Govt must cut tariffs to progress, says Niti Aayog CEO BVR Subrahmanyam

Tariff does not protect any country and India needs to cut tariffs for its own good, irrespective of who tells India to do so, NITI Aayog CEO BVR Subrahmanyam said on Friday.

Addressing the 69th Foundation Day of All India Management Association (AIMA), Subrahmanyam further said that being open to the world has to be among the top five priorities of India if it wants to become a developed country.

To cut tariffs, India must complete trade agreements with the European Union, the United Kingdom and other major economies, he added.

The Niti Aayog CEO stressed that deregulation at both centre and the state levels are critical for making India a part of the global supply chains.

There is interest in India but people visit, see and fly to other countries, he said.

Subrahmanyam pointed that Indonesia, Vietnam, Turkey and others have been beneficiaries of 'China plus one' strategy of global companies.

He argued that global value chain needs more than PLI (production linked incentive) -- it needs deregulation and skilling too.

The Niti Aayog CEO termed the paperwork involved in business horrendous, which is killing the MSMEs.

According to him, the Niti Aayog is trying to push India into global supply chains in different sectors.

He informed that the Aayog's recommendations for the electronics component supply chain are awaiting Cabinet clearance and it is working on the steps needed by auto component, chemicals, textiles and footwear sectors to join global supply chains.

Subrahmanyam informed that the Niti Aayog has conceptualised a national manufacturing mission which will be launched in three months.

The mission will coordinate with more than 20 ministries on manufacturing related policies, he added.

Along with manufacturing, he opined that education and agriculture have to be the top three priorities of the country to become a developed country.

He said that India has a conundrum of a large population with vacant jobs because of a paucity of relevant skills.

Agriculture has to be transformed by shifting it away from rice and wheat to horticulture, floriculture, dairy and such activities, Subrahmanyam added.

Referring to the disparity between states, he said that the states that offer the best education and the best business experience are richer and growing richer.

Subrahmanyam emphasised that states also need to be open to enterprises from other states because only the local entrepreneurs cannot develop states.

"Enterprise should flow freely and restrictions will only push states back," he said.

The Niti Aayog CEO said that the system of rating states is effective in convincing them to reform.

He said that the fiscal health index of states is a diagnostic tool which rates them on the efficiency of their budget management and not just the size of their economy.

"Some states promise incentives but cannot write checks," Subrahmanyam said.