India needs factories and AI-ready jobs, says CEA

Chief Economic Adviser V Anantha Nageswaran has emphasized India's need for robust manufacturing, foreign investment attraction, and AI-ready job creation as the nation strives to become developed by 2047. Speaking at the SBI Banking & Economics Conclave 2026, Nageswaran highlighted the country's development journey amid geopolitical tensions, supply chain weaponization, climate variability, and China's manufacturing prowess.

Nageswaran stressed that India must reimagine and reinvent its operations across private and public sectors, focusing on economic resilience while maintaining growth. He argued that manufacturing is crucial in diversifying India's growth and enhancing its economic resilience and security. With a goods trade deficit around 3.5-4% of GDP, even excluding oil and gold, India needs to develop both manufacturing and services sectors concurrently.

The CEA pointed out India's goods trade deficit, urging a balanced approach between indigenisation and export competitiveness. He highlighted the need for policy improvements at state and national levels to attract foreign investment, emphasizing tax certainty, investor protection, and access to a skilled workforce. Nageswaran also advocated for buffering critical commodities and developing domestic capabilities for essential components that could become global supply chain choke points.

Regarding AI, Nageswaran suggested focusing on AI's impact on employment, noting that while junior workers suffer, overall employment, including senior workers, has increased. He cautioned that a slowdown in creating entry-level jobs could exacerbate inequality and pose long-term social risks, given India's demographic dividend.

Thus, Nageswaran advocated for both AI-enabled and AI-insulated jobs, particularly in labor-intensive manufacturing and services like hospitality, tourism, and elder care. He also pushed for increased attractiveness of trade skills and greater private-sector involvement in education. Despite these challenges, Nageswaran remains optimistic about India's growth momentum, attributing it to reforms and progress in digital public infrastructure, financial inclusion, capital expenditure, and formalization, with the economy expanding at a 7.8% rate.