Need reforms, FDI in insurance at 49%: Sunil Mittal

Q: So the government should go ahead with that?

A: Absolutely, and the government is committed. They have introduced this in the Rajya Sabha, they had political difficulties. If they can build a political consensus, they should get there.

Q: What happens if once again, having promised it, they don't deliver on insurance caps, banking and pension reforms? Would that be a bad signal or is that something the country can live with?

A: I am optimistic. My view is that we will see some movement. How far that will be, I don't know.

Q: But you are an optimist?

A: Yes.

Q: Now let's come to reforms that the government hasn't spoken about at all. Let's start with the need to FDI in retail. It is something that the government has thought about but is not committed to and is scared of. Do you think it's an essential reform?

A: I think if you have to get agricultural linkages and have the benefits of the agricultural power that India possesses in its right way, retail reforms are almost a necessity. Now the question is how fast and how soon you can do it. The government feels that logistics need to be improved, farm technique needs to be improved, the whole cold chain which is missing in this country needs to be established. You can see that the government is committed. The question therefore is now whether the final front-end store will be allowed for foreign investment.

Q: How do you convince the government that the fear that they have about FDI in retail adversely affect small corner shops and the unorganised sector is an unrealistic fear, an exaggerated fear? How do you convince them?

A: If you look at the Western world even today the debate goes on as to how many more stores can TESCO open in the UK or how many stores can Wal-Mart open in the US. This debate therefore is not new and now unwarranted. This debate has to be had. The question is for how long will the debate happen? There have been reports by the Indian Council of Research in International Economic Relations (ICRIER) and many others have worked on the impact of organised retail over the unorganised sector.

Q: Do you think that the proof that the unorganised sectors claim to have - that wherever in Europe and America large retail has set up, small shops have shutdown and there has been a big affect on small shopkeepers - is exaggerated?

A: I will give you an example of Mexico which is more close to our own situation here. The Wal-Mart is now the largest player in Mexico. The unorganised retail has actually increased its presence in Mexico during the same period that Wal-Mart has established themselves.

Q: So this cuts both ways?

A: My view is that in a country like India of a billion people, both will flourish.

Q: What about labour reforms? It is an area where industrialists are pushing the government. What's your view? Do we need labour reforms to encourage investors and increase employment or is labour reform an over-exaggerated issue because most industrialists have learned to live with the system?

A: If you are asking whether that is on top of the list which needs working on, the answer is no. My view is that some of the old legacy establishment industries are struggling with some labour issues. All the modern new industries have very little of these issues. Thankfully, there are no strikes. Indian labour is much more efficient in their workplace, much more work-oriented. I think, labour reforms are again something desirable but having a hire-and-fire policy in a country like India is not going to be an acceptable task and neither should that be a requirement from the industry.

Q: This is very interesting. Here's an industrialist that says hire and fire in India should not be the target that industrialists push for?

A: We must be much more benevolent and much more caring of our labour force. That is a philosophy I hold very dear and I think all industry players must. Having said that, there will be industries in distress and there is no point having the whole industry go down. They need to have some flexibility from time to time. So it will be desirable for the government and industry to come together, create a platform in which they can have a discussion when in trouble, and should discuss how should industry behave vis-à-vis its labour.

Q: But it is not priority number one?

A: Well, certainly it is not.

Q: Let's now come to the issue of oil price. The Petroleum Minister has hinted that it could be deregulated. Montek Singh Ahluwalia has publicly said that this is an opportunity and he believes that this should be done. The oil price at the same time is edging above $70 towards $75. Do you think we need to tackle deregulation of petrol, diesel and cooking gas urgently?

A: I think it's again an issue. As we all know, there is a very huge subsidy involved here, people are used to consuming petrol, oil and gas products at subsidised prices. Tweaking this or making it go to market-related prices is going to be tough. So politically, there has got to be an act of balancing here.

Q: You are a very understanding industrialist. I mean, on things that other industrialists push for - like labour reform, like deregulation of the oil price even on an issue that concerns you like FDI and retail - you are much more understanding of the political difficulties than most industrialists.

A: I think you have to face the reality on the ground and for me any increment in growth rates at the cost of societal strife or stress is not warranted.

Q: Societal strife is something that the government must keep an eye on and they must modulate the push for growth to a shore that they don't endanger society's harmony.

A: When the government refers to inclusive growth, it really takes care of the whole package.

Q: How critically will you be watching the Budget on Monday, July 6?

A: I am unlikely to be here but I will probably watch it from wherever I am in the world. I am very hopeful that the government is going to give a very strong signal through this Budget which will ensure that the industry cheers and feels good about the Budget but equally, the aam admi (common man) is taken care of.

Q: But the fact that you are not here itself suggests that the Budget is not a priority that you are waiting for with anxiety?

A: I wouldn't say there's no anxiety. From my point of view, I would love to be here. I have been here during most of the Budgets but I will be travelling and therefore I wouldn't be here.

Q: Sunil Mittal, a pleasure talking to you.

A: Pleasure.