Commerce Minister Nirmala Sitharaman has her job cut out as she prepares to come out with mid-way changes in the Foreign Trade Policy (FTP) before the Goods & Services Tax regime kicks in from July 1.

Looking at a possibility of rupee trade with nations by getting into currency swap mechanism with partner traders to counter currency fluctuation, in an interview with BusinessLine , she said there was no scope for the government to intervene in currency markets to help exporters and only the RBI could deal with extreme fluctuations. Excerpts :

What are the mid-way changes that you propose to bring in the FTP?

I am keeping my mind open about the extent of the review. I am willing to reassemble a lot of things that went into the FTP. Newer ideas may also find a place. And here a lot of emphasis has been given to working out rupee trade with nations wherever it is possible.

Are you looking at rupee trade to deal with currency fluctuations?

If rupee trade is possible, a lot of issues related to currency fluctuations can be addressed. But a rupee trade deal can also lead to ease of doing trade. It also makes it possible for countries to move without hesitation. This input has come from several quarters and it is also gaining ground. We see possibility of doing such trade with South-East Asian countries, Iran, Russia and also with the Eurasian union. This proposal has a lot of meat.

Exporters have complained about the rupee’s sharp rise hurting business and have sought government intervention...

I think the government is very clear that the rupee is market determined. And if there are extreme fluctuations, it is for the RBI to enter the market to quell any wild speculations.

What are the other focus areas in the FTP review?

We are looking at promoting small and medium enterprises (SMEs). We have supported SMEs in the past by extending the Merchandise Export Incentive Scheme irrespective of sectors. The results have always been positive.

There is a greater need to support SMEs because credit access is still a issue. Then comes the problem of whether they can afford the interest rate.

Will you consider infrastructure status for SMEs to ease access to credit?

We are looking at various options. We are also looking at how we can empower SMEs through incentives, make them stand on their own and be good exporters. They have the capability and product value. It is infrastructural problems that are hindering them. We want to help them perform better. They have an important role in job creation. For the investment that they make, they create proportionately larger jobs compared to the capital intensive sectors.

Food Processing Minister Harsimrat Kaur Badal has been asking for easing of FDI in her sector — allowing non-food items for retail. Is DIPP considering it?

We certainly consider requests from various ministries on the FDI policy including easing the policy and bringing in certain strands important for them. These are matters being discussed.

Are you considering Apple’s request for changes related to FDI policy?

Telecom products is one among the many areas we are looking to ease FDI rules on. The biggest worry for the government is the possible creation of an inverted duty structure. However much you may be wanting to open up to help manufacturing, it should not lead to a situation where finished goods get cheaper than their parts.

Even if I were to encourage manufacturing based on some parts coming from elsewhere, I should also be conscious of any inverted duty structure which could hurt the ‘Make in India’ drive. So, there is still work to be done before a final announcement is made.

Subsequent to FIPB dismantling, how will applications that are not under automatic route be considered? What about security clearance?

Most of the FDI policy changes that had to be made for various sectors have been made. Very few are left behind. For those few, they are part of ministries where regulators exist. And if any application comes for consideration for FDI, the competent ministry and their regulators are in a position to handle those.

Even if they have to contact the Home Ministry for security reasons, it is possible for the Ministry to gain that kind of an access and get the required permission. So, I don’t see the necessity for any residual arrangement. But, if required, it can be worked out even as we seek the Cabinet permission for FIPB dismantling.

India’s existing Bilateral Investment Treaties have lapsed with most countries, including the EU. Some countries are not keen on India’s model BIT draft...

I am sure the Department of Economic Affairs will be able to give exact figures, but even with this draft, negotiations have happened. With some countries we have already started signing new agreements.

It is an issue where negotiations have to commence with the EU. In the past, we have had separate agreements with individual members of the EU. In the course of these agreements as they stand currently, within the EU, individual countries had given away that right to the European Commission itself. So it is Brussels and not Berlin or Prague or Rome that will take up their respective investment treaty agreements.

So even though it looks as if there are several countries whose treaties have expired, if you look at holsitically they are all under one EU, which is yet to start the negotiations.

Have you got any indications on when talks with EU will begin on BIT and the free trade pact?

Very recently, when I met the Italian Prime Minister I said that for both India and EU’s benefit, it might be worth our while to start the negotiations on both the FTA and the BIT.

And he readily agreed saying that he would talk to the European Commission. I hope talks will begin soon.

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