Finance Minister says Indian companies must combine scale with durability, stronger governance, innovation and technological capability to build globally competitive institutions

Finance Minister Nirmala Sitharaman has urged Indian industry to look beyond simply expanding the size of businesses and focus on building enterprises that are resilient, well-governed, technologically capable and globally competitive as India works towards its long-term Viksit Bharat 2047 objective.

Addressing the 53rd National Management Convention of the All India Management Association (AIMA) in New Delhi on Tuesday, Sitharaman said India's expanding market, entrepreneurial activity and institutional capacity provide a foundation for higher ambitions, but the ability to execute effectively will determine how these strengths translate into lasting economic capabilities.

The Finance Minister's remarks put corporate quality, institutional durability and management practices at the centre of India's next phase of economic growth.

From Bigger Companies to Stronger Institutions

Sitharaman said Indian businesses should not measure progress only through increasing scale. Companies, she noted, need to combine scale with durability, higher quality, stronger governance and deeper technological capabilities.

The emphasis comes as Indian companies increasingly operate in global markets and compete with businesses that have established technology, intellectual property, supply chains and institutional systems.

For Indian enterprises, building sustainable competitive advantages could therefore require investments that extend beyond capacity expansion. These include stronger internal systems, professional management, technology adoption, skilled employees and robust governance frameworks.

Governance as a Business Capability

Corporate governance was another major theme in the Finance Minister's address.

Sitharaman said governance should not be treated merely as a collection of external rules or compliance requirements. Instead, institutions need to establish their own standards of conduct and accountability.

She also emphasised the importance of trust between businesses and government.

According to her, companies should engage constructively with regulators and government agencies, participate meaningfully in consultations and present evidence when differences arise. Not every disagreement, she suggested, needs to immediately become a legal dispute.

For businesses, a more predictable relationship with regulators can be important when making long-term investments, planning projects and operating in highly regulated sectors.

Resilience Becomes Increasingly Important

The call for greater resilience comes against a backdrop of changing global supply chains, technological disruption and evolving trade and investment patterns.

Businesses that focus only on short-term expansion can remain vulnerable if market conditions change rapidly. Strong balance sheets, diversified supply chains, technology capabilities and effective risk-management systems can become increasingly important as companies expand.

For Indian industry, resilience also has a broader strategic dimension because companies are expected to participate in areas ranging from manufacturing and infrastructure to advanced technology, energy and critical supply chains.

R&D Needs Greater Corporate Participation

Sitharaman also called for greater spending on research and development, either directly through corporate R&D centres or through partnerships with universities and research institutions.

The objective, she said, should not simply be to manufacture products domestically but to develop products, technologies and intellectual property in India.

Her broader message was that India's industrial ambitions need to move from a manufacturing-led model towards one in which Indian companies also design, develop and commercialise technologies for global markets.

Official data from the Department of Science and Technology shows that India's gross expenditure on R&D reached ₹2.45 trillion in 2023-24, equivalent to about 0.84% of GDP. The private sector accounted for 51.8% of total R&D expenditure in that year, indicating that private-sector participation has increased substantially over the period covered by the latest statistics.

From 'Made in India' to Innovation from India

A key part of the Finance Minister's message was the need for India to strengthen its ability to generate intellectual property.

Manufacturing capacity can create employment, exports and domestic value addition, but technology ownership can potentially provide companies with a deeper competitive advantage.

This makes investment in product development, engineering, patents, research laboratories and collaboration with academic institutions increasingly important.

The transition from manufacturing products developed elsewhere to creating technologies and products in India could also help Indian companies compete in higher-value segments of global supply chains.

Management Education Needs to Become More Practical

Sitharaman also highlighted the importance of strengthening management capabilities among entrepreneurs and corporate leaders.

She called for practical, shorter programmes covering areas such as hiring, delegation, financial discipline, customer management, compliance and system building.

Such capabilities can become particularly important as startups and family-owned businesses expand from relatively small operations into larger institutions.

Rapid growth can create organisational challenges if management systems, reporting structures and financial controls do not evolve at the same pace as the business.

Family Businesses Face a Different Set of Challenges

The Finance Minister also highlighted the need for practical programmes for family businesses, particularly around succession planning, governance, professionalisation and conflict management.

Family-owned enterprises form an important part of India's business ecosystem, but transitions between generations can create challenges involving ownership, management control and strategic decision-making.

Formal governance structures and clearer succession processes can help businesses separate ownership responsibilities from day-to-day management while maintaining continuity across generations.

Growth Must Reach Beyond Urban Premium Consumers

Another important part of Sitharaman's message concerned India's consumption base.

She cautioned against building corporate strategies exclusively around affluent urban consumers. India's economic demand also comes from working families connected to agriculture, rural construction, transport and informal enterprises.

For consumer-facing companies, this suggests that future growth strategies may need to address multiple income segments rather than focusing exclusively on premiumisation.

The broader consumption opportunity could involve affordable products, financial services, healthcare, mobility, digital services and other offerings aimed at India's expanding middle-income and emerging consumer base.

Private Participation in Emerging Sectors

Sitharaman also pointed to the widening role of private enterprise as India opens more areas of the economy to private participation.

Sectors such as space and nuclear energy are increasingly being discussed within a broader framework of private-sector involvement, while technology-intensive areas such as semiconductors, artificial intelligence, quantum technologies and advanced manufacturing are receiving policy attention.

Government programmes include the ₹1 lakh crore Research, Development and Innovation Fund, which is intended to support private-sector participation in high-risk and strategic technology development.

This creates potential opportunities for Indian businesses while also increasing expectations around technological capability, capital allocation and execution.

India's Innovation Ecosystem Is Expanding

The government's latest data indicates that India's innovation ecosystem has expanded significantly.

According to official figures, India's GERD increased from ₹1.33 trillion in 2019-20 to ₹2.45 trillion in 2023-24, while the country's Global Innovation Index ranking improved from 81st in 2015 to 38th in 2025.

The growth in R&D spending and innovation activity provides a foundation, but the challenge for industry will be converting research expenditure into commercially successful technologies, products and intellectual property.

This requires closer connections between universities, research institutions, startups and established companies.

What It Means for Corporate India

The Finance Minister's message effectively places five priorities before Indian industry: scale, resilience, governance, innovation and management capability.

For large companies, this could mean increasing investments in technology, R&D, global competitiveness and institutional systems. For smaller businesses, the focus could be on professionalising operations, improving financial controls and developing scalable management structures.

For investors, these factors can also become increasingly relevant when assessing the quality of businesses. Revenue growth and market share remain important, but the sustainability of that growth can depend on governance, capital allocation, innovation and organisational capability.

Market Outlook

The Finance Minister's remarks underline a broader shift in the requirements for India's next phase of corporate growth. Expanding capacity and increasing scale remain important, but companies will also need stronger governance, technology capabilities, innovation pipelines and resilient operating structures.

The emphasis on R&D is particularly relevant as India seeks to move higher in global value chains. Official data shows that R&D expenditure has increased substantially, while private-sector participation has become a larger component of total national R&D spending.

For corporate India, the key long-term indicators will therefore include productivity, technology investment, intellectual-property creation, professional management, capital efficiency and the ability to build businesses that can compete beyond the domestic market.

The transition towards a more technology-intensive and globally competitive corporate sector could shape investment themes across manufacturing, technology, financial services, infrastructure, defence, energy and emerging industries in the years ahead.