While both India and China are regarded as the economic powerhouses of the future, Commerce and Industry Minister Anand Sharma feels both should exercise greater respect and understanding for each other. In an interaction with Nayanima Basu, he also says the progress in World Trade Organization (WTO) talks had been slow. Excerpts:
What is your ministry’s stance on the recent imbroglio over the import of Chinese telecom equipment?
This issue has to be looked at from a holistic view. When it comes to technical parameters that are given by the security establishments, these have to be fully confirmed. Other countries have the same approach. What we do or have done is transparent and democratic. The Department of Telecommunications, or DoT, along with the security establishments would now have to take a call. If certain security parameters are to be made, then they should be made. I would not like these issues to be looked at from a narrow window of a country or a company. It is much more than that. China is our largest trading partner. We are two big economies of Asia and of the world, which are bound to influence the economic order in the coming decades. So, there is a need for more cooperation and understanding. A larger view has to be taken.
Of late, the commerce and industry ministry has become very aggressive in giving the foreign direct investment (FDI) policy a major thrust. Do you think the initiatives taken by you have been actually helpful for the investors? Also, are you looking at revising the caps on sectors like retail, aviation and defence?
We have already taken a number of initiatives that are interlinked to bring in transparency and make the policy more comprehensive. These had sent very strong signals to investors that India is ready to attract bigger investments. As far as relaxing the caps are concerned on certain sectors, we are constantly reviewing the policy. There are very few sectors that have caps, as we work on a small list where the caps are there as most of the sectors are permitted 100 per cent FDI through the automatic route. But, we are looking at certain sectors such as agriculture where the FDI ceiling would be reviewed. We have just issued a discussion paper on FDI in the defence sector for stakeholders’ views in a transparent and inclusive manner. These are not policy drafts. All the views would be considered in evolving these into the policy. I will meet with the defence minister on this issue so that the views are fully taken on board.
You are also planning to issue a similar discussion paper on FDI in retail, both single and multi-brand. What have you proposed in that?
These are all calibrated. I am very clear that single-brand retail is doing very well and it is very important that investments in India come though the back-end chain first, as that will ensure better management and our post-harvest losses would be minimised, farmers would be better remunerated, products would be better marketed and there would be more jobs as well as income generation. That consolidation has already taken place.
The country’s exports seem to be stabilising. But, this would probably be the first year when we would not see a formal announcement of the Foreign Trade Policy. Also, what impact of the euro zone do you foresee on our foreign trade?
We had said last year only when we announced the Foreign Trade Policy for 2009-2014 that it would be valid for two years, as we were going through challenging times and some amount of stabilisation was needed. Continuity is required as we are constantly having periodic reviews and minor tweaking would continue to happen. But broad policy matters have been announced. So, I don’t think there is a need to announce a formal FTP every year. The Greek crisis or the current happening in the euro zone would be managed, as there had been some forceful interventions by the International Monetary Fund and the World Bank. But, I do not foresee an adverse impact on our economy and trade.
What about the Chinese yuan? Is it not adversely impacting the competitiveness of Indian exports?
Our views had been clearly expressed. Again, it is for China to take a view. I hope they are considering what major trading partners have said.
The European Commission had recently said it had made amendments to the notification (EC Regulation No 1383/2003) that mandates its members to detain shipments containing pharmaceutical products during transit through the European Union destined for developing countries. Are you still considering dragging it to the WTO disputes body?
Both India and Brazil have taken the first step in terms of moving a consultation mechanism to take the complaint to the WTO (disputes panel) as that is a process that we need to follow as we cannot go for the redress mechanism straightaway. We have taken it up very strongly with the EU and they have taken on board India’s sensitivities and Brazil’s concerns, because what was being done was not in conformity with the Trips PLUS (a set of commitments stricter than the mandatory standards of WTO’s Trips Agreement). The EU has offered to amend the particular notification.
