India Inc must rethink trade strategy, says Assocham president Sanjay Nayar
Nayar, also the founder of Sorin Investments and part of Nykaa’s promoter group, outlined how India Inc should respond to the challenges ahead.
Impact of US Tariffs on Indian Exports
Nayar acknowledged that the US tariffs will put pressure on Indian exports, particularly in sectors like textiles and engineering. Around 18% of India’s merchandise exports go to the US. While short-term disruptions are expected, Nayar pointed out that India’s domestic demand and economic fundamentals provide a buffer.
“Manufacturers are likely to diversify supply chains and use FTAs with countries like the UAE and Australia to reduce dependence on the US,” TOI quoted him as saying. He also noted that India continues to benefit from the “China+1” sourcing strategy adopted by global buyers.
Preparing for Lower Tariff Era
As India pushes for new trade agreements with the UK, EU, and other countries, the domestic industry needs to move away from dependence on high tariffs. According to Nayar, government initiatives like the Production-Linked Incentive (PLI) scheme and GST reforms have already encouraged businesses to upgrade operations and scale.
“Legacy firms may feel the shift, but younger companies are more agile, competitive, and aligned with global benchmarks,” he said. He added that while the transition may be bumpy, it creates a path for long-term competitiveness.
Policy Clarity and Structural Reform Needed
On reforms, Nayar stressed the need for policy consistency and deeper institutional changes. “Predictability, not surprises, builds resilience in times of global shocks like US tariffs,” he said.He called for faster implementation of judicial and contract enforcement reforms, which are crucial for investor confidence and job creation. MSMEs, in particular, need greater access to credit and institutional support to be active in global value chains.
More Investment Needed in Innovation, People
Nayar warned that private sector investment in innovation and human capital remains low. “Businesses can’t hide behind high returns on invested capital. Tax incentives have become a cushion, not a trigger for innovation,” he said. He argued that Indian consumers face limited choices due to weak competition and innovation, calling the current model unsustainable.
On Startups and Innovation
Responding to Union Minister Piyush Goyal’s recent remarks that Indian startups lack cutting-edge innovation, Nayar said the concern is valid but must be seen in context. “Startups have made major progress in sectors like fintech, logistics, SaaS, and health-tech,” he said.
Going forward, he believes the ecosystem must evolve to focus on deep-tech and industrial innovation, moving beyond just app-based models.
With global trade shifting rapidly, Nayar’s message to Indian businesses is clear: upgrade capabilities, stay competitive, and be ready for change.
