When Siddharth Zarabi and Rituparna Bhuyan walked into his Udyog Bhawan office in New Delhi, the first thing the Union Minister said was, "No questions on retail". And that set the tone for the rest of the interaction. Excerpts:
What does the recent spurt in exports imply?
The huge increase in exports, despite dollar fluctuations and increase in oil prices, demonstrates the resilience of the Indian economy. It reflects the fact that India today is globally competitive.
Last year, we had 22 per cent growth in exports, while this year it is 30 per cent. We must remember that merchandise goods, which are exported, are not absorbed in the economy.
Thus, this is an incremental economic activity, which has led to additional revenues for the government and at the same time created additional jobs.
Exports have to be the growth story of any country in the world and it is the same for India. The FDI is at record levels. Today, India is a prime investment destination. For the first time, the equity component of FDI inflows will cross $10 billion. This has doubled over the last year.
What are the reasons for this?
Confidence! It is the business and the industry sector, which are building resilience and new confidence. Moreover, it is the global confidence that the present government exudes.
There are regional trade pacts, which we are looking at and then there is the multilateral framework, where things are stuck at the moment. The multilateral trading system is very important.
As India becomes more and more globally competitive, the rule-based multilateral trading system will become more important for the country.
The WTO is very important to India. At the same time, India would like to engage regionally and bilaterally. So we are trying to ink deals with many countries. These regional trade pacts are incremental to the WTO process and not a contradiction.
There has been some criticism of free trade agreements. Is there any data to substantiate that our economy or companies have suffered because of such agreements?
The industry says it wants FTAs but at the same time, also a level playing field, because if we are going to have cheaper imports and the other country is going to have taxes (it may cause problems).
Today, as a destination, both in terms of exports and investment, India is facing competition from other Asian countries like Vietnam and Indonesia. So, India has to remain abreast of that competition to be able to attract investment. Foreign investment cannot be wasted and it has to be attracted.
What is your take on special economic zones?
Special economic zones are an industrial cluster with infrastructure primarily meant for exports. If we are talking about growth in the manufacturing sector, then we are talking about growth in the industry. The onus of creating the infrastructure is on the government but it doesn't have resources.
The concept of an SEZ is that both infrastructure and exports can take place without paying taxes and without getting a refund. The difference between a domestic tariff area (DTA) unit and the one in an SEZ and is that the former pays excise duty and gets a refund while an SEZ unit doesn't pay excise duty and thus doesn't get a refund.
The concept of SEZs is actually 35 years old. We have also had export processing zones. All that has happened and it has now been put under one Act.
There are concerns regarding land. People feel that state governments, who have been acquiring land, are not transparent and the process is not fair. This matter has to be taken care of by land acquisition laws.
Why was a land acquisition policy not put in place before the SEZ Act?
The SEZ Act is not a land rehabilitation law. Land is required not only for SEZs but also for industry, irrigation process, for roads etc. The process of acquiring land must be transparent and fair.
The revenue department has talked of revenue forgone and there are indications that various exemptions may be taken away. What is your view?
How notional does one want to get? If there is no SEZ, there would be no industry coming up in that region. In any case (the lack of industrial development) would mean revenue loss. We have to attract industry and ensure infrastructure development in those regions. And in any case, exports today are taxed and also eligible for tax exemption.
The concern of the finance ministry is about its misuse and abuse. If there are cars, there will be traffic jams and accidents on roads. Should we stop producing motor cars because of that?
What have you been telling the Empowered Group of Ministers (EGoM) on this?
The real issue is that of land. We have got to ask the state governments what is the status of the land. We are going to make sure that state governments follow rules and at the same time know the status of the land being acquired.
Personally, do you approve of the number of SEZs in India?
The question is not about the number of SEZs, but of the units inside them. Today in China, there could be 500 units but in India there could be only 10-15 units. This doesn't mean that they are comparable. The more the units, the better it is.
Five years down the line, how do you see SEZs?
The largest employment generation machine. There would be a great employment generating opportunity.
When will the EGoM say the last word on this?
You are asking questions like a daily reporter (he stands up, indicating the interview is over). Let us get the information from the state governments.
India's great rush for SEZs
