Efforts to increase foreign direct investments (FDI) and improve ease of doing business can boost manufacturing only if fundamental aspects of economic development such as infrastructure availability, cost of capital and land acquisition are addressed, Commerce Secretary Rajeev Kher said.
“The first layer of issue that needs to be addressed remains consistent and should be addressed as soon as possible. That is what the government is taking as a challenge,” Kher said speaking at a CII conference on expanding India’s share in the world trade and the role of manufacturing sector in it on Tuesday.
The Commerce Secretary said the revival of manufacturing can’t be pegged to the growth in exports.
He said the prospects of domestic manufacturing have to be connected with the prospects of domestic consumption.
“This would logically spur the country’s capacity to connect to the world,” he said.
Commenting on the country’s intellectual property rights (IPR) policy, Kher said while he was not recommending a review, he believed that a differentiated regime could be brought in sectors which facilitate manufacturing at the upper-end.
On the foreign trade policy which will be announced after the Union Budget, Kher said the government was trying to create the right eco-system to foster trade. “There is a need for change in mindset. The mental bloc about tariffs has to change. While tariffs do play a role, it is only a part of trade policy,” he said.
Dwelling on the issue of improving fundamentals, Kher said until India resolves basic factors such as land acquisition, cost of capital, infrastructure and labour productivity, manufacturing can’t improve. Attracting FDI and improving ease of doing business are only details that come later.
He pointed out that over the last few months, the manufacturing sector had shown erratic behaviour. He said the sector needed some stability and hoped that the slew of infrastructure development initiativesundertaken would give a boost to the sector.