Swadeshi Ficci To Oppose Subsidies On Imports

The Federation of Indian Chambers of Commerce & Industry (Ficci) will take up the cudgels on behalf of the domestic industry to ensure that subsidies on imports are done away with, says the newly elected Ficci president, K K Modi.

Our manufacturing sector can compete in the international arena, but we cannot subsidise imports. In calculating the countervailing duty (CVD), we have confined ourselves to the excise duty. There are a number of levies other than excise duty that the domestic industry has to bear. Ficci has to help the government evolve a way to end this unwarranted subsidy on imports without breaking any law of the World Trade Organisation, he said.

According to him, the CVD should be equal to the sum total of all the domestic levies on domestic products.

It is okay not to give subsidy for exports. But there is something called the entry cost. In India, we have not yet decided who should pay this cost, whether the government or the consumer, said the Ficci president.

The governments decision to set up an India brand equity fund, he said, was too small an effort in this regard and dealt with only a small aspect of the problem.

The Ficci president also favours a limit on foreign investment in certain sectors. We have to examine areas where we dont have technology and resources. There we have to permit 100 per cent foreign investment. But if I want to make a watch, refrigerators or a new type of chocolate, let them play a supporting role. In these areas, there is no need of 100 per cent foreign enterprise, he said.

He is strongly opposed to any take-over of domestic enterprises by foreign companies. This is not acceptable. Indian companies should be encouraged to become globally competitive. The weak ones can merge with the strong Indian companies. We are ready for partnership with foreign companies. But take-over no way, he said.

Besides, Modi says that if a foreign company already has a joint venture in India, it should not be allowed to set up a 100 per cent subsidiary in the same field.

If it happens, in one case you are competing and in another you are a shareholder and privy to all sensitive information, he reasoned.

Modi also wants the cost of liberalisation to be shared by the government and banks. In the pre-liberalisation era, there were restrictions on the size of unit an entrepreneur could set up. Under the onslaught of foreign competition, the small units are facing closure. The entrepreneurs alone cannot be blamed. The policy-makers must share the responsibility as well as the banks that lent money for such enterprise, he says.

Ficci also plans to work towards achieving a sustainable export surplus. We should not develop our trade on the basis of subsidies, but we have to follow the tactics adopted by other countries to meet the entry cost, Modi said. Another problem is that the moment exports rise sharply, the government gets suspicious that somebody is benefiting unjustly, he says.

Modi warned that if the current industrial slow-down continued, we were heading for a major recession. Dismissing recent talks about a recovery, he said: Business is in a very bad shape. Most of the units are either facing a squeeze on profits or incurring losses. The consumer is not coming forward to purchase. The prime task is to revive demand and reverse the trend of slow-down.

At Ficci, Modi plans to work closely with the government to prepare the domestic industry for the new era that is opening as a result of the WTO agreement. We have opened our doors. But if we do not prepare ourselves for the new situation, India as a whole will be the loser.

The world trade is not played in a very civilised manner. There are trade hawks waiting to pounce upon any country. Our political leaders, bureaucrats and people have not realised this, he said.

Modi also wants the cost of liberalisation to be shared by the government and banks. In the pre-liberalisation era, there were restrictions on the size of unit an entrepreneur could set up. Under the onslaught of foreign competition, the small units are facing closure.