In an e-Adda hosted by The Indian Express, Nitin Gadkari, Union Minister of Road, Transport & Highways and MSME, spoke on clearance of dues to MSMEs, how to get demand back in the market and restarting industry.
On government’s strategy to deal with the economic impact of COVID-19
We are fighting a war against coronavirus but we are also facing an economic war. Some of the state governments do not have money to pay salaries. Even the revenue of the central government has dropped. The banking system is also facing a big crisis. The MSMEs, migrant labourers, farmers, everyone is in problem. This is a crucial time for the Indian economy, in fact for the world economy. In this situation we need to finalise a policy where we need to first consider the problems of the poor, of gaon, gareeb, mazdoor and kisan. I have been told by the hotel and restaurant associations that one crore and fifty lakh waiters work in this field. Even wellness centres, salons have fifty lakh workers of which 50 per cent are women. So everyone is in a problem. The government’s vision is that we need to create more liquidity in the market, and increase purchasing power. That is the reason the government has deposited money into the accounts of the poor, 35 crore people, in the Pradhan Mantri Jan Dhan Yojana. The government opened up the food stock for the poor. We are now supplying large scales of wheat and rice to them through state governments on a very reasonable rate. At the same time, due to the lockdown, the situation is very complicated and challenging. Now that the lockdown is in the fourth stage, we have liberalised many things. First of all, the country needs to understand the art of living with coronavirus. We need to stop the spread of coronavirus, we don’t have any vaccine so for the time being we need to plan everything.
The government’s plan now is to pump 20 lakh crores with different schemes. Secondly, we need to launch infrastructure works immediately and we need maximum public, private and foreign investment in infrastructure, roads, railways, aviation, and even the power sectors. These are the big infrastructure projects that we need to finance. By increasing liquidity in the market we will create more employment potential and at the same time we need to accelerate the wheels of the economy. The government is giving packages to different stakeholders. In the coal industry, we are opening the mines for the public-private sector and a lot of reforms have already been taken by the government. The government is committed to the ease of (doing) business and at the same time, we need to make economic reforms. First perform, then reform and then transform. That is the mission for the government. A lot of things have opened up for the international investor. In defence and other fields, this decision has already been taken. Hundred percent FDI has been allowed in infrastructure. We need to bring in reforms in agriculture too. We have an import of nine billion dollars of edible oil and our farmers’ production per acre for soyabean is only four-and-a-half quintal. The average per acre in Brazil is about 26- 27, and in the US, it is 30 quintal because of the use of GM seeds. We have a difference of opinion in the country on GM seeds but we need more research. Self-sustainable — that is very important. Atmanirbhar Bharat, that is the consent.
On how the global mood towards China spells opportunity for India
So we need to reduce imports and increase exports. This is a blessing in disguise for all of us because you already know the statement from the prime minister of Japan, that those Japanese who have investments in China, can ship out. The Japanese government is giving them a special package for that. This is the mood of the whole world community. From the US to everybody else, they want to shift many industries, they don’t want to deal with China. The Chinese economy is one of the most powerful economies in the world, so this is the time for India. We have both skilled manpower and raw material here. The way in which we are developing India is a huge opportunity for all industries. First of all, upgradation of technology and secondly the most important thing is that we can take foreign capital – FDI – in our different industries, particularly infrastructure.
For the first time, we are facing this kind of crisis. I interact with many people, they are nervous, there is frustration and negativity. First of all with the help of all stakeholders, including the media, we need to create positivity in the minds of the people. And self-confidence is equally important. We will face and win this war and go ahead and make India an economic superpower. We need to give a positive message to all stakeholders because without that confidence we cannot fight the war.
On how to get demand back in the market
When you pump money into the economy, it is going to create demand. I am giving you an example. The 45 lakh MSMEs where the loan is up to 25 crore and turnover up to 100 crore, additional 20 percent collateral free loan, and this money is approximately three lakh crore. There is subordinate debt fund of Rs 20,000 crore that is going to two lakh MSMEs for benefitting the restructure of stressed assets. We have already restructured six lakh MSMEs up to March 31 and we have taken a decision to increase the debt up to December 31. So by this way out, at least my expectation is that 25 lakh MSMEs will be restructured. Again for restructure, we made the provision of a fund of Rs 10,000 crore which will combine with other funds to create a fund of Rs 50,000 crore for equity infusion. In the present banking formula, the industries which are not getting the advantage because of the law, because bank is not pushing for the restructure of the industry, where government will take the risk and infusion of equity and that equity which will be given by the government fund, now that will be legally applicable for all these norms for the banks.
We have extended the EPF support up to August 2020. The EPF contribution is reduced to 10 percent for three months…ultimately this is going to be helpful to the industry and when industry is going to get the money, when their limits are increased and working capital is increased, ultimately they are going to spend…Circulation of money is very important, it is going to accelerate the wheels of the economy and that is most important. Ultimately the government also has its limitations. We have given everything to people and we are trying how to convert this into an economic success story.
On pending payments to MSMEs
One of the major problems with MSMEs is that they are not getting their payment. This problem is not just with Bharat sarkar, its ministries and undertakings but also with the state governments, its ministries and their undertakings and private industry. All this capital is the working capital of small MSMEs. So now the central government has taken a decision that whatever is the liability of the different ministries and public undertakings of the central government, within 45 days they will give all payments to the MSMEs. Secondly I have already written a letter to all chief ministers and state governments to take immediate decisions. I have requested all major industry owners to issue payments to MSMEs. Take the example of the automobile industry. This is an industry that probably has the most employment potential in the country, it has a turnover of Rs 4,50,000 crore and 1,40,000 crore export. When I requested all of them, they said first of all we will issue the payment if there is a balance. So now this is a problem and I don’t have any hesitation to accept it. We are now trying to find a solution but this is a time when we are not in a position to take any action against anybody. Now most people are giving money to the MSMEs on a priority basis. The SAMADHAN portal is there. If anyone is not getting their payment, he can come to the portal and we can find a way out. This is a problem, it’s the reason they don’t have working capital and working capital is like oxygen for an ICU patient. So today this is one of the issues but by giving additional 20 percent working capital without collateral or any fee to the industry, I feel that there will be some advantage. We’re expecting that governments will pay MSMEs as early as possible.
On banks lending to MSMEs
We are now giving permission to district cooperative banks, urban cooperative banks and NBFCs for financing MSMEs. The banks are now giving loans and 75 per cent of the loan is secured. So there is no risk. The role of NBFCs in giving auto and other loans has been good but because of the ILFS problem, they stopped auto finance and that was one of the reasons the auto sector faced a lot of problems. So now the government has decided to help NBFC. In Maharashtra, these urban cooperative banks have deposits of more than three lakh fifty thousand crore in small towns. I already have an idea of how to get foreign investments in NBFCs. The country needs foreign investments. In Bangladesh, the way they developed bank culture is a success story. We need to support people (in small sectors). They are honest, they are paying their money back and there is no problem. So we have to make funds available to them. We are also planning to make biofuel and ethanol from rice husk. We have stock of wheat and rice for up to three years and we do not even have a place to store it. We have two years’ stock of sugar. There was always a quarrel between food versus fuel. Now we need to change the crop pattern and use the rice husk, or waste rice. We can make ethanol and save our import. We have seven lakh crore import of crude oil, so somewhere we need a lot of policy decisions on our import and export situation. And we need to find out the option — swadeshi.
Our village industry turnover is 88,000 crore up to the end of March and we have decided to make this turnover five lakh crore in the next two years. Actually our contribution to the GDP is 29 per cent, we want to take it up to 50 per cent. Our export of our country, out of which 48 per cent of our export is from MSME, we want to take it up to 60 per cent and until now we have created 11 crore jobs. In these five years, our plan is to create five crore new jobs. I am giving an example. I am wearing a watch from Titan and this is a belt of Khadi and the dial is also in Khadi. The watch made by Titan is out of stock within a month. They have innovated and are making products in different designs. Levi’s is a US company that makes jeans. Khadi denim is very popular. All the Khadi denim is now purchased by Levi’s. So we have got a huge potential, and where we need to plan how we can create more employment potential in rural, tribal, agriculture and forest area and how we can use that raw material.
Actually, we have changed the definition of MSMEs. For the last 14 years, the government had been trying to change this and now we have taken this decision. The existing classification was manufacturing and service sector. For manufacturing sector in micro, the investment is of 25 lakh and for service enterprise, a turnover of 10 lakh. Now the micro investment is coming to 1 crore, four times more, and turnover to five crore, which is fifty times more. Now in the small scale industries the investment was five crore, now we have taken the investment to 10 crore, and the turnover of two crore we have taken as fifty crore. In the medium industries, the investment was 10 crore, and turnover of five crore, now it is an investment of 20 crore and turnover of 100 crore. Now we have merged manufacturing and service as one sector. We are now thinking of increasing investment, particularly for medium industries, taking the turnover from 100 crore to 200 crore and investment from 20 crore to 50 crore. And we are trying to make a special category — village industry — where we are planning to give more concessions. We need decentralisation of industries. We need to make more industrial clusters. Now everyone wants to go to Gurgaon, Noida, Mumbai, Pune, Bangalore, Chennai and Hyderabad. We need decentralisation of industry.
On restarting industries and the issue of migrant labour
The impression in the minds of people is that all our industries and our MSMEs are dependent on migrant labour. This is not correct. It is around 10 per cent, 15 per cent, 20 per cent, and industry-to-industry volume is different. First of all, the industry can start with 30 and 40 per cent. They definitely need migrant labourers. You are correct, there is a lot of frustration among the migrant labourers, they have started walking from Mumbai to Patna. They all come to Delhi, Gurgaon and Mumbai because of employment. Aur koi khushi se nai aya hai, majboori se aya hai (they come because of their compulsions). We need to create confidence in them. I am confident that when we start industry, they will come back but we need to increase confidence in their mind. I feel in due course of time when the atmosphere will change, they will come back. The current impression is that our entire industry is dependent on migrant labour and when they are not there, it will be difficult to start the industry. There are difficulties but with 30 to 40 percent labour they can start it, and some labourers can work overtime. There are three things on which the government has already taken a decision in Maharashtra. First of all, masks are mandatory, secondly more than one metre social distance is mandatory, and thirdly the use of sanitizers. And big industries should take all measures (to provide) food and shelter to labourers and make arrangements for their transport also. So these are the conditions by which we can start industry.
Sudarshan Venu, Joint Managing Director, TVS Motor
You have given support for the industry to open up, particularly to the MSME sector. As you mentioned, it is a very important sector from the point of view of jobs and the supply chain. It plays a crucial role, specially in the semi-urban and rural areas. The policy measures include immediate liquidity and beyond that. Some of the MSMEs in our own supply chain and others around are asking how they can access this financing and liquidity. Would it be through the banks? Would the NBFCs also have a role? Also, since the government is giving credit guarantee, would they get it at an affordable rate?
Interest rate will be the same. They will get additional 20 per cent working capital without collateral and no fee will be charged. But whatever regular interest they are paying for their working capital, they are to pay for additional interest; the same type of interest for 20 per cent more working capital. But (they) won’t need any government guarantee or collateral for that. Second thing, with the NBFC — I don’t know whether it’s included in the Reserve Bank circular or not. In many schemes now, our interest is to take cooperation from NBFC. I feel we need to strengthen NBFC as the most available resource for taking loan for MSME. We need more stake there, because in the automobile industry, the majority business, NBFCs are doing good; they are creating jobs and a market for you. Because they are giving loans, poor people are purchasing cars, motorcycles, trucks etc. The government is now in the mood to pump money through banks, MSME and the society and country, by which we want to create more demand and increase the purchasing power. That’s very important. If there is a big order for you, then only you can purchase from your ancillaries, and they can only run when you give an order to them. So, the most important thing is to increase the purchasing power, and that’s going to increase demand. Without that we can’t accelerate the economy. We are using all ways — public-private investment, banks, NBFC, urban cooperative bank, district cooperative bank, all deposits. Reserve Bank can also support the banks to create more capital in the market. Again, we can try and get FDI.
I am asking you a question. At TVS, you are exporting. Your income is in dollar and the turnover is also in dollar. Why are you not making NBFC? If you take the loan on dollars, the interest cost will be very less. I will give an example. In Mumbai JNPT, there was one road from Panvel to JNPT (Jawaharlal Nehru Port Trust) costing Rs 2,500 crore. ICICI bank sanctioned the loan for that at 11 per cent interest. So, I decided to take a foreign loan in dollars. When we go for a tender for taking loan, the State Bank capital and DBS Singapore joint venture gave at 2.25 per cent interest rate; because my turnover in the port is 500 crore dollar per year. So, my suggestion is why are you not taking this loan and that can be pumped into your NBFC and create a reasonably low-interest finance for purchasing of vehicles, which will create more demand and increase your productivity. Is it possible?
Sudarshan Venu: So far, we have been taking a lot of dollar loans, hedged or unhedged, based on company policy at the OEM level, say TVS or whoever. We have been taking some of it in our own NBFC and other NBFCs as well, but the idea of involving MSMEs as part of this — because their product is also ultimately going into the product which is being exported — is a new idea. We will explore this. Perhaps, the MSMEs also — with some government support there — these bonds can also be floated in the international markets and get investors’ support, which will bring lower cost capital not just to the OEM and NBFC, but the MSMEs, which can then benefit from that… This will also allow smaller companies like the MSMEs to access lower-cost foreign capital.
We should not just depend on the banks. We should create some alternatives that are strong. Banks will understand there is competition and will come to support everybody. To create competition in the financial institutions also is very important. That’s the reason that I am of the strong opinion that there is a need to strengthen NBFC… I have another question to you. I helped you when the Tamil Nadu government was not giving you the permission and I got permission for TVS to start. I told them it was important and that you will take all preventive measures… the journalists are apprehensive that since everything is closed, migrant labour is not there, so no one is in the production mode. What is the impact of migrant labour, what are the problems you faced and how did you tackle them? Can you share your experience?
Sudarshan Venu: We focused on exports even when India was under lockdown. Some of that is really helping us now to manage the cash flows and pay a lot of the MSMEs and other vendors and people as well. We were able to provide food and shelter wherever possible to the migrant workers, so some of them didn’t want to go away. I think this was one move which attached them a little to us. Secondly, we educated them to a large extent on safety, on how to keep themselves safe, that we want to take care of them. We paid the salaries. We also told them, ‘As soon as work opens, we will call you back and there will be an opportunity for you’. I think the combination of some taking care during this time and the fact that we were offering an opportunity once things resume, this really helped us.
P Krishnamurthy, Founder and Chairman, P Krishnamurthy & Associates
I have two questions. Do you really expect demand pick-up to happen, because all these projects will have an impact in three to five years. What we need is immediate revival and recovery. The second is about real estate, construction and hospitality, which come under your ministry. These three engage a large number of people. We need specific relief measures for them to revive. If not, they will be in a very serious situation in 2020.
One important thing is that at any cost we need to pump more money into the system. We have to increase liquidity, either from the government or public-private investment or foreign investment. Without creating more liquidity in the market, we can’t create more demand. It’s very important. That’s the reason we are trying all ways. We are also helping the stakeholders at the lower level: the labourers, Jan Dhan yojana. If they get money, the money will start accelerating the economy. For instance, suppose in Jan Dhan bank we deposit money, they will immediately go to the market and purchase something for their requirements.
The second thing is that the real estate sector’s position is very bad. I have had special interactions with them. It doesn’t come under my ministry, it comes under the housing ministry. It comes under urban ministry, Mr Puri is the minister. There are a lot of MSMEs that supply raw material to real estate developers, and they are in a very bad shape. The problem is there is no (buying) capacity. Only one per cent people can purchase the house where the cost is more than Rs 10 lakh. Now, they are making houses for Rs 50-80 lakh. There is a big saturation. People are not in a position to purchase. We need to make smart villages; houses that cost less than Rs 5 lakh; Rs 3 lakh in the village area. Now the government has declared the rental scheme. I am also planning to initiate and am giving all the suggestions to real estate people, asking them to come to NHAI as a contractor. We have tremendous work and they can work here. Secondly, I have also asked them to go for affordable and low-cost housing in villages and small towns where there is demand.
Regarding the development in Noida, Gurgaon, Mumbai and big metro cities, there is a huge problem. It’s a big subject. I am not the authority to talk about it, but during my interaction with the national organisation, I have given them several suggestions. Secondly, the hospitality sector is also very important. I feel that within some days, we will resolve all the problems related with the sector. They will be back to their own position. There will be no problem. But real estate is a big problem. This is the time when we should collectively think of ways of getting more investment and more liquidity into the market. Without that, we can’t accelerate the economy.
Rajeev Sethi, founder-chairman, Asian Heritage Foundation
My question is inspired by your vision to link the small with the big and your singular capacity to connect local with national. While your thinking is huge, to have freight corridors cutting so deep through the poorest of the countryside, can we not perhaps include a small pagdandi for tourism, especially rural tourism. These can become a source of reviving skills and a huge cultural enterprise, involving millions, which would include local groups, hospitality, services. That’s one question. The other one is that while we are talking of turnover, equity and investments, bank loans etc, it seems to me that small is no longer a qualification. Being small is almost a disqualification. A micro daily wage earner, a small cottage-level artisan or performing art group, how do we bring them on board as beneficiaries? So, one issue is on linking MSMEs to your department of road transport. The other is to reach out to the poorest of the poor with the schemes that you have now repositioned.
I will first answer your second question. Mahatma Gandhi’s principle was that we need maximum production with the involvement of maximum number of people. Unfortunately, Nehru was of the opinion that we need maximum production. In Nehruji’s approach towards the economy, he started several big industries, like the Bhilai Steel Plant. His approach was (to establish) big industries that will give boost to India. Gandhiji’s approach was maximum production with the maximum number of people. Deendayal Upadhyayji and Dr Ram Manohar Lohiaji were of the same opinion. We need big industries. Just like aviation. Now, there are public-private investments. In the UPA time, they purchased aircrafts costing Rs 70,000 crore. Now, as compared with Indian Airlines or Air India, private airlines are economically viable. Their ticket rates are lower and they are giving good services. I never understood why the government invested Rs 70,000 crore for purchasing aircrafts. First of all, whenever there is a possibility of public-private investment, the government should not invest in it. I will give you an example. I constructed Mumbai-Pune Expressway, Worli-Bandra ceiling project, and 55 flyovers in Mumbai, without government money. I raised the capital from the market and we completed it. Now, we are making the roads depending on the economic viability. That’s very important because I am raising money from the market. I have to return that money. We are also making lots of roads from the Budget. For example, in the Northeast, we are spending Rs 1 lakh crore on road construction. We have developed the special corporation NHIDCL (National Highways and Infrastructure Development Corporation) for that. Now, industrial corridors are not with me. That is with the Commerce Ministry. But making express highways is very important. Take the example of Delhi-Meerut. The 16-lane road is near Swaminarayan Mandir. Earlier, people would spend one and a half hours on this route, now it takes only 20 minutes because of that road. So, somewhere, (one has to take into account) the traffic density, the requirement, etc. We plan taking all this under consideration.
All roads are not special highways. There is still a place for backward areas, tribal districts, border districts. We are making 17 airports, where the roads will be used for some time as airstrip for landing flights and after that, just like the railway phatak, they can again start that road. We are making that in Rajasthan border-level.
As answer to your second question, we are making the new road from Dehradun linking Char Dham: Badrinath, Kedarnath, Gangotri and Yamnotri. We have already started the work. We are making tunnels and it’s a really beautiful, all-season road. So far, one could go to these four places only for six months. After that the road is closed. Since it’s an all-weather road, you could use it throughout the year. This is going to increase the traffic density. The number of tourists will increase. It will also lead to more employment. Near Joshimath in Uttarakhand, there is a place called Auli. When I had visited Davos, I was inspired to make something like Davos in India. So, I have had constant interactions with the Uttarakhand chief minister to develop Auli as an international destination. It’s better than Davos. The government is supporting them, we are making roads for them. But it is not under my ministry. I can provide infrastructure but the state government has to take initiative. It is going to create at least two times bigger potential for the hospitality sector in Uttarakhand — only these two projects.
The good news is that we are also connecting Pithoragarh with Mansarovar. It’s a very difficult task. The BRO is working. They used 26 helicopters for taking drilling machines there. The rock work is already complete and road construction has to start. I am confident that this is going to create a huge impact. Indian tourists can go from Pithoragarh to Mansarovar. They don’t need to go to Nepal. It’s going to increase tourism. I accept that we need to develop good roads, good hotels, motels, resorts, roadside amenities, clean environment, entertainment parks, adventure sports, water sports. I will also say that religious tourism is also equally important. We need to have some good resorts there and it’s only after that we can attract foreign tourists. They are going to create more employment potential for our youth. But some things are under my ministry, some things are with the other ministries and some are with the state government. All stakeholders need to plan for that. I am definitely going to support all these things.
Sridhar Jayaraman, Company Secretary, Bajaj Auto Ltd
COVID-19 has become a great leveler of talent all across the world. Many opportunities are going to open up for the highly talented and brilliant youth of the country, because I am told even global giants like Google and Microsoft are looking for talent world over, as anyway people are now working from home. Can the government also help in this process of opening up more opportunities by disseminating this information to the global giants and also disseminating the information to the top institutions in India, where we can say that such opportunities are available and it can become a win-win situation for the global giants and the Indian youth. What are your thoughts on this?
Yes, we are of the same opinion and we are supporting all these ideas. We are trying to invite all types of big investments. Actually, I feel, it’s a blessing in disguise. I always say one thing: there are some people who convert problems into opportunities and there are some who convert opportunities into problems. There are opportunities. Innovation, entrepreneurship, science, technology, research skills and experiences — we name them as knowledge. The conversion of knowledge into wealth and conversion of waste into wealth is the future.
This is the time when we can take advantage of the situation and the whole world is now interested to deal with India. We have got the skill and manpower. Our software people are now dominating in the whole world by their capabilities. Our doctors are good in the whole world. So, this is the time that we need to take advantage of. Two things are very important: Our small-scale industries and major industries can upgrade their technology because in the international market, we need to reduce logistics cost, labour cost, power cost, capital cost, and by technology we can make better quality, no compromise with the quality, and we can reduce the cost. That’s the most important thing for our MSMEs, small-scale industries, handloom, handicraft and village industries. We have got a huge potential, and knowledge as power — we have got trained skilled manpower, engineering students, talented students, the business leaders are preliminary. We have got good universities, private universities, we have got potential. We should take advantage of the situation. I always say that you can take horses up to the water but you can’t make it mandatory for them to drink the water. The government as the facilitator is very keen to support all these people who want to do something for the country internationally.
Mahesh Munjal, Chairman and Managing Director, Majestic Auto Limited
Please allow about two per cent rebate or discount on interest for one year to the MSMEs. This will cost only about Rs 10,000 crore. You may take it back from Rs 3,70,000 crore or may be add. Everybody will be really grateful. Secondly, I was manufacturing bicycle spokes and somebody imported from China. When the spokes arrived, they were at the landed price which was equal to my steel price, the purchase price. Which means, given steel is cheaper there by about 20 per cent, that’s a good start for them. Companies will come here for return on investment. We should compare our costing with the Chinese companies’ costing to attract industries.
I will give you the example of Morbi. Earlier, ceramic tiles were brought from Morbi, the market then shifted to China. The manufacturers in Morbi changed their technology and enhanced their production. They minimised the cost after greater production and now tiles have stopped coming from China. Now, we are going to publish a book on three years of export and import, which will be in the public domain. We will definitely try and see how we can offer Indian alternatives for whatever is imported from China. Secondly, I feel that if in your industry something is imported from China, we should increase the import duty on it. We must protect our own industries. You should also keep your costs such that they are competitive. If some situations are beyond your control, then we must increase the duty on Chinese imports on some of the items. Even if our costs are a bit higher, it will do. But encouraging China for its cheap goods is not good for us. We must save our own people first. Our people, by increasing production and productivity, should try and reduce their costing. In various heads — logistics cost, power, labour cost, electricity cost – in all these areas whatever help is required we will surely do. It’s necessary for the economy that we help our people to survive. Gradually, when they increase their volume, they will be able to reduce their cost. We are studying many issues regarding China. We will recommend to the commerce industry that if we have to help protect MSMEs, we will have to increase duty on Chinese imports.
KK Rathi, Managing Director, IndiaNivesh Fund Managers Pvt Ltd
You had announced the vehicle scrappage policy around two years ago. Even two months back, you had said that the policy will be in effect from March, but it has not been introduced yet. What are the reasons behind its delay. It is in everyone’s interest: from the point of view of pollution, automobile industry and further growth.
The policy has been finalised by my ministry but we need approvals from different departments as well as the cabinet. There are different views that come to the fore. Recently I have approached SIAM (Society of Indian Automobile Manufacturers), as I also needed a financial package for tax rebates etc. Now, if a manufacturer scraps its vehicles and issues certificates, then we should offer some discount. This is being discussed. It’s very embarrassing for me that I have been saying this for two years but have not been able to implement it. But this is beyond my limitation. I have briefed my new secretary, who is in Agra now. The policy will be implemented soon. It will be a huge advantage for the automobile sector. The turnover of India’s automobile sector is Rs 4.5 lakh crore, which constitutes of Rs 1,45,000 crore worth of exports. We have recently increased the depth of Kandla port to 18 metre. We have also increased the depth of JNPT port. The port will see the world’s old vehicles. Our aluminium, copper, steel, rubber, plastic will all be recycled. With the spares, the cost will be significantly reduce. It’s my dream that our automobile industry becomes world’s number one. With the scrappage policy, the pollution will also reduce, demand of vehicles will increase, which will give rise to employment. This will also reduce the price of automobiles, which will help us compete in the world market and enhance exports.
Pramod Kapoor, Founder and Publisher, Roli Books
Profitability is as important as availability of capital. Cheap capital is one of the main ingredients for profit. Instead of giving such a complicated assistance that we have to run to the chartered accountant, why couldn’t the government straightaway cut the interest rates by two-third and give it at 3 per cent, for example. Or give us income tax holiday or part of it at least till March 31 and also give some incentive to those companies which have not slashed the salaries or put people on furlough.
Your suggestions are good, but, at the same time, there are lot of companies that are fighting for survival. If we need to restructure them, we need to finance them. By increasing the working capital also, we are helping them. No matter where the money comes from, it should benefit them. It should go to the labour, the MSME. It is the same thing — the government only has to give the money. Even the money given to the banks is on government guarantee. There are many views on how the government should give money. Your suggestions are good, but there are pros and cons. How is it easier for the government to do so is decided by different committees; the bank system, RBI, finance ministry, they have all collectively given the package.
Siddhartha Dasgupta, President, Corporate Affairs, OYO Hotels and Homes
This is about the working capital requirement of the start-up industry. As of now, the start-up industry has to raise capital from the VCs and all, and the same money is used for working capital also. Under the MSME schemes, which have been announced, if some working capital provisions can be made for the start-up industry, then it will be very helpful for them. Then, the capital that they raise from VCs and all, which will be for capital use, doesn’t get used for working capital.
Your suggestion is good. I don’t have detailed information about it, but I will check and see whether it’s possible for us to provide working capital to start-ups. I think the scheme is already there, but I will get it confirmed and try to do the needful.
Mayank Kumar, Vice Chairman, SOWiL Limited
I have two questions. MSME Act says payments must be made in 45 days to an MSME company by the entities. A lot of government entities, as you said, are delaying payments. In MSRDC (Maharashtra State Road Development Corporation), when you did the Mumbai-Pune Expressway and the various flyovers, there was a provision that if payment is delayed, interest would be borne by the officers who were responsible for the delay of payments. If this is implemented nationwide, I think it may help catalyse payments in time to MSME companies.
Nitin Gadkari: One of the important things that we need to find out is some mechanism to know how can it be possible to get payments as early as possible to the MSMEs from the major industry, government and government undertakings. This is really one of the crucial issues. But the situation in the country now, in all sectors, is not good. It is very difficult to make a law or take stern action because everyone is in a problem. We are now thinking of different mechanisms. One of the mechanisms is that we can make a scheme under which we will deposit the insurance premium, suppose an amount of Rs 50,000 crore, to the bank. On the credit of that company, where MSME is supplying material, we will raise the fund and that will go to MSME. If suppose the interest cost will be borne by the major company, that is also part of the scheme, still there are a lot of problems. I am working on it. Presently, I don’t have a good alternative, but this is a crucial problem. There are lots of pluses and minuses. It’s a very complicated issue. I can assure you that I understand what’s the problem that small units and the MSMEs are facing, and somewhere we need to find a way out.
Amardeep Tony Singh, Chairman and Managing Director, Pritam Group of Hotels
This is particularly in respect to the hospitality industry and the food and beverage industry. Unless the footfall revives, which I think in the near future looks very bleak, will the government consider low-cost capital infusion to support this industry, as this industry is already a very big provider of jobs to the country.
Nitin Gadkari: You are giving a good suggestion to the wrong person. I am not the finance minister, but I feel that these are definitely genuine and legitimate problems. Because of coronavirus, people are facing a lot of problems. I will try my best to find a way out for that. I will talk to the Finance Ministry and see how we can resolve this and provide relief. Presently, there are lot of problems, but I feel that whatever decision has been taken by the government, probably this industry will also get the benefit. If you feel that there is more required from the government at the ministry level, we will definitely think about it. Send your detailed representation to the ministry, we will check with the concerning authority and try to find a way out.
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