We are glad to present the TextileFuture Newsletter today with two items, the first one is entitled “Fashion on climate” and treats the reduction of greenhouse-gas emissions.
The second item is on “India’s turning point – An economic agenda to spur growth and jobs”.
We think that the two items – based upon McKinsey reports – are of interest to you. This time, we published the short versions, but you have access to both reports by downloading the necessary reports at full length.
Here starts the first feature:
Fashion on climate
Look closer at how the fashion industry can urgently act to reduce its greenhouse-gas emissions.
By guest authors Achim Berg, Anna Granskog, Libbi Lee, and Karl-Hendrik Magnus all from McKinsey. Achim Berg and Karl-Hendrik Magnus are senior partners in McKinsey’s Frankfurt office, Anna Granskog is a partner in the Helsinki office, and Libbi Lee is an associate partner in the London office.
The authors wish to thank Sara Kappelmark, Poorni Polgampola, Corinne Sawers, and our partners at the Global Fashion Agenda (as coauthors of the report) for their contributions to this article.
As the need to address climate change becomes more urgent, industry sectors are working to reduce their carbon emissions. Fashion makes a sizeable contribution to climate change. McKinsey research shows that the sector was responsible for some 2.1 billion metric tons of greenhouse-gas (GHG) emissions in 2018, about 4 % of the global total. To set that in context, the fashion industry emits about the same quantity of GHGs per year as the entire economies of France, Germany, and the United Kingdom combined.
Despite efforts to reduce emissions, the industry is on a trajectory that will exceed the 1.5-degree pathway to mitigate climate change set out by the Intergovernmental Panel on Climate Change (IPCC) and ratified in the 2015 Paris agreement. To reach this pathway, fashion would need to cut its GHG emissions to 1.1 billion metric tons of CO2 equivalent by 2030. But our growth calculations, adjusted to take into account the likely impact of COVID-19, show that the industry is set to overshoot its target by almost twofold, with emissions of 2.1 billion metric tons of CO2 equivalent in 2030, unless it adopts additional abatement actions (Exhibit 1).
To gain a deeper understanding of fashion’s carbon emissions and identify additional abatement efforts the industry could pursue, we examined the entire value chain from farms and factories to brands and retailers to policy makers, investors, and consumers (see sidebar, “Our methods and assumptions”). Our findings show that all participants in all parts of the value chain have a role to play in driving decarbonization and bringing about real and lasting change for the better in the fashion industry.
Our methods and assumptions
To arrive at an emission baseline for the fashion industry, we calculated the volume of garments manufactured, used, and disposed in 2018, taking into account the fibres used to meet garment demand and the energy consumption and emission intensity of the raw materials and processes involved.
Our analysis considered a range of possible trajectories for the fashion industry post COVID-19, and was based on a scenario in which a 30 % drop in demand in 2020 is followed by a rebound in 2021, with sales some 3 % higher than in 2019.
We calculated the fashion industry’s target 2030 pathway of 1.1 billion metric tons of GHG emissions by combining the 1.5-degree scenario in the Intergovernmental Panel on Climate Change (IPCC) report with our bottom-up calculation of the industry’s emission baseline. In assessing abatement potential, we focused on 17 levers across the value chain (Exhibit), ranging from improving the production and cultivation of materials to increasing recycling and collections for garments at the end of their life. For each lever, we assessed the level of decarbonization that could be achieved under two scenarios: the industry’s current trajectory and an accelerated abatement program to meet the target 2030 pathway.
More detail on our methodology can be found by downloading the full report
To gain a deeper understanding of fashion’s carbon emissions and identify additional abatement efforts the industry could pursue, we examined the entire value chain from farms and factories to brands and retailers to policy makers, investors, and consumers (see sidebar, “Our methods and assumptions”). Our findings show that all participants in all parts of the value chain have a role to play in driving decarbonization and bringing about real and lasting change for the better in the fashion industry.
Accelerated abatement
One of the challenges fashion faces in reducing its GHG footprint is the likelihood that shifting population and consumption patterns will drive continuing industry growth. A predicted rise in volumes could push carbon emissions to around 2.7 billion metric tons a year by 2030 if no abatement actions are taken. However, if the industry continues to embrace decarbonization initiatives at its current pace, it will cap emissions at around 2.1 billion metric tons a year by 2030, roughly the same as they are today. Yet even with these efforts, emissions would reach almost twice the maximum level that would allow the fashion industry to follow the 1.5-degree pathway.
To reach the 1.5-degree pathway, the industry would need to intensify its abatement actions and scale up existing decarbonization efforts to reduce annual emissions to around 1.1 billion metric tons in 2030, roughly half of today’s figure. Some 60 % of the additional emission reduction under this accelerated abatement scenario could be achieved in upstream operations, through initiatives such as energy-efficiency improvements and a transition to renewable energy, with support from brands and retailers. Another 18 % of emissions could be saved through operational improvements by fashion brands, and a further 21 % through changes in consumer behavior. Together, these efforts could reshape the fashion landscape.
The good news for the fashion industry is, that many of the actions required for accelerated abatement can be delivered at modest cost. Almost 90 % of the measures we identified would cost less than USD50 per metric ton of GHG emissions abated. What’s more, around 55 % of the measures would lead to net cost savings for the industry.
The remaining actions would require incentives to shape consumer demand or regulations to deliver abatement. Up-front capital would be needed to fund 60 % of the abatement measures.
Given their potential to act as the main drivers of accelerated abatement, brands and retailers face a call to collaborate with others in the value chain to invest for long-term social and environmental benefits. Not only can they effect change in their own operations but they can also support decarbonization efforts elsewhere in the industry and help consumers make more sustainable purchasing choices.
Priorities for industry participants
Our analysis identified a need for concerted action in three key areas:
Reducing emissions from upstream operations. Manufacturers and fibre producers could deliver 61 % of the accelerated abatement we identified by decarbonising material production and processing, minimizing production and manufacturing waste, and decarbonizing garment manufacturing. Improvements in energy efficiency and a transition from fossil fuels to renewable-energy sources could deliver about 1 billion metric tons of emission abatement in 2030 across the fashion value chain.
Reducing emissions from brands’ own operations. The main contributions brands could make to emission abatement are to improve their material mix (for instance, through greater use of recycled fibre), increase their use of sustainable transport, improve their packaging (with recycled and lighter materials), decarbonise their retail operations, minimize returns, and reduce overproduction (only 60 % of garments are currently sold without a markdown). If brands followed the measures we have identified, they could achieve 308 million metric tons of CO2-equivalent abatement in 2030.
Encouraging sustainable consumer behaviour. The adoption of a more conscious approach to fashion consumption, changes in consumer behaviour during use and reuse, and the introduction by brands of radically new business models could contribute 347 million metric tons of emission abatement in 2030. The main levers in this effort are an increase in circular business models promoting garment rental, resale, repair, and refurbishment; a reduction in washing and drying; and an increase in recycling and collection to reduce landfill waste and move the industry toward an operating model based on closed-loop recycling.
Policy makers and investors also have important parts to play in these efforts. Governments and regulators should promote sustainable practices and conscious consumption, and provide incentives to support decarbonization measures with high abatement potential. Investors can make their contribution by encouraging decarbonization initiatives, emission transparency, and sustainability-focused innovation among the companies in their portfolios.
Stepping up
Accelerating emission abatement through the actions identified in our analysis calls for bold commitments from stakeholders across the value chain. These commitments need to be supported by equally bold actions, greater transparency, increased collaboration, and joint investment.
After 2030, the challenge becomes still greater. To stay on the 1.5-degree pathway, fashion will need to go beyond the accelerated abatement envisaged in our analysis and deploy all its ingenuity and creativity to decouple value creation from volume growth.
The report on which this article is based is part of a multiyear strategic-knowledge partnership between the Global Fashion Agenda and McKinsey & Company. The partnership aims to present research and a fact base on the priorities of CEOs and to guide and mobilize industry players in taking bold action on sustainability.
Download the full report (PDF–1.5MB).
Here starts the second item:
India’s turning point: An economic agenda to spur growth and jobs
A clarion call is sounding for India to put growth on a sustainably faster track and meet the aspirations of its growing workforce.
By guest authors By Shirish Sankhe, Anu Madgavkar, Gautam Kumra, Jonathan Woetzel, Sven Smit, and Kanmani Chockalingam. Shirish Sankhe is a senior partner in McKinsey’s Mumbai office, where Kanmani Chockalingam is a consultant; Anu Madgavkar is a partner in the McKinsey Global Institute, where Jonathan Woetzel, a senior partner in the Shanghai office, is a director and Sven Smit, a senior partner in the Amsterdam office, is a director and cochair; and Gautam Kumra is a senior partner in the Delhi office and the managing director of McKinsey India.
This report was edited by Peter Gumbel, editorial director of the McKinsey Global Institute.
India is at a decisive point in its journey toward prosperity. The economic crisis sparked by COVID-19 could spur reforms that return the economy to a high-growth track and create gainful jobs for 90 million workers to 2030; letting go of this opportunity could risk a decade of economic stagnation. A new report from the McKinsey Global Institute identifies a reform agenda that could be implemented in the next 12 to 18 months. It aims to raise productivity and incomes for workers, small and midsize firms, and large businesses, keeping India in the ranks of the world’s outperforming emerging economies.
Table of Contents
- India needs rapid GDP growth to create at least 90 million nonfarm jobs by 2030
- Three ‘growth boosters’ can spur USD 2.5 trillion of economic value and 30 % of nonfarm jobs
- To capture frontier opportunities, India needs to triple its number of large firms
- Six areas of targeted reform can raise productivity and competitiveness
- Financial-sector reforms can help India meet its USD 2.4 trillion capital requirement
- The central government, states, and business sector will need to act together
Section 1
India needs rapid GDP growth to create at least 90 million nonfarm jobs by 2030
A clarion call is sounding for India to put growth on a sustainably faster track and meet the aspirations of its growing workforce. Over the decade to 2030, India needs to create at least 90 million new nonfarm jobs to absorb the 60 million new workers who will enter the workforce based on current demographics, and an additional 30 million workers who could move from farm work to more productive nonfarm sectors. If an additional 55 million women enter the labor force, at least partially correcting historical underrepresentation, India’s job creation imperative would be even greater (Exhibit 1).
For gainful and productive employment growth of this magnitude , India’s GDP will need to grow by 8.0 to 8.5 % annually over the next decade, or about double the 4.2 % rate of growth in fiscal year 2020. Given the uncertainties about economic outcomes during the COVID-19 pandemic, our analysis looks at scenarios beginning in fiscal year 2023, although many of our proposed actions would start well before then, and in fact be implemented in the next 12 to 18 months.
Net employment would need to grow by 1.5 % per year from 2023 to 2030, similar to the average rate that India achieved from 2000 to 2012, but much higher than the flat net employment experienced from 2013 to 2018. At the same time, India will need to maintain productivity growth at 6.5 to 7.0 % per year, the same as it achieved from 2013 to 2018. The two objectives are not contradictory; indeed, employment cannot grow sustainably without high productivity growth, and vice versa.
If India fails to introduce measures to address prepandemic trends of flat employment and slowing economic growth, and does not manage the shock of the crisis adequately, its economy could expand by just 5.5 to 6.0 % from 2023 to 2030, with a decadal growth of just 5 % and absorb only about six million new workers, marking a decade of lost opportunity (Exhibit 2).
India has a successful track record to draw on: over the past three decades, the country has been one of just 18 outperforming emerging economies to achieve robust and consistent high growth. Pro-growth reforms lifted productivity and helped the country weather shocks and cycles. Real GDP growth has averaged 6.8 % annually since 1992, and it has been inclusive; economic prosperityhas brought significant improvement in living standards. Since 2005, more than 270 million people have escaped extreme poverty.
Yet India’s economy was already showing signs of weakness before the COVID-19 crisis; in the aftermath of the global financial crisis, its main demand engines of domestic private investment and global demand have stalled. Bank credit to industry slowed, and the proportion of nonperforming assets to total assets tripled to more than 9 % in the period from fiscal year 2012 to 2019. Exports declined as a share of India’s GDP from 25 to 19 % between 2013 and 2019. Gross domestic savings and household savings slowed, while labor-force participation fell from 58 to 49 % between 2005 and 2018. Core sectors, including manufacturing and construction, showed signs of stress.
In order to recover to a high-growth path, India’s sectoral mix would need to move toward higher-productivity sectors that also have the potential to create more jobs. And, within individual sectors, a move toward new business models that harness global trends could drive productivity and demand.
We find that the manufacturing and construction sectors could achieve the largest acceleration in sector GDP growth relative to the past. In the coming decade, manufacturing productivity has the potential to rise by about 7.5 % per year, contributing more than one-fifth of the incremental GDP in our estimates. Construction could add as many as one in four of the incremental gross jobs. In addition, both labor-intensive and knowledge-intensive sectors will have to sustain and improve on their past strong momentum. We estimate that about 30 million farm jobs could move to other sectors by 2030 as part of a high-growth strategy.
Section 2
Three ‘growth boosters’ can spur USD 2.5 trillion of economic value and 30 % of nonfarm jobs
India needs to leapfrog ahead to achieve the employment and productivity growth needed. Fortunately, it has many opportunities to do so. Global trends such as digitization and automation, shifting supply chains, urbanization, rising incomes and demographic shifts, and a greater focus on sustainability, health, and safety are accelerating or assuming a new significance in the wake of the pandemic. For India, these trends could manifest as three growth boosters that become the hallmarks of the postpandemic economy. Within these three growth boosters, we find 43 potential business opportunities that could create about USD2.5 trillion of economic value in 2030 and support 112 million jobs, or about 30 % of the nonfarm workforce in 2030 (Exhibit 3).
Growth booster 1: Global hubs serving India and the world
This theme offers as much as USD1 trillion in economic value. To achieve this, India will need to work now to grasp opportunities presented by forces such as rising wages in other parts of Asia, trade conflicts, and efforts to make supply chains more resilient. Rising flows and volumes of data suggest demand for a range of offshored and nearshored services. Greater affluence and leisure time and a focus on health and safety will also open up opportunities to produce and sell more manufactured goods and services.
India would need to raise its competitiveness in high-potential sectors like electronics and capital goods, chemicals, textiles and apparel, auto and auto components, and pharmaceuticals and medical devices, which contributed to about 56 % of global trade in 2018. India’s share of exports in these sectors is 1.5 % of the global total, while its share of imports is 2.3 %. It could also build on its traditional strength in IT-enabled services to reflect digital and emerging technologies like artificial intelligence (AI) and machine learning–based analytics. The country also has an opportunity to develop high-value agricultural ecosystems, healthcare services for India and the world, and high-value tourism.
Growth booster 2: Efficiency engines for India’s competitiveness
The business models in this grouping can eliminate inefficiency in areas that underpin a competitive economy: power, logistics, financial services, automation, and government services. In each case, opportunities for value-creating market-based models could emerge, generating about USD865 billion in economic value by 2030. Examples include next-generation financial services, such as innovation in digital payment offerings, new flow-based lending products, asset resolution and recovery models that could make insolvency processes more streamlined and effective, and a larger range of risk capital investment vehicles such as alternative investment funds. Automation of work and Industry 4.0 could bring greater efficiency; for example, about 60 % of manufacturing-sector output could leverage predictive maintenance, smart safety management, and product design. These in turn can lift productivity in plants and factories by 7 to 11 %. Many workers in these roles will require retraining and redeployment, and some may be displaced. Other opportunities exist in efficient mining and mineral sufficiency; high–efficiency power distribution, which could reduce power tariffs to commercial and industrial customers by 20 to 25 %; and a push to greater e-governance.
Growth booster 3: New ways of living and working
Indian businesses can create economic value of about USD635 billion by 2030 if they can tap into the shifting preferences of Indians aspiring to a higher standard of living. Safer, higher-quality urban environments, cleaner air and water, more convenience-based services, and more independent work in the new ideas-based economy are all opportunities to create millions of productive jobs in service sectors. Among other examples, India has the opportunity to introduce a robust planning approach for its top cities, which have low capital investment per capita and are less productive than they should be. In retail, if India could increase the share of e-commerce and modern trade to 20 % and establish digitally enabled supply chains, this could generate USD125 billion in economic value by 2030 and lift the productivity of 5.1 million storekeepers and e-commerce workers. Climate change mitigation and adaptation also are creating opportunities, such as more energy-efficient buildings and factories. India could more than triple its renewable energy capacity, from 87 gigawatts to 375 gigawatts, and increase the share of wind and solar energy in power generation from about 7 % to best-in-class 30 %. Finally, digital communication services provide opportunities in universally available, affordable, high-speed internet connectivity and fast-growing digital media and entertainment ecosystems.
Section 3
To capture frontier opportunities, India needs to triple its number of large firms
Large companies with revenues exceeding USD500 million have been significant drivers of growth and innovation in India and other outperforming emerging economies. India has about 600 such firms. They are 2.3 times more productive than midsize firms, account for almost 40 % of total exports, and employ 20 % of the direct formal workforce.
Compared with corporate peers in some other emerging economies, however, India has fewer large firms relative to GDP. Large Indian firms contributed revenues equivalent to 48 % of nominal GDP in 2018. That is 1.5 to 1.6 times less than China, Malaysia, and Thailand—and 3.5 times less than South Korea.
India’s large firms have also not achieved their productivity or profitability potential. Overall productivity levels are on average one-tenth to one-quarter those of peers in other “outperformer” economies. And their profitability, measured as return on assets, has declined since 2012, from 1.9 to 1.2 %. Profits are also concentrated: just 20 of the country’s large firms contribute 80 % of the total profit.
One factor underlying these trends is that India has a “missing middle” of midsize firms that typically grow into formidable competitors of larger rivals. For example, peer-emerging economies have almost twice as many midsize firms per trillion dollars of GDP (Exhibit 4).
The upward mobility of small and midsize firms matters because it influences the degree of competitive pressure to which large firms are subjected. The higher such pressure, or contestability, the greater the likelihood that only the most efficient and high-performing firms will survive at the top. In some other emerging economies, it is harder for big firms to stay at the top. In China, for example, 66 % of companies in the top quintile of firms by economic profit have been replaced over the past two decades. In India, by contrast, only 57 % of top companies were replaced. In some sectors in India, including automotive and chemicals, the figure is even lower.
In order to achieve higher, system-wide productivity, India would need to raise the level of contestability and enable 1,000 or more midsize and small firms to scale up to large firms, and 10000 or more small firms to scale up to midsize. That in turn will require capital: we estimate that these firms will need about six times the amount of capital currently used, of which about half needs to be risk capital.
Section 4
Six areas of targeted reform can raise productivity and competitiveness
To seize the frontier business opportunities—and help increase the productivity and competitiveness of India’s firms—we outline reform options on six key themes:
Introduce sector-specific policies to raise productivity in manufacturing, real estate, agriculture and food processing, retail, and healthcare
We estimate these sectors could contribute USD6.3 trillion of GDP in 2030, compared to USD2.7 trillion in 2020. Of this total, the manufacturing sector has the potential to generate USD1.25 trillion of GDP in 2030, more than double the USD500 billion it accounted for in 2020. Putting in place a holistic policy framework with three components would be a key step forward. First is a stable and declining tariff regime, with inverted duty structures removed. Second, building well-functioning port-proximate manufacturing clusters, with free-trade warehousing zones, faster approval processes, and more flexible labor laws. Third, providing incentives, which are targeted, time bound, and conditional, and reduce the cost disadvantage India faces in comparison with other outperforming emerging economies.
The construction sector has the potential to more than double its GDP to USD 550 billion, from USD 250 billion in 2020. In the real estate sector, homeownership could be encouraged by rationalizing stamp duties and registration fees to reduce costs to buyers, and offering greater tax incentives. Regulatory amendments in tenancy and rent-control policies could bring additional investment into rental stock construction. Large-scale affordable-housing contracts could enable modern construction methods that can increase productivity and reduce costs.
India also has the potential to generate up to USD 95 billion in high-value agricultural exports, with growth driven predominantly by livestock and fisheries, pulses, spices, fruits and vegetables, horticulture, and dairy, among others. Possible reforms include changing the Agricultural Produce Marketing Committee Act to ensure barrier-free interstate trade and amending the Essential Commodities Act to deregulate the supply and distribution of agricultural commodities. The government announced these reforms as part of its COVID-19 package, but they will require the support of specific policies implemented at the state level.
In retail, if traditional models are to give way to a larger share of e-commerce and modern trade, India will need a level playing field across trade formats, which would imply minimal regulatory intervention and a foreign direct investment policy that is agnostic to business models and products.
In healthcare, India’s potential to increase access to quality healthcare and attract medical tourism will require ramped-up spending and investment from the public sector. India currently spends about 3.5 % of GDP on healthcare, but we estimate that it could nearly double spending to 6.4 % of GDP in line with benchmarks. India could also increase healthcare productivity by enabling new business models, including telemedicine.
Unlock land supply to reduce the cost of residential and industrial land use
Buying a home is financially out of reach for many Indians, and the high cost of land is a key reason. For companies, high-cost land puts a brake on expanding productive capacity. We estimate that, by enacting several key reforms, India has the potential to reduce land costs by 20 to 25 % and increase the supply of land available for construction. Steps toward achieving this could include mapping out 20 to 25 % of public and state-owned enterprises’ land that is suitable for construction and currently underused, and leasing out portions at affordable prices to private developers.
Create flexible labour markets with stronger social safety nets and more portable benefits
A more vibrant economy will require more flexible labor markets. India continues to place labor restrictions on manufacturing companies, which encourages small firms to remain small. The government could consider reviewing the various laws on the books and examine options to improve labour-market flexibility. Barriers to flexibility could be removed by providing more freedom to manufacturing companies to shape the size, composition, and skills of the workforce, in line with evolving needs.
Reduce commercial and industrial (C&I) power tariffs through new business models in power distribution
Various reform measures could help reduce C&I power tariffs by 20 to 25 %. These include a shift to franchising models or privatization of power distribution companies in the top 100 cities; the introduction of cost-reflective tariffs for C&I customers and direct-benefit transfers for subsidies; and a focus on smart-meter penetration. While the government announced some of these reforms as part of its COVID-19 package, they may require the support of specific policies implemented at the state level.
Monetise government-owned assets and increase efficiency through privatisation of more than 30 state-owned enterprises (SOEs)
Large-scale privatisation could more than double productivity and potentially contribute between 0.2 and 0.4 percentage points annually on average to GDP. Privatization would need to be accompanied by an appropriate institutional framework and effective competition. In all, India has about 1,900 state-owned enterprises, of which we estimate about 400 could be privatized. Potential proceeds could be USD540 billion between 2020 and 2030 (Exhibit 5). We estimate that just 2 % of all SOEs could yield as much as 80 % of all potential proceeds.
Improve the ease and reduce the cost of doing business
India has made significant progress in the World Bank rankings for ease of doing business; the country rose from 130th overall in 2016 to 63rd in 2020. However, Indian companies still face obstacles ranging from delayed payments for public procurement to tedious and slow processes for obtaining permits. Construction permits, for example, take 106 days, almost double the time in peer emerging markets. These and other issues could be resolved if the government adopted global best practices in relevant areas. For example, to simplify and expedite tax payments, a one-stop shop for a range of taxes could be set up. An “e-governance for business” mission at the state-government level could improve the ease of doing business at the local level.
Section 5
Financial-sector reforms can help India meet its USD2.4 trillion capital requirement
We estimate the total capital requirement for this reform agenda at about USD2.4 trillion in 2030, compared with about USD865 billion in fiscal year 2020. Small and midsize companies will need access to more than USD800 billion in capital in 2030. India will also need to finance government expenditure, budgeted in the range of 26 to 29 % of GDP each year. A triple focus will enable investment to return to about 37 % of GDP, the level India has achieved in high-growth periods in the past, from 33 % in fiscal year 2020:
Channel more household savings to capital markets
India can meet the bulk of its investment requirement through domestic sources of capital if it succeeds in raising the household savings rate to 19 % of GDP from the current 17 % and, within household savings, to raise the flows to financial rather than physical assets to 11 % of GDP in 2030, from 7 % in 2018. That amounts to annual average growth of 12 % in the pool of capital available for financial intermediation (rather than invested in land or gold). Net foreign capital inflows would also need to rise to about 3 % of GDP from 1.8 %. Of this, net foreign direct investment would need to increase to USD120 billion (1.8 % of GDP) from about USD30 billion (1.1 %), in line with peers in Asia. Beyond the sums required, India would need to ensure that a higher share of household financial savings flows to productive firms through a deeper capital market. The overall depth of financial markets in India is about 140 % of GDP versus an average of about 240 % among peers.
Reduce credit intermediation costs
The average commercial borrower in India has seen continued high real interest rates, which are more than five percentage points higher than in other outperforming emerging economies. India can reduce its cost of financing by taking steps to reduce the cost of credit intermediation in the banking system. Streamlining public finances, as described in the section below, would help end the “crowding out” of funding by government and also allow market-linked interest rates on government small savings schemes. Other measures include setting up a “special assets bank,” backed by private-sector funding, to help tackle resolution of NPAs. Among several international precedents for such action is Sweden’s establishment of a “bad bank” in the early 1990s.
Streamline public finances to allocate capital more efficiently
We estimate that India has the potential to save about 3.6 % of GDP on an annual basis, on average over fiscal years 2021–30. These savings could come from a range of measures, including more efficient subsidy and social spending; proceeds from privatization of state-owned enterprises; monetising assets including roads, railways, ports, airports, power infrastructure, and telecom towers; greater tax buoyancy, particularly driven by faster growth; power-sector reforms; and market-linking small-savings rates.
Section 6
The central government, states, and business sector will need to act together
About half of the reforms identified in this report can be enacted through a policy or law. Other reforms will require the government to implement initiatives and projects. While the central government’s pro-growth vision and agenda are essential, state governments have a critical role to play. They will need to implement roughly 60 % of the reforms. Business leaders also have a major responsibility for realizing the high-growth agenda.
The starting point will be a clear and sharp vision, arrived at by the central government in alignment with the business community. For a reform agenda to endure across multiple years, an institutional body could steward the process under the chairmanship of the prime minister, with the right level of empowerment, including for resource allocation, and technical- and domain-specific expertise.
State governments will need to set their visions and blueprints to address key pro-growth priorities. The choices would vary by state depending on local endowments, such as agricultural resources, educated professionals, and port-proximate land. It would also depend on the distance of the state from the productivity frontier and the urgency of bridging the gap, for example, in areas like power-sector distribution losses, logistics cost, and the quality of urban infrastructure. States could then create powerful demonstration effects by taking a few of these ideas and making them work, at scale, in select areas.
Finally, India’s business leaders would need to raise aspirations and commit to productivity growth through a set of frontier business ideas. Businesses need to develop a long-term value creation mindset coupled with a strong performance-oriented culture; both of these create stakeholder value in the long term. A set of winning capabilities are essential if firms are to emerge as large, high-growth, globally competitive businesses. These include customer-centric innovation that focuses on developing expertise in next-generation ideas and greater localization in India; operational excellence and scalable platforms that can cut unnecessary costs; an embrace of automation and emerging AI technologies; the ability to win in discontinuities, including by disregarding established business practices and models to solve problems, and fostering creativity and nimbleness; using well-executed mergers, acquisitions, and partnerships to help scale up; and the ability to build a strong trust-based brand to attract capital, customers, and employees.
The COVID-19 pandemic is just the latest in a line of events that have focused public attention on how companies behave. Exemplary performance—including through well-executed mergers, acquisitions, and partnerships; clear reporting; strong accountability; transparency; a focus on ethical values; brands built based on trust, and purpose—will become even more important in the decade ahead.
The Newsletter of last Week
Reimagining industrial supply chains – Australia’s next normal: The cautious consumer – plus two videos on the post covid-19 period under sustainability aspects by Private Bank J. Safra Sarasin https://textile-future.com/archives/56986
The highlights of TextileFuture’s News of last week. For your convenience just click on the feature.
Acquisition
Sulzer to acquire Haselmeier https://textile-future.com/archives/57065
Fitesa strikes Deal to buy Tredegar’s Personal Care Business https://textile-future.com/archives/57354
PE Firm buys Fibrix Filtration https://textile-future.com/archives/57356
Apparel
Global textile, apparel sector seek new growth path as COVID-19 halts exports https://textile-future.com/archives/57325
Automotives
China’s Auto Champion Geely will Rev Up Portfolios https://textile-future.com/archives/57124
PIRELLI: CONTAINS COVID-19 EFFECTS, ADJUSTED EBIT POSITIVE 66.7 MILLION crisis https://textile-future.com/archives/57128
ATLAS: cutting-edge technology for sustainable vehicle acoustics https://textile-future.com/archives/57272
Greatly improved supercapacitors will be multi-billion dollar business, taking 10 % of battery sales https://textile-future.com/archives/57400
Batik
The thousand-year old art of Batik in the digital age https://textile-future.com/archives/57162
Boots
Wolverine and Metallica Scholars Partner to release Two New Metallica-inspired Boots, provide funding to Trade Programmes across the USA https://textile-future.com/archives/57167
China
China’s Economy is Bouncing Back—And Gaining Ground on the U.S. https://textile-future.com/archives/57082
China’s attempts to spur Consumption show Signs of Working https://textile-future.com/archives/57423
Collaboration
Leading textile tech innovators unite to create world’s first garment fully powered by HeiQ Viroblock https://textile-future.com/archives/57190
Companies
Dick’s Sporting Goods’ Profit and E-commerce Sales Surge https://textile-future.com/archives/57277
Data
Swiss Job Statistics in 2nd quarter 2020: all indicators fell due to Covid-19 crisis https://textile-future.com/archives/57121
Swiss GDP in the second quarter of 2020: pandemic leads to historic slump https://textile-future.com/archives/57197
G20 international merchandise trade collapsed in April 2020 … https://textile-future.com/archives/57215
Rise of 380 000 jobs in tertiary sector between 2011 and 2018 in Switzerland https://textile-future.com/archives/57315
U.S. Consumer Spending rose more Slowly in July https://textile-future.com/archives/57358
Swiss Retail trade turnover rose in July 2020 https://textile-future.com/archives/57426
Direct Sale
LC Waikiki Kyrgyzstan Introduced Direct Sales Model on Instagram https://textile-future.com/archives/57375
Economy
Historic contraction in Rich Economies presages long Climb Back https://textile-future.com/archives/57228
U.S. Unemployment Claims remain Historically High https://textile-future.com/archives/57263
The weekly charts of McKinsey https://textile-future.com/archives/57406
EU
Rules of origin: EU to enhance preferential trade with Pan-Euro-Mediterranean (PEM) countries https://textile-future.com/archives/57070
Events
Intertextile Shanghai Home Textiles 2020 concluded successfully: online and offline platforms met sourcing demands https://textile-future.com/archives/57178
Itematech exhibits at Cinte TechTextil 2020 in Shanghai, China https://textile-future.com/archives/57330
Interview
Fashion industry reached 55 billion dollars in the MENA region https://textile-future.com/archives/57231
Malaysia
Shopping in Malaysia: Kuala Lumpur Buyer Behaviour https://textile-future.com/archives/57150
Online Outlets
Tapestry is attracting Gen Z with new focus on online outlets https://textile-future.com/archives/57068
Personalities
The real people behind the statistics https://textile-future.com/archives/57145
Plastic
PLASTIC POLLUTION – How to tackle the plastic waste problem from the bottom up https://textile-future.com/archives/57343
Refreshing Brand
Soma launches Brand Refresh with a Strong Message of Inclusivity and Comfort https://textile-future.com/archives/57073
Regulations
EU regulations affecting textiles https://textile-future.com/archives/57134
Retailing
There will soon be only 14 Lord & Taylor stores left https://textile-future.com/archives/57101
Nordstrom’s already Bad Year gets Worse https://textile-future.com/archives/57255
Silicone
Elkem expands availability of Upstream Silicones in North America https://textile-future.com/archives/57137
Success Story
Three staple fibre bicomponent systems successfully commissioned in Asia https://textile-future.com/archives/57437
Sustainability
Science based Targets initiative endorses climate protection goals of Bayer AG https://textile-future.com/archives/57115
Sustainable Textiles Switzerland 2030 https://textile-future.com/archives/57282
Young and Green: Faces of Innovative Youth in Climate-Friendly Technology https://textile-future.com/archives/57297
Sulzer is partnering with H&M to recycle worn textiles https://textile-future.com/archives/57418
Tommy Hilfiger commits to going “circular”. Will it work? https://textile-future.com/archives/57430
Trade
WTO issues new report on how COVID-19-related restrictions on cross-border mobility are affecting global trade https://textile-future.com/archives/57193
Webinars
Webinar Series on U.S. Government Financing Tools for U.S. Companies and Partners (September 3, 2020 for ASIA EDGE https://textile-future.com/archives/57412
Workshop
OECD Workshop on Climate Change: Assumptions, Uncertainties and Surprises https://textile-future.com/archives/57371