Decisions on better credit flow and a promise to speed up consignments will see exports and the economy pick up steam in the coming months, commerce and industry minister Piyush Goyal tells TOI’s Sidhartha and Rajeev Deshpande. He says India can be part of the Regional Comprehensive Economic Partnership if there are adequate safeguards. Excerpts from the interview:
The fall in imports during the last three months is seen to be symptomatic of weak demand in the economy. Exports too were down during two of the last three months. What is your analysis?
We have to focus on addressing concerns of the international trading sector and that is exactly what the Prime Minister, the financeNSE -2.08 % minister and all of us have been working towards. The finance minister announced a series of measures. The problem of credit will be addressed significantly. Credit flow to exports fell by 22% in the last few months and was a cause for lower traction for exports. These and other steps like faster turnaround time, improving logistics, easier certificate of origin issuance and engaging the world to expand our footprint through more FTAs and a more open architecture of the international trade will help.
Is it time to reassess our export basket given that India is not as competitive on the wage front in sectors such as textiles?
We are still competitive on the wage front. Our workers have special skills, we can be competitive on the wage front though we may not always be competitive in every industry. We should look at expanding our basket, sometimes reorienting our basket, look at import substitution products, and look at how we can engage with the global value chains. We should look at larger amounts of free trade like several countries did and have benefited hugely from it. We should move to large-scale manufacturing in India. We will soon come out with a very proactive industrial policy and we are working to see how the trade policy should be unique this year.
The recent sharp slowing down of growth has led to commentary around serious problems with the economy, and former Prime Minister Manmohan Singh has predicted a long period of recession.
It’s a similar situation across the world and in comparable economies. There are uncertainties that have caused this, the trade war, world growth is slowing down, many countries are grappling with serious issues among themselves. These would have had an impact but the challenge before us is how we can overcome this faster. In the next few days, we are going to seriously engage with countries to see if they can relocate to India and facilitate their entry. We have almost 20,000 acre land around eight industrial towns that have come up, I will quickly come out with attractive policies on this.
Currency was a major factor for Japan and China. In India, many believe a strong currency is good. What are your thoughts on the issue given that many see rupee as over-valued?
There is talk that the rupee is 18% over-valued and it affects our exports. There are two schools of thought. One believes that if we let our currency depreciate, our exports become competitive, imports become expensive. I was an exporter many years ago and I recall buyers also followed the Indian currency and every time it depreciated, they forced us to reduce our price while (imported) input costs went up… I found myself worse off. At the macro-level, we still have a trade deficit. So, how can a country with massive trade deficit benefit from a depreciating rupee is difficult for me as a common man to understand. It may be applicable to certain sectors but it’s not a panacea for all the problems.
Are we closing the gap with the US on outstanding trade issues?
The dialogue always continues. With an open spirit of accommodation, we are engaged with the US given our deep friendship. We will wait for Prime Minister Narendra Modi and President Trump to meet next week before we can respond more concretely. I am optimistic.
One of the big worries in RCEP negotiations is the entry of China in a big way in the Indian market.
I am not sure it’s a worry. You cannot remain in an isolated state. Protecting national interest and the interest of our industry is our job. That is the paramount foundation on which any negotiation takes place. Not negotiating, only worrying and not trying to find solution, only looking at the dark and negative side, the glass half empty rather. than the possibilities is not good. We are not ones to shy away from accepting bold challenges.
How do you propose to deal with a possible import surge from China?
Obviously, I must be concerned about it and am trying to find the solutions. Unless I get adequate solutions and safeguards, obviously there is no deal.
What are the big concerns from your point of view given that you have just returned from a ministerial meeting on RCEP?
I must confess, 114 days ago, I started as a naysayer. I had the same worries but as I went into the granular details and studied India’s engagement in the past, India’s weaknesses in earlier FTAs and the lost opportunities of the last 20 years and saw the opportunities and what should be done going forward, I feel an empowered India is set for a very strong rebound. RCEP is one agreement which opens up huge global footprint for us — it accounts for 47% of the global population and almost 40% of global trade. I can choose to be scared of it or I can choose to look at it as a great opportunity. I think the opportunities will be huge and we can leverage our advantages and competitive strengths.
Source : Times Of India