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Uday Kotak, Founder and Director of Kotak Bank, has urged India to remain open to Chinese investments, pointing to early signs of partnerships between Indian and Chinese companies, while advocating that the rupee be allowed to find its own level.
Speaking at the Bloomberg New Economy Forum, the veteran banker said the rupee, which has been weakening for eight years, should be allowed to find its own level, with the currency eventually reflecting the underlying strength of the Indian economy. We should let the rupee find its own level and overtime the true strength of the economy will play out. He further noted that India has faced greater pressure from portfolio investment flows than from its current account, amid the concentration of global capital in a few large companies. One of the reasons why India is where it is is because we had very significant portfolio investments. The stock of portfolio investments was high, and there was this crazy concentration where what mattered in the world was not more than ten stocks, and all the money went in there. As a result, India saw less of a problem on the current account and more on the portfolio account, with investments chasing just seven to eight stocks worldwide, he said. Turning to China, he advocated a pragmatic approach towards economic cooperation. India of course is refocussing significant beyond manufacturing, he said, adding, My view is if you can't beat them, join them, and we need to be open. And I think we're seeing early signs of that in India where Indian companies are partnering with Chinese companies for Make in India, and the Chinese companies are open. Kotak noted that a few such partnerships have already emerged. "If there are joint ventures between Chinese and Indian companies for manufacturing in India, the game China played with the US many years ago, that could be a path forward for India, and India has to keep its optionality open," he said. He further argued that India should diversify its sources of foreign investment rather than remain heavily dependent on Western economies, particularly amid changing global trade and investment dynamics. "Historically, India has looked too much to the West for investment, but with the challenges, particularly from the United States, and an overall more transactional approach to investment, the time has come for India to keep all its options open," he said. (ANI)
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