India Inc should not worry about tariffs, focus on competitiveness: Godrej

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Amid fears of the possible impact of US tariff measures, industry grouping CII on Tuesday asked companies to focus on competitiveness rather than worrying about the duty revisions.

Jamshyd Godrej, the chairman and managing director of locks and refrigerator maker Godrej & Boyce, said that Indian manufacturers will have to focus on scale just like China in its pursuit to become more competitive.

US President Donald Trump has announced that the country will charge tariffs at par with the ones levied by India on American imports from April 2. Experts have opined that there is a difference in tariffs of the two countries and there can be some impact on Indian exporters.

"...I think tariffs is the wrong thing to focus on. The thing to focus on is competitiveness. And I think everyone should get away from this tariff mindset," Godrej told reporters on the sidelines of CII Manufacturing Summit here.

Godrej, who has been a past president of CII and also chairman of the summit, recalled that the 1991 reforms which involved tariff cuts and devaluation of the rupee was a big step out of the protective mindset and helped make the Indian industry competitive.

Noting that there are many Indian companies doing good job internationally, Godrej rued that local companies still lag in manufacturing.

Contribution of manufacturing to the overall economic activity continues to be low, and the target of taking it up to a fourth of GDP still eludes, he said.

The government has to take specific steps and facilitate the growth of manufacturing, he said.

Speaking at the same event, A S Bhatia, Secretary of the Department for Promotion of Industry and Internal Trade, said the goal of increasing share of manufacturing to 25 per cent of the gross value added from the present 16-17 per cent is still maintained.

A lot more needs to be done for reducing burden of regulation and cost of doing business, he said, adding that we also need to take steps towards deregulations.

The government is also working to reduce the cost of logistics to the global average of 6-7 per cent, he said.

The government's production linked incentive scheme has yielded Rs 1.61 lakh crore in investments, Rs 5.31 lakh crore of exports and employment for 11.5 lakh people since its launch, he said, hoping that the scheme will continue to yield better results as the investments mature.

He conceded that the focus on quality has resulted in some issues for the manufacturing, but added that the government has acted promptly to redress them.

Bhatia asked big corporations to enlarge their vendor relationships with local manufacturers, and startups to help the overall manufacturing activity in the country.

It is also essential for startups to move away from their focus on services and try to do more of products, which will also give a boost to manufacturing, he said.