Will work with govt on GST, retail FDI

Written by Ashish Sinha | Rishi Raj | Updated: Apr 23 2012, 09:23am hrs
Amidst an impression of reforms slowing down, policy paralysis and government inaction on most issues, Adi Godrej, the newly elected president of the Confederation of Indian Industries (CII), says that his chamber will work with the government, the Opposition and the states for speedy implementation of key measures like GST and FDI in retail to revive growth. In an interview with Ashish Sinha and Rishi Raj, he discusses the way forward for India Inc.

Is the policy paralysis leading to a trust deficit between India Inc and the Centre

I would not call it a trust deficit. CII is working with the government to revive growth. We recently met the Prime Minister to discuss the matter. We suggested that the perception is sometimes worse than the reality. We assured the PM that the industry will work with the government to change the negative perception which comes from bringing in retrospective changes in the tax laws or other such instances. We suggested if we work together, both perception and sentiment will improve and growth can be revived.

Why is CII not that vocal on issues like the retrospective tax changes

CII has been vocal about it. We have raised the matter in our AGM and national conference. When the finance minister came to CII meeting, we took up the matter very strongly. Officials within the finance ministry accepted that this is an issue which will need to be resolved quickly. We want these changes to be made before the Finance Bill is passed, as after that it will become difficult.

But it appears that the industry and the government are on the same page when it comes to these issues

That is not correct. In our AGM and national conference, the finance secretary conceded that the government is open to changes and it is looking at changes. Even in the last few days some meetings have taken place and we are hopeful that these issues will be resolved.

What will be the impact on investments if such issues are not resolved What are the few steps that the industry should take to improve sentiment

There will be considerable impact on investments if the sentiment is negative. The industry can take the reform process forward. Some of the reforms do not require legislative actions, some do. Where legislative actions are required, we are willing to work with the Opposition also. We have told the government to focus on industries which are not doing well. These include infrastructure, aviation, mining, and power. The government should resolve the issues there. We have also told them that take 50 large projects and see that they go forward and CII can cooperate with them on that. So, there are lot of things that can be done. Governance and transparency needs to be improved. There is no sense in throwing up hands. We should tackle the problems and move forward.

What is your projection on Indias growth rate

I do not want to make any projections. There are many reasons why the growth rate should accelerate. But there are many reasons why it could decelerate. All depends on how things shape up. Overall, I am hopeful that the growth rate in FY13 will accelerate.

On aviation, do you think Kingfisher has a case for bailout Whats your take on the government bailing out Air India and its adverse impact on private airlines

I do not want to comment on individual companies but generally I do not believe that the government should bail out the private sector. Yes, policies should be changed if a sector is badly affected, especially across the board. Bottlenecks should be removed by the government. Not only aviation, there are sectors like power, mining, etc, where policies are not working. Generally speaking, there are sectors from which the government should get out. In aviation, at least there are private airlines giving competition to the public sector carrier. This is a better situation than in the past when Air India was a government monopoly.

Why has CII not been vocal about private sector companies that give bad name to both the industry and the government as happened in the case of telecom licences issued in 2008 CII has also been quiet on issue of telecom licences being looked at from 1994 onwards

I would like to completely disagree with you. We in CII had formed a task force and worked out principle of ethics for all our members. We are not defending anybody. There are misactions on the part of the private sector but we should not pre-judge anything till the matter is closed. The telecom matter is a legal matter. CII as an industry body should not be taking positions on such issues until the legalities are over. It would be inappropriate for CII as it does not have the legal wherewithal to take positions on these issues. CII should only be involved in policy decisions which are not embroiled in legal disputes.

What is the CIIs position on the mandatory auction of all natural resources Are the powers given to the Competition Commission of India adequate or does CII want more

We support total transparency in the allocation of all natural resources. Whether auction is the best way forward or not is a different matter but CII supports adoption of transparent mechanism in such allocation. Even on sale and purchase of assets, we support transparency. Also, that should be in companies as well and not just in the government. CCIs powers are more than adequate. The problem is the implementation of laws. Like the competition policy which is on the anvil. It is a good idea. It ensures that the actions taken by the ministries and the government are competitive and not unilateral.

What does the industry want from the government on FDI

We think that FDI should be opened up whether it is in multi-brand retail, insurance or telecom. Also, there should be positive perception about governance in the country. FDI or FII wont come to India if there is a negative perception. Growth should also be restored quickly in order to attract FDI. If you tell someone to invest in India on the promise of certain benefits, and later if changes are made retrospectively to deny those very benefits to them, then FDI wont come.

Do you support a real estate regulator

CII feels in some sectors an independent regulator is good. We should not have government regulation or a regulator which is perceived to be biased towards the government. In certain sectors like education, insurance and telecom, an independent regulator does add value. On the other hand, there should be freedom of operation and the regulator insures the freedom to operate. Today, there are too many constraints and regulation. There is too much regulation in real estate today. This should go.