New Delhi

Finance Minister Nirmala Sitharaman on Wednesday flagged rising fiscal stress in some Indian states and called for greater emphasis on manufacturing, innovation and strategic trade positioning, saying India’s growth ambitions hinge on disciplined fiscal management and competitive domestic capabilities.

Speaking at the Times Network India Economic Conclave, Sitharaman said studies by the Reserve Bank of India point to “worrisome” debt-to-GDP levels in certain states, cautioning that unchecked borrowing could undermine long-term development.

“Unless debt is managed within FRBM limits and high-interest liabilities are reduced, states end up borrowing to service loans rather than for development. This is a poor fiscal strategy and poses a risk to the 10-year momentum required for achieving the goal of Viksit Bharat by 2047,” she said.

On trade, the finance minister said India must define its own path amid changing global economic norms. “Trade is no longer what we understood under traditional global trade rules. Countries with aspirations like India must set their own goalposts and chart their own growth story,” she said.

Responding to criticism of India’s tariff regime, Sitharaman said global trade is neither free nor fair, adding that tariffs are increasingly being used as tools of economic strategy. She said India’s measures to guard against dumping often attract criticism, while similar actions by other countries go unquestioned.

While acknowledging that services contribute over 60 per cent to India’s GDP, Sitharaman said services alone cannot substitute for manufacturing-led growth driven by innovation and research. She pointed out that private sector participation in research and development remains low in India compared to global levels.

Highlighting decentralised manufacturing, she cited examples of regional industries leveraging local resources to supply global markets, underscoring the need for policy support at the grassroots level. She said the government’s focus on MSMEs and industrial clusters aims to enable such growth, supported by wider access to credit through schemes like Mudra.

Outlining India’s long-term ambitions, Sitharaman said the country could aspire to account for 25 per cent of global trade, provided manufacturing and agriculture are revitalised alongside sustained growth in services.

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She also said efforts are underway to deepen the bond market to expand funding avenues beyond equity, and noted that emerging sectors such as global capability centres and data centres require reliable energy, explaining the policy emphasis on nuclear power, including small modular reactors, alongside renewables.