Excerpts from Reporter’s Diary on CNBC-TV18 Watch the full show »
Commerce Secretary Nirmala Sitharaman says exports falling for tenth straight month is definitely something the government is trying to address. But Sitharaman says one needs to look at falling Indian exports keeping in mind that demand across the globe is depressed.
Speaking to CNN-IBN’s Pallavi Ghosh, Sitharaman says the government is trying to make Indian exports more competitive by announcing the interest subvention scheme.
The Cabinet today approved the interest subvention scheme that would allow small and medium sectors exporters to avail of loans from banks at a 3 percent lower rate.
The government has provided for Rs 2700 crore, the amount the interest subvention scheme will cost the exchequer, adds the Commerce Secretary.
Below is the transcript of Nirmala Sitharaman’s interview with CNBC-TV18’s Pallavi Ghosh.
Q: There are question marks raised that the Prime Minister goes on his visits abroad and what does he get back for India. Even as we speak exports are dipping alarmingly, does that worry you? What is the reason, what are you going to try and do to stop that?
A: For 10 consecutive months exports are coming down, it certainly is a matter of concern. I am not seeking consolation on the fact that exports not just of India but even let us say China who is much bigger than us is coming down because there is a global depression. Demand all over the world is coming down, peoples purchasing power even in countries abroad – our traditional export areas, are all coming down. What are we doing about it? We are interacting with the industry. We have in fact today come up with a interest subvention scheme which will include all exports of small and medium enterprises. Over and above that nearly 25 sectors which are labour intensive sectors, sectors which have the potential for better job creation are all being covered by this. This will mean that nearly 3 percent of interest subvention support will be given by us. It will be about Rs 2700 crore annually a burden on the exchequer but certainly we have provided that because we want to ensure that our exports become competitive.
Q: The cabinet also has approved that Foreign Direct Investment (FDI) and they have also given this clearance to three Small and Medium Enterprises ( SME ). Is that enough?
A: It may not be enough because the fall is definitely clearly happening but let me underline here and this is a point on which Piyush Goyal who did a press conference today to report on what happened at the cabinet has also elaborated. The fall in our exports, chunk of it, is largely due to the fall in crude oil prices. We import a lot of crude oil, do a lot of things to it and also export something out of it. That is one thing.
Second the fall in crude oil has also lead to the fall in terms of value in our exports. So, the quantum that you export has not fallen at all but because of the crude oil prices falling, because of the commodity prices falling, because of metals which constitutes some kind of an input for the exports are falling essentially because of these three main factors the value of your exports has fallen. So, the quantum has not fallen is a sort of consolation but because value is falling it is a worry.
Q: You talk about FDI for example, do we expect more FDIs now coming up for example in print media. Do we expect that kind of opening up to come in?
A: At the moment we have not touched print media at all.
Q: But do you plan to?
A: No. I am not even speculating on it because at the moment what we have done in the last tranche is to open up on 15 sectors but no newly. We have made the rules which govern them simplified where the cap was unreasonably on 26 which could go to 49 we have still increased but without changing an ownership. Obviously with 49 you don’t get the controlling stakes but where it was tat 74 we thought it was making sense to move it to 100 and therefore essentially the character has not been changed. Rules have been simplified so that the investor doesn’t have to spend too much time doing due diligence and also where some kind of a security check was happening anyway by having it done two times over we thought it was unnecessary, so we removed the second time’s security check. So, in other words in the last announcement before Diwali where we tried easing on 15 different areas we only made it simplified and where it was bringing in certain anomalies we have removed them and ensured that the composite cap kind of a regulation which we removed earlier will also mean something in these 15 sectors. That is what we have done. I don’t see anything happening drastically different from this in the near future.
Q: The Prime Minister of course himself made a very important statement and a kind of a reassurance to the corporate sector when he talked about no retrospective tax. But beyond that, have you moved and spoken to Vodafone beyond the arbitration, is those kind of negotiations on with them?
A: No, because when the arbitration is on, I am not sure any other kind of engagement on that matter can happen because that will be violative of the arbitration process. So, with retrospective tax issue with the arbitrators, we will wait for them to say. But very clearly the government has committed itself saying it shall not go on the route of retrospective taxation. Equally having said that, the Finance Minister has also made it plain that he is spending his time essentially to provide India with a simplified taxation framework. I am sure he is going to come out with that; that itself will make our lives easier in terms of taxation.
Q: Rahul Gandhi in his first reaction after the election results were out and many other opposition leaders said that it is time for the Prime Minister and his government to go back to governance. A lot of tall tales have been told, ‘Acche din’ needs to be brought back. What would you have to say to that?
A: I am very pleased at the speed with which Shri Rahul Gandhi wants the Prime Minister to work; the mandate is for five years, within one and a half years quite a few things have been achieved which were actually reforms which could have happened earlier. But I am glad that the Prime Minister has taken the initiative. Mr. Rahul Gandhi should be assured that ‘Acche Din’ will happen under this Prime Minister.