Apr 19
Emerging Economics
Emerging Economics
India's business services exports to surpass IT exports, opine experts at L&T conclave
A roundtable titled “Macro  Road Ahead: 2024 and Beyond”, hosted by L&T’s Corporate Strategy Team in January, witnessed  the convergence of experts from the fields of economics, finance and geopolitics.
Hosted at AMN Tower in Powai, Mumbai, it was graced by L&T seniors – including CMD Mr S N Subrahmanyan, CFO Mr R Shankar Raman and several ECom members – the event aimed at creating a better understanding of the macroeconomic landscape and to gain valuable insights on the emerging trends both in India and abroad.
The galaxy of speakers – senior management professionals from reputed institutions and domain experts – was unanimous on how global capital flows are likely to get disrupted as central banks continue their post-pandemic monetary tightening. This will keep interest rates elevated in the foreseeable future and, going forward, credit will get repriced.
The speakers opined that geopolitics would play a major role in shaping global macroeconomics in 2024. Expressing optimism about India, they spoke of India’s resilience in a slowing world and its ability to outperform its peers with a sustained 7%+ GDP growth.
They lauded India’s infrastructure-focused growth strategy but felt that the government’s ability to do the heavy lifting on infra investments for a prolonged period is limited. Expecting the government to stay firm on its fiscal consolidation path, the experts opined that India’s inclusion in global bond markets is expected to mobilise USD 20-22 billion starting June 2024.They also believe that FPI flow will remain strong due to structural macro growth story and political stability.
The private sector’s investment revival has been restricted to a few sectors like cement and steel. Acknowledging that India has not so far benefitted from the China+1 model, the speakers pointed out that the performance-linked incentive (PLI) scheme, launched with the objective to boost the manufacturing sector, has not quite translated into substantial private investments, with mostly assembly operations enjoying the incentives.
The speakers expect private investments to flow into the areas of battery storage, specialty steel, electric vehicles, green hydrogen, semiconductors, etc., both as a part of PLI and outside it.
While India’s share in global GDP is just about 3.5%, the share in global modern services stands at an impressive 8% which is resulting in substantial inflow of knowhow. The experts felt that in the next 20 years, business services exports from India will be much bigger than India’s IT services exports.
The discussions surrounding infrastructure activities in India underscored the following:
  • Demand for horizontal infra to remain high vis-à-vis vertical infra.
  • While bank funding to EPC players is on the rise, smaller players are getting marginalised as bank funding dries off for entities whose credit ratings are below the A category. Insolvencies among smaller players is rising.
  • For hybrid annuity models, a strong sponsor is better equipped to weather execution difficulties.
  • While central support to water treatment and metro rail projects is likely to stay strong, the state governments, whose contribution to infra investments is almost same as that of the central government, will continue to focus on roads, bridges and irrigation projects.
  • The new age infra which deserve special mention are smart metering, green hydrogen and data centres, and of these, only the data centre category is at an advanced stage of execution.
  • Surety Bonds, as a replacement for Bank Guarantees, will take another 6-7 years to emerge as a mainstream financing channel for corporates.
  • Significant debt refinancing and M&A opportunities are to unfold. Once a project becomes operational, it can become InvIT-ised. 



Dr Neelkanth Mishra, Chief Economist – Axis Bank & Member – PM’s Economic Advisory Council; Chairman – UIDAI
Mr Navneet Munot, MD & CEO – HDFC AMC
Mr Sudhir Kapadia, Sr Tax Partner Board Member – EY India
Ms Lakshmi Iyer, Investment Strategy – Kotak Alternate Asset Managers Ltd
Mr Rakesh Arora, Founder – Go India Stocks
Dr Sachchidanand Shukla, Group Chief Economist – L&T
Mr Prashant Tarwadi, Director – Large Corporates, India Ratings & Research
Mr Dharmakirti Joshi, Chief Economist – Crisil
Dr Samiran Chakraborty, MD & Chief Economist – India Citigroup
Ms Anubhuti Sahay, Executive Director & Head – South Asia, Eco Research, Standard Chartered
Mr Anup Sahay, Head – Corporate Strategy & Special Initiatives, L&T
Mr Nitin A Gokhale, Strategic Affairs & Defence Expert


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