The sustained revival in exports, and the recently announced impressive GDP growth of 8.6% in the fourth quarter have signalled recovery, but the agenda for the government is still unfinished. Discussions on liberalising FDI in multi-brand retail, framing of the new manufacturing policy and boosting investor confidence are high on the agenda of the government, said Anand Sharma, union minister for commerce and industry, in an interview with MG Arun and Shubham Batra. Excerpts:
The country has registered an annual 36% growth in exports in April, the sixth consecutive rise after 13 straight months of decline. Can this be sustained?
The impact of the recession was universal but not uniform. India remained a favourable destination for global investors and hopefully, we will continue to do better. However, there was a sharp fall in demand for our exports, primarily in the US, Europe and Japan. Last May, it went into the red territory. But we consulted all stakeholders before we came out with the monetary policy and other incentives. The objective was to arrest the fall. It is, therefore, quite satisfying that we achieved the objective. We started improving by September, and by December, we had turned the corner. This has demonstrated the resilience of the Indian industry and also the effectiveness of government policies.
What were the driving forces behind this resilience?
We have been able to sustain because of the strong domestic demand in the rural sector. The manufacturing sector is doing really well. My priority and focus is now on manufacturing. We have dealt with the issues pertaining to FDI. For the first time, a single FDI policy paper is in place, which subsumes 108 press notes, all the circulars and RBI guidelines. So, it?s easy for investors to comprehend our policy. There is definitional clarity on the policy pertaining to those sectors where approvals are required. We created a company called Invest India. It has become functional now. It is a partnership between the government and the industry. The government has taken 49% equity and the rest is with Ficci. It will provide sectoral counselling and support to investors. That portal is now functional. Third, we raised the cap from Rs 600 crore in 1999, to Rs 1,200 crore. All these steps have sent a strong message to foreign investors. This will hopefully also bring in technology. Manufacturing is hovering between 15-16%. We want to take it to 25%.
What steps are being taken to drive manufacturing growth?
Through inclusive growth and the sustainable development approach, we will able to create opportunities for our people. The projection is that 200 million more people will join the workforce in a decade. We will come out with a manufacturing policy, which we don?t have now. The policy draft document was released on March 31 for stakeholder consultations. After taking in inputs from all stakeholders, I propose to have three sessions with the industry and with the states to finalise it and take it to the cabinet. Also, as part of our efforts, in January, I had announced that we will set up National Manufacturing and Investment Zones. We are in talks with states including Rajasthan, Maharashtra, Andhra Pradesh and Tamil Nadu. We would also like the growth in the industry to reach east and north-eastern India.I am going to have these sessions in July and am sure that the manufacturing policy is going to be out by this autumn.
Isn?t the crisis in Europe a matter of concern?
Fortunately, the major countries in Europe have not been confronted with the sovereign credit issue so far. There has been prompt and strong intervention by the IMF. We have built in the scope for market expansion as part of our long term strategy. We will move into diversified regions from traditional destinations.
What are the current deliberations on FDI policy in retail?
I believe in an inclusive and democratic approach in policy formulation and that?s where consulting all stakeholders is important. We are very clear that we first want investment to come in terms of technology, which we are permitting now. Infrastructure has to be created, warehouses, cold storage facilities, refrigerated transportation and agro processing is required. So, there is incremental value added there. Going back to the backward linkages, it will create value addition and will also create jobs. Once that happens, we will look at the front-end. Then these policies will be discussed. I am not looking at any timeline for this, I leave it to the stakeholders to decide that.
What is the progress on the WTO talks?
Stakeholder consultation is taking place with the understanding and support of our coalition partners in the developing world and our interlocutors in the developed world, including the US and the UK. Negotiations are proceeding, but these are complex negotiations, with countries coming from different levels of developmental challenges. What we are impressing most on is the revision of the draft reports. If we succeed in this a rule-based, multi-lateral trade regime, it will correct the historical imbalance and enhance global commerce.