US eager to support and partner with India to bolster mutual economic growth: Penny Pritzker, Secretary of Commerce, US

Ms Penny Pritzker, Secretary of Commerce, US Department of Commerce was here in Mumbai today to attend an interactive session with the Indian industry organised by Confederation of Indian Industry (CII). She said that the purpose of her visit in Mumbai and at the Strategic Dialogue in New Delhi was to open up new avenues that can help reinvigorate and deepen the economic ties between US and India. She said, “The United States has a vested interest in seeing India succeed, in seeing this nation reach its full economic potential-and we want to be an essential partner in meeting your goals.”

Secretary Pritzker said that she believes that businesses can act as key bridges between the two nations and their economies and they can be the cornerstones of friendship and sources of strength for the US-India relationship. Owing to her association with Indian partnerships during her career with the private sector, Ms Pritzker said that she completely understands the huge important of business connections. She emphasized that the actions of her team will continue in the rest of the week with the Strategic Dialogue, which is a mechanism to reinvigorate, re-energize and strengthen the US-India economic relationship.

According to Ms Pritzker, developing infrastructure, improving manufacturing and encouraging government to create a business climate that is more open to global investments are the three key areas that US would like to focus on for its initial efforts. She said that these objectives are in line with the priorities set by the new government led by Mr Modi. Ms Pritzker assured that the US is willing to support India by sharing its best practices and all possible knowledge and expertise to succeed in these areas. She expressed optimism that the bilateral trade between India and the US that currently stands at USD 96 billion has the potential to grow in multiples. She urged Indian business leaders to come forward and take the lead for the same.

Mr Ajay Shriram, President CII and Chairman & Senior Managing Director, DCM Shriram Ltd. said that the results of the 2014 general elections spell the aspiration for stability and growth. He lauded the new Prime Minister’s initiatives and his maiden budget. Expressing the government’s clear intent to promote India as an investor friendly destination, Mr Shriram said that the investment relation between the two nations is strong in both directions and both have contributed significantly to each other in terms of investment capacity, skill sets, employment opportunities and social development. He added that CII believes that bilateral economic engagement can jump-shift rapidly in the wake of the US economy’s recovery and Indian economy pulling through a trough.

Citing that the two countries enjoy not only strong trade ties but also meaningful human interaction, CII President Mr Shriram said that there existed a huge opportunity for partnership in the areas of cyber security, defence, agriculture, education & skills development, energy security, entertainment and media. He expressed the need to get over the trade stagnation witnessed by the two nations in the last two years and set the target for economic engagement at USD 500 billion as the next step in strengthening bilateral ties.

Mr Chandrajit Banerjee, Director General CII, said that CII hopes to strengthen its ties with the US Department of Commerce further in the years to come. He said, “CII is glad to see the resumption of several bilateral dialogues, including the US-India Strategic Dialogue which is scheduled to take place tomorrow in New Delhi. We hope that other dialogues such as the Trade Policy Forum, Private Sector Advisory Group, Commercial Dialogue, among others will soon resume. I also hope that the US-India CEO Forum can be revitalized—it could be a tremendous platform.” He assured that CII is committed to strengthening and reinforcing the bilateral ties between the two countries.

The US is India’s second largest trading partner, and India ranks 11th in USA’s list of trading nations. The two-way trade grew more than five-fold since 2000 and currently stands at more than $96 billion. American and Indian companies invested over USD 28 billion and USD 9 billion in India and US, respectively, resulting in significant job creation.

CII Proposes 100-Day Agenda for New Government

Unveiling the CII action theme for the year as ‘Accelerating Growth, Creating Employment’, Mr Shriram noted, “With slowing growth and high inflation adversely impacting employment, CII will urge the nextGovernment to focus on reviving growth and generating new jobs.”

In his press conference, Mr Shriram added that CII has proposed a strong 100-day action agenda for the new governmentto boost growth. “A strong economic revival package and right implementation of policies by a fresh Government can help create as many as 150 million jobs in the next ten years,” he stressed. “Industry is looking for top policy steps such as introduction of GST, easing of interest rates by 100 bps, keeping subsidies at 1.7 per cent of GDP, and restructuring of labour laws to promote mass manufacturing.”

CII further stated thatwithcontinuing robust reforms, GDP growth could be taken back to the 8 per cent level in the next three years. “Amarket-friendly environment is required that would proactively promote investments, business and entrepreneurship,” said Mr Shriram. Mass manufacturing sectors and labour-intensive services sectors need to be encouraged, he continued.

Key priorities for CII in the coming year will be in the following ten areas: education, skills, economic growth, manufacturing sector growth, investments, ease of doing business, export competitiveness, legal and regulatory architecture, labour law reforms and entrepreneurship.

CII has strongly called for implementation of the following policies, among others, in the first 100 days by the next Government:

–          Introduction of GST

–          Containment of subsidies and fiscal consolidation

–          Monetary easing – reduction in the repo rate by 100 bps

–          Maintenance of a competitive exchange rate

–          Fast-tracking stalled projects and increasing public capital investments

–          Timely implementation of DMIC and NIMZs

–          Setting up of state level mechanisms similar to Project Monitoring Group which will review and monitor projects at state level

–          A strong inter- Ministerial co-ordination group to resolve sticky issues like mining, raw material securitisation for sectors like Steel, etc

–          An institutional mechanism to renegotiate the terms of concession in Public Private Partnership Contracts to salvage stranded investments

–          Expansion of e-governance & technology based initiatives to simplify processes and online monitoring of application forms

–          Time-bound approvals by introducing ‘deemed approvals’ in case of delays beyond prescribed limit

–          Restructuring labour laws including introduction of Fixed Term Employment for industry to hire manpower on short term assignments

CII would continue to provide inputs in the areas of direct and indirect taxes to help India emerge as an attractive destination for business.

In agriculture, CII’s Food and Agricultural Center of Excellence (FACE)is studying the impact of Agricultural Produce Marketing Committee Act (APMC) which needs to be revamped to delist perishables. CII will also undertake a study on gas pricing and its impact on end-users, macro-economic indicators and the investment environment.

In manufacturing, it will work with concerned Ministries and State Governments on delayed projects and also on specific policies, particularly for labour-intensive sectors. CII has called for quick implementation of the National Manufacturing Policy and would bring out a report on Mass Manufacturing policy.For MSMEs, CII plans to launch a Finance Facilitation Centre and initiatives to link Indian SMEs with global value chains.

In services, CII will constitute National Services Competitiveness Council and develop a sectoral strategy for doubling of services export by 2025. It has targeted several sectors such as Tourism and Hospitality, Financial Services, Telecommunications and Professional Services for export promotion.

For better quality higher education, one of the CII interventions will be to launch the 100-100 program where 100 CII member companies will create 100 Faculty Sabbaticals who will spend two/ three months in industry to explore multi-level partnerships like research, curriculum, and skills development. In skills, CII will help implement the National Skill Qualification Framework (NSQF) and continue to work on Sector Skills Councils.

In labour laws, CII will create platforms for sharing best practices from industry which have helped in fostering better industrial relations within the current framework. In addition, it will work with its membership, Trade Unions, Central and State Governments for creating consensus on various issues.

To improve the ease of doing business in India, CII will present to the government best practices in the states which can be emulated in the areas of land acquisition, contract enforcement and taxation. CII has been strongly underscoring the need for a reduction in transactions cost of exports to overcome difficult business conditions abroad. In this context, CII has constituted a task force on transactions costs which proposes a framework for building an efficient trade facilitation mechanism in India.

In order to support entrepreneurship, CII will significantly expand its PPP initiative “India Innovation Initiative” to select the most innovative entrepreneurs through a pan-India competition. 

Working as Partners – Aligning Aspirations

There is little doubt that India’s best asset is its large and growing workforce, a cohort of increasingly literate, innovative and hardworking young people.

Indeed, India’s rise towards an inclusive and high-growth economy is predicated on unleashing the dynamism and productivity of its workers. It is in the context of creating opportunities for India’s youth that Industrial Relations must be viewed in India. 

Action Agenda for the Manufacturing Sector

Manufacturing is the engine for India’s economic growth and plays a pivotal role in the country’s sustainable and equitable growth. It has the potential to generate employment for a skilled, semiskilled as well as a non-skilled workforce and capitalize on the demographic dividend that the country enjoys.

While the sector has played a fundamental role in opening up the Indian economy to foreign investment and investors, created opportunities for domestic manufacturers to grow and compete in foreign markets and placed India among attractive destinations for investments, Indian manufacturing has a long way to go before it achieves the National Manufacturing Policy (NMP) set target of contributing 25 per cent to the GDP, and realizes it’s true potential.

Given the strong potential and the far reaching impact of manufacturing in employment generation, investments and infrastructure development, both the Government and the industry acknowledge

its strategic importance and see a central role for manufacturing-led industrial development of the economy. However, the current economic environment presents various challenges. Macro

economic issues such as moderation in GDP growth, rising inflation, high interest rates and the widening current account deficit, coupled with micro-economic issues such as a complex business regulatory framework, sluggish implementation process of industrial reforms, high compliance costs, inadequate infrastructure, rigid labour norms, time consuming clearances and approval processes, land acquisition issues, rising instances of industrial disputes and non-availability of requisite workforce have impacted the entire industry. This environment has not only hampered manufacturing growth, but also the overall growth of the Indian economy.

Therefore, the need of the hour is a robust decision making and policy implementation system to revive and re-ignite growth in manufacturing. The Government has already initiated the process of implementing the NMP and notified 12 National Investments and Manufacturing Zones (NIMZs) across the country. These zones will help overcome various challenges and issues faced by

manufacturing today and facilitate high manufacturing growth, but urgent need would be to expedite setting up these notified NIMZs. Complementing these measures is the 12th Five Year Plan focus on

promoting manufacturing by developing capabilities across sectors, especially through technology, innovation and R&D in core sectors, and the setting up of the Cabinet Committee on Investment (CCI) to fast track clearance for large projects.

However, bringing convergence on important policies such as the Land Acquisition and Rehabilitation Bill, the MMDR Act, and the implementation of GST as well as the alignment of national and state manufacturing priorities will be essential for manufacturing to achieve its true potential.

CII has submitted a list of large scale manufacturing projects to the Government for consideration by the CCI with a recommendation that projects below Rs 1000 crore be reviewed as well to spur the investment cycle in the country.

CII is also working with the Government in easing business regulations in the country and is constituting a ‘Task Force on Ease of Doing Business’ that would make recommendations to simplify doing business in India. CII will work closely with the Government and various stakeholders to make manufacturing in India more attractive.

Undoubtedly, a strong manufacturing sector and its healthy growth is crucial for ensuring high GDP growth, creating additional employment opportunities, reducing inequalities and increasing investments and global competitiveness. CII hopes continuous time-bound efforts and ongoing reforms will help put manufacturing back on a high growth trajectory.