India must accelerate reforms, review QCOs, and push disinvestment to stay competitive, says Amitabh Kant | Full transcript

Amitabh Kant

Speaking at Network18’s Reforms Reloaded 2025 summit in Delhi, former NITI Aayog CEO and G20 Sherpa Amitabh Kant said India should treat GST simplification as just the beginning of a deeper reform wave, calling for urgent action on labour law implementation, disinvestment, clean tech, urban renewal, and a review of excessive quality control orders that he warned were “licensing by the back door.”

Shereen Bhan:

Well, ladies and gentlemen, it is a pleasure and a privilege to welcome Amitabh Kant here on the Reforms Reloaded platform. Here's something that I want to share with the audience. It was the 12th of August and I was in conversation with Mr. Kant on a platform like this, and I asked him, I said, what next as far as reforms are concerned, and the number one item on his list on the 12th of August was GST rate rationalization. Clearly, the government was listening to you, Mr. Kant.

Amitabh Kant:

Well, I don't know whether they're listening or not, but it's a great thing that they've simplified the GST. I think it will greatly help in pushing the consumption story of India, which in turn will create great demand, which in turn will increase capacity utilization and will lead to further investments in the Indian economy. It will create a virtuous cycle of investments, and that is in the context of all the challenges we are facing globally. This reform was critical.

Shereen Bhan:

Well, this reform was critical and this reform has been done, and the hope is that it will boost consumption, boost demand, and then boost investment. What's the sense that you get on that front, because the government is saying, look, we've done the heavy lifting, we've been front-loading capex, now we're giving you stimulus as far as the income tax cuts and other GST cuts are concerned. What's the sense that you get from industry now that you're on the other side, Mr. Kant, about its willingness, its appetite to invest?

Amitabh Kant:

So, the government has done a lot. I would say this: to bring in the GST simplification at this particular stage, to bring in all the states on board is a remarkable thing, and all credit to the PM and the FM for that. But I think we should accelerate the pace of many other reforms, simply because the global challenges in terms of the breakdown of global supply chains, the rise in protectionism, the breakdown of institutions with a war on both in Europe and Middle East, there are many challenges now with this H1B visa. So, we need to use this crisis as an opportunity to push many other reforms, to my mind, and GST should just be the beginning of an accelerated reform process.

Shereen Bhan:

Okay, if GST is just the beginning, what's the next step? You talked about the H1B visa issue which blew up over the weekend, you tweeted saying that this will in fact end up being an opportunity or could become an opportunity for India. I think that tweet has gone viral, you've got about 5 million views on that, but what do you believe we need to do in order for us to actually ensure that this emerges as a silver lining, Mr. Kant?

Amitabh Kant:

So, Shireen, the challenge is that there is no talent, there's no talent for computing power in the United States of America. So it's not that the Indian companies utilize the H1B visa; it's the United States companies which bring in all this, utilize the H1B visa for their advantage. So, if they had put that $100,000 per year, then it would have had huge implications. But now that they've clearly announced, backtracked, and said that it's only in the initial period and not for students studying in the United States, I think my analysis is that this will over a period of six years, it will work out to a very marginal component which will then get passed on to the consumer.

But it opens up the opportunity for a lot of American companies because there's lack of predictability and consistency of policies; it gives you an opportunity to open many more GCCs and it also leads to a much more level of outsourcing for these companies, because simply there is no talent available and you need talent to be able to do this. So India should be a beneficiary of this. My view is that India will benefit out of this.

Shereen Bhan:

You do think that India will benefit from this. But since we're talking about the next steps, Mr. Kant, quality control orders—I think that has been one of the issues that industry has been talking about as a constraint. In your view, is there a need for a big review or a dismantling even of quality control orders in the way that they're being implemented at this point in time?

Amitabh Kant:

So, quality control orders, we've had an excess dosage of them. We've had about QCOs imposed on over 760 odd items. If you're doing it on the end product, I'll understand. But you're putting quality control orders on inputs and components, and you're making it difficult for medium and small industries to do production, and it is having severe implications on their livelihood, their survival. And I think all QCOs need to be reviewed and at least all QCOs on inputs need to be eliminated because it'll make it very difficult for India to be competitive. It'll make it very difficult for India to export, and therefore my view is a strong review of QCOs. It is licensing by the back door. All QCOs have been brought in under pressure by industry lobby groups, which is doing huge damage to India.

Shereen Bhan:

So a quick review and—

Amitabh Kant:

An elimination on all inputs. Because you're making the end product very expensive, and you're basically making your country non-competitive in the global economy.

Shereen Bhan:

So from that perspective, if we are talking about making India more competitive as well as integrating India into the global supply chain, GST done, QCOs, you believe work in progress or needs to be work in progress with a certain degree of urgency, what else?

Amitabh Kant:

So first and foremost, let's look at what the government has already announced for quick implementation. First and foremost, I think the labour laws, because they're already passed by Parliament. Over 22 states have already approved them. So just implement the labour laws, which will enable you to do size and scale of manufacturing. That's critical.

Number two, the government had, some time back, announced—two budgets back—announced that it'll remain in only four strategic areas and also said that it will disinvest two banks, one insurance company. We need to get disinvestment and asset monetization back central stage. And that's important because I believe that India can grow over a long period, three-decade period, at 9 to 10% per annum, which is what our ambition is of the Prime Minister to create a Viksit Bharat. It's a very ambitious task. So you need to bring free enterprise centre stage. That's critical.

Thirdly, I think in the context of H1B visa, you need to create good, really smart urbanization in India. And the budget this year had announced a one lakh crore for urban renewable fund. Now that needs to be implemented ASAP so that you clean up your cities, the garbage. There should be a massive competition among cities after cities, and at least create 25 cities in India which are on par with the best in the world. This can be spurred through this one lakh crore. Government has already announced intention in the budget, push for implementation.

The fourth is the government has announced in the budget itself the clean tech mission. Now, India is importing 85% of its solar, 75% of its electric components, 80% of its batteries. So get that clean tech mission announced because then you'll start working on batteries, EVs, solar, wind—all that is critical.

And the last, I would say, is that you need to also push for, the government needs to push in a very, very big way right now, skill development, because your demographics are in your favor. The skill sector needs a huge, huge push because that will create new jobs not only for India, but for the rest of the world. If India is going to provide 30% of the manpower for the world by 2047, growth with jobs is critical. And therefore, to my mind, these are four or five key suggestions that I have.

Shereen Bhan:

Well, that's the top five there from Amitabh Kant. Very specific, very tangible suggestions that you've put on the table for the government.

Amitabh Kant:

Let's start with privatization of Ashoka Hotel in the heart of Delhi. The government has no business to run hotels. I mean, why should the Government of India run the Ashoka Hotel?

Shereen Bhan:

You've been in government. Why is it that we haven't been able to invest in Ashoka Hotel?

Amitabh Kant:

We had at that point of time privatized 18 hotels. Ashoka was also put out. We could not attract a good bid for Ashoka at that point of time, but there's no rationale at all for governments to run hotels. And that's a mindset which should move from central government to all state governments—that they should keep their hands off from certain areas.

Shereen Bhan:

Keep their hands off of certain areas. But let's just stick with the theme of privatization, because now in your current role as an advisor to Fairfax, and Fairfax is one of the contenders for IDBI Bank possibly. IDBI Bank is another contender that has been up for privatization for almost a decade now. So do you feel the government is hoping that it'll get done this financial year? Are you feeling confident that it'll get done this financial year?

Amitabh Kant:

I'm optimistic about it, and I hope it happens early, because we should not allow fatigue to set in. These things happen at a particular moment of time. And the earlier you do it, the better it is for the government, better it is for India.

And that is why I'm saying not merely IDBI, but the government had said it'll privatize two other banks, one more insurance company. Those recommendations were made. We should go back.

Shereen Bhan:

You had made recommendations from NITI Aayog as well?

Amitabh Kant:

So we should go back and push that, because the challenge which India is facing now, the headwinds which we are facing in the context of global crisis, requires us to be bold, gutsy, courageous, like this government has been in the case of GST. I mean, the speed at which FM and PM have pushed through the reforms on GST and made it simple and easy is really praiseworthy. I really admire the tenacity of the government in being able to do that. And that inspires me to push for more and more reforms.

Shereen Bhan:

Well, it's inspiring. Everybody here in this room as well, Mr. Kant, but let's talk about that one lakh crore rupee that you talked about, which is a budget announcement. So the capital allocation has been made in the budget, the urban renewal mission that you spoke about to clean up, spruce up our cities, and so on and so forth. I mean, you know, we're talking about cities like Gurugram and every day there are people tweeting about the problems there in terms of the garbage and so on and so forth. I mean, what will it finally take to get to execution? Forget the capital allocation. How do we execute these projects? How do we execute these missions?

Amitabh Kant:

I think much like the government got all the states together on GST, the government needs to bring political will and administrative ability to drive good, smart urbanization, get all the states, at least the states which contribute a significant component. You know, cities are drivers of growth, they're drivers of innovation, etc. So to my mind, these cities will be the real driver. The top 20 cities actually account for almost what, 45% of your GDP. So if you're able to drive that and make that grow very enormously, they will become not merely the drivers of your GDP, but they'll create a huge number of jobs.

And to my mind, good drainage, good sewage, good roads are critical for India now. You've reached a stage of your growth where good urbanization will determine the future of India.

Shereen Bhan:

Good urbanization will certainly determine the future of India. But, I come back to the question on how do we actually get it done. But a lot of people have commented that we probably need a GST council kind of federal body to take forward some of these crucial reforms. A, is that even possible? B, how do we go forward on that?

Amitabh Kant:

No, you don't need a body for everything. You need to bring that political will amongst the states. Because India is a very large country, so the chief ministers also need to take responsibility, much like the Chief Minister of Maharashtra or the Chief Minister of UP. They've really improved the quality of the infrastructure in a very, very big way. I mean, you see the transformation in Mumbai, or you see the transformation in Pune, or you see the transformation in Nagpur, or you see the transformation in Uttar Pradesh. The roads, the expressways, the highways, the shape of Lucknow has changed. So all this, this should inspire many more states to push for it. And definitely, Gurgaon needs to be cleaned up, improved radically.

But one more point, Shireen, since we were talking about many things in the coming days, one critical thing, I think, is the announcement of the budget, which was made for deep fund of funds.

Shereen Bhan:

Yeah, research and innovation.

Amitabh Kant:

Yes. So the fund of funds is critical for India. One of the main reasons why the startup movement took off in India was because we have this fund of funds for startups. So if you have a fund of funds for deep tech, a large one for deep tech and clean tech, that will enable you to, you know, the fund of funds does the risk sharing with VCs. It'll attract a lot of investments through private equity and venture capital. And the fund of funds will take only one-fourth of the risk. But you require patient capital over a long period of time. So not merely that the government should create a fund of funds, but, to my mind, Life Insurance Corporation should create a fund of funds also.

And so should Reliance, and so should Mr. Adani, and these big conglomerates should also create fund of funds for India to attract a lot of VCs to do deep tech, because the upsides of that for the country will be enormous. And India needs to do many more deep tech startups. That's critical. That would require a fund of funds. And that's something which was announced in the budget. So I'm just saying that what was announced in the budget needs to be rapidly implemented now.

Shereen Bhan:

Yes, one lakh rupees was announced in the budget, and they have moved on that now. And, of course, there's a change in mindset where the government is also now looking at possibly picking up equity in some of these companies that it's investing in, especially on the quantum side, to the quantum mission, and so on and so forth. From your experience of Startup India, Mr. Kant…

Amitabh Kant:

To my mind, that's not a great idea.

Shereen Bhan:

No?

Amitabh Kant:

The government should keep its arms off from business. The more government gets into it, they'll start tampering with business decision-making. That's my view. You can have a different…

Shereen Bhan:

So do not pick up equity.

Amitabh Kant:

You should use the viability gap funding rule. But if you start taking equity, government officers will start sitting on the boards. They will start killing your decision-making because government officers, by nature, are status quo in nature. They're not willing to take the kind of risks which the business is supposed to take. So that's not a great idea to my mind.

Shereen Bhan:

Would you have said the same thing if you were still in government?

Amitabh Kant:

Well, I survived somehow.

Shereen Bhan:

No, but to be fair, Mr. Kant, from your experience of starting the Startup India mission to where we are today, what more do you believe the government can do, or actually the private sector or the startup ecosystem in itself can do to further the cause of startups?

Amitabh Kant:

Well, first of all, I think what has happened is that in the startup movement, in the initial period, we used the fund of funds. Later, a lot of money came in from external sources. India still attracts about 79% of the money coming into the startup movement from abroad. It's Indian family houses, Indian business houses, Indian insurance companies, Indian pension funds that must fund the startup movement of India. That is not happening, to my mind. That's critical.

Secondly, I think two great things have happened in India. One is that India supported the new foundational models, supported a number of startups, which over a period of time will pay results. It's also provided computing power at good costs. And therefore, we should see results of that. It's sometimes good to be coming in a little later rather than be the beginner. And you'll see good results coming out of this. But we should build up AI on top of our digital public infrastructure, make it open source, open API. And that will help us to accelerate the pace of innovation in India. So, to my mind, far more resources coming in from within India into the startup movement.

And definitely, we need four or five big, big fund of funds to push for more and more VCs taking risks, because you need, you know, in the space sector, in the battery sector, you need patient capital of 15 years, 20 years, you need to do a huge amount of disruption in deep tech. I mean, all these Indians are going into Silicon Valley. Now that they're not welcome in Silicon Valley, we should demonstrate that all Indians are welcome back to do disruption in India. And that is what the fund of funds should do.

Shereen Bhan:

Well, government fund of funds and the private sector also to launch fund of funds. That's the message there from Amitabh Kant. But when we last spoke, you said the one sector that is Trump tariff-proof is tourism. And you believe that that should be on high priority for the government at this point in time. Are you starting to see any signs of that?

Amitabh Kant:

I think the biggest opportunity for India is travel and tourism. And that's simply because India is buying close to 1,800 planes. We are already sending out 30 million Indians abroad. If you do not get tourists from abroad, you will become the biggest exporter of tourists in the world. And therefore, yeah, there's no what's going to happen. So India hasn't done an Incredible India campaign for a decade now.

You need to promote and market. I learned that it is not even participating in the World Tourism Mark, which, to my mind, is a shame because India needs to be very aggressive, exactly like we've been with the reform of GST. The Prime Minister has regularly talked about tourism. The Ministry of Tourism should be vigorously and aggressively promoting and marketing India, penetrating global markets because of foreign tourists. Domestic tourism is good right now, but on domestic tourism will take you only so far.

The real value in terms of returns to resorts and hotels will come in from foreign tourists because they'll pay you five times what domestic tourism is paying you. And in the long run, you need to make India a global destination for getting the rich and the famous of the world to India. And that requires you to do brand marketing of India abroad.

Shereen Bhan:

So for that, we need Amitabh Kant?

Amitabh Kant:

No, you don't need Amitabh Kant. You need the Ministry of Tourism to be aggressive with the brand campaign.

Shereen Bhan:

Yes, most certainly. But now that you're on the private side and you're dealing with the private sector, you talked about bureaucrats and the fact that many, I wouldn't generalize, but many, as you point out, have a status quo mindset. How different is the private sector?

Amitabh Kant:

Well, the private sector's job is to create wealth. I think that spirit of enterprise and the spirit of making, you know, the Prime Minister set a great ambition of a four-trillion to a 30-plus trillion dollar economy by the time in 22 years. I mean, that requires you to do a scorching pace of growth. Very few countries in the world have been able to do it. Japan, Korea, China, that's all. 108 countries caught in the middle-income trap right now. Now, if India is to achieve what the Prime Minister's vision is, it needs bureaucrats to dismantle rules, regulations, procedures, acts, and also disinvest heavily, and also do asset monetization, and also sell India as a tourism destination. This requires a very aggressive and a progressive mindset of the civil servants.

Shereen Bhan:

Mr. Kant, you're talking about an aggressive mindset of civil servants to take some of those decisions that have been long pending that you spoke of. But as we look at the global environment, one of the things that we've seen positive action on: you said that India must re-engage economically with China. And we've seen both sides take tangible steps to do that. What do you make of this thaw in the economic relationship, as well as measures on both sides to re-engage?

Amitabh Kant:

Well, my view on this is very simple. We import about 130 billion worth of goods from China. By doing that, we are creating jobs in China. We should get Chinese companies to do joint ventures with Indian companies. Don't give them more than 49%. But you need Chinese companies, especially to manufacture in India. I'm saying this simply because the world has lost its art of manufacturing.

If you look at the top 20 American companies, all of them are manufacturing 95% in China. Read this book, Apple in China, you'll realize this. So they are all creating jobs in China. Now, you want to do component manufacturing, you want to do machinery manufacturing, you want to do input manufacturing. You'll have to get these Chinese manufacturers to manufacture in India, create jobs in India. That's important to my mind. And China, even at the worst of relationship with Taiwan, got the Taiwanese to invest in China, got Japanese to invest in China in the worst of relationship. So, to my mind, instead of importing, manufacturing in India is critical. And get the Chinese companies to ensure that technology is passed on to Indian companies. And that's why I get them to do JVs with Indian companies.

Shereen Bhan:

So what would Swadeshi mean in a contemporary India? What is the Swadeshi model that India should prioritize today?

Amitabh Kant:

Well, Swadeshi, to my mind, would mean that you make in India, you make in India, you do startup in India, but be a part of integral value chain. You penetrate global markets. You can't be selling only in India, you have to sell to the world. You'll get 10 times more prices. You have to be a very, very integral part of the value chain, despite the protectionism which Trump is preaching to the rest of the world. None of China, Korea, Japan, none of them grew without selling to America. So we have to do that. Without that, India can't grow at 9 to 10%. Exports are critical. Every time India has grown, it's grown on the back of exports.

Shereen Bhan:

But it's becoming an increasingly challenging environment as far as exports are concerned.

Amitabh Kant:

Yes. Many challenges, we'll have to face those challenges head-on and become productively efficient. That's why when I talk about free enterprise, when I talk about disinvestment, when I talk about privatization or asset monetization, I'm saying this: the productivity levels of India have to improve. Trump has given you this opportunity to become far more competitive. He's given you the opportunity to become far more productive. Let's not lose this opportunity. This is a God-given gift which Trump has given us.

Shereen Bhan:

So we should say thank you, President Trump. But on a more serious note, from the vantage point that you had of being the G20 Sherpa, the world that we're living in today, I mean, just in a matter of two years, how fractured globalization is, what do you believe the consequences will be of this changing global order, of this changing face and nature of globalization in the medium term?

Amitabh Kant:

So first of all, let's be clear on one simple thing, and that is the biggest beneficiary of globalization was the United States of America. It's the only country in the world which has retained its share of global GDP at close to 27%, 48% of the market cap with just 4% of the population. No other country or no other region has been able to do it. Europe came down from 30% to close to less than 15%. So the biggest beneficiary has been the United States of America.

And when the opportunity for the global south and other countries came to benefit from this process of globalization, you start killing WTO, you kill the distinction between developed and developing countries. You say that there is no less developed country. And you say that I want to bring manufacturing back to the United States.

You think these American women are going to work 24/7 on making Apple phones? Never will they do that, because it's become a post-industrial society now. And therefore, it's very, very important that we use this opportunity to really push for manufacturing in India to create jobs, because India has to grow with jobs. And in some of these populous states of India, you need to push for manufacturing in a very big way. This would require us several things to do. You need to bring down the cost of logistics. You need to bring down the cost of power in India, make yourself more efficient. You need to have more skilled labor. You need to bring down your interest rates. You need to bring down the statutory liquidity ratio, which at 18% is the highest, second highest in the world after Bangladesh. Every bank is busy buying government bonds, and you're leaving nothing for lending. So the interest rates must come down. I mean, these are critical things to remember.

Shereen Bhan:

That's a long list of what must come down, what should go up, Mr. Kant.

Amitabh Kant:

Well, the growth rate must go on to 8.5, 9%, on a consistent basis overall.

Shereen Bhan:

And you think on the back of the measures that you just spoke of, that that is possible?

Amitabh Kant:

Well, you see the results of GST, which will be very good, earth-breaking measures. Every time the government has pushed for key reforms, the GDP goes up. And therefore, I'm absolutely clear that all the budget announcements—I'm not saying anything else—I'm merely saying that the budget announcements… Implement the budget announcements. Implement the budget announcements. Implement the disinvestment budget announcement. Implement the deep tech, the urban reforms, and the clean tech mission. All this will help you to accelerate the pace of your growth, nothing else. This is the political will of the government.

Shereen Bhan:

So, no new ideas, so to speak, you're just saying get what you've already announced?

Amitabh Kant:

No, no, I believe in implementation, implementation, and implementation.

Shereen Bhan:

Implementation, implementation, implementation. Before I let you go, if you were to do Incredible India today, as you lamented it hasn't been done in 10 years, if you were to do Incredible India today, what would you call it?

Amitabh Kant:

No, I'll call it… See, you've already built your brand, never kill a good brand. Just sustain that, it's etched in the minds of people. If you were to create a new brand, it'll take you another decade or so. So, just reinforce that brand and there's nothing better. India is such a phenomenal country, there's nothing better than it being called Incredible.

Shereen Bhan:

More power to you and more power to Incredible India. Amitabh Kant, always a pleasure. Thank you so much for joining us here this evening. Ladies and gentlemen, a big round of applause for Amitabh Kant, the former Sherpa of G20 and CEO of Niti Aayog. Thank you very much for your time.