Recounting the achievements of the first three years of the Narendra Modi-led National Democratic Alliance government, Union minister of state (independent charge) for commerce and industry Nirmala Sitharaman, in an interview with
BW Businessworld’s Suman K Jha, outlines the agenda for the next two years, and says consolidating ‘Make in India’ would be one of her priorities.
Edited excerpts:
We are often told that India is the brightest spot in the world economy today. Is this the Modi government’s biggest achievement as it completes three years in office?
Yes, we are the brightest spot in the world economy, and this has been observed by the global political economy observers. Despite all odds, this becomes a significant achievement. Sustaining the achievement of being a vibrant economy is important, and what’s more important is that inflation has been kept completely under control. There are no signs of inflation fears rising in the next few years.
Corruption is not a word you can use against this government. Yes, reaching the position of being a bright star globally is the biggest satisfying account of the Modi government’s first three years in office.
There’s a new wave of protectionism across the world, even as India goes about liberalising and globalizing. Is there a cause of concern on this count?
The concern is bigger because the Indian services sector has proven to the world that it is globally competitive. Even sectors such as pharmaceuticals have proven to be global and it is getting certified by most of the authorities.
Because you are performing better, you are costing yourself better and you are better in the context of global trade, you see protectionist barriers. Protectionist barriers are not always the obvious, like tariff barriers. In trade, tariff barriers are the obvious barriers, but there are many non-tariff barriers that are being mounted. Those are tough to fight.
As a result, you find protectionism not just taking one form, which you can imagine as being a part of the global trade scenario…there are several others as well. These consume time and by then, your industry and productive work force gets disillusioned.
Why do you think countries such as the US and Australia are raising protectionism walls, and what are we doing to protect the professionals’ interests in those countries?
It is so difficult to hear the protectionist talk from those very countries who all these years have lectured you on free trade, globalised world, and the advantages of being integrated into that free trade globalised value chain. But when you have reservations about that probably hurting your own homegrown industries, you want to have it calibrated. Therefore, India has never been anti-free trade. But, we have given policy support to protect our own industries till the time they are globally competitive.
We have had constant talking down to about the virtues of free trade. But a time comes when they think that it’s free trade, and we will take you on that too; you have very serious protectionist policies coming up — both predictable in the trade architecture, and those who are slightly out of it. We must engage with them and ensure that our interests are not affected, but at the same time you got to have on an offensive strategy and capture those markets.
Our finance minister took the issue of H-1B with the US commerce minister. We had talks with the Australian prime minister. So, what are we doing specifically to address those concerns?
The situation today, under the Donald Trump administration (in the US), is not very different from what existed under the Obama administration. But, now the executive order brought in by Trump has made it possible for him to probably pick and choose the people he wants. In other words, Trump wants specialized high-end, experienced people coming to his country, rather than the fresh graduates who also go there to fulfil project requirements. The executive order can only go that far and not any further.
The number won’t change, what will change is the types of people. The industry also feels that through the Congressional decisions, if there are financial implications that can be added on, we must not panic on that aspect. Yes, it will have an impact on the Indian IT sector and the sector is factoring in these changes. They see the possibility to adapt to the changing environment. There’s an opportunity in the threat — opportunities for re-skilling and high-end skilling.
We are talking about Industry 4.0 and Make in India, but we have not seen jobs in corresponding numbers when we talk about the success of the ‘Make in India’ story. Is it a cause for concern that jobs are not coming in corresponding numbers?
These are difficult days, granted. At the same time, our understanding of jobs has to change. Government is not going to be the sole provider of jobs. We are in a transitional industrial adaptation phase where some industries are bringing in robots, the other industries may not be prepared but they are also thinking about artificial intelligence and digitization will bring in a great deal of perfection and professionalism.
If we look at jobs created in the past, there were instances like, say, a Bhilai Steel Plant, where some 5,000 people have been engaged. Today, we have to look at providing jobs through self-employment and entrepreneurship and hence must not miss out on the contribution of Mudra (Pradhan Mantri Mudra Yojana).
Mudra has clearly told people that you don’t need to provide security in banks for the small businesses. It can be given without mortgaging any asset. This is the reason for encouraging start-ups, because where there is an innovative idea, an idea that can generate employment and serve the local community, at a cost which is affordable, we are there to help them. So, our understanding of jobs has to be recast on the point of view of self-employment, entrepreneurship and scaling up and down to suit local requirements.
If there is a proposal coming in for clearance in the Cabinet, our Prime Minister’s first question always is — ‘Tell me what it means for employment and how many of the people will be benefitted from it, directly and indirectly’.
No permission is given till that mandatory paragraph or two is mentioned in the proposal. So, the emphasis on jobs and job creation is certainly there, but it has to come from several sectors unlike before. In India, gathering data on this informal availability of jobs doesn’t happen. Even if it’s in the old regime, where the information to employment pertained to only 5-10 per cent of those employed in the formal sector, nobody had any idea for the informal sector.
It’s an excellent idea. But does it still concern you that on the ground level, it’s not leading to creation of jobs?
We are only looking at it from the point of view of measuring jobs. For example, here is an investment of X amount and it has given us Y number of jobs. That’s not something I will have to look out for any longer. Mudra has given a couple of crore jobs in 4-5 states. We have to look at different ways to obtain the employment data.
Major investments coming under the foreign direct investment (FDI) and are going in to sectors like railways and defence, are going to have longer gestation periods. The numbers have increased manifold after the launch of Make in India post-2014. Post-independence, 2015-16 saw the highest FDI coming into the country. Financial year 2016-17 will exceed the FDI investments of last year. All these investments are going into various sectors, but in some sectors where the investment is big, we can even say the number of people employed (not until they come to this stage of production). Until then, there will be investments made, but we won’t have any idea of the number of people employed.
FDI reforms and FDI inflows have been the biggest success stories for the government. Is there a scope of further FDI reforms?
Yes, there are a few sectors left. We are winding up Foreign Investment Promotion Board (FIPB) as it is not relevant anymore. Sectors to receive FDI are going on the automatic route. Then, there would be no need for a government approval. Now that the government approvals have come down in such a large way, we thought it is irrelevant to have FIPB. But, for sectors which have not moved to the automatic route, we feel that the ministries have enough regulators to take care of it.
Can we expect some forward movement in multi-brand retail?
We still look at it as an area that has to be handled with greater consultation. Some discussions have happened about multi-brand retail and food processed within India, which is already out. There is no substantial report-worthy news on that. Consultations may happen, but I can’t say the conclusion it will lead to.
Do you think a stronger rupee reflects a stronger economy?
I am wary of joining this debate. When you represent the commerce ministry, people think you take decisions in favour of exporters. Now, if an exporter is benefitting from a cheaper rupee, why would a minister say – ‘it’s not required’? A stronger rupee is a market-determined thing. It is only when extreme fluctuations happen, the Reserve Bank of India intervenes. If today the market is determining rupee to wherever it is, we must understand that’s because of the market situation. The government has not been interfering.
If India were to be an export-driven economy, the value of rupee would have mattered and being where it is, it may not have helped the exporters. The fluctuation of currency has been a regular feature for two years now.
Exports have grown in the last six months. This has happened in these trying circumstances. The exports have grown and they have been growing consistently. The exporters’ performance suggests that rupee might not be the only issue which will determine export performance. Rupee’s appreciation matters, but that might not be the only factor which will make a big difference.
Now that the government has completed three years, what’s the agenda for the next two years?
Make in India will be reaching its 3 years in September this year. We are looking at ensuring that India becomes a manufacturing hub. India has skilled manpower which has to be effectively utilized. Agriculture can’t absorb them anymore. IT and services, and even sectors like education, health tourism, wellness can’t be the biggest employer…you need manufacturing.
We ourselves are a very big market for consumer essentials, fast-moving, perishable goods. We need manufacturing for ourselves and for exports. We also have a manufacturing policy of 2011, which tells us 25 per cent of the gross domestic product should come from manufacturing.
The Indian government is pushing for ‘digital’ and ‘skill’, so we need to integrate them to make sure India becomes a manufacturing hub. We have to work in the context of Industrial Revolution 4.0 as robotics and artificial intelligence is growing in a big way. We need our skilling to be more purpose-driven. Manufacturing policies should reflect the changes coming into the society. The major thing I will be looking at is consolidating ‘Make in India’ and pushing towards Industrial Revolution 4.0.
What’s the biggest leadership lesson to learn from Prime Minster Modi?
The dedication, versatility and commitment with which he deals with subjects. He is truly an inspiring task master.
BW Reporters
Suman K Jha was the deputy editor with BW Businessworld
