Geopolitical instability shows no sign of abating. Are you still hopeful of achieving the $2 trillion export target?
I am confident for three or four reasons. One, despite these problems, India continues to be an oasis in the desert. We continue to have nominal growth upward of 11%, constant prices upward of 7%. So there is more and more action happening in terms of manufacturing, in terms of our services sector, point one. Point two, while there is global uncertainty, there are problems, I keep telling the export community, goods and services, that the world market is still $30-35 trillion. There is still trade happening all over the world. We need not only maintain our market share but increase our market share. With that size of global trade, we are 2%, can we look to make that 4% irrespective of the global growth. We’ll have a challenge because the Houthi problem, the Red Sea problem, affects us directly. Prime Minister Narendra Modi always believes that we should encourage debate, discussion and dialogue and sort out problems. So he has been to Russia, he is going to Ukraine. I hope his efforts as a messenger of peace will bring peace and prosperity to the world.China’s export strategy and some other countries are centred around large economic zones. India’s special economic zone (SEZ) policy hasn’t made much of a dent. What do you think should be done in terms of creating this infrastructure for export-led growth?
SEZs today rest on the benefit of duty-free import of capital goods, slightly better infrastructure with customs facilities and all. You can import duty-free or raw materials, you don’t pay goods and services tax (GST), and then export the goods. We have created an ecosystem now. We are trying to amend the SEZ law to liberalise it further and encourage better utilisation of the assets or infrastructure available in SEZs.
We have the MOOWR scheme, or Manufacturing and Other Operations in Warehouse, under which whatever you export, you don’t pay duty or GST. Whatever you use domestically, you pay GST and use it. We are bringing flexibility into the system without the garb of SEZ.
At the same time, our effort is to create a web of industrial parks across the country. The prime minister’s vision is that we have to create a golden quadrilateral of industrial parks. This golden quadrilateral of industrial parks will add to investments. We have eight industrial parks, four of which are nearly complete, four under implementation, and now the honourable finance minister has announced 12 more. We will dot the whole country like a necklace. Investors from anywhere in the world can choose where (they) want to go right from Bihar to Tamil Nadu, to Kerala to Rajasthan, across the country. We are looking at the concept of anchors or large industries, with MSMEs dotting the ecosystem, which brings scale and quality focus. These are the enablers which will take us to $2 trillion (exports).Industry has been flagging concerns over equipment imports from China and also entry of technicians.
There’s a whole wide world from where industry can get equipment. For those who have already bought in the past, we’re trying to be as accommodative as we can be. For the others, I think they should buy better-quality, high-quality, long-lasting equipment. It’s available across the world.
The budget talked about easing foreign direct investment (FDI), so what do you think are the possible areas where we can see some opening up?
I don’t see much more in terms of opening up as much as I see in terms of greater flexibility and greater ease of investment. In terms of opening up, defence you can go right up to 100%. Insurance, there’s no demand for any further opening up. Banking, there’s no demand. I think Indians also should participate in all these sectors.
Does the broad FDI trend line concern you?
Absolutely no concern. What has happened is we have continuously grown, but we had a huge bump-up during Covid, the two years when we saw a couple of companies come up with huge FDI. It’s like an extraordinary item. If you segregate the extraordinary item, our trend line of growth in FDI is unrelenting.
What is the thinking on FDI in tobacco and online gaming? Is there any thinking on tightening?
I’m open to suggestions from the industry on both of these. In terms of tobacco, I recently received some recommendations from members of parliament and industry that we must seriously look at smuggling of tobacco goods or cigarettes coming in. We will examine that in greater detail and, if necessary, take action.
There has been a lot of buzz around Tesla investing in India? What is the update on this?
We have come out with a policy. We are open to any company investing under that policy or even otherwise. That policy is only an enabler. If somebody wishes to import, we have given the possibility that you can import and market in India prior to even setting up the factory, if you are committing to set up the factory. There are many who are ready to set up the factory, wait that time, instead of importing and then sell India-made cars. For example, VinFast is coming in. They could have imported under the policy but decided to start production. We welcome that better.
What about China’s BYD?
As of now, there is no pending proposal of BYD to consider. If anybody or any company comes with any proposal for Chinese investments, it goes through a process. We take a call on every application under that process.
The portal to fast-track visas for Chinese technicians has been launched for PLI sector but will processing also be quick?
Nobody is complaining because, if there was any issue, they would have talked to me. I have continuously interacted with production-linked incentive (PLI) companies. My department does a review of all the PLI sectors from the ministries. Just before the election, I had met all the PLI beneficiaries from all 14 sectors and I had told them that after six months we will meet again. So it’s now time to meet next month.
What is the status of PLI schemes for toys, footwear and leather?
It is a budget announcement so these will come up soon.
Indian industry has investments in Bangladesh. Do developments there concern you and what does it mean in particular for the textile industry?
As (foreign minister) Jaishankar has said, the situation is still evolving but I am given to understand that their textile industry is going through some difficulties.
What is the status of FTA talks with the United Kingdom and the European Union?
Both have had a political change. I met the new (UK) prime minister at the G7 meeting in Italy. We now wait for him to get briefed and get a hang of the issues. At an appropriate time, we will restart discussions. When I met him both before the elections and after, on both occasions he said that he is committed to expanding. He and his government, Labour Party, are committed to expanding relations with India. We’ll wait for them to reach out after they’re clear on what India is offering and what their demands are.
In the EU, we had a last round in June. The European Commission is still being formed. Once it’s done, we will know my counterpart and we’ll talk to them.
What is progress on the Asean FTA review?
We were able to make some corrections. It’s going on, but it’s going on slowly. We are looking for important corrections to make it more balanced and ensure we get market access for some of our important sectors. I’m thinking of attending the economic ministers meeting to push for it.
What are your concerns about big multinational ecommerce companies?
I am in favour of technology. I am in favour of ensuring that technology becomes an enabler for innovation, enabler for better competence, comfort, convenience and jobs. But I do believe that we will have to respect the letter and spirit of the law. Everybody has to do that, big and small. We will have to carefully analyse certain areas where the effects of ecommerce can be detrimental to India’s interests. I gave a simple example of mobile phones. We ended up closing all the mobile phones small shops. But in the process, what has happened is that consumers may feel they’ve got a product through the internet easily and comfortably but when confronting any problem they do not have a place to go to exercise the right to repair.
You expressed some concern that the letter and spirit of law perhaps not being always followed by all players…
The FDI is allowed only if it’s business to business, not B2C. What are all these companies doing? Consumers are buying from Amazon and it becomes B2C. How can that be legal? So, the ecommerce industry in this country is operating in a grey area. They are working in an opaque fashion which needs to be further exposed or broken down into reality.
How do you view in particular the dramatic rise of quick commerce?
If they engage with the small kirana stores and involve them in their supply chain, possibly that would be a way forward.
What about the ecommerce policy? Would you be addressing some of these concerns that you expressed and by when can we expect it?
We have taken cognisance of some of these subjects. It is under deliberation and discussion. Once it’s ready, we will get back.
Does India plan to join the trade pillar of the Indo-Pacific Economic Framework (IPEF)?
We have not decided. We are an observer but the whole discussion is right now on standstill till the US elections get over. So once that gets revived, we can take a call.
What is the feedback on the employment and the skilling schemes that you’ve got from industry. How hopeful are you of these really taking off?
We are very confident of their take-off. They’re very well thought of and the world recognises it’s ultimately making our people more employable. People are working in many areas in different ways, but their true potential will come out with the right vocational guidance and related skills suitable to what the person is or capabilities the person has.
Private capex has been a worry. What is the industry telling you in your discussions?
Industry is so bullish, I have yet to meet one guy who doesn’t give me a number which is mind boggling in terms of investment. All these upcoming industrial parks will only see private investment.
So are you satisfied with the level of private capex coming in?
PM Modi says you can never be satisfied. Yeh dil maange more, but they are doing well.
Every steel company is almost doubling its capex and every cement firm is looking for both organic and inorganic (growth) and with infrastructure coming in such a big way, these two sectors are going to boom.
It is expected that we will build in the next 20-25 years, twice the number of buildings that are already existing in the whole country.
With all of this, there is going to be demand for furniture, wood, electricals, chips and board, tiling, bathroom fitting, sanitaryware, firefighting systems, escalators, lifts. We are already exporting $25 billion of capital goods. While we are importing a large number also and now we are trying to see how we can both become more self-reliant and self-sufficient and expand our exports. We are working from industry to industry. We have shortlisted 50 sectors which I will spend time with understanding what we can do for them, work as partners to grow their industry and whatever help they require.
There was a concern about reforms slowing… UPSC’s lateral entry ad was withdrawn.
Lateral entry is not the end of the world in terms of reform. Reforms are happening in a thousand ways in the country. Lateral entry for 45 posts were advertised. They said they will review it to meet the concerns expressed by friends and colleagues both within our party and our friendly parties. The previous notifications are also there to protect reservations. It just needs a little amendment.