. We should not stay back in the old regime.
There are lakhs and lakhs of crores stuck in litigation in direct taxes, in indirect taxes, and other regulatory matters. Vivad se Vishwas-type schemes need to be brought up. The government will get very large amounts of money released by those schemes; they can be put to good use now. Maybe the government will win in 10 years' time, and that money may become available to the government in 10 years' time, but why not settle it now on the lines of Vivad se Vishwas? More money in the hands of the government today will give the necessary, desired fillip to infrastructure and to various social programs that are vitally needed, and importantly release the industry from its past litigations and problems and allow them to reset and look into the future. This will be a very important area.
The last part where the government is very active is in the area of signing FTAs. Again, back during my time at CII when I was active, we did the CECA, the Comprehensive Economic Cooperation Agreement with Singapore. Many new FTAs have been done: the UK has been recently negotiated—the Prime Minister really pushed hard so that we could get to the FTA with the UK; EFTA was done earlier; Australia was done earlier; UAE has been done recently; the big PTA with the US, the FTA with the EU, and the negotiations with Saudi Arabia are in very advanced stages. I think we have to ensure that the government not just merely safeguards our interest while doing those FTAs, which it will be, but it's also important that we as industry and chambers don't ask for things which will make these FTAs difficult. We have to have a reasonable outcome for those markets to open up for our Indian companies, for those markets to be available to us as we open our markets. So FTAs, more deals, more enablements will help our industry as well.
In closing, let me say that building trust and India first is an article of faith with CII, with the Indian industry. As someone who has walked the fine line between ambition and accountability, I say it with a great deal of confidence and a message for our government that industry will play its part. It's rare for industry to have such a large, big market in a single country. It's rare for industry to have such strong support from the government. It is rare that the government's ambition, a political leadership's ambition, is greater than the industry's ambition. What more can we ask? A stable, solid, bold leadership of a Prime Minister exhorting the Indian industry to do more. We heard Nadda-ji just before us saying when he went to the Prime Minister seeking his guidance on the health program, he said, 'Think big.' That is what he always says: think big, think in a way which creates massive impact and scale in the country. But while doing so, it's important that we keep in our mind that our stakeholders are not just our shareholders who look for profits and dividends; our stakeholders are also the population at large. If industry grows and that growth is not equitable, I don't think we would have done our job and earned the trust of the government and the society. We need to ensure that all our stakeholders are equally taken care of. I am reminded of the quote of John Kennedy when he said, 'Ask not what the country can do for you.' Today is the time for us to say, 'What can we do for the country?' And as businessmen, all of us put in risk capital, all of us work hard. People have the desire to leave bigger fortunes, bigger wealth, lots of wealth, factories, balance sheets for the children. I think it is important that they keep in mind in their framework—in front, center, and rear-view mirror—that you need to leave a great society, a strong nation for them more than anything. Thank you very much.
