Till when can the stimulus measures continue
It is too premature to even think of exiting the contra-cyclical measures for the industry and export-oriented sectors. Only when we are sure that we have moved in to the positive territory and stay there for some time, we should think of it. As a policy, we think our incentives and stimulus have done better as compared to most other countries. It is very clearly reflected in our industrial growth. Some of the core sectors have been in double-digit growth, automobiles have done well, so have FMCGs.
What is your outlook on exports
I am pretty optimistic that in the coming quarter, which will end by December, we should be closing the gap, and in the last quarter, we would have crossed over as far as foreign trade is concerned. But that does not mean that we have to become complacent. We have to be vigilant and respond to have capacity and ability to respond if required.
Its been five months in office. What is your assessment on Indias exports
There has been a visible improvement in exports over the steep fall that started last October. There was a period when exports were falling every month at the rate of 33 or 34%. This was primarily because of the economic crisis engulfing the world and the contraction of major economies. Which have been the traditional destination for Indian exports - the US , Europe, Japan. It would not have been prudent or wait for major economies to turn around because it was difficult to wait for anybody to predict when these economies will return to the previous levels. But there are discernible signs that the dark clouds are parting over Europe and the US. Some sun rays are peering through.
Having said that, we consciously looked at measures which would stimulate growth in the industry, specially those sectors which are integral to exports such as handicrafts, leather, engineering and electronic goods, pharmaceuticals.
The move to cover entire Latin America, Africa and Far East has already started paying dividends. By the time the major economies return to the earlier demand and consumption levels, we hope that the target that we have set for ourselves, to double our exports, by 2015, we will be able to achieve, and surely, by 2010, the target of $ 200 billion. We have to remember that the global trade is still shrinking. According to the WTO it will shrink between 9 and 11 % and almost the same is the prognosis by the World Bank. Even if the majority of the OECD countries go in to positive growth trajectory, it will still be miniscule. So for us to sustain our economic engagement, exports in to newer areas was an imperative.
What was the strategy behind the exports sops given earlier
We have already continued with the DEPB, we have continued with excise cuts, the focus market scheme, the market linked focus product scheme, we have included all the sectors in one or the other scheme. The sectors are getting substantial benefits. We have to increase the pace (of exports). It is not just only about the quantum of exports. We have to have a long term vision.
Going forward, what can we expect
When we had released the FTP, we had said that by the middle of November, we will start collating information from all the sectors, and then have a review and take measures, which could be sector specific. Our endeavor will be to close the gap. This has been there for a long time now and to narrow it. It is narrowing now.
Which sectors need support at the moment
We will see. Some of the sectors have already responded very well. We are looking at some other sectors. Until we have the final numbers, we cannot tell which sectors will need support. Engineering will need some support. Apparel, handicrafts we will see if we can do some thing more. Gems and jewellery has already picked up. Handicrafts so far have done well.
What is your take on the foreign investment scene
It has improved and there is no flight of capital. We did see FDI slowing down because the capital flows were severely affected by the economic down turn. The overseas banks and financial institutions were not lending even if they had liquidity. Even in India, our banks had liquidity, but they became more conservative while lending. That situation has improved. India is encouraged by the increased FDI inflows.
Do we see further liberalization of FDI policy
As of now the FDI policy is working very fine. I am saying so because it is clearly reflected in how the foreign investors are looking at it. We had gone in consciously for rationalisation by defining ownership and control. That has definitely helped. As we move keep on evolving. But for the time being I do not see any need to revisit the issue.
What about FDI in lucrative sectors like retail
In Single brand retail we already have allowed FDI. Up to the whole sale point it t all right. In back end chain it is important to have foreign equity participation. In the single brand retail they can also do value addition. Thats what we want to encourage. As for the front end, I do not think we are ready as of now. Because it is a vast social security net which we have. But those who have come in the single brand retail,-- it is a single product which they market abroad they have done very well.
But there are apprehensions that Press Note 2, 3 and 4 will lead to diversion of FDI in to restricted sectors like retail
The policy is very clear. It is permitted in single brand retail. And there fore there cannot be any diversion to any sector, which as of now is not open. That would be a violation.
Plantation sector in many states have apprehensions on FTAs. What do you have to say about this
Plantation sector has structural issues. There are many reasons for this. In tea and coffee the rejuvenation was not done. The government has come out with a comprehensive package for re-plantation. That has proceeded very well. By the time it is completed, we will see increase in productivity. Coffee growers seem to be having problem. I am sensitive to that. We have cleared a package, which hopefully the cabinet should be clearing soon. We are also supporting the spices sector. The rubber plantations, the structural issues are for various reasons. Technology up gradation was not there, rejuvenation was not done. Bushes has outlived their life span, labour issues were there, owners had not invested in upkeep of their plantation. Thats when the government had to step in. The cabinet has constituted a Group of Ministers (GoM) on the plantation sector to look in to the structural issues and come up with a comprehensive plan .
Many plantations, like that in coffee are in debt. How does the government see this
The package will address the indebtness of the small coffee growers. We have commissioned some studies on the plantation sector that will feed their inputs in to the GoM.
Africa has been your strong point. But Indian pharmaceutical exporters are having problem in exporting to African countries because of strict TRIPS plus norms. At the same time Pharma consignments are getting confiscated in EU ports. How will you deal with this
There has been a concerted campaign globally by multinational cartels who have lost space in the global market because of the arrival of the Indian generics. The Antiretrovirals, were very costly and Indian generics brought it down to $ 1000 per year and now it is $ 400 a year. So while ensuring the availability of life saving medicines at affordable prices, the Indian pharma industry has done that well. We are aware of the difficulty that the Indian companies are facing and such legislations will be violative of the WTO. It can only create a situation where poor people do not have access to affordable medicines. Indian generics cannot be called as counterfeit, nor is it spurious. Over 70000 drugs are manufactured in India. Outside the US, the maximum number of FDA approvals is from India. We have been talking to various governments. I remain hopeful that whatever actions are contemplated are rolled back and not implemented.
Other challenges of the pharma industry have been that some countries in Europe had confiscated shipments for other countries. This is again in violation of the WTO. I have taken it up very firmly with the EU trade commissioner Catherine Ashton. We have been assured that they will take corrective action. India EU summit is taking place in New Delhi in November. We will access the situation after their response.