ET Awards: Sitharaman flags AI threat and global risks, says reforms on the way to support India Inc growth

The Finance Minister emphasized that managing inflation, protecting economic growth, and maintaining external stability must be tackled simultaneously rather than as mutually exclusive trade-offs. To counter the severe volatility in crude oil prices driven by the ongoing West Asia crisis, India strategically leveraged its strategic petroleum reserves and expanded domestic refining capacity to ensure uninterrupted energy access. Similarly, the government deliberately absorbed the shock of global fertilizer price spikes to shield the agricultural sector, prioritizing food security and farmer welfare over the strict fiscal deficit targets mandated by the Fiscal Responsibility and Budget Management Act. Sitharaman also addressed the recent weakness in Foreign Direct Investment and sustained outflows in Foreign Portfolio Investment, clarifying that these are cyclical trends driven by global interest rate dynamics and currency fluctuations rather than any deterioration in domestic fundamentals. During periods of external supply disruptions, the government remains prepared to deploy tactical support mechanisms, mirroring the Emergency Credit Line Guarantee Scheme used during the pandemic, to sustain domestic consumption, which serves as the ultimate shock-absorber for the Indian economy.

In a highly significant policy acknowledgment, Sitharaman equated the cybersecurity risks posed by advanced generative AI to a "war threat" capable of crippling India’s entire digital public infrastructure. The specific concern revolves around Claude Mythos, a frontier large language model developed by the US-based firm Anthropic, which possesses unprecedented and dangerous capabilities in autonomous vulnerability discovery and exploitation, such as finding zero-day flaws. Because Anthropic has heavily restricted access to this model globally under its Project Glasswing initiative, Indian enterprises and banks face an asymmetric risk, leaving them vulnerable to a foreign private entity's access policies. To counter this, the Ministry of Electronics and Information Technology is actively engaging with the US administration, Anthropic, and domestic banking regulators to proactively develop AI-driven defense mechanisms. For UPSC aspirants, this scenario perfectly illustrates the urgent need for robust global AI governance frameworks, while underscoring India's strategic imperative to build indigenous capabilities in defensive artificial intelligence to secure its critical information infrastructure against state and non-state actors.

Viewing recurring external shocks as strategic opportunities, the Finance Ministry is accelerating structural reforms aimed at drastically reducing the regulatory compliance burden on Indian businesses. The government recognizes that India’s historically high reliance on imported goods presents a vast, untapped domestic market for capacity addition, a core philosophy underpinning the Atmanirbhar Bharat initiative. By designing targeted tactical packages for industries exposed to sudden external disruptions—such as recent US tariff hikes or insurance risks in the Strait of Hormuz—the state acts as an essential buffer for the private sector. Furthermore, the administration's willingness to intervene directly in supply chains, such as sourcing affordable crude oil irrespective of international geopolitical pressure, reflects a pragmatic doctrine of economic nationalism where domestic citizen interest strictly supersedes external diplomatic optics. This evolving model of state-industry synergy is absolutely vital for scaling domestic manufacturing, enhancing global competitiveness, and insulating the Indian economy in an increasingly fragmented global trade environment.