‘Worried about Red Sea crisis...shipments getting delayed, more expensive’

“EXPORTERS ARE NOW ABLE TO STAND ON THEIR FEET AND WE HAVE BEEN ABLE TO MOVE AWAY FROM THE MINDSET OF EXPORT INCENTIVES. I DON’T THINK THERE’S ANY GOING BACK ON IT” PIYUSH GOYAL,

COMMERCE AND INDUSTRY MINISTER

The government is concerned about the impact of the increase in shipping charges as commercial vessels are taking a longer route to avoid the troubled Red Sea region, Commerce and Industry, Food and Public Distribution Minister PIYUSH GOYAL said in a post-budget interaction in New Delhi. Edited excerpts:

Earlier this week, the finance ministry said that the Red Sea crisis may have an inflationary impact. Can we expect intervention and support from the government on this front?

We are worried about it. We are concerned that our shipments are getting delayed and also getting more expensive if they go around the Cape of Good Hope. We were hopeful that it will get resolved but it seems to be taking longer than anticipated. Otherwise, this year we may have again gone back to growth even on merchandise exports. The trend was good in November, December (2023), but then problems due to the Houthi rebels have created a bit of a dampener (for exports).

Many governments, including India, are taking precautionary measures to safeguard free flow of vessels and to protect them from these activities.

Exporters are now able to stand on their feet and we have been able to move away from the mindset of export incentives. I don’t think there’s any going back on it. We want our exporters to be resilient and face the world’s challenges and by and large we have been successful in that.

The budget document showed that the industry department is considering new PLI schemes for toys and leather

and footwear sector and the Union Cabinet’s approval is awaited. There were also discussions that no new PLI schemes would be introduced for now.

We have a total allocation of ~1.97 trillion for PLI schemes. We have been able to commit ~1.56 trillion through various sectors. We have a good amount of savings. (The new PLI scheme for toys and leather and footwear) will depend on the decisions taken by the Union Cabinet. It will depend on whatever they decide.

We are waiting to see the efficacy of existing

PLI schemes.

Not only DPIIT, different departments have sought different PLI schemes and many are under consideration. They will see which scheme will be useful and will be in the best interest of the country.

The finance minister said that India is negotiating bilateral investment treaties (BIT) with foreign partners in the spirit of FDI – ‘first develop India’. How many countries are we in talk with for the BIT, apart from the European Union and UK?

Talks are going on with many countries at different levels. Many BITS were cancelled in 2016. Many of them are talking, many don't even want the BIT. It has become a passè. For example, many countries don't like ISDS (investor-state dispute settlement).

There was a time when India used to negotiate from a position of weakness. People would dictate terms to India and we would do things under pressure. Some of our free-trade agreements (FTAS) signed 10-12 years ago are really detrimental to India. You've seen how we do stakeholder consultations for days on end and are meeting different sections, hundreds of meetings before every FTA.

Do we see a change in the model of BIT?

India is a pragmatic country and it will see on a case-to-case basis what has to be done but the interest of India comes first.