Make in India Campaign to Help India Adapt to Changing Global Demand: Commerce Secretary

There is a strong need for India to connect to the global market and the Make in India campaign is helping India adapt to the changing demand scenario in the world today. This was stated by Mr Rajeev Kher, Commerce Secretary, Ministry of Commerce and Industry, Government of India at a Conference on “Expanding India’s Share in World Trade: Manufacturing Revival Holds Key” organized by Confederation of Indian Industry (CII), Ministry for Foreign Affairs, Sweden and Embassy of Sweden in India in New delhi today.

Mr. Kher pointed out that India has 1.4 – 1.5% global share in merchandise exports, 3-3.5% global share in services exports and about 1.7-1.8% composite share. He added that India’s merchandise trade reached $764 billion in the current fiscal year making it $1 trillion taking into account the services exports.

Mr. Kher observed that global dynamics were changing. The European Union is on the decline. Africa continues to grow. South East Asia is growing at moderate rate. Japan continues to struggle to revive its economy. China’s growth is halting. Interestingly, small trade share with Central Asia and Latin America shows India’s potential to increase trade with these regions. He felt that India needed to adapt to these changes and produce goods which could be exported to the regions exhibiting growth and it was in this backdrop that he felt that the Make in India campaign was very timely.

Highlighting some of the government’s initiatives, the Commerce Secretary stated that India is creating foreign trade policy eco-system to foster trade.  He called for a change in mindset in India. He was of the view that the tariffs mental bloc has to change. While tariffs do play a role, it is only part of trade policy.

The Commerce Secretary suggested that the value chain approach needs to be brought in to spur competitiveness in tariff structures. He stated that Indian companies should also look at other countries to fragmentize manufacturing activities and harness competitiveness. Locational advantage is crucial to being part of Regional Value Chains or Global Value Chains. In this context, he suggested that Indian companies could look at investing Cambodia-Laos-Myanmar-Vietnam (CLMV) region.

Mr. Kher pointed out that over the last few months, the Indian manufacturing sector has been showing erratic behavior. According to him, the sector needed some stability and hoped that the slew of infrastructure development initiatives that had been undertaken would help give a boost to the sector.

Mr. Kher also observed that the role of services sector in manufacturing cannot be undermined. He felt that ease of doing business is another important component that would ensure better manufacturing growth. Undertaking measures to promote trade facilitation would also help provide a boost to this sector.

In his speech, His Excellency Mr Joakim Reiter, Deputy Director General and Head of the International Trade Policy Department, Ministry for Foreign Affairs, Sweden said, “To propel India’s manufacturing growth, domestic and external sector reforms are needed. Countries need to embrace Regional and Global Value Chains. Countries are investment takers. The idea of high tariffs and investment coming in may work in a limited sectors and limited time. But in the long run, competitive rules will attract investments. So countries should focus to develop right ecosystem for investments to thrive not on incentivizing short term investments.”

Mr Harsha Vardhana Singh, Former Deputy Director General, WTO was of the view that that trade facilitation and other reforms needs to be compressed into a shorter time frame. The trade policy discourse in changing among industry and governance structures. He also pointed out that India needs differentiated IPR policies. China is now focusing high-tech and high-quality products to be part of high value chains and thus coming up with state of the art IPR. Effective protection and infant industry arguments would need to be challenged. Even in finished goods, competition is required, he added.

Mr Pravir Kumar, Director General of Foreign Trade, Ministry of Commerce and Industry, Government of India stated that India has gained a position of strength in services. However, the corresponding growth has yet to be achieved in the manufacturing sector. Jobless growth has its limitations given India’s young and growing population. It is estimated that 1% manufacturing growth can create 30 million new jobs. Manufacturing sector will also lead to equitable growth where the fruits are enjoyed by all. Development is sustainable if it includes the lower strata of society.

Mr Kumar added that the government has incorporated digitization. Businesses can apply online for IEC code and within 2 days it would be processed to promote young entrepreneurs to enter the trade field.

Sharing his thoughts on the issue, His Excellency Mr Harald Sandberg, Ambassador of Sweden to India said, “Sometimes, simple measures make huge difference. In my opinion, competition is important. It doesn’t mean free market with no rules but competition under rule of law, free rule based system where rules are predictable and apply to all. Industrial growth is achieved through competition. A typical car produced in Sweden has about 50% foreign value addition.”

Culture, Commerce and Connectivity to be the hallmark of India’s relation to the CLMV Countries: Ms Nirmala Sitharaman

Culture, Commerce and Connectivity will be the hallmark of India’s relation to the CLMV Countries. This was stated by Ms Nirmala Sitharaman, Minister of State for Commerce & Industry, Government of India. The Minister was speaking at the 2nd India – CLMV Business Conclave, “ASEAN – India Economic Engagement: The Way Forward” organized by CII and the Department of Commerce, Ministry of Commerce and Industry here today.

 

 

 

According to the Minister, India’s Look East Policy had become more a more focused “Act East” Policy. There was now a greater stress on action and specific projects to help integrate with the Asian region.

The Minister mentioned that the threshold to the CLMV region was India’s North East and the government was taking steps to promote the development of this region as well as its connectivity to the CLMV countries.

The Minister pointed out that India-CLMV trade was concentrated in only a few items and there was tremendous scope to deepen and widen the trade basket. The Minister mentioned that several sectors hold potential for trade and investment between India and the CLMV countries. These included skill development, agricultural products, manufacturing, project exports, energy among others.

On the wider India – ASEAN relationship, the Minister mentioned that the government was aiming to increase India-ASEAN trade to $100 bn by 2015 and to double it to $200 bn by 2020. According to her, this would only be possible through greater connectivity with the region and this required improved road, rail and sea links. The Minister stated that the various infrastructure projects undertaken to improve connectivity were now under advanced stages of completion and the focus would now shift to the creation of soft infrastructure.

 

In his address, Mr Rajeev Kher, Commerce Secretary, Department of Commerce, Ministry of Commerce & Industry stated that India’s trade with the CLMV region amounted to USD 13 billion in 2013-14. Much of that trade, he observed, was with Vietnam. He felt that there was tremendous scope to expand trade relations with the other countries in the region.

Mr. Kher highlighted the need to establish regional and sub-regional value chains in order to maintain and sustain long-term economic relationship with the region. He stated that India industry could partner with businesses in the CLMV countries to reach out to newer markets. He felt that by joining forces, Indian and CLMV industry could take advantage of the trade agreement architecture that the CLMV countries have to access newer markets.

 

The Commerce Secretary stated that the Government was proposing to set up an SPV to promote investments by Indian business in CLMV region. According to him, Indian industry could take advantage of the Lines of Credit and Buyers Credit schemes to promote project exports into the CLMV countries.

According to Mr. Ajay Shriram, President, CII stated that connecting the CLMV countries with India can yield numerous benefits. These include larger markets can bring about economies of scale in production and enhance competitiveness. Integration of markets can facilitate the movement of production networks and attract more foreign direct investment (FDI) along with the benefits of knowledge and technology transfer and opportunities to connect to regional and global supply chains. He pointed out that sectors such as skill development, agricultural products, manufacturing, project exports, energy hold tremendous potential to boost trade and investment between India and the CLMV countries.

According to Mr Sanjay Kirloskar, Deputy Chairman, CII (Western Region) and Chairman & Managing Director, Kirloskar Brothers Ltd., India and CLMV, as fast developing Asian regional economies, were facing identical political and business environment in the region. The two regions would certainly benefit by cooperating with each other in the emerging global economic order.

Earlier, welcoming the participants, Mr. Chandrajit Banerjee, Director General, CII stated that Indian industry looks forward to adoption of Regional Comprehensive Economic Partnership,. He felt that this would help promote greater regional integratrion with ASEAN and in particular the CLMV countries.