Tax adventurism remains a major issue: Sidharth Birla, Ficci
December, 25th 2013
Prime Minister Manmohan Singh may be at the fag end of his second term, but he is seriously concerned about the long-term implications of the current state of India's economy and its impact on industry, as the new Federation of Indian Chambers of Commerce and Industry (Ficci) president Sidharth Birla learnt when he met him on Monday.
Speaking to ET, Birla said that the PM has asked India Inc to think beyond short-term interests and look at market opportunities beyond the World Trade Organization framework. The PM also expressed concerns about Indian industry lagging behind the rest of the world, especially on the technology adoption front, due to the fraying of the domestic investment environment in the last few years. Excerpts from an interview with Birla:
At Ficci's annual general meeting's last meeting, ministers, top government officials as well as Congress vice-president Rahul Gandhi spoke about getting things done with a new rigour that industry has welcomed. Do you feel this is a case of too little, too late, with the Lok Sabha polls just five months away?
Sidharth Birla: Elections take place every five years, so that doesn't stop the process. The problem for us, in recent times, has been that the propensity to cut a cheque has gone down in the household as well as the corporate sector. When people buy gold, it means they couldn't find anything else to invest in - they didn't want to cut a cheque to buy a car or house. Money was going out of the productive sectors into the unproductive sector. That's the state of mind of the country.
So if that state of mind starts turning positive, it's good, at whatever point of time it comes. It could be argued that it is too little, too late, but it sets the base for long-term stability. Any investment that is planned will see three to five general elections. Large investments involve plans of 15-20 years. For consumer-oriented items, if your factory is not up and running in less than three years, it won't work. Elections are like tornadoes. We have had three typhoons in Orissa this year.
If you worry only about typhoons, you will never set up shop there. Is Orissa a good place to do business is what matters? Other risks can be insured or left to God. The Ficci AGM coincided with the thought process in government and we are lucky we got that articulation. If all parties are talking about job creation, export competitiveness, growth, now is the time to set the vision for that.
You met the prime minister on Monday morning. What was the key message from him for Indian industry?
Sidharth Birla: He was in a good mood and thinking a little forward. He asked us to look at trade agreements beyond WTO. We are asking for greater market access, which can be done through new frameworks or existing trade pacts. He asked us to sensitise industry on how to leverage our positions through market access and intellectual property.
He tried to sensitise us that we shouldn't take a short-term view on such issues. Let us not take a view that compromises our interests, but also not become such that we only consider short-term interests. He was very balanced on that. Perhaps he was thinking about the problems faced by industry over the past year, and said that large parts of Indian industry may have withdrawn from the technological advances in the world. We have a lot of catching up to do. So he tried to encourage us and take us to new paradigms.