Budget set to pack in sops for manufacturing

Commerce Minister Anand Sharma Says No Review Of New FDI Norms

 BUDGET 2009-10 is expected to have a special package for the manufacturing sector that will include tax incentives, says commerce and industry minister Anand Sharma, who is set to take up the issue of protectionism with the US trade representative Ron Kirk in Bali later this week. In an exclusive chat with Amiti Sen and Shobna Chadha, the minister talked about a wide range of issues, including the new FDI policy and his resolve to keep it unchanged as of now.

What is the importance of the FDI policy in sustaining growth and do you think there is a need to review the current norms?
Foreign investment is an important component in India's growth...It is welcome particularly in infrastructure, and other value-addition sectors in agriculture like food processing. The new FDI guidelines was the result of a considered decision taken by the empowered group of ministers (eGoM) after bringing in all points of views. There is no question of a comprehensive review at the moment. Once a view is taken, we have to see its impact and see how it functions. We have to first assess, before we comment to see how it is functioning. Moreover, the eGoM has ensured that in all sensitive sectors, care is taken to protect the caps.
Our exports are dependent on other economies which are doing badly. How do you plan to help the sector?
We are already looking at a special package for exporters, manufacturing and labourintensive sectors. By giving incentives, we will make Indian exports globally more attractive. While some of them will play out in the Budget, others will come in the foreign trade policy in August. THE US' proposed changes in its tax policy might hurt investments in India. Do you have plans of taking up the issue?
I spoke to the US trade representative Ron Kirk today (on Monday) and we have decided to meet at the Cairns meeting in Bali on June 6-7. I plan to take up the issue with him there. We also plan to exchange our views on how the global downturn is affecting various sectors and how we need to deal with it. The issues which came in the way of the World Trade Organisation (WTO) discussions last year also need to be discussed and sorted out. We remain committed to that.
It seems private equity investors and other funds want to come back to India with stability in the government and equity climate. Do you have specific plans of encouraging them?
These are decisions which the FIIs and funds have to make. It is true that India remains a safe and attractive destination for investors, both FDI and FII. And that is getting reflected in the FDI which is coming in. We have had stable FDI coming in last year at $27-28 billion. In the first quarter, we have had $20 billion coming through FIIs. This is because they are sure of stability of the Indian economy, and the fact that it still remains vibrant.
At the WTO meet last year, the Indian industry was apprehensive about the US trying to pressurise India to be a part of the talks on bringing down tariffs on certain sectors to zero. How do you propose to tackle that?
Non-agriculture market access (Nama) issues are fairly complex. The two groups on agriculture and Nama came up with their reports late last year. These may be useful base documents for further negotiations. We are positively inclined towards carrying forward talks. But this is a subject which will be discussed further in the eGoM in WTO. Right now, the Bali meeting of the Cairns group will provide a useful platform for further discussions.
    amiti.sen@timesgroup.com 

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