Ahead of the World Trade Organization’s (WTO’s) ministerial in Argentina in December, commerce and industry minister Suresh Prabhu indicates while the country is willing to discuss a new issue like e-commerce and may even agree to an accelerated work programme on it, it doesn’t want such new subjects on the negotiating table until old matters, such as the Doha Development Agenda (DDA), are addressed. Prabhu wonders if the minimum support prices of crops hardly cover costs, how others can claim India is offering subsidies to farmers on procurement. In an interview to Banikinkar Pattanayak, the minister says India is very keen on having Apple here and if the iPhone maker submits a specific (and revised) proposal on investments, it will be discussed with MeitY, and adds that Alibaba hasn’t applied to DIPP for buying into BigBasket. “We have some advantage in services trade, which will grow faster than goods trade in future and the services sector is very employment-intensive as well,” he observes. Excerpts:
What will be India’s position on public stock-holding of foodgrain at the upcoming WTO ministerial in Buenos Aires?
We are very clear that our policies on public stock-holding are going to stay. We already have a permanent peace clause. (This clause protects India’s food procurement programmes against penal action from WTO members in case subsidy ceilings are exceeded). If we get a better solution than this, we will of course be more than happy to push for it. But until then, even with the current arrangement, our public procurement won’t get affected at all, and we won’t compromise on this issue either.
India has been seeking DDA’s implementation at the earliest. What are the DDA issues that you’ll push for at Buenos Aires?
We want greater market access for developing countries in agriculture. We are also asking the US and the developed world to reduce their massive trade-distorting farm subsidies to ensure a level-playing field. They give subsidies in a clever manner. For instance, some countries offer subsidies for not ploughing the land. The idea is if fields are kept vacant, prices of the commodity concerned won’t fall (as there’ll be a lid on production). These are indirect subsidies. By contrast, India hardly gives any subsidy. If the minimum support prices offer no or only very little premium over the costs of production, as many farmers say, then how are we giving massive subsidies, as claimed by some? So the concept of subsidy in agriculture must be debated in great details at the WTO; it won’t happen in Buenos Aires, but I feel that all nations must have a proper understanding of ground realities.
Are you willing to accommodate the developed countries’ demand of having new issues like e-commerce on the WTO agenda?
Our stand, which I conveyed at the mini-ministerial in Marrakech (in Morocco) in October, is that if you want new issues to be worked on, settle the old issues at the earliest. Also, we see no problem in discussing new issues like e-commerce, but taking it to the negotiating table is not acceptable at this moment because we already have a lot of issues (the DDA, for instance) that are yet to be concluded. We can also think of having an accelerated work programme for certain important issues like e-commerce but we must ensure such a move doesn’t relegate important items already on the negotiating table to the background.
Do you think the export fall in October after a gap of of 14 months will be reversed as early as November?
It was just a 1% fall. It’s not possible to give forecast on export performance every month but we won’t achieve growth in outbound shipment unless we explore new markets, bring in new products and have a clear, market-specific strategy. I have asked the Exim Bank and IIFT (Indian Institute of Foreign Trade) to prepare strategy accordingly. I have also directed various export promotion councils to explore markets and firm up strategy for their products. There is a tremendous scope, for example, to improve exports in gold jewellery. To boost trade, we are also doing a survey on niche segments where we can export more. Already, to arrest the recent decline in exports in labour-intensive sectors like garments, we raised the MEIS (Merchandise Export From India Scheme) benefits on Saturday to apparels and made-ups from 2% to 4% (of value of exports) until end-June 2018.
Has the introduction of the GST completely neutralised taxes on exports as was envisaged?
After the launch of the GST, the taxes on exports will be neutralised by and by. Initially, there was a bit of problem because of the delay in refunds; once that’s settled, exports will benefit from the GST regime in a big way.
Which are the sectors you are looking at to ease the FDI rules further? The proposal to allow FDI in legal services has been pending for long.
We are already among the most open economy as far as FDI is concerned. But we have to balance the interests of various stakeholders. As far as legal services are concerned, we can’t do something which will go against the interest of our own people totally. So consultations with various stakeholders are going on. But global investors, in general, are very bullish on India.
The food processing ministry wants some non-edible items to be included in retailing of locally-produced food items, where 100% FDI is allowed? What is your view on that?
If they submit a specific proposal with us, then we will look into that.
Has Alibaba applied to the DIPP for buying into BigBasket?
If any specific proposal comes to us, we will look into it.
Have they applied to you?
Has Apple got back to you with its revised plan?
We are very keen to have Apple here and ensure that their application is processed on time. So let them come with specific proposals on investment and it will be taken up with the line ministry (MeITY) for further action.
Given the long list of pre-conditions that Apple had earlier presented, are you planning any special dispensation for it?
Let a specific proposal come from them and it will be sent to the relevant ministry for examination.
With trade protectionism spreading its tentacles far and wide, more so in the developed world, how do you plan to counter its damaging impact on India?
Protectionism adopted by some countries, including the developed ones, is a big challenge because new trade walls are getting erected and non-tariff barriers are getting imposed. Some nations are trying to prevent a seamless exports of both goods and services.
We have not been able to take advantage of China moving away from certain goods segments, like textiles and garments?
We have some advantage in services trade, which will grow faster than goods trade in future and the services sector is very employment-intensive as well.
We are trying to boost manufacturing and we have a Make in India programme? Does more thurst to services gel with this?
Services provide a great opportunity for India. We are pushing services to be included in trade agreements also. So we are creating market for services as well as goods like pharmaceuticals.