India’s trailer market

From the December 2015 issue.

After a period of slow growth and lacklustre investment, India’s economic narrative has taken a positive turn in 2015. But the final chapter is yet to be written.

There has been a distinct change in perception about the Indian economy since Prime Minister, Narendra Modi, came into power in 2014, culminating in a wide-reaching return of business confidence and a spike in transport equipment sales.

Yet, there is more behind India’s recent resurgence than the usual dose of post-election euphoria, experts argue, with the improvement largely carried by infrastructure and manufacturing instead of the much talked-about IT and telecommunication industry. The result could be a historic change of direction for the subcontinent that would see it morph from a technology services into a manufacturing hub.

Stage one of the transformation has already begun: Since Modi secured the nation’s first single-party majority in almost three decades last May, he introduced a comprehensive structural and financial reform agenda that prompted both the World Bank and the International Monetary Fund to upgrade India’s growth forecast again, calling it the fastest expanding globally, ahead of long-time favourite China.

“India, today, is in a far better situation than it was a year ago,” A. Didar Singh, Secretary General of the Federation of Indian Chambers of Commerce and Industry, recently summarised the development in an Indo-Asian News Service (IANS) interview. “The policy direction set by the Modi Government has definitely improved business sentiment. The Government has given a huge impetus to infrastructure activities and taken several steps to revive the growth of the economy.”

Even rating agency Moody’s, which had warned India of a downgrade not too long ago, changed the outlook for the country from stable to positive again – indicating just how impactful the change of political leadership has been for the subcontinent. “The establishment of an inflation targeting framework, the efforts to address banking sector weaknesses, the passage of various bills and a realistic budget are all positive for the sovereign credit profile,” Moody’s Senior Vice-President, Atsi Sheth, told IANS.

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