• How do you to plan to solve the burning issues of farm subsidies and the great divide between the West and developing world?Ranjeet Patnaik It is a fact that developed countries such as the US and EU give huge subsidies as well as extensive domestic support to their farmers. These subsidies distort market forces, resulting in unfair trade. We in India are deeply concerned about this. Our agricultural sector consists mostly of subsistence farmers. In India, agriculture is more a means of survival rather than a commercial activity. Heavy subsidies by developed countries depress international prices for agricultural produce, which means that our farmers can neither compete internationally nor can they face the competition from dumped imports of subsidised farm goods. We have taken a very strong position on this in the WTO negotiations. We have made it absolutely clear that there is no question of India—or for that matter, any other developing country—providing greater market access to foreign agricultural products unless there is a simultaneous commitment by developed countries to reduce and eliminate trade-distorting subsidies as per a fixed timetable. In other words, we have emphasised that all three pillars of the WTO Agreement on Agriculture, viz Domestic Support, Export Subsidies and Market Access, must be addressed with the same level of specificity. Fortunately, we have been able to influence the negotiations positively to a great extent, and I am optimistic about our success. • The 100-per cent Export Oriented Units (EOUs), as the name suggests, were meant to export 100 per cent of their products. But due to dilutions in the policy, they are now allowed to sell 50 per cent of these in the domestic market. So how do you propose to prevent the misuse of facilities given by the Exim Policy to these EOUs?S Rajagopalan It is true that EOUs are allowed to sell up to 50 per cent of their exports in the domestic market. However, there is no question of ‘misuse of facility’ since any sale in the domestic tariff area attracts full duties. Therefore, the question of predatory pricing does not arise. This is borne out by the fact that even though the permissible limit is 50 per cent, the sales of EOUs in the domestic market is actually less than 10 per cent of their exports. I would like to clarify the logic behind this facility. The reason is two-fold: first, the manufacturing process generates seconds or waste which cannot be exported due to strict quality-control requirements. Hence, there has to be some outlet for the disposal of such products. The second reason is that international trade is fraught with uncertainties and ups and downs as market situations change continuously. This enabling provision is meant to give comfort to EOUs that they have some outlet market available to them in the event of wide fluctuations in the international market. • You are talking about increasing India’s share in global trade in few years. With government control ubiquitous, faltering ports and a red-tape system, how do you hope to achieve this?Shashi Kanth Our current share of world trade is barely 0.8 per cent, with a value of around $62 billion. I would like to have a quantum leap in this. I am not satisfied with the earlier target of 1 per cent of world trade. I have decided that we must at least double our share of the world trade within 5 years. Since the volume of international trade is also increasing, this means that in order to double our percentage share we will have to triple our current volume of trade in terms of dollar value. The first step I have taken in this direction is to initiate the preparation of a comprehensive Foreign Trade Policy. Earlier the Government used to come out with an annual Exim Policy. While incorporating these features in the new policy, I feel we must adopt an integrated approach and go well beyond this, and establish a clear coherence between our trade policy and other economic policies. I have also decided to identify six to eight focus areas where we will be coming out with Special Initiatives. The aim of the new Foreign Trade Policy will be two-fold: to effect a quantum leap in exports, and also to generate increased employment opportunities. As part of this policy, we will be dismantling such controls and constraints that act as impediments to exports. I want to bring in greater transparency to our working. I want to improve and simplify procedures so that the transaction costs of doing trade are reduced. As announced in the Budget, we are going to come out with a new Special Economic Zones Act. We want to make India a hub of both manufacturing as well as trade. It is my dream to make India one among the major global players in international trade within the next few years. • Generally, countries which have adopted a technical (knowledge)-based approach regarding their industries have flourishing economies. When is India going to shift its labour-intensive approach to a technical one?Shailendra Kumar I do not believe that employment generation and technical excellence are mutually exclusive. In a very large economy such as India, there is a need to develop both technological or knowledge-based industries like IT, software, biotechnology and pharma, as well as a need to provide employment to a substantial segment of the population that has yet to acquire the skills required for hi-tech activity. We require a manufacturing base that can provide employment to this large segment. This strategy is also necessary to take advantage of the growing world trade in medium-technology sectors. Our approach is, and will continue to be, one that assimilates the latest available technology while striving to create more and more job opportunities. I do not see this approach as self-contradictory. • How does your ministry plan to tackle the widespread industrial sickness in the sector of small and medium enterprises, given the challenges faced due to cheaper imports from China and other Asian countries?Mohammad Shoaib Challenges are always to be faced head on. We have to identify our areas of comparative advantage and build up on them. Small and medium enterprises (SMEs) are a very important element in our strategy for employment generation, as also for export expansion. Our major exports consist of gems and jewellery, garments, textiles and leather goods: all of which are in the SME sector. We are developing a set of special initiatives for a number of SME sectors. An essential ingredient will be technology upgradation. We are conscious that a major constraint is the availability of finance, and so we shall take steps, provide adequate credit to SMEs to make them viable, strong and competitive. • Do you have any plans for the rural areas of BIMARU states?Sanjay Kumar Jha We have a number of special packages for industrially under-developed regions. My ministry has a scheme for industrial infrastructure upgradation through which the Central Government provides up to Rs 50 crore per industrial cluster for the upgradation of infrastructure and improvement of efficiency. I propose to strengthen and enlarge this scheme. We are also looking at various facilities that can be given to EOUs in order to make them ‘Virtual SEZ’ Units.
