Govt to curb low-grade imports, opportunistic takeover of firms: Piyush Goyal

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Published: June 23, 2020 2:35 AM

Several FDI proposals from the Chinese investors are also reportedly awaiting the home ministry’s security clearance. Over 90% of the country’s FDI comes through the automatic route.

Goyal also said merchandise exports had started to improve in June, having recorded a fall of only 10-12% in the first two weeks of this month, as lockdown curbs were eased to facilitate resumption of operations by businesses.Goyal also said merchandise exports had started to improve in June, having recorded a fall of only 10-12% in the first two weeks of this month, as lockdown curbs were eased to facilitate resumption of operations by businesses. (File image)

Commerce and industry minister Piyush Goyal on Monday highlighted the government’s resolve to curb sub-standard imports and “opportunistic” takeover of domestic firms following a sharp drop in their valuation during the pandemic.

While the minister didn’t name any country, China is the biggest source of sub-stabndard supplies to India. New Delhi also tightened its foreign direct investment (FDI) policy in April to curb “opportunistic takeovers/acquisitions” of Indian companies, mainly by cash-rich Chinese, by stipulating that all such proposals from bordering nations would require government clearance.

Several FDI proposals from the Chinese investors are also reportedly awaiting the home ministry’s security clearance. Over 90% of the country’s FDI comes through the automatic route.

Goyal also said merchandise exports had started to improve in June, having recorded a fall of only 10-12% in the first two weeks of this month, as lockdown curbs were eased to facilitate resumption of operations by businesses.

Exports had contracted by a record 60% in April and 36.5% in May when a Covid-induced lockdown was in force, resulting in a massive cancellation of orders.

Speaking at a CII event, Goyal said the government has to balance its security concerns with liberalising the FDI regime. “FDI is welcome, but we certainly have to take precautions that we do not get the wrong type of capital which is opportunist and which is not really good for the nation.”

The minister also said the government is giving special focus to high quality standard products. “I think a lot of people have not appreciated that our government is giving priority to high quality standards….(But) India has finally evolved and has made up its mind that we are going to only accept good quality products,” he said.

He made a case for purchase of quality domestic products even if they are a bit more expensive than the low-grade imported ones. Else, in the long run, people have to pay a “terrible price” if they don’t buy quality Indian goods.

The minister reiterated that subsidies are never good for businesses and don’t usually benefit them in the long term. So the government’s focus is to ensure sustainable growth in outbound shipments and not just giving “handout” to exporters.

On FDI, the minister said while almost all sectors are open for overseas investors, he is open to fresh ideas for making it even easier to draw FDI. “We have some constraints in multi-brand retail because we have a large part of Indians dependent on small mom-and-pop stores,” he said. These shops also played a key role in ensuring that essential supplies are available to people during the current Covid-19 pandemic.

“In insurance, our expectations from insurance companies were much more and deeper, sadly we feel let down…,” he added.

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