“We need to grow at 8-9% to maintain the edge” March 2018 issue

“We need to grow at 8-9% to maintain the edge”

He has served as an Ambassador of India to Jordan, Libya and Malta and is currently on the advisory boards of BRICS Chamber of Commerce and Indo-Latin American Chamber of Commerce. In a free-wheeling interaction with The Dollar Business, Anil Kumar Trigunayat talks about the possible trade impacts of the conflicts in the Middle East on India apart from discussing the opportunities that exists in the region for the Indian EXIM community.

Interview by Ahmad Shariq khan | January 2018 Issue | The Dollar Business

TDB: India has had friendly relations with Qatar as well as the GCC countries that have imposed a blockade on Qatar. Do you envision the blockade hampering India-GCC trade?

Anil Kumar Trigunayat (AKT): Gulf countries are part of our extended neighbourhood and are extremely important for our energy security. Our relationship with Qatar is specially important because Qatar fulfils a major part of India’s LNG requirements. We have a large Indian diaspora in the region and their welfare is also important to us. These countries are also a significant source of foreign exchange remittances. It is estimated that almost eight million Indians in the GCC remit over $35 billion annually. The Middle Eastern countries are also important trading partners and India has had excellent bilateral relations with all of them.

The recent blockade of Qatar by Saudi Arabia, UAE and Bahrain is very unfortunate. Extremism and support for it directly or indirectly by various regimes in the region through non-State actors have often been talked about and referred to in international discourses and is a real threat. But the blockade may not solve the problem. All regimes in the region, while pursuing their own interests, are also overtly committed to fighting terrorism. Hopefully, in the near future, the international community will be able to do something to provide guidance and clarity on the road ahead.

GCC and other Middle Eastern countries are our key trading partners, and both our trade and investments have been on the upswing in this region. Currently, there are dozens of Indian companies that have expanded their footprints in Qatar and other countries. Although the difficult situation in the region combined with low petroleum prices may depress the demand for products and services in these countries in the short run, the scenario would not be India specific.

TDB: As a spillover of the blockade, what newer challenges do you foresee for Indian businesses in Qatar?

AKT: Many major Indian companies have undertaken several crucial turnkey projects in Qatar as well as other GCC countries and are well entrenched there. However, to hedge against the unstable situation, it is imperative for Indian companies that have acquired adequate expertise in doing business in the Arab world to also explore markets beyond GCC. For example, Jordan has a number of free trade agreements (FTAs), including FTAs with US, EU, Greater Arab Free Trade Area (GAFTA), and Indian companies should explore export opportunities in markets like Jordan. The textile sector has been aggressively seeking newer markets in the Middle-East, and other sectors should also follow suit.

Soon, we will see massive reconstruction efforts in war-ravaged Iraq and Syria and it is the right time for Indian businesses to position themselves strategically to make the most of this opportunity.

TDB: What opportunities does the MENA region offer our exporters?

AKT: The Middle East and North Africa (MENA) region is our major trade and transit partner. It is also a region in flux. The governments of these countries have begun to understand the limitations of a hydrocarbon-driven economy and as such are rapidly diversifying their economies. This is where Indian firms can join hands with these regimes with a long-term perspective. Renewable energy holds great potential for collaboration and so does information technology. Country-to-country collaborations, especially in the agricultural sector, too have immense potential. I believe, the traditional buyer-seller relationship has to be converted into a long-term strategic partnership. GCC and Middle Eastern companies can also diversify their investments portfolios to cater to India’s infrastructure development.

TDB: Was India ready for reforms like GST and demonetisation at the time of implementation?

AKT: The far-reaching economic reforms introduced by Prime Minister Narendra Modi will have a lasting impact in the long run. When and how to introduce reforms is the prerogative of the government and depends on several factors. In some cases, one has to take the bull by the horns and that is exactly what the government did. Evidently, these reforms caused some pains but that is true for all evolutionary policies.

India is one of the fastest growing major economies in the world. Even though there has been some deceleration in GDP numbers of late, our fundamentals are strong. One should not judge the impact of such far-reaching reforms by looking at data for just a few quarters. I am quite confident that once the structural infirmities are rectified, the economy will bounce back. Going forward, we have to grow at 8-9% per annum to maintain the edge and to provide for our billion plus population. I believe both GST and demonetisation were good policy decisions, but the implementation could have been better and smoother to avoid the disruption and discomfort caused to ordinary people and businesses.

"India needs to move further up the ladder in the ease of doing business ranking"

 

TDB: What is your take on schemes like ‘Make in India’ and ‘Digital India’?

AKT: These government schemes are ambitious and are aimed at harnessing India’s potential to its maximum. Every year, over 12 million graduates join the Indian workforce and both these schemes can help generate employment. ‘Digital India’ will give a boost to the services sector which is currently integral to the well being of our economy. It will also certainly contribute in bringing an attitudinal change in the mindset of the public.

The manufacturing and agriculture sectors are the real job providers. And this is where iconic schemes like ‘Make in India’ can help create employment for the masses. I think the success and efficacy of ‘Make in India’, both in terms of employment and manufacturing growth, can only be judged after a few years as the gestation period in manufacturing is long. However, the concerned government departments and agencies should keep reviewing the schemes after taking feedback from the ground and tweak them to make them more efficient.

TDB: India’s ease of doing business rank has gone up significantly this year. Do these ranks matter when it comes to attracting foreign direct investments and increasing exports?

AKT: India is an economic powerhouse and an engine for global growth – there is no doubting that. Since the economic reforms in 1991, India has evolved a lot and the perception about the Indian market has also changed. Today, the world perceives India as a huge consumer market, a reliable sourcing destination and a behemoth when it comes to IT services and talent. But, to attract investments we need to maintain our edge at all times as many countries are vying for the same limited pool of FDI. Policies and their implementation have to be smooth and transparent. We have come a long way from the red-tapism of the past, but we can definitely do much better. I believe that while our ease of doing business ranking has improved significantly, we need to go further up the ladder in this competitive global economy.

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