Q: Do you see the pickup in exports in the last two months sustaining?
A: The momentum will continue and the reasons are very apparent. The exporters are being agile and identifying newer markets, moving with their products, (and) ensuring that the existing markets are reclaimed if not expanded. The mood is upbeat.
Q: Rupee has appreciated and that means lower incentive for exports…
A: There is no denying that if you look at it only from the point of view of exports an appreciating rupee naturally means that your exports will be more expensive. If you look at it from that limited point of view it is fair to assume appreciating rupee is not going to help. (However) India’s economy is not as China’s. We are not driven just by export performances. It is also an economy which has a huge demand and manufacturing happens to meet our own demand. To that extent…the other strengths of the Indian economy do get reflected when your rupee strengthens… We have to have this debate in contrast with China. Our economy has not moved just on the strength of our exports. To that extent, given the reality, currency volatilities have become the new normal in the past 2-3 years. Exporters are constantly struggling to factor that in. It is not a shocker that came only yesterday. My view of the rupee will be with all these aspects factored in.
Q: Exports do get a lot of incentives and that may change as we move to Goods and Services Tax. How are you preparing the sector for the shift?
A: Both the ministry of finance and the GST council have given a lot of time to our export sector representatives. All their concerns have been heard. In some respect they have been responded. Their larger issues have been addressed. On May 18-19, when the council will meet, any anxiety or concern that exporters may have can certainly be taken up.
Q: Globally, we are hearing these protectionist voices. Where do you see the global trade heading? Should India too be putting some firewalls?
A: Most of the expressions we use in economics are relative terms. All of us are votaries of free trade. In degree mine may vary from somebody else’s. That is not wrong. Any votary of 100% free trade would be unrealistic if he felt that the world is moving towards 100% free trade. Most developed countries which have been speaking ardently about free trade are for some reason today going back to some kind of protectionism. Perhaps it is due to the slow growth of their economy. The relativity of free trade they espoused till yesterday is now lesser in comparison.
Countries like India, which were coming from a low base, have always been cautious about how much they can open. Post globalisation, the debate has been, how much more are we going to liberalise Today, the question is, if globalisation will continue or stop My position is all over the world globalisation has halted to an extent. It is not moving as much as it was a few years ago. We are at a stage where we need a greater global integration of our industries. Our sense of caution continues even today. It is not as if we are less protectionist yesterday or we more free trade votary today. Votaries of free trade are not unfettered votaries anymore, they are cautious of free trade. It is showing very sharply in the services sector because that is where emerging economies are proving to be a big challenge for developed economies.
Q: We have high stakes in WTO General Agreement on Trade and Services (GATS) Mode-4 dealing with movement of professionals. Going forward how are we going to deal with this situation?
A: To be fair I don’t think the situation was better before or even last year. It has always been India asking for due recognition, not more recognition.
Even in bilateral agreement environment, what is agreed has not been implemented. Sometimes it is said they can also be subject to a review when the next period comes which itself to me shows that an unspoken barrier exists even after a bilateral agreement is concluded. The features of the agreement, after being signed and ratified, are still not initiated. In some cases we are coming to an end of the due term of agreement and we are still asking for implementation. The non-tariff barriers are all coming to the fore now. We are picking on them and then questioning as to how ‘fair’ is this ‘fair trade’ agreement.
Q: Are you referring to India-Singapore Comprehensive Economic Cooperation Agreement?
A: Yes. For instance, our mutual recognition does not happen. You don’t even get to fulfil the features of the Singapore FTA and unfortunately that is now being touted as a feature for review. They seemed to explain it off by saying that it is a small country and they cannot afford for people to come in in big numbers and it can lead to political turmoil. But for us, it is a number which you have agreed and why don’t you allow?
Q: The Regional Comprehensive Economic Partnership (RCEP) ministerial will take place soon. Should we expect a deal envisaging reduction in tariffs on goods?
A: We are not looking at a deal just for goods. We are looking at an agreement in all which is the spirit of any multilateral feature. Nothing is agreed till everything is agreed. On the number of tariff lines we want to offer, the RCEP group would want us to be ambitious. They have already put the three tier offer on the sideline and said we will come with one offer for goods which will have to match up with an existing best FTA in that area. We have FTA with Singapore, Japan, Korea and the ASEAN. The best of these offers will be our benchmark. Unless we get an assurance that we will have different staging period offered to us, we just won’t be able to sell it back in our country.
Q: The finance minister had in his budget speech announced further liberalisation of the FDI regime. How are things shaping in that direction?
A: We are steadily moving towards opening up newer sectors. We will consult all other ministries and take upon it. Discussions go on and we will have to see where we have a consensus.
Q: How will dismantling of Foreign Investment Promotion Board (FIPB) work? Will we need a separate licencing clearance and a ministry approval, or will it be rolled into one?
A: We have opened most of the sectors to the automatic route and proposals in these do not have to go through FIPB. For those sectors that require FIPB clearance we are saying that, if a regulator exists and it can say what it had to keep in mind to give a licence or permission, then why do we want the FIPB to do that job? Leave it to that regulator or ministry. There are not many sectors left anyway. That is the guiding principle. Hopefully sooner that note will go to the cabinet. Discussions have come to a near finish.
Q: On food retail, are you looking at allowing more products? Could we see some announcement soon?
A: There is a lot of discussion on it. We are already talking about what is grown and value added in India. The food ministry is saying that you would need something more to attract consumers. He would want to buy other things as well like cosmetics.
Q: In the ecommerce sector, there have been issues over discounts, etc. Are you relooking at the entire framework?
A: I am not doing any relook at this stage. A lot of them have approached me, some to say if these discounts are being really given by the manufacturers and sellers or by the platforms, the marketplace creators. They have highlighted these issues, saying that isn’t there a grey area and if we need to bring in some clarity. We have had many of these portals also coming and meeting us, giving their viewpoints. I have not come to any conclusion, but I am not reviewing anything on ecommerce.
Q: How do you assess the performance of Make in India programme?
A: It is a continuing process of opening up sectors, making it easier to do business in India. We are opening up sectors in which neither Indian nor foreign investors were allowed to participate earlier. We will get more people to participate even in sectors where except for the government no one was participating, such as certain aspects of defence (and) rail equipment. Some segments were opened after the launch of Make in India by the prime minister… The emphasis next is to look at the number of employment opportunities being created, correlation of investment with job creation, especially in sectors which can accommodate labour-intensive production.
Source: Economic Times