'We need to improve India's global rating'

Q&A: Onkar Singh Kanwar

Onkar Singh Kanwar

Apollo Tyres Chairman Onkar Singh Kanwar has taken over as the president of the Federation of Indian Chambers of Commerce and Industry (Ficci) at a time when there is going to be much less protection for the Indian industry "" product patents are going to come back, textile export quotas will go, Press Note 18 might get diluted and import duties will be lowered to Asean levels.

As one of the country's premier lobby groups, Ficci will have to strive hard to protect the interests of Indian business. There has been a perception that the industry association was closer to the earlier National Democratic Alliance (NDA) regime than the ruling United Progressive Alliance (UPA) government. Clearly, Kanwar's task is cut out.

On the positive side, Kanwar is the son of the extremely resourceful Raunaq Singh, who had served as Ficci president in 1989. Sitting in his spacious office at Federation House, Kanwar spoke to Business Standard about the road ahead for him. Excerpts:

You are taking over when the protection for Indian industry is being scaled down. What role do you see for Ficci in the new scenario?

An industry association cannot sit idle. Its role keeps evolving. I want to give plenty of emphasis on improving India's global rating. And Ficci will work with the government on this. Why can't we have ports like those in Jebel Ali, Malaysia or Singapore? Why can't we have world-class airports like those in Amsterdam, London or Singapore?

To give you another example, we have world-class tourist destinations such as Goa and Rajasthan, but we are losing out on visitors because the tariff is too high. Why can't we improve what we have? India has much more to offer than other countries.

We want the government to create a cluster of industries, have special economic zones (SEZs) and export processing zones like in China. There you can get all clearances within 24 hours and there are no labour restrictions. The idea is to showcase India.

But Planning Commission Deputy Chairman Montek Singh Ahluwalia said at your annual general meeting (AGM) earlier in the week that there isn't scope to put up too many SEZs in the country?

He is well experienced in such matters. I am sure he will be open to any suggestion that is workable. We have to bring India on the global radar screen. Wal-Mart's chairman says that he would like to source products worth $3 billion from India. But his man for south-east Asia says because of internal and external logistics, it can't be more than $200 million to $300 million.

To come back to my first question, how is Ficci's role going to change with protection being scaled down for the Indian industry?

There is no question that we have to make Indian industry more competitive by working on what I call the LITPIT factors "" labour, infrastructure, transport, power, interest and tax structures (indirect).

The incidence of tax alone in India ranges from 33 to 42 per cent. In south-east Asia and the European Union, it is just 16 per cent. One the one hand, the import duties are going down, on the other, the input costs are going up.

India is the only country in the world with such a large base of entrepreneurs. But they get bogged down by the LITPIT factors. They don't know where to go. America was built by such entrepreneurs and not by state companies. In India too, world-class companies like Satyam and Bharti have been built by entrepreneurs. We need to look at them. Over a period of time, we need to bring in the right labour laws.

So what do you suggest?

In garments, for instance, there are seasonal order changes. So, some times you need to scale down and some times you need to scale up. Contract labour should be permitted in such enterprises. Andhra Pradesh has already done it. Why can't we have a similar model for the rest of the country?

This government has talked of affirmative action by the corporate sector to provide jobs to the backward classes. Ficci has opposed it....

We have nothing against reservations. But these should be done in educational and vocational institutions. There is a shortage of trained people. You can't get good plumbers and carpenters.

They are all going to the Gulf. In the tourism industry, there aren't enough people to offer the right courtesies to the guests. There has to be partnership with industry in developing these skills. But we should have a say in managing these institutes. Money is where the mouth is.

In the US, companies are given special incentives for giving jobs to backward classes. They are given small government contracts and their financing is done at low costs. We support the demand for similar fiscal incentives in India for reservation of jobs in the private sector.

There is a perception that Ficci was closer to the NDA regime than the current UPA government.

Ficci is an organisation and there is no personal agenda. Tomorrow, there could be somebody else in my place. Similarly, the basic policies of the government have not changed. Only the people have changed. Only day before yesterday we met the prime minister.

But you are close to people in the Congress.

I am close to my business.

If you look back at 2004, two events hogged the limelight: the fight over Priyamvada Birla's estate and the spat between the Ambani brothers. What is the message in it for family-controlled businesses in the country?

So far as the Birla family is concerned, it is a technical and legal matter. There is no dispute within the family. So it would be wrong on my part to comment. In the case of Reliance, they have complied with all the regulations of the Securities and Exchange Board of India. What they do internally, is their own internal affair.

What role can Ficci play to ensure there is a smooth succession in the families?

During my tenure, I think, we will have some seminars on this. I haven't given much thought to it. If there are big companies, there are also a large number of investors. Companies need to be transparent.

Ficci had actively fought for protecting the interests of Indian businessmen in joint ventures with multinational corporations, which resulted in Press Note 18. Now, it seems, the provisions of the note are going to be diluted substantially. What is Ficci doing about it?

There has to be a cooling off period of at least five years in case the foreign partner wants to start on its own. You have learnt something from me. Managing operations in this country is not easy. I have created your brand, I have brought in shareholders on the confidence of the joint venture partner.

So if the foreign partner wants to leave, there should be a cooling off period. This template is there in joint venture agreements in the West, not ours. And the cooling off should start from the day the foreign partner notifies the Indian joint venture partner.

As Press Note 18 is being cited by most investors as the biggest stumbling block to investing in India, are you sure the government will listen to you?

I am confident the government will take the right decision and the interests of Indian business will be held up logically.