Need a level-playing field for domestic industry, says new PHDCCI chief

K. R. Srivats Updated - October 07, 2021 at 03:43 PM.

Govt must bring petrol, diesel within GST ambit to improve competitiveness

Pradeep Multani

Indian industry needs a level-playing field vis-a-vis China and government must take steps to ease the cost of doing business in the country to help make Indian products competitive in the world markets, Pradeep Multani, new President of industry chamber, PHD Chamber of Commerce and Industry (PHDCCI), has said.

“Industry doesn’t want anything extra. Please analyse what China is giving to their industries and let us have a level playing field. The same level of incentives should be there. We need cost of manufacturing to be made at par with them. We are not seeking protectionism. All that we are saying is don’t make Indian industry face a situation of unfair competition from them (China),” Multani told BusinessLine in an interview.

GST on fuels

Multani also made a case for bringing petrol and diesel within the Goods and Services Tax (GST) system to enable industry to take input tax credit and thereby improve competitiveness. “This will be a big help to the Indian industry. This will allow the industry to become competitive to take on the world,” he said.

He also stressed the need for review of free trade agreements that are not serving the purpose of being beneficial to domestic industry. The government should also look at adding services in the FTAs, especially when they account for 56 per cent of GDP, he added.

The PHDCCI chief asserted that cost of doing business in India is still high as compared to the situation in China despite the Indian government coming up with several well meaning initiatives.

“We strongly support the policies of this government. Aatmanirbhar Bharat is fantastic. But things have not percolated to the ground level, especially at the level of State government. There are bottlenecks in implementation. Even today banking sector has not changed with the times. Their mindset has not changed at all when it came to collaterals,” he said .

Other issues

Multani, who is Chairman of Multani Pharmaceuticals, a manufacturer of Ayurvedic and Unani products, highlighted that land rates, logistic costs, interest rates, electricity costs and cost of compliances are “very high” in India and this was making Indian products uncompetitive.

For instance, logistic costs in India are at 12-13 per cent as against 7-8 per cent in China, he noted, adding that this clearly gave them the edge both in domestic and international markets.

“On cost of capital, though RBI has taken several steps to bring down interest rate in the system, this has not fully percolated at the ground level. Interest rates in India are significantly higher than many advanced economies and availability of finances is still a problem for MSMEs. Banks continue to demand huge collaterals,” Multani said.

Seeking facilitation steps

He said that government must sort out implementation issues at the ground level and facilitate a conducive business climate. “We are not demanding subsidies to be given to our manufacturers. We are demanding facilitation measures, especially for small businesses. For instance, it took a lot of time for RoDTEP rates to get announced. This uncertainty on the new rates had led to blockage of working capital for many of us,” he said

Multani said industry would prefer a system where government hands out a licence in perpetuity rather than continuing with the present norm of yearly renewals or say after two years.

This system of issuing licences in perpetuity has started in the pharma department. It should get extended to other sectors and government departments as well. “We are having 30-35 departments on our head. We would like every department to just have registration. The attitude of bureaucrats should be that of enablers. The mission of achieving $5-trillion economy should not only be that of government, industry and trade to achieve that goal. That goal should also be of the bureaucrat or officials and people who control you,” he said.

PHDCCI chief also said that government should move to a system where a responsible, compliant industry should be super encouraged. He also underscored the need for expeditious and timely justice from the legal system. “ We can get even more FDI if we do this,” he said.

Stating that India economy is on strong recovery mode post pandemic, Multani said that PHDCCI expects Indian economy to record 10.2 per cent growth this fiscal and about 10 per cent growth in next fiscal.

Published on October 7, 2021 10:13