HVK Archives: Sanctions will not have impact on industry or economy. Alternative finance available
Sanctions will not have impact on industry or economy. Alternative finance available - The Sunday Observer
Olga Tellis
()
May 24-30, 1998
Title: Sanctions will not have impact on industry or economy. Alternative finance available
Author: Olga Tellis
Publication: The Sunday Observer
Date: May 24-30, 1998
The way business and industry have rushed forward in support of
the government after the five nuclear tests is charming. They
have been running up facsimile, telephone, and Speed Post bills
trying to convince the world of business of India's peaceful
intentions.
This is in stark contrast to the way some big industrial houses
like the Tatas behaved when India was a fledgling republic.
Because they didn't agree with Nehru's socialistic ideas, they
went out of their way to see that India did not get steel plants
>from the West. That is how India began to lean more and more
towards the Soviet Union and got her steel plants constructed by
the Russians. The West also dissuaded India from going in for
oil exploration. Again it was the Soviet Union which carried out
seismic surveys and told India about its tremendous oil reserves,
setting the country off on an exciting journey in search of the
black gold.
But, evidently, times have changed. The young president of the
Confederation of Indian Industry, Rajesh Shah, spoke to OLGA
TELLIS about his organization's participation in managing the
fallout of the nuclear tests. "We have the relationships which we
believe will help India at this time," he said. Excerpts from the
interview:
What is your view on the sanctions Imposed by the United States,
Japan and Germany on India? Do you think the action is justified?
Only the United States has imposed sanctions. Japan and Germany
have not. The latter two, countries have only suspended aid as
far as I know. The American sanctions are in keeping with
American laws and, as far as I know, the US administration does
not have any option on the announcement of sanctions. A review of
the sanctions would be possible through repeal of the law and the
exact implications would depend on the letter and spirit of the
rules which are framed relating to these sanctions.
What will be the impact, sectorwise, on trade, industry, exports,
the forex markets, and the capital market? What about
infrastructure?
I do not envisage any major impact, based on what we know today,
because the sanctions are essentially related to government
activities such as aid, certain financing of projects by the Exim
Bank of the USA or OPIC. My own belief is that the sanctions will
not have a major impact on Indian industry or on the Indian
economy. We are studying the implications. It is still too early
to assess the extent of the impact because the details of the
rules have yet to be announced by the US government. In many
cases, alternative financing will be available from European
countries for investments, trade financing, and infrastructure
projects.
How can this impact be contained? Please spell out what must be
done.
The impact can be contained in two different ways. First, by
getting into a dialogue with the USA so as to ensure that the
rules which are framed are fairly broad and reasonably flexible
and really do not impact on the private sector-to-private sector
business.
The second effort must be to take initiatives to find alternative
sources of supply of products, services, and financing wherever
these may be impacted by the sanctions. This initiative has
already been taken by Indian business.
A major part of all this effort is communications - constructive
and helpful communications - to spell out the mutuality of
interest between the USA and India and between the American and
Indian economies. We are doing this, quite strongly, from CII.
The CII has taken several Initiatives. Can you elaborate on them?
Yes, we have taken several initiatives. We immediately wrote to
the heads of government of some of the G-8 countries seeking
their support in maintaining a focus on our economic relations
and business Partnerships. We brought out, a full-page
advertisement on the same issue in The Financial Times of 16 May
across the world and this was timed with the G-8 summit in
Birmingham.
We have addressed all our major counterpart organizations across
the world, asking them to use their good offices to keep a
balance in their relationship with India and to keep the economic
focus upfront. We have also written to the CEOs of major
corporations around the world with whom the CII has extensive
contacts and dialogue to do the same.
We have set up an advisory group headed by Jamshyd Godrej, our
past president and CEO of the Godrej Group, to assist Indian and
foreign companies in any way required and, within the
secretariat, we have set up what we call a otline with a multi-
disciplined team of senior executives dedicated to assist foreign
and Indian businesses.
What is It that made the CII take such unprecedented steps?
Well, the nuclear tests are unprecedented as far as India is
concerned. The CII felt that the tests were carried out be. cause
of the serious security concerns that India had. It is,
therefore, a time to participate in, and contribute to, managing
the fallout of the nuclear tests in terms of reactions,
sanctions, etc.
The CII has always been very Proactive internationally and this
is why we have 12 international offices and 140 international
partnerships. We have the relationships which we believe modestly
will help India at this time, and help Indian industry also.
What do you expect the outcome to be? Have you had any reaction
>from your counterparts abroad?
I expect the outcome to be very rational and moderate. Already,
the responses Which are coming from abroad show that there is
appreciation for the CH initiative and communications. There is
also respect for India and an understanding of why the nuclear
tests were necessary in terms of national security
considerations. Counterpart organizations have sent us copies of
resolutions they have adopted or letters they have sent
supporting the CH's proposal to keep economic links going, to
build further on economic ties and to expand our business
relationships.
I understand that you wrote to two prime ministers - the Italian
and the French. Have you had any reaction yet?
Yes, we wrote to the prime minister of Italy and the-president of
France. We also wrote to the prime minister of the UK, the prime
minister of Japan, the chancellor of Germany, and others. No, we
have not had any reactions as yet, nor do we really expect a
reaction.
There is a view that the budget will have to meet the shortfall
caused by the sanctions. What sort of budget are you expecting?
I do not share the view that the budget will have to meet the
shortfall caused by the sanctions. What is this shortfall we are
talking about? The focus of the budget has to be on bringing back
growth in the economy and taking it from 5.5 per cent of the GDP
to 7 per cent and beyond. That has always been the focus of the
budget. We need to bring higher levels of investment and demand
into the economy to fuel higher growth.
How do you think the government can cash in on the enormous
goodwill it has in the country now to push forward policies that
will give a boost to economic development?
I already see the government, which has become stronger within
the country, Pushing forward on the economic front. Counter-
guarantees for power projects have been approved, foreign
investment in roads has been cleared, Joint ventures between
Ports and foreign companies have been announced, to mention just
three. Almost every day, the government is making a new
announcement and a new decision clearing the backlog of issues
which were pending on the economic front. Quite clearly, all this
is going to boost growth and bring investment back and this is a
time when everyone will support such actions.
Do you see a meaningful role for the CII in helping the
government to take measures to boost the economy?
The CII believes in working in partnership with the central and
state governments and we have been doing so continuously over
many, many years. It is an institutional policy. Our suggestions
endeavour to go beyond Generalities to specifics and we try to
work out the details so that we are more constructive and more
helpful m boosting the economy.
Our role is actually six-fold. The traditional role is to put
forward the proposals and suggestions for economic policies and
Procedures. The second role is to manage the globalization
process for Indian industry in a way that we emerge steadily as a
strong economic nation and a strong industrial nation.
Third, we are constantly working for international partnership-
building so that we are working hi an Increasingly globalized
environment but working together with our counterparts.
Fourth, we are intensively supporting Indian industry to become
competitive through services relating to quality, technology,
environment, energy, HRD, etc,
Fifth, we are trying to work as a catalyst to support Indian
companies getting increasingly involved in the social sector of
development such as education, health, AIDS, and jobs for the
disabled.
And, finally, we are deeply and strongly committed to building an
India and an Indian economy which is far more transparent than it
is today, which is free of the red tape and Procedures which tie
us up, and a country which is much easier to function in, across
the board.
It is commonly perceived by businessmen and anyone who has to
deal with government that while the permit raj has gone, and
reforms have come, corruption has become worse with a strong
network between the politicians and the bureaucracy. Can this be
tackled?
I have a different perception of the corruption issue. My
perception is that the root of the problem is in the election
system and the very large amount of funds which are required by
candidates to fight elections and win elections. The limits were
in this year by the Election Commission, but these are still
nowhere near the real requirement of funds.
We have to address this issue. The only way is to go in for state
funding of elections as a number of other countries have done.
There are formulas available internationally, there are norms
available. We need to evolve our own norms based on Indian needs.
Then political parties and candidates will not need to depend on
business for financial support or, at least, that dependence will
be reduced tremendously. This is the way to go, the way to
tackle the issue.
Back
Top
|
