Min­istries Ready Plan to get Econ­omy Started Relook at Trade Pacts likely to Boost Man­u­fac­tur­ing

Tele­com Bats for More Lib­eral M&A Pol­icy

The Economic Times - - Economy - DEEPSHIKHA SIKAR­WAR

The new govern­ment is likely to take a relook at the coun­try’s trad­ing ar­range­ments, in­clud­ing tar­iff struc­tures un­der free trade pacts that may be un­der­min­ing do­mes­tic man­u­fac­tur­ing. “There is a need to spur man­u­fac­tur­ing…A group is look­ing at the tar­iff struc­ture in re­spect to the trad­ing ar­range­ments,” a fi­nance min­istry of­fi­cial told ET. Ac­cord­ing to the of­fi­cial, the un­der­ly­ing prin­ci­ple of trad­ing ar­range­ments should be to pro­mote value ad­di­tion and man­u­fac­tur­ing in the coun­try. While this re­quires tar­iffs to be lower on in­puts and higher on pro­cessed and fi­nal goods, sever- al of In­dia’s trade pacts are not aligned to this prin­ci­ple, the of­fi­cial said.

A study is ex­pected to sug­gest a course cor­rec­tion by em­pha­sis­ing re­moval of in­verted duty struc­ture to elim­i­nate the cost dis­ad­van­tage for In­dian man­u­fac­tur­ers.

The rev­enue depart­ment, too, has ex­pressed reser­va­tions on In­dia sign­ing a Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship (RCEP) that in­cludes China, ac­cord­ing to an­other fi­nance min­istry of­fi­cial.

In­dia has signed free trade agree­ments with about 20 coun­tries, in­clud­ing Ja­pan, Korea, ASEAN na­tions, Sri Lanka and Nepal while it is ne­go­ti­at­ing mar­ket-open­ing pacts with Aus­tralia, Canada, New Zealand and the Euro­pean Union. A course cor­rec­tion is also seen serve two ob­jec­tives—dis­cour­ag­ing im­ports that have posed a chal­lenge to the ex­ter­nal sec­tor and boost­ing do­mes­tic man­u­fac­tur­ing. Poor per­for­mance of In­dia’s in­dus­trial sec­tor has be­come a cause for worry for pol­i­cy­mak­ers who are look­ing for ways to cre­ate jobs. In­dus­trial pro­duc­tion re­mained al­most flat in 2013-14, de­clin­ing 0.1 % com­pared with an ex­pan­sion of 1.1% in 2012-13, mainly on ac­count of a drop in out­put in man­u­fac­tur­ing, es­pe­cially cap­i­tal goods. The fi­nance min­istry has read­ied a de­tailed plan out­lin­ing key ac­tion points re­quired to im­prove busi­ness sen­ti­ment, spur growth, con­tain in­fla­tion and main- tain price sta­bil­ity, boost in­fra­struc­ture, deepen fi­nan­cial sec­tor and ra­tio­nalise the for­eign in­vest­ment regime. The govern­ment is ex­pected to take up mar­ket re­forms, pav­ing the way for free move­ment of farm goods, open mar­ket sales and deeper for­ward mar­kets to en­able price dis­cov­ery of agri goods.

In in­fra­struc­ture, the fo­cus is on en­er­gis­ing the pub­lic-pri­vate part­ner­ship model by invit­ing bids for projects af­ter clear­ances are in place and at least 80% of the land re­quired has been ac­quired. The idea is also to im­prove model con­ces­sion agree­ments to cut down on lit­i­ga­tion. On the taxation side, the goods and ser­vices tax and the di­rect taxes code are pend­ing re­forms. Com­plete ini­tia­tives such as spec­turm trad­ing and shar­ing, na­tional op­tic fi­bre net­work, full num­ber porta­bil­ity Mea­sures to boost en­ergy se­cu­rity, re­duce oil im­port bill and en­cour­age in­vest­ments in the sec­tor

ANANDITA SINGH MANKO­TIA

The tele­com depart­ment has bat­ted for a more lib­eral M&A pol­icy in a pre­sen­ta­tion to the Cab­i­net sec­re­tary, in­di­cat­ing that the new govern­ment could relook at the re­cently un­veiled rules which re­quire a buyer to pay mar­ket-linked price for air­waves that come with any ac­qui­si­tion, a clause which was panned by oper­a­tors and an­a­lysts. The pre­sen­ta­tion on Tues­day, which was made in a runup to govern­ment for­ma­tion next week, high­lighted the hits and misses of the out­go­ing UPA-II govern­ment, with the ma­jor in­com­plete ini­tia­tives­be­ingspec­trum­trad­ing,shar­ing, na­tional op­tic fi­bre net­work and full mo­bile num­ber porta­bil­ity. It also pro­posed fur­ther ra­tio­nal­i­sa­tion of the an­nual charges that oper­a­tors pay to use band­width, or spec­trum us­age charge (SUC). The pre­sen­ta­tion, a copy of which was avail­able with ET, showed that the tele­com depart­ment (DoT) had al­ready in­cor­po­rated var­i­ous points from the BJP man­i­festo as part of its ac­tion plan, in­clud­ing pro­vi­sion of Wi-Fi fa­cil­i­ties at ur­ban cen­tres and the cre­ation of dig­i­tal high­ways. People privy to the meet­ing be­tween the Cab­i­net sec­re­tary and DoT sec­re­tary MF Fa­rooqui told ET that the depart­ment was asked to high­light its achieve­ments in the re­cent past and point out ini­tia­tives which didn’t go ac­cord­ing to plan. They added that while the depart­ment had pre­pared an ex­haus­tive list of is­sues, the higher author­ity asked for four or five is­sues that would top the depart­ment’s agenda, if it was given a “free-hand” to im­ple­ment pol­icy. The depart­ment will now go back to the govern­ment with a re­fined list of top five is­sues and pro­pos­als. A ma­jor point in the tele­com depart­ment’s pre­sen­ta­tion was a pro­posal for eas­ier en­try and exit from the sec­tor. This came within three month­sof thep­re­vi­ous­gov­ern­ment no­ti­fy­ing a new merger and ac­qui­si­tion pol­icy which re­laxed the mar­ket share cap of a merged en­tity by in­creas­ing it to 50% from 35%.

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