In an exclusive conversation with CNBC-TV18, Memani said that India’s macroeconomic conditions – including benign inflation, stable current account dynamics and healthy GDP growth – justify a reduction in interest rates, provided global and currency risks remain contained.
“If you look at the normal factors of GDP growth, inflation, fiscal deficit and global interest rate trends, one would generally look at lowering interest rates,” he said, adding that Indian interest rates continue to be 3–5 percentage points higher than those in major competing economies such as China and Europe.
“If the macroeconomic policy allows, and without causing any volatility or risk, industry preference would be for interest rates to come down slightly.”
Volatility, Not the 90-Level, Is Industry’s Concern on Rupee-Dollar
The conversation comes at a time when the rupee has breached the 90-per-dollar mark for the first time. But Memani emphasises that the number itself is not the concern — volatility is.
“From an industry standpoint, volatility is something we don’t like. As long as the rupee is moving in line with market trends, it’s fine. But if there is too much volatility, it starts impacting everyone,” he said. Companies are currently waiting to see where the rupee stabilises before taking a more definite view, he added.
Despite the rupee hitting a new low, Memani underscored that India faces no macroeconomic risk arising from the currency movement. “The current account balance is not much of an issue, interest rates are benign and inflation is benign.”
Weak Rupee Helping Export Competitiveness – Especially Services
On the export front, Memani noted that a weaker rupee does offer an edge — though the benefits vary across sectors.
“A 90-rupee dollar will definitely add to export revenues or profitability. Services make up 45–50% of our export basket, and most of their input costs are rupee-based, so they become significantly more competitive,” he said.
Sectors with high export-import linkages, such as gems & jewellery or crude exports, see a more limited benefit since imports rise proportionately. But in aggregate, he emphasised, the rupee’s depreciation does support overall export competitiveness.
At the same time, the global backdrop complicates the picture. “The Indian economy has done well relative to the world, but globally growth is weak, and every country is following its own trade policy. So, exports must be assessed in that context,” he added.
Trade Deal with US Important, But Must Serve National Interest
While India has made unprecedented progress on trade agreements — with pacts signed or advanced with the UK FTA, EU, Australia, Middle East and fresh conversations with Israel and New Zealand — the India–US trade deal remains delayed.
Memani said industry would welcome the deal, but only within the framework of national interest.
“These are complex conversations involving more than just commercial elements. Whenever they get resolved, it will be good for the economy—but economic interest is only a subset of national interest.”
Private Capex Growing, But Structural Reforms Needed
On domestic investment, Memani pushed back against the narrative that private capex is stagnant. “Private capex is growing and growing well. It may not be at the pace the government wants, but we expect it to accelerate over the next 12 months.”
However, he stressed that deeper structural issues must be addressed to sustain momentum:
Power sector inefficiencies, where industry pays ₹1.5–2 per unit extra due to cross-subsidies and state electricity board losses of ₹6–7 lakh crore.
He said privatising SEBs or offering additional distribution licences — backed by central incentives — is essential.
Unlocking value in government equity, worth ₹45–50 lakh crore, to fund strategic infrastructure such as multiplying India’s high-speed rail network fivefold.
Creating a $50 billion Indian sovereign wealth fund focused on advanced manufacturing, overseas acquisitions for technology and resources, and strategic global assets.
Accelerating multimodal logistics parks, with greater public-private partnership and private operational management to reduce logistics costs.
Tax Dispute Resolution a Critical Reform
Memani flagged tax certainty as a major requirement to boost investment. India has ₹31 lakh crore stuck in tax disputes, with 70–80% at the CIT(A) level.
He called for alternate dispute resolution mechanisms, faster settlement, and rationalisation of GST audits — especially for companies operating in multiple states. He also reiterated CII’s recommendation for accelerated depreciation of 33% for domestically manufactured capital goods to nudge private capex.
A Turning Point for India’s Next Growth Phase
With a possible rate cut, a weak but stable rupee aiding exports, and industry pushing for deeper structural reforms, Memani said India is entering a crucial phase of its growth transformation. The agenda spans manufacturing, tax reforms, power sector restructuring, logistics efficiency and strategic global positioning.
“The government has done a remarkable amount of reform in the past six months across GST, labour and rare earths. But we now need to push the next layer of competitiveness levers to fully realise India’s growth potential,” he said.
