 "Banmali Agrawala, GE South Asia President & CEO")
Make in India is more critical and important for small and medium scale firms than for large companies; there is a government which is willing to help and that is a very good combination, says Banmali Agrawala, GE South Asia President & CEO. The next phase is to translate that intent into action and take credible steps — that is what now everyone is waiting for, Agrawala tells Sanjay Jog in an interview at the Make in India Week's venue in Mumbai. India is well positioned to further achieve new high in its growth, he adds.
What are your expectations from the Union Budget?
Budget is always about capital allocation. We have a windfall (gain) from low oil prices. So, there is more capital available. Let us see how the government uses that capital to spur growth. It would be good to see some of that capital being used towards building infrastructure and to address the financial sector — the banking sector. So, more the government spares money for building infrastructure, which could also spur the economic growth because of manufacturing and all of that, it will be really nice. So, that is what we are waiting to see.
How is GE prepared to be an active player in the Make in India initiative?
The message that the government giving out is we are open for business and investments. Come and make in India, manufacture in India which is a very refreshing message.
Secondly, there is a golden opportunity right now as India is the one bright spot in the global economy and it is growing. You have an opportunity, you have a government, which is willing to help; it is a very good combination. The next phase now is to translate that intent into action and credible steps.
We clearly recognise that India has a great opportunity to manufacture, innovate and do all of that. For large companies, all these small hurdles do not come in the way; they will still find a solution because you have the people, financial resources and time. It is for the smaller companies that they have to.
Read our full coverage on Union Budget 2016
So, Make in India is more critical and more important for small and medium scale than for large companies and that is where it should be focused. How do you make the life of a small scale industry easier to file taxes, to get permit, clearances? In GE, I employ 100 people to do all that, but what about small enterprises.
If you look at the new dimension of manufacturing, big guys like us will set up the unit. But it is now not labour-intensive — that used to be in the past. However, further in the supply chain, you have lot of opportunities for small and medium companies. If they do not succeed large ones will not succeed.
Will Make in India succeed with slow pace of reforms?
I would not hinge the entire success on reforms. They are difficult. We are democratic country. So, the bolder the reforms, the faster and impactful will be the entire Make in India.
However, you have to balance the economic development and social and political side of that. I think that is what the prime minister and the government are doing right now.
How do you see recent initiatives in the energy sector?
I would say that the tariff policy which was cleared by the Union Cabinet is a forward-looking policy. It is a good policy that addresses everything to address. So, the first thing is that somehow the Centre should be able to convince the states through incentivising and penalising their behaviour. This apart, the political discussion has to recognise that power sector does not make losses. So, tariffs have to be addressed. You cannot say that my tariff has to go down even if input costs are going up. So, politically, the understanding of this space needs to be much better.
Further, there is a massive opportunity to eliminate inefficiencies such as distribution losses even lower plant load factor (PLF) in the system. So, if tariff needs to be increased say by 20% at least 10-15% can come out of by simply eliminating inefficiencies. So, the net increase will be lower.
Sometimes, one hears a statement that we have achieved self sufficiency in generation. I would contest that position because the country certainly needs a lot more power, our per capita consumption is still low, out unmet demand is still very high, the number of diesel generation sets are sold are very high, there is load shedding that happens. So, I don't think that we have achieved self-sufficiency in power generation.
We need to continue to invest in more power generation. The whole focus on renewable (energy) is phenomenal to put India on global map, but how do you integrate renewable into the grid system is extremely crucial as renewable power is unpredictable and infirm. So, how do you get renewable power to firm be extremely crucial and the government needs to take steps. You need to have some storage capacity to make renewable power more useful.
