Industry can't complain anymore: Nath

CHAT ROOM

Commerce and Industry Minister Kamal Nath

Commerce and Industry Minister Kamal Nath is not just battling high viral fever but also fighting many odds in his effort to catapult India to the next orbit in global trade. His debut Foreign Trade Policy, he says, provides an integrated and holistic approach towards shaping India's role in global service and merchandise trade.

In an interview with Business Standard, Kamal Nath explains how his policy would help double India's market share in global trade in the next five years.

You claim to have set a new paradigm in your debut Foreign Trade policy. How is it different from the previous Exim policies?

What I have tried to do is project exports as an engine of growth. Exports, as many look at it, is not merely a dollar generating activity. It is an incremental economic activity. All that cannot be absorbed by the domestic market goes towards exports. It also sets the tone for new schemes that are likely to be announced in the future.

Moreover, we have tried to move away from the product specific incentives. But yes, we are focussing on sectoral initiatives that are expected to boost employment in the semi-urban and rural areas.

It's been only 100 days for me. Have a heart and give me some more time...

What has prompted the choice of sectors that you have emphasised on? Is it just job creation?

I have looked at sunrise areas. For example, in floriculture, there is enormous potential. The floriculture sector can achieve a quantum growth. It has the potential to leapfrog from a turnover of Rs 100 crore to Rs 1,000 crore. We hope to double our share in global trade in the next five years and hence the focus has to be on sunrise sectors which hold a great promise. If we achieve a compounded annual growth rate of over 20 per cent, then the target of doubling our share in global trade is very much possible.

What is it for the services sector in your policy statement?

The "Served from India" scheme is a revolution that I want the services sector to enact. Individual service providers have also been a big thrust area for me. There are fiscal supports too like duty free imports for technological upgrade for the service providers.

You have set yourself an ambitious target of doubling India's share in global trade. But infrastructure bottlenecks can force your targets to go awry.

Infrastructure creation is not merely this ministry's function. But the high targets will put further pressure on other ministries in the government to perform. For the Prime Minister, infrastructure creation is a top priority. A cabinet committee has already been constituted for that.

You have not actually spelt out the future of the DEPB scheme. There is still some uncertainty about it.

I am trying to figure out how the DEPB scheme can be merged with the duty drawback scheme. Basically, all these are duty remission schemes. In my deliberations with the exporters and industry chambers, there will be clarity if there is a need to create another scheme.

To cut down transaction costs, you have announced some piecemeal measures. But are they enough?

Small exporters had to bear a huge cost "" 3.5 per cent "" on bank guarantees in the form of commitment charges, etc. I have done away with that. With the removal of age restrictions on import of second-hand equipment and machinery, industry cannot complain anymore.

It will now be purely an investment decision by any importer when he is putting up a plant. Yes, the machinery should not be obsolete as it will affect the importer's competitiveness.

Given the target, what kind of export growth do you see over the next five years?

Our present export growth target is 16 per cent and our exports are currently growing at 24 per cent. To achieve 1.5 per cent share, we would have to maintain an export growth of 20-21 per cent annually.

How relevant is the Foreign Trade Policy to the 'aam adami'? How will you ensure that the benefits go to farmers and are not cornered by intermediaries?

We have identified precisely those items, like fruits and vegetables, to qualify for benefits. Here, the scope of increasing trade volumes is large. When exports of these items is carried out in a systematic manner, greater export demand will be generated, which will automatically ensure that the benefits trickle down to the lowest level.

You have said more free trade agreements are being planned. Could you elaborate on which countries you are talking to and the stage at which these talks are?

We are talking to the Association of Southeast Asian Nations (Asean) group, Mercosur nations, Bangladesh and Singapore, at various levels. We need to harmonise, and our trade agreements should complement the world trading system.

What kind of employment generation are you expecting, given the UPA government's commitment to the Common Minimum Programme?

Even though it is difficult to quantify, it is obvious that increased economic activity due to greater trade volumes will considerably boost employment. If we say that the manufacturing or the services sector will be the major thrust of the policy, it means that more jobs will be created. The rest is just a matter of calculation. Incremental export growth cannot take place without employing more people. The thrust areas we have identified are those that have potential to show steep growth.