The Indian manufacturing sector should aim for export-led growth driven by climate-friendly processes and view regulations like the ‘Carbon Border Adjustment Mechanism’ (CBAM) as an opportunity to build a global footprint, Jamshyd Godrej, chairman, CII Sohrabji Godrej Green Business Centre and chairman, Godrej & Boyce, told *Business Standard* in an interaction in Delhi on Wednesday.
Godrej, who has been one of the founding members of the centre, said the idea of CBAM is beneficial for every country as it will encourage industry to improve sustainability while offering protection against cheap imports.
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“What we are doing is giving protection to Indian industry against cheap imports, such as steel from China. But we are not doing the other part. India should have something like CBAM. Anyone can offer a cheap product, but if our tariff regulations state that you can’t just bring something cheap here, you also need to bring something with a better carbon footprint, or else pay higher tariffs,” Godrej said.
He acknowledged that there is a prevalent view that CBAM will have a negative impact, but he believes it will be short term. “When Europe thought of CBAM, we should have also considered our own CBAM and gone in tandem. But it is not too late; we should develop a similar scheme that boosts the Indian industry’s drive to become more carbon neutral. They will benefit when they export and build a climate-resilient supply chain as well,” he said.
He added that as leading players reorient their manufacturing with greener options, this shift is likely to create a domino effect across the supply chain. “If a truck maker like Volvo says all the parts that go into manufacturing will be green, the supply chain will also reimagine its business,” he noted.
Godrej also discussed the slowdown in consumption within the Indian economy, attributing it to an excessive focus on building self-sufficiency.
“If we had export-led growth, the economy would be in a different situation now. Given the right policies, opportunities, and infrastructure, manufacturers can become big players globally. That is where growth will come from. The buying power in India grows as a function of GDP,” he said, adding, “If you do not export, you are at greater risk because you depend solely on the Indian economy. If you have 20 markets and five of them underperform, at least 15 are doing well.”
First Published: Oct 16 2024 | 4:54 PM IST