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At the World Economic Forum in Davos, Piyush Goyal, Railways Minister, Commerce and Industry Minister spoke about the government's strategic outlook for India.
He said, India is a land which has the power of democracy, the power of demography, the power of leadership, the power of talent, all of which culminates in the power of opportunity.
"Our job as government would be to harness each one of these powers, strengthen each one of these opportunities – the opportunity to bring technology, the opportunity to provide capital and an open framework in which we can invite capital both domestic and international," he added.
According to him, India is poised to be one of the world’s biggest economies and the best place to live and work in.
The vision that the Prime Minister has set for the nation that we work as an organic entity. Government works as a facilitator to businesses, said Goyal."We have set for ourselves the mantra that 'government has no business to be in business' and we will focus ourselves on really helping people come to India, engage with India, invest in India, help us innovate, help us engage with the technology that is the kind of story that I see ahead of us," he added.
Speaking on India as investing opportunity he said, "There is a lot of enthusiasm to invest in the land where they see the opportunity, where they see the huge demographic dividend playout, where they have the confidence that democracy is going to ensure a fair and balanced treatment for everybody. Large opportunity that a billion plus people aspiring for a better quality of life offer.
Below is the transcript of his interview with CNBC-TV18's Shereen Bhan
Q: Let me start by asking you in terms of economic imperatives and economic priorities, this is the second term of the Modi government. the first term saw reforms like Insolvency and Bankruptcy Code, the goods and services tax (GST) being put forward. I ask you this in the context of the immediate situation that India is faced with, as well as more medium and long term perspective, what are the economic priorities that your government wants to take forward?
A: India being the part of the global world did have to suffer the consequences of the uncertainties that the world economy is going through in the last couple of years, but largely it looks to have plateaued out, and looking at the November-December situation, things have once again started showing an upturn. When I talk to business persons around the room, and around the different engagements I have had at Davos, there is a lot of enthusiasm to invest in the land where they see the opportunity, where they see the huge demographic dividend playout, where they have the confidence that democracy is going to ensure a fair and balanced treatment for everybody, where they see huge talent, very committed young work force, skilled, wanting to innovate, wanting to participate in the great growth story ahead of us and the large opportunity that a billion plus people aspiring for a better quality of life offer.
The enthusiasm is quite infectious when you are at Davos and you see everybody coming and expressing that we have this investment plan, I am going to add so many more people to my workforce - at least four-five companies have told me that in the next five years they see more than 50 percent of their total work force operating out of India for their world operations and some of them are really big names.
I think the vision that the Prime Minister has set for the nation that we work as an organic entity. Government works as a facilitator to businesses, we get the clutches out of the business and help domestic industry, domestic services sector stand on its own feet - empower them rather than only throw in the sops. And the fact that we have set for ourselves the mantra that 'government has no business to be in business' and we will focus ourselves on really helping people come to India, engage with India, invest in India, help us innovate, help us engage with the technology that is the kind of story that I see ahead of us.
It is the innovators who are going to rule, it is the technologies of tomorrow, which India is going to work on. The young startsups, the people with fresh entrepreneurial ideas, people working with the commitment to achieve a goal is quite exciting times for us in government, and every one of my engagement whether in India with different business groups, with different stakeholders, shows us that as partners when we all work together we can truly transform India.
Q: May I ask you much more immediate question and this in the context of the fact that there is a demand and a clamour to try and stimulate consumption at this point in time. The expectation is that there could be something that the budget will announce the Union Budget, which is a couple of weeks away on personal income taxes for instance because the government has already acted on a significant cut in corporate taxation. The expectation also is that can there be a deviation perhaps from the fiscal consolidation roadmap because the government will need to pump-prime the economy. We did a dipstick poll of about dozen Indian CEOs here in Davos and most believed that the government should go in for fiscal expansion, what is your own view, do you believe that is necessary and warranted today?
A: As a minister of the government, I cannot express any views before the budget and you know that and you are not going to get an answer on this one.
Q: Do you believe that there is a need for the government to try and pump-prime the economy from where it is today?
A: I believe the economy is well poised to take off from here and the government is committed to ensure that all of us work together to make that happen.
Q: One of the things that you articulated was the fact that this government is now looking at strategic disinvestment and privatisation. It was a stated objective in term I as well but it did not go through, you are now much more actively pursuing this in the second term. How quickly do you believe we will be able to see the government move on this? Air India for instance is on the block, BPCL is another company where the government has stated its objective of privatisation and will you ever consider banks to be put in that basket of privatisation?
A: First of all let me tell you in the first term, we had inherited an economy which was in a pretty terrible shape and it was largely spent in putting the economy back in shape and getting confidence of the world back into India. At that stage, if we had started looking at disinvesting some of these jewels, we wouldn’t have got a great value for that and I am glad we did not venture to do that because I believe now when we are out in the market with these assets, we will be able to fetch a far better value. Take for example - Container Corporation of India (CONCOR) it is a company under the railways. To my mind, it will be the best way for anybody in the world who wants to come in to the logistics business of India and a growing economy, which is going to double its economy in the next five years and I think once we cross that USD 4000 per capita mark then it is going to be all the way up. CONCOR is exciting journey for anybody who wants to get into logistics.
Air India, if I wasn’t a minister, today I would be betting for Air India. It has some of the best bilaterals world over, many of them are unused; somebody with deep pockets, and there are many companies which have very low carry on their investments, very low cost to their capital that they have put in and with current leasing rates on aircrafts being what they are, a well-managed efficient Air India with a lot more good aircraft put in, using these bilaterals is nothing short of a gold mine to my mind. So this is the time when - Aramco, I met with this Saudi ministers yesterday. His entire focus of the conversation was I have a USD 100 billion, which I want to invest in India. He said, show me the opportunity, give me the opportunity and I want to do it quickly, my prince is very unhappy with me that I have not yet done that.
Q: So what did he say about Bharat Petroleum Corporation (BPCL)?
A: They are very excited about the opportunity. So, I think we have seen a lot more interest, across Davos in a last two days. My own engagements show me that smart businessmen and you certainly have a bunch of smart people attending Davos very clearly can see that India is the place to be, India is the place to expand and India is the place to invest for a better future particularly considering that they can see that India today is a land where you have equal opportunity, you can work with integrity, you don’t have to run the corridors of power, you don’t need a corporate communications director sitting in Delhi anymore and that is the India that Prime Minister Modi is trying to create.I
Q: You didn’t answer my question about privatising public sector banks, is that likely to be put on the agenda?
A: Well, our decisions are all made known to everybody in public domain as and when they are made. I see no reason to commit ourselves to one or the other, we have something like 230 PSUs, I will have to start running down that list with you. But having said that and I do hope anybody in the room doesn’t have a wrong impression that the public sector banks haven’t done a good job. World over, and if I may take the example of the world’s biggest economy, way back in 2008-2009, it was no government bank that caused the economic collapse of the world, they were all private banks.
We in India have enough private banks who did not do us any great glory but on the contrary if you ask me, banks which have been run by the government for the last 30-40 years have done some great service to the nation. They have provided the capital to the entrepreneurs when none else would, they have been willing to handhold and stand by entrepreneurs. An organisation like IDBI or ICICI in its earlier avatar State Bank all of them are responsible for the large amounts of infrastructure we have been able to create. Industry going to the back waters, I don’t think a Mahindra would have been a Mahindra today without all of these banks supporting them through good times and bad times.
It is only that what we did is bring to fore a lot of the problems that had accumulated over the years were not recognised as such over the years, I think we did a good job cleaning up the banks, strengthening them and it is all the way up for them from here.
Q: I think that is something that the government also is hoping will be the case.
A: We are also looking at innovative ways to make liquidity available to borrowers. I will give you a simple example for exports. Export financing, as a part of the overall cleaning up process, also went through its stress, and I think over the last couple of years we saw export financing fall by about 30-35 percent.
When I came into the commerce ministry, we sat down with Mr. Rajnish Kumar and several other bankers and we worked as joint stakeholders, as partners, in trying to right size this problem. We came up with a solution in about two months’ time. Very soon in the next week maybe, you will be hearing an announcement of a new scheme for export financing, where we are backstopping any losses that exports could lead to for any of the banks up to the extent of 90 percent - on principle and interest.
Now, that straightaway moves any credit given to exporters whether in foreign currency or in Indian rupees to an ‘AA’ rated credit. With that they do not need too much capital, with that they are much more confident to lend, the Export Credit Guarantee Corporation (ECGC) will support with a 90 percent guarantee of repayment in case they have a loss. We have liberalized the rules. The bankers wrote the policy, which we have adopted and our expectation is that in the next three years, we will be 250 percent of the current outstanding on export credit.
Dollar credits will be available at Libor plus between 100-150 basis points and rupee credit will be available at repo-linked rates, repo plus 150-200 basis points. Now that will make us comparable to any level of interest cost anywhere in the world.
Q: What is the realistic expectation now on India signing up for more bilateral’s, for more multilateral agreements, the Regional Comprehensive Economic Partnership (RCEP) invitation to rejoin the negotiations has come, is India going to accept that for the talks in Bali, what should we realistically expect?
A: I have articulated on many occasions that RCEP was an unbalanced trade agreement which was really not fulfilling the guiding principles on which RCEP was started about eight years ago and therefore India chose not to participate in it. Out of the RCEP countries, we already have trade agreements bilaterally with the Association of Southeast Asian Nations (ASEAN) 10 countries, with Japan and Korea. We were in any case close to concluding negotiations with Australia which we have restarted now and I think in the next six or eight months we can quite easily close a bilateral comprehensive partnership agreement with Australia.
So, the only country left would be New Zealand with whom we have about USD 300-400 million trade and not much potential with the small population that they have. They are rather looking for Indian market, which we cannot open for dairy. So, China was the only country left and effectively RCEP was becoming free trade agreement (FTA) between China and India. I do not think India is ready to engage, unless we see greater degree of transparency, open government, regulatory practices being followed, and a greater market access for Indian goods and services on a reciprocal basis.
I can assure you and through you, everybody in the country and in the world that today India ensures that trade stands on its own legs. We do not let diplomacy overtake trade and to that extent I am very excited about our discussions with the United States of America. We will close the loop on some of the older issues and hopefully start discussing a much greater degree of cooperation through a FTA with the United States of America.
Britain has already reached out to us and once Brexit is done with, hopefully on January 31, we are going to start talking to Britain to look at a FTA with them. European Union (EU) has also engaged with India through several countries, the German Chancellor, the French President, the Hungarian minister met me, several of the participants of EU have reached out to the Prime Minister, and some to me. I had a very good engagement yesterday on these lines, today I have some meetings to take this forward and I think we are going to be back on the negotiating table for an FTA with EU.
We have discussed yesterday with Switzerland to see if we can once again get back into negotiations with those four country grouping European Free Trade Association (EFTA) possibly. Canada has reached out, we are going to talk to Canada and consider having a FTA with them. Yesterday, the Mexican minister has expressed desire. Now, it is for all of you to consider, why is every country and every group in the world wanting to talk to me and talk to India. I rest my case.
Q: Just very quickly to specific questions on what you said, would it be fair to assume that to we are not going to accept the invitation to rejoin the conversation on RCEP?
A: We will let you know when we decide.
Q: You talked about the India-US FTA, while that will be a conversation that will take place, what about the mini deal that was already in the works and the expectation was of closure?
A: Trade negotiations, I think we all understand are very complex issues. You are not negotiating trade with deadlines and in a hurry. In fact, I feel very sorry to say this, even though our government has never reneged on any commitment and therefore we have fulfilled our FTA commitments with several countries with whom FTAs were entered into in the 2009 to 2012 period, but sadly many of them did not have the level of stakeholder consultations that we do, before we agree on any issue.
It did not protect India’s interest on the services side, on giving greater market access for India considering that there were different prosperity levels between different nations at that point of time. I think we could have done a far better job in negotiation and I for one am never in a hurry, I let negotiations take its time, but when it happens, it happens for the good of India.
Q: It is still time away?
A: You never know, it could happen tomorrow or it could happen in some time.
Q: Since we were talking about trade, let me ask you a follow-up question on that. There is concern on the fact that India might be going into an era of hiking import duties, is that a legitimate fear to have? Also what will it mean in terms of short term impact on the economy? You already have the provision to use safeguard duties, anti-dumping duties if you feel that it is warranted in a particular category or for a particular product, so why would there be a consideration to look at an overhaul or a review and hiking import duties across the board if that is being considered?
A: We are always open to all sorts of suggestions. There are areas where you use safeguard duties or countervailing measures, there are areas where you find that there has been an effort to under-price goods. Some industries come and complain to me that the cost of raw material is more than the cost at which goods are being imported. We recently busted a racket where sports goods were coming into the country at abysmally low prices. A badminton racket at 30 cents, ridiculous prices for products that are coming into the country. We are finding some of the non-leather footwear coming in at as low as USD 0.5 or 40 cents for a pair of shoes, now these are areas where very often there is misclassification, very often there is under-pricing. There may be areas where we will have to take some action either on the people who are doing the wrong or through trade measures or through import duties. All options are on the table, we assess which is the best way to ensure that wrong practices do not happen.
We never usually have a problem in any inputs that come in from Europe, from the United States, and even from Africa but there are certain geographies where we have to be very concerned. There are certain misuses of the free trade agreements and sometimes, I fear that there is an effort to circumvent product origin rules through the free trade agreement route, in those areas we look at even more innovative solutions.
We will have to also protect domestic industry. Whenever domestic industry comes to me with a problem, I have to assess it. Every country in the world and I talk to trade ministers across the world, everybody raises issues of their concern. In fact, India was a hesitant partner of industry in the past. Under the Narendra Modi government, we are willing to stand for industry, we are willing to work with industry, we are willing to protect their interests and we are willing to engage with other countries to ensure that our industry gets fair, equal and reciprocal access without which we will obviously have to have countervailing measures.
Q: The concern is not just with the Citizenship Amendment Act (CAA) but it is on what could perhaps follow which is the National Register which the government has said that the national population register is being done at this point in time but not the National Register of Citizens (NRC). Capital is a coward, let us be clear about it and capital is coward and it will go where it feels safe. So when you talk to investors what is it that you will tell them on this specific issue because this is causing a degree of unrest?
A: But every country has a population register, I need to know my population. I need to know how many people are there, I need to know how many people deserve affirmative action or support and I don’t see where the concern comes from. NRC, there is no discussion as yet. I think it is unfortunately a bogey that has being sought to be created and mind you there will obviously be a few people and there is political opposition in every country, and they will use every effort to misguide or misinform or misinterpret. Let me assure everybody, a population register is something where every country does, every country wants to know who is in that country but it is no relation to citizenship, it is the population. I need to know how many people are there in Mumbai if I have to provide for drainage systems and water for them. I need to know how many people live in village, so that I can assure everybody gets a home, everybody gets a toilet, everybody gets electricity, everybody gets access to free healthcare, which we are doing to provide healthcare to 500 million people across the country, the poor and the lesser privileged.
So, to my mind it is a bogey, and in the last two and half days that I have been here not one investor, not one minister and not one engagement on public platform this issue has come up. So, it is a bogey that the world has seen through and everybody in the world recognise, I mean I wonder if America has opened up the doors so that each one of us could apply for citizenship and get a living in America, nobody does that. We all have rules of the game, but if anybody requires for example Adnan Sami, the very famous singer, we all love hearing him and like him 600 other Muslims who were no getting a fair treatment applied for citizenship and in the last five years have received citizenship in India and so, is it with other countries or other parts of the world.
Yemen had a problem, India evacuated a hundred and sixty thousand people from there. We did not ask them the colour of their religion when they wanted relief and rehabilitation. No other country in the world, the developed world did not lift a finger to do anything about it. There is a neighbour in which nearly a million people of a particular religion are openly being persecuted, where is the rest of the world, what are they doing about it that is the question to ask.
Q: The top 5 priorities on the economic calendar?
A: I think it has been very well articulated by CII at Davos that this is a land which has the power of democracy, the power of demography, the power of leadership, the power of talent, all of which culminates in the power of opportunity. Our job as government would be to harness each one of these powers, strengthen each one of these opportunities – the opportunity to bring technology, the opportunity to provide capital and an open framework in which we can invite capital both domestic and international.
We will have to handhold to see how we can make domestic industry both more competitive and working to world class standards. We will have to engage with the rest of the world on equal terms for equitable and fair opportunity for India and not just a one sided transaction. In all of this we are happy to partner, we are happy to work with our stakeholders across the world, across the country and this is one government which is a listening government, a government that engages with people across different sectors, we are willing to listen, we are willing to work with everybody and I have no doubt in our mind that we are poised to be one of the world’s biggest economies and the best place to live and work in.