Bilateral economic pacts and free trade agreements must be “absolutely” expedited, ITC chairman Sanjiv Puri told ET, as a tariff-torn world scrambles to redraw trade frontiers that could help expand India’s bailiwick in several sectors where it is competitive.
“We would like it to happen yesterday,” Puri said in an interview, while adding that developments since April 2 “are only providing some impetus for new trading blocs to be formed. Once these agreements are done, I think the playing field for Indian industries will become much larger."
However, the head of the maker of Sunfeast cookies and Fiama soaps said India needs to be “very cautious” about the way the tariffs pan out. The countries facing curbs should not use India as a dumping ground. Already, the spectre is looming over several industries, he said.
However, Puri said, the good news is that the government has announced the formation of a panel to keep a close watch. But the nation needs a methodical plan to “keep a watch on this in a very agile fashion” as dumping is a serious threat.
Puri said bigger opportunities for Indian value chains to integrate into global value chains will emerge, expanding the scope of business.
The Oval Office imposed reciprocal tariffs on many countries, including India, on April 2, but later postponed them by three months, until July 9. China remains an exception, however, facing tariffs of 145%. Although the imposition of fresh tariffs has been delayed, a 10% baseline duty on exports to the US continues.
Global Uncertainty
Puri said in the current global economic environment, “uncertainty makes investors cautious.” The chief of the hotels-to-daily essentials maker added, “This is not to say investment would not happen. India is after all a consumption-driven economy.”
He pointed to a lot of investments in future-facing sectors such as energy, electronics and semiconductors. “Investments are also happening in GCCs, real estate and hospitality. We’ve never seen the kind of investments in hospitality that we are seeing today,” Puri said. “Obviously in some other sectors, because of external factors, caution would come in. But overall, India is well positioned — far more resilient and still able to grow reasonably well.”
Urban Demand
Asked about the urban slowdown, Puri said he expected it to ease by the year end as consumption is getting a little better.
The past four quarters have seen demand in cities challenged due to inflationary pressures, low wage growth and higher housing rentals. In India, there has been a persistent slump in demand spanning daily groceries, staples, apparel and cars, especially in cities, leading consumer goods companies to forecast subdued revenue growth for the next few quarters.
NielsenIQ said the fast-moving consumer goods (FMCG) sector expanded 10.6% by value and 7.1% by volume in the December quarter, aided by rural demand and small and medium companies’ performance.
Kolkata-based ITC makes a plethora of products and brands, including Aashirvaad staples, Master Chef ready-to-cook foods, Classmate paper products and Engage fragrances.
The ITC chief sees better demand in the latter part of the year. “Tourism is doing well, GCCs are growing. Progressively, I think demand should improve,” Puri said. “Some factors are already supporting this improvement — the monsoon is expected to be better, the crop is better, the benefits of income tax relief that have come in, and the cumulative benefit of the investments that are coming in the economy will come through.”
He cautioned, however, that monitorables include food inflation, which has been very sticky, climate-related events and the near-term impact of the trade barriers.
“Would this subdue global demand even further? Would it impact exports? These are things that are to be monitored. Having said that, I think we are on a good wicket because the Indian economy has momentum,” said Puri.
Mentioning “domestic drivers because of reforms”, Puri said he believes India will still continue to do well. “A 6.5% GDP growth this year despite all the global disturbances is a reasonably good number. It might get dented a little bit because the economists are forecasting 20-50 bps (lower), but overall I’m positive,” Puri said.
Small is Big
Asked about the resurgence of regional brands and emergence of small and direct-to-consumer brands threatening legacy companies, Puri said, “Competition is always good for the economy... it brings out the best in everybody. It requires you to look at the way in which you architect your portfolio, requires you to acquire new skills because the channels of distribution are also changing.”
“All this also requires you to ramp up the order of efficiency in the system because you need to be very competitive, so it is good for the economy and I think it also creates… innovation, so you need the capacity to innovate,” he said.
A report by Axis Securities released last week noted that FMCG companies are finding it increasingly tough to navigate the current market landscape amid competition from nimble regional brands and emerging direct-to-consumer (D2C) brands.
“The operating environment remains challenging, as companies face stiff competition from regional players, the increasing presence of D2C brands, and inventory liquidation pressures in general trade channels," Puri said.
Calling out to India’s “strong spirit of enterprise,” Puri said, “Access to capital is better. The digitisation of the economy and the spirit of entrepreneurship and innovation are giving rise to newer players. There are also opportunities being created by these brands; newer spaces are being identified and many of these players are scaling up to a certain level.”
He said these companies could “require partnerships from larger companies or collaboration after a certain scale, it makes sense for a bigger player to come in because then the company has to be institutionalised, processes have to become strong, distribution motes and manufacturing and brand building capacities have to come in. So it creates opportunities also and it creates competition.”
In February, ITC acquired frozen foods brand Prasuma. Two years back, it acquired D2C company Sproutlife Foods which sells Yoga Bar healthy snacks. In 2020, ITC had acquired Kolkata-based spice maker Sunrise Foods.
“I've always believed that only the paranoid survive. So competition is always there, so you need to be on your toes, you just have to wake up and run every day,” Puri said.
“We would like it to happen yesterday,” Puri said in an interview, while adding that developments since April 2 “are only providing some impetus for new trading blocs to be formed. Once these agreements are done, I think the playing field for Indian industries will become much larger."
However, the head of the maker of Sunfeast cookies and Fiama soaps said India needs to be “very cautious” about the way the tariffs pan out. The countries facing curbs should not use India as a dumping ground. Already, the spectre is looming over several industries, he said.
However, Puri said, the good news is that the government has announced the formation of a panel to keep a close watch. But the nation needs a methodical plan to “keep a watch on this in a very agile fashion” as dumping is a serious threat.
Puri said bigger opportunities for Indian value chains to integrate into global value chains will emerge, expanding the scope of business.
The Oval Office imposed reciprocal tariffs on many countries, including India, on April 2, but later postponed them by three months, until July 9. China remains an exception, however, facing tariffs of 145%. Although the imposition of fresh tariffs has been delayed, a 10% baseline duty on exports to the US continues.
Global Uncertainty
Puri said in the current global economic environment, “uncertainty makes investors cautious.” The chief of the hotels-to-daily essentials maker added, “This is not to say investment would not happen. India is after all a consumption-driven economy.”
He pointed to a lot of investments in future-facing sectors such as energy, electronics and semiconductors. “Investments are also happening in GCCs, real estate and hospitality. We’ve never seen the kind of investments in hospitality that we are seeing today,” Puri said. “Obviously in some other sectors, because of external factors, caution would come in. But overall, India is well positioned — far more resilient and still able to grow reasonably well.”
Urban Demand
Asked about the urban slowdown, Puri said he expected it to ease by the year end as consumption is getting a little better.
The past four quarters have seen demand in cities challenged due to inflationary pressures, low wage growth and higher housing rentals. In India, there has been a persistent slump in demand spanning daily groceries, staples, apparel and cars, especially in cities, leading consumer goods companies to forecast subdued revenue growth for the next few quarters.
NielsenIQ said the fast-moving consumer goods (FMCG) sector expanded 10.6% by value and 7.1% by volume in the December quarter, aided by rural demand and small and medium companies’ performance.
Kolkata-based ITC makes a plethora of products and brands, including Aashirvaad staples, Master Chef ready-to-cook foods, Classmate paper products and Engage fragrances.
The ITC chief sees better demand in the latter part of the year. “Tourism is doing well, GCCs are growing. Progressively, I think demand should improve,” Puri said. “Some factors are already supporting this improvement — the monsoon is expected to be better, the crop is better, the benefits of income tax relief that have come in, and the cumulative benefit of the investments that are coming in the economy will come through.”
He cautioned, however, that monitorables include food inflation, which has been very sticky, climate-related events and the near-term impact of the trade barriers.
“Would this subdue global demand even further? Would it impact exports? These are things that are to be monitored. Having said that, I think we are on a good wicket because the Indian economy has momentum,” said Puri.
Mentioning “domestic drivers because of reforms”, Puri said he believes India will still continue to do well. “A 6.5% GDP growth this year despite all the global disturbances is a reasonably good number. It might get dented a little bit because the economists are forecasting 20-50 bps (lower), but overall I’m positive,” Puri said.
Small is Big
Asked about the resurgence of regional brands and emergence of small and direct-to-consumer brands threatening legacy companies, Puri said, “Competition is always good for the economy... it brings out the best in everybody. It requires you to look at the way in which you architect your portfolio, requires you to acquire new skills because the channels of distribution are also changing.”
“All this also requires you to ramp up the order of efficiency in the system because you need to be very competitive, so it is good for the economy and I think it also creates… innovation, so you need the capacity to innovate,” he said.
A report by Axis Securities released last week noted that FMCG companies are finding it increasingly tough to navigate the current market landscape amid competition from nimble regional brands and emerging direct-to-consumer (D2C) brands.
“The operating environment remains challenging, as companies face stiff competition from regional players, the increasing presence of D2C brands, and inventory liquidation pressures in general trade channels," Puri said.
Calling out to India’s “strong spirit of enterprise,” Puri said, “Access to capital is better. The digitisation of the economy and the spirit of entrepreneurship and innovation are giving rise to newer players. There are also opportunities being created by these brands; newer spaces are being identified and many of these players are scaling up to a certain level.”
He said these companies could “require partnerships from larger companies or collaboration after a certain scale, it makes sense for a bigger player to come in because then the company has to be institutionalised, processes have to become strong, distribution motes and manufacturing and brand building capacities have to come in. So it creates opportunities also and it creates competition.”
In February, ITC acquired frozen foods brand Prasuma. Two years back, it acquired D2C company Sproutlife Foods which sells Yoga Bar healthy snacks. In 2020, ITC had acquired Kolkata-based spice maker Sunrise Foods.
“I've always believed that only the paranoid survive. So competition is always there, so you need to be on your toes, you just have to wake up and run every day,” Puri said.
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