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This article was first published 7 years ago  » Business » 'Make in India will have to be worked on'

'Make in India will have to be worked on'

By Subhayan Chakraborty & Indivjal Dhasmana
May 17, 2017 16:24 IST
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'We’ll constantly keep improving the environment for manufacturing and investors, be it Indian or foreign, so that they find it easier to do business here.'

'A strong rupee shouldn’t be seen only as a deterrent for exports.'

In the run up to three years of the National Democratic Alliance (NDA) government, Minister of State for Commerce and Industry (Independent Charge) Nirmala Sitharaman says it is time to consolidate some of the major initiatives as well as take new steps. She tells Subhayan Chakraborty and Indivjal Dhasmana in an interview that the government will find a way to incentivise sectors, even if the World Trade Organization norms force India to phase out export subsidies by 2018-end. Excerpts:

Soon, this government will complete three years in office. Do you feel it’s time for consolidation of major  initiatives taken so far or do you think new measures can be rolled out now?

It has to be a blend of both. Consolidation is absolutely required because the major initiatives taken by Prime Minister Narendra Modi have shown steady results, at least in the commerce and industry ministry, and it is necessary to consolidate these. So it’s the best time for both consolidation and for new things.

Say, for instance, Make in India was brought in as agriculture was laden with under-employment. Even in some states that were progressing well on agriculture employment, the situation was uneconomical. And, therefore, there was emphasis on making India a manufacturing hub.

There was an emphasis on making India a better place for investment as well as a place for manufacturing, for India and for exports. So for me, consolidation of Make in India will have to be worked on.

How is the government looking to link the issues of Industry 4.0 with all this?

The exercise I’ve started is to understand sectorally and to talk to states to ask how ready they are for Industry 4.0. I am open to accommodating all industries which are ready, partly-ready and not at all ready.

I’m going to factor in other policies to see how best this is going to help in our attempt to make India a manufacturing hub and to ensure employment. The government is pushing Digital India, which in a way is consistent with Industry 4.0 - robotics, internet, knowledge-based economies, smartness in cities, smartness in manufacturing.

I will also be able to link Skill India with this. This has already started and we’re coming out with a new industrial policy, which will absorb the 2011 national manufacturing policy as well as face industry 4.0 issues and push Digital India. We have just started engaging with states. Hopefully by September, which marks three years of Make in India, I should come out with an industrial policy.

Has demonetisation affected the plan to boost industrial growth, because the Index of Industrial Production has contracted in February?

These are monthly fluctuations. I will not get tempted to comment based on these. On demonetisation, I have said it did have an effect during the two-three weeks of that quarter, after the announcement was made in November.

The effect was in sectors where migrant and unskilled labour was involved. However, most labour-intensive export-driven sectors have also taken upon themselves to have the Jan Dhan work accentuated to give bank accounts to workers who didn’t have it. So I don’t think the industrial policy will bear the brunt of demonetisation. That phase is long gone.

How long will it take for the industrial policy to boost job creation?

In sectors such as defence and railways, where big investments are happening, numbers will be available only after the gestation period. So I would not conclude in a hurry that no employment is happening.

Similarly, I am also guided by the principle that the government alone won’t be able to create all jobs. What we’re also doing is to ensure that the spirit of entrepreneurship among citizens is kept up. That is where the Stand Up and Start Up India policies, together with Mudra, are driven towards.

The Prime Minister has also given direction on potential job increases. Is it a new initiative?

Some months ago, the PM made it explicitly clear that every investment proposal that comes to the Cabinet should have at least a paragraph on direct and indirect employment. So all of us have been very clearly geared towards doing that due diligence.

How will things get better for companies such as Apple under the new industrial policy that the government is planning? They have cited many problems in starting manufacturing here…

Things will improve for everybody. No policy is made for only one company. I can only say that manufacturing being our focus, we’ll constantly keep improving the environment for manufacturing and investors, be it Indian or foreign, so that they find it easier to do business here.

Has Apple made a fresh case for itself after the government launched a phased manufacturing policy for mobile phones and electronics?

I haven’t had any fresh request from them.

You seem to have changed your stance on the issue of rupee’s valuation. Now, you’re pitching for a stronger currency as it reflects the strength of the economy. Have you given up on letting the rupee finding its true value?

The rupee finding its true position has always been the government’s stance and the government has never had any intention of artificially lowering or boosting it. I don’t know where the earlier debate started. But it was probably part of a Cabinet note doing the ministerial rounds in which I had said internal reforms are needed to give exports a substantial boost.

One of the things we had suggested was how the rupee might or might not help in this. I don’t know how it came out that the commerce department was in support of tweaking the value of the rupee.

But, again, recently when asked about the rupee appreciation, I did say that exporters have been facing such currency fluctuation for the past year. So I am confident that exporters would have factored in that it is becoming the new normal. A strong rupee should not be seen only as a deterrent for exports.

The economy is not only dependent on exports, but on the domestic market as well. So that’s the background with which this debate and the earlier narrative happened.

Is the rupee gaining strength a reason behind India increasingly pushing for a rupee trade mechanism with other nations?

Ages ago, we had a rupee trade with the erstwhile USSR, which took a back seat with the country becoming several independent republics. It didn’t get revived after liberalisation. That this will boost trade is one of the inputs I got during a review of the foreign trade policy.

Is the government keeping the export target of $900 billion by 2019-20 intact in the current foreign trade policy?

There hasn’t been even a single suggestion by industry or anyone else that would mean expressing doubts over this target.

Wouldn’t the industry find it difficult to deal with disruptions such as demonetisation, the proposed GST roll-out and now a possible change in the financial year cycle?

I think the economy, including manufacturers and exporters, have an advantage of information being given to them on time. Except for demonetisation, for obvious reasons, it was not a bolt from the blue every time.

Of course, each one will have to make certain adjustments in compliance and record-keeping. I don’t see them as disruptions. On the contrary, they are streamlining the economy.

India is set to lose the right to provide direct benefits to exports under WTO laws by 2018. How is the government looking to tackle this?

We can’t let sectors that need help go high and dry. This won’t stop me from executing my right to support them through an agreeable route.

How receptive are other nations of India’s proposal for trade facilitation agreement on services at the WTO? Also, do you feel it will deter the US administration from imposing restrictions on the visa regime?

Although the two issues are related, I don’t think they are related in the sense you are asking. The trade facilitation agreement on services is a larger issue of a much-needed framework and understanding of global services trade. Of course, it has a long way to go, it has to be discussed, questions have to be answered and we have to seek the cooperation of all members.

But on the H1-B visa, an executive order can be stretched only to an extent. I again put my faith in the Indian information technology sector because it has seen the details of what is coming - from not only the US, but also Australia and other nations.

The sector is factoring in such changes. But there is a shortage of the required skillset among local talent. Recent data show not only Indian companies, but US companies are also using the H1B visa system to recruit.

Are you looking at the IT issue as short-term aberration or is this going to continue?

I don't look at it as a short-term aberration. It will have long-term impact, though not a negative one. But Indian industry will have to factor this in while taking decisions.

Photograph: Danish Siddiqui/Reuters

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Subhayan Chakraborty & Indivjal Dhasmana
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