Zoho's Sridhar Vembu Explains PM Modi's 'Swadeshi' Call: Conserving Forex Amid Rapid Growth

The Question Behind the 'Swadeshi' Call

India's economy grew 7.8 per cent in the April-June quarter, according to the Ministry of Statistics and Programme Implementation, beating the Reserve Bank of India's forecast of 7 per cent for the period. The stronger-than-expected performance underscored the resilience of domestic activity despite global headwinds, including the conflict in Iran, which had raised concerns about energy prices, inflation, and weaker demand.

Yet, days after the GDP figures were released, Prime Minister Narendra Modi renewed his appeal for a self-reliant, or Atmanirbhar, India, urging citizens to avoid discretionary spending abroad. As reported by Moneycontrol, Modi said: "Foreign trips, if you are going for leisure, you should not go. If you are getting married abroad, you should not do so. And if it is not necessary, you should not buy gold either." He also referred to global challenges, including ongoing wars, supply-chain disruptions, and uncertainty since the Covid-19 pandemic, according to India Today.

The juxtaposition of strong growth and calls for restraint prompted a question that circulated widely online, as quoted by The Economic Times: "If economy is growing at 7.8% why is the PM asking us not to travel abroad, not to buy gold, not to have foreign weddings etc?"

Vembu's Explanation: Import Dependence and Foreign Exchange

Zoho founder and chief scientist Sridhar Vembu took to social media to explain the reasoning behind the appeal. According to Business Today and other outlets, Vembu said that even as the economy grows at a good rate, India still has an import dependence in energy and technology.

"In fact, the faster the economy grows, the greater the need for both energy and technology inputs," Vembu said in his post, as quoted by The Economic Times and Lokmat Times. He noted that these imports—including precision machines, materials, CPUs, GPUs, and advanced software—are needed not only for domestic consumption but also for exports. As reported by Moneycontrol, Vembu said that even India's export industries rely on imported technology and equipment.

Vembu argued that this reliance creates a growing need for foreign exchange, which must be managed carefully. He compared the situation to a fast-growing company that needs capital to expand. "So it has to conserve capital to invest in growth. Our nation needs to conserve foreign exchange likewise," he said, as quoted by Business Today and Moneycontrol.

The need to conserve foreign exchange is not permanent, Vembu said. He explained that once India gains competence in advanced technologies and achieves energy independence through renewable energy developed domestically, the country would no longer need to conserve foreign exchange.

Lessons from East Asia

Vembu pointed to the experience of several East Asian economies—Japan, Taiwan, South Korea, and later China—which went through phases of rapid GDP growth while simultaneously working to conserve foreign exchange. As reported by Lokmat Times, Vembu said: "Their economies were growing rapidly even as they worked hard to conserve foreign exchange."

He noted that catching up with the West took these countries decades. "We have made a good start but we need time," Vembu said, as quoted by Moneycontrol.

Vembu argued that India is in a similar phase as it builds its technological capabilities and moves towards greater energy independence. "That is exactly what our government is trying to do," he said, according to Business Today.

The Broader Economic Context

The discussion comes amid broader attention to India's foreign-exchange position. India's forex reserves recently hit a record of $729 billion, as reported by The Economic Times. Chief Economic Adviser V Anantha Nageswaran has pointed to the role of India's foreign-exchange cushion in supporting growth, noting that the country's foreign-currency inflows provide a buffer against external shocks, helping the economy sustain momentum even when the rupee and global markets face pressure.

Vembu's explanation aligns with this view, framing the Prime Minister's appeal not as a sign of economic weakness but as a prudent measure to ensure long-term sustainability. As he argued, strong economic growth and the need to conserve foreign exchange can coexist—a lesson drawn from the trajectory of East Asian economies that eventually caught up with the West.