Industry Should Learn To Stand Up To Mncs: N Kumar

Confederation of Indian Industry president N Kumar yesterday said the domestic industry would have to learn to stand up to foreign competition with the progressive lifting of import barriers.

In his first interview after he took over as the president of CII, Kumar made a strong plea for streamlining of indirect tax structures, especially sales tax and octroi, and reduction in interest rates to assist domestic industry in this task.

Indian industry has realised that the country would have to drop its tariff barriers in keeping with World Trade Organisation guidelines. The customs duty will keep coming down as India has to conform to the WTO guidelines, he said.

 

However, a similar kind of restructuring has not been adequately addressed by the government in the domestic tax structure, he clarified. Indian industry is disadvantaged in several areas, especially that of domestic taxes, it has to pay a so many internal taxes like sales taxes and octroi among other local taxes. Besides, we are also faced with high interest cost and poor infrastructure. The capital goods industry is faced with the zero import duty problem in fertiliser and petroleum sectors, he said.

The government has to do much in indirect taxes, though the budget has more than satisfactorily addressed direct taxes. We need a streamlining of duties in various industries, especially the aluminium industry and the hot rolled coils (HRC) and cold rolled coil (CRC) segments of steel industry. We have already put in a note to the government in this regard, he added.

Kumar painted a bright picture of the efforts of domestic industry to go global. We already have so many Indian MNCs coming up. Companies like Sundaram Fasteners, NIIT, Dabur, Infosys and Tata Consultancy Services are all acquiring a global look. The main thing with Indian industry is that it is so happy servicing the domestic markets, they do not want to venture abroad, he pointed out.

Commenting on the increased level of competition being faced by the domestic industry, Kumar said, Indian industry must face competition. The CII has set up a competitive council which will suggest ways and means to improve competitiveness of domestic industries. Indian industry needs to improve the quality of its products, technology employed by it and its markets.

When asked about the initiative taken by the confederation towards brand building to improve the image of Indian goods world-wide, he said, The domestic industry must realise the importance of brands and brand presence which is very different from advertising. The global market is pushed by brand consciousness. At the CII, we do not have any particular fund for this purpose, we are just a coordinating body. We will be working closely with various other industry bodies and bring in the experience of our members which will help increase brand awareness among domestic manufacturers.

Commenting on the draft Companies Bill, he said restrictions on managerial remuneration under the law is not warranted in the present scenario. He pointed out, In principle, we would want the shareholders to decide on the managerial remuneration. We do not want more paper work, it should essentially be the prerogative of the shareholders to fix the quantum of managerial remuneration at the annual general meetings.

He also emphasised that the concept of shelf prospectus, which has been opened to public sector banks and financial institutions, needs to be extended to private companies as well.

On the issue of law and order, he maintained that industry will not go to those areas where the promoter is not comfortable.

Investors should feel comfortable with the political situation of a state. If the law and order situation is deteriorating, then industry will not go to that state. We, at CII, have state officers who constantly interact with state governments and the advise on what the situation is like and what needs to be done.

Indian industry must face competition. It needs to improve the quality of its products, technology employed by it

N Kumar, CII president