Home >politics >policy >BJP shouldn’t retrospectively amend FDI in supermarkets: CII president

New Delhi: A change in the government after the elections is not a worry. It is the uncertainty till the elections that the industry is apprehensive about, said S. Gopalakrishnan, president of industry lobby Confederation of Indian Industry (CII) and co-founder and executive vice-chairman of Infosys Ltd.

In an interview, Gopalakrishnan, who chose not to speak about Infosys, said that if a coalition led by the Bharatiya Janata Party (BJP) comes to power after the elections due next year, he expects it to at least allow foreign retailers that already have Indian permits to carry on business in the country despite its opposition to foreign direct investment (FDI) in supermarkets. Edited excerpts:

How do you see the current economic environment and how far we are from a recovery?

The current environment is challenging. We have seen a dramatic decline in GDP (gross domestic product) growth. In two years time, it has come down from 8.5% to 5%. We have seen the fiscal deficit, current account deficit and rupee valuation becoming challenging. There is also political uncertainty because of elections. Having said that, the medium- to long-term story of India is very much intact. We have a young population, we are adding 20 million youth to the workforce every year.

The other positive thing about our GDP is that 80% of it is dependent on internal economic activities and only 20% is dependent on exports. If we are able to stimulate economic activity within the country through encouraging consumption and investment in infrastructure, we will impact 80% of the GDP growth. How long it will last? I think the immediate milestone is the election, both at the state level as well as the central level. With that, at least the political uncertainty may be behind us.

What are the apprehensions and expectations of the industry about the general election?

It is believed regional parties will have a larger say in the next government at the centre. Is that a threat to economic stability and policy making?

At CII, we looked at each of the states. At least 10 states are growing at 8% or more. These 10 states are governed by six different parties. So we believe that there is broad support for economic growth. The last 20 years also proves the same point as we had UPA (United Progressive Alliance), NDA (National Democratic Alliance) as well as the Third Front government and we have had 8.5% average growth.

But on some policy issues, there are obvious differences, like FDI in multi-brand retail. The BJP has even threatened to roll back the policy if it comes to power.

At CII, as an industry body, we believe retrospective amendments will hurt investor sentiment because then there is no sanctity for contracts and policies. Anything that is prospective, in a democracy we have to give it to the government to set the policy. But we believe that we need FDI and we think there is broad consensus on this though different governments may differ on the areas in which FDI should be allowed.

When it comes to FDI in multi-brand retail, I of course hope that it is not changed (if BJP comes to power). Let’s say the (BJP) manifesto says it will be changed, it should not be retrospective. Everything that is approved should continue.

So they can stop allowing it from the day they come to power?

That is a prerogative of a government in a democracy. But as an industry body, we are saying, ‘don’t do it.’ But a democratic government can review it without changing the existing contracts.

The rupee has depreciated around 15% since January. The government has taken a number of measures. What more measures would the industry like to see in this front?

We have to see how to get back confidence in the investors’ mind. We have to see how to increase our exports and reduce our imports. We have to look at if there are any other mechanism to increase the revenue of the government and reduce its expenses. We have also recommended that the government should look at sovereign bonds as a mechanism to raise some funds.

The food security Bill is being debated in Parliament. CII has gone on record saying it will increase subsidy burden on the government. Do you think the costs will outweigh the benefits when it comes to this Bill?

We are very clear. Should we look at the poor and should we look at making sure that nobody goes hungry? Yes, we need to have a scheme that targets the right people. It seems difficult to understand why the coverage should be 67% when the government’s own data says 22% are considered poor. We are saying please look at the coverage, the needy and the distribution mechanism you have set up so that you can eliminate the leakages in the system.

Countries like the US and the UK have tightened visa norms for IT professionals. What impact do you see and how bad it can be for the industry?

We are concerned about it. As an industry body and as a government, we need to work with US and other governments, because we are seeing this phenomenon not only from the US but other countries as well. We need to see how we can make sure the restrictions do not hamper the free movement of professionals.

This is also true for India. We need to make sure that movement of professionals in India is not hampered. There is no certainty about it on what it is, so there hasn’t been any impact assessment yet.

The government is going ahead with its unique identification scheme. However, considering India’s week cyber security infrastructure and delayed implementation of national cyber security policy, experts say collating and centralizing such information regarding Indian citizens can be risky.

This is a problem worldwide, not only India’s problem. And in most of the cases, you will find that the greatest harm occurs through insiders. If you look at US, the Snowden case or the Manning case, they are all insiders. Whenever there is any breach in institutions or organizations, according to many industry surveys, the number one threat is an insider.

There are other issues like break-in , espionage and cyber war as well, so we have to protect ourselves by building the capability. As an industry and as a government, we try. But we need to try harder. This is a number one concern for organizations and governments around the world.

Subscribe to newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperLivemint.com is now on Telegram. Join Livemint channel in your Telegram and stay updated

My Reads Logout