Foxconn to set up 10-12 manufacturing units in India: Kant

Below is the transcript of Amitabh Kant’s interview with CNBC-TV18's Shereen Bhan.Q: Let me start with the big headline that came in last night and that is Foxconn's Founder Terry Gou here in India saying we are drawing up a 10-year investment plan but we haven’t finalised what that plan is. I know he had a meeting with you, I know he has a meeting with the Prime Minister, what more can you share with us about the Foxconn's plan?A: They are looking at a very long-term vision about India. Their team has been several times in India. They have travelled through the length and breadth of India, several destinations, I think they are looking at about 10-12 manufacturing units across India, a very large scale investment.Q: What kind of investment?A: They are looking at manufacturing across solar, across mobiles, across handsets and they are looking at it as making India manufacturing base for global supplies. So they need to do their homework right, they are still in the process of detailed interaction and I think we should give them some breathing time on this.Q: By when do you expect them to finalise their plans, Terry Gou is saying that they still have to deal with challenges related to land, infrastructure so on and so forth, they have identified several states and several states are wooing them but by when do you anticipate that they will finalise their plans and ballpark, what is the kind of number that they have spoken to you about in terms of investment?A: It is a very large scale investment. We are talking about 10-12 manufacturing units across, they are already in Andhra Pradesh, in fact they are manufacturing right now for Xiaomi telephones, they were in Chennai, they have relocated to Sri City in Andhra Pradesh but they are looking at manufacturing across to minimum of 10-12 sites so they have travelled to about 6-7 states already and I think they are looking at a fairly large scale investment. So I think we should allow them to do their due diligence.Q: Can you share with us who are the other big ticket investors who are likely to finalise their India investment plans. I know before they meet the Prime Minister they are in your office meeting you. Can you give us a sense of the kind of investments lined up and the marquee names that are likely to invest?A: First and foremost it is important to realise that since the launch of Make in India, India's Foreign Direct Investment (FDI) has grown by roughly about 48 percent at a time when globally FDIs have fallen by about 16 percent. So, India has really enhanced its capacity in terms of attracting FDI. We have had some very good investments in the recent times. You have had the Daimler plant in Chennai, you have GE in Pune, we have just had General Motors announcing that it will be investing USD 1 billion. You have Ford expanding its presence, Samsung is expanding its presence and I personally feel that many big ticket investments, the Wanda Group from China, the Softbank, Masayoshi Son has already invested about close to USD 2.5 billion in India but he is looking at very large investments in solar sector and my personal view is that we are heading for some big ticket investments in the coming 6-7 months.Q: Ballpark figure?A: My personal view is that India is going to see some major investments in the manufacturing side in the next 6-7 months.Q: Since you are talking about big ticket investments I come back to the question on whether this governments change of heart as far as the land acquisition policy is concerned is going to hurt those investment plans because at this point in time the parliamentary panel is yet to submit its report but all sources indicate that the government is unlikely to continue or pursue the reforms that it intended to pursue through its ordinance and we are going to go back to the 2013 land bill. How significantly is that going to damage investment plans as far as you are concerned?A: I don't think there is a change of heart. The long-term vision is very much intact. It is very clear that the government wants to push manufacturing. It wants to push investments in a very big way. They are pushing for land acquisition, they need to arrive at a consensus. The feeling is that it is much better to use states to drive many more changes, states must become the key driver of growth. So, if consensus is elusive in centre we must allow many states to move forward and states will actually become the key drivers of India's growth. So, to my mind if you have 10-12 states in India driving India's growth then India is bound to grow at about 9-10 percent over a long period of time. You need 10 champion states in India. So, they must become the reformist states and that zeal of the states must transfer to the central government.Q: I know you cannot speak too much as far as the land bill is concerned because you have deposed in front of parliamentary panel, so I understand the sensitivity there.A: I have always been a believer that whatever we do whether it is land acquisition or several laws and acts across the country, we must keep things extremely simple, extremely easy for people to come in and do business.Q: Let us talk about the FDI composite cap and ofcourse the DIPPs clarifications have been out just a while back. Let me talk to you about the two sectors where actually there is no change, one is defence and the other is banking. While I understand the sensitivity as far as the defence sector is concerned, one doesn't understand why using the composite cap window you haven’t been able to move as far as the sub-sectoral limit I banking is concerned?A: What we have done in composite caps is very revolutionary. It is very radical in terms of allowing fungibility, allowing ease of doing business, allowing people the freedom to move from one kind of investment to the other, making things extremely simple. So, that must be appreciated across that we have allowed many sectors where FIIs can move through the automatic route upto 49 percent. Many FIIs - in many sectors across the board companies can move up to 49 percent.Banking and defence was discussed and debated, we do inter-ministerial discussions and it was felt that these are strategic sectors, we need to hold on to this.So, in the case of banking actually there is already 49 percent FII. So, to my mind 49 percent FII is a lot for banking at this point of time and in the case of defence it is already 26 percent. So, that is fairly significant. At 49 percent FDI if 26 percent is allowed for defence it is fine and in 74 percent for banks 49 percent is already allowed for FIIs.Q: So, there is going to be no changes as far as defence or banking are concerned in the near term?A: Not immediately. There has been a lot of inter-ministerial discussions.Q: So, there is scope that perhaps we could see an opening up in the future?A:The process of changes in the FDI policy is a constant process of inter-ministerial discussions. I can never close that window but at this moment the thinking in government is that banking and defence are strategic sectors. We need to limit FII to 49 percent and 26 percent.Q: Let me ask you about retail because there has been so to speak a relief as far as the retail sector is concerned - 49 percent in multi-brand retail the FPI route through the automatic window. Again there is confusion in the mind of investors as far as retail is concerned. On one hand the policy stands for multi-brand retail. The government says we are not going to smile on investments coming into multi-brand retail. On the other hand you do this business as far as the composite cap is concerned. What do investors make of whether this government wants retail investments, doesn't want retail investments?A: What is the confusion? The government policy on multi-brand retail was absolutely clear.Q: The government says it is not in favour of multi-brand retail.A: For 49 percent FDI, FII was already permitted. All that we have done is we have said through the composite cap that it is permitted through the automatic route. We have just made things easier for people.Q: You may have made things easier but the government has said that it frowned upon retail FDI in multi brand retail.  A: What the government has said is that beyond 49 percent; what this composite cap has said is that till 49 percent FDI, FII can come in into India in retail. We have been extremely liberal as far as e-commerce is concerned. We have gone up to this whole 100 percent for B2B and we are interacting with number of state governments, we have interacted with players across the board. We are quite open right at this point of time in interacting with all them to define e-commerce to a define market place. We are waiting for some more inputs from the state government and we will take this forward. Q: Since you are talking about e-commerce and liberalising the e-commerce regulations further is there a thought that at least as far as single brand is concerned the Ikea’s of the world for instance allow them to go the B2C route on e-commerce? A: There has been a lot of interaction, we have been constantly liberalising the single brand route.  Q: Further liberalisation expected? Are you likely to do away with the sourcing norms for instant a single brand?A: We have just done this for Nike and Adidas where we have said that those who have franchises stores can establish their own outlets. Now the issue of 30 percent sourcing is something which has been embedded in the policy for a long time. That is something which we have got representation on a single brand that is an issue which is being examined.Q: Is it likely to be diluted or done away with? A: I don’t think it can be completely done away with because we need sources. Q: So it will be diluted? A: No, we need to look at some high technologies sectors where local sourcing may not just be feasible at all. We are examining these issues; we are keen that actually sourcing must take place from India. However, in certain sectors it just may not be technically feasible. Q: So you could take a more sectoral approach as far as minimum sourcing requirements is concerned? A: We are interacting with players across the board. Q: How soon do you expect to formalise the regulations as far as e-commerce is concerned? A: This is one ministry which has been added in terms of liberalisation. We have liberalised everything possible, defence, railways, construction ...Q: The one sector that you haven’t and there is a buzz that you are likely to is Broadcast Media. Are you likely to review the FDI cap as far as Broadcast Media is concerned? A: Not yet, we have not initiated anything nor are we interacting. That is something which will have to initiate by the Ministry of information and broadcasting but there is no movement on that as yet. However, you can’t blame Department of Industrial Policy and Promotion (DIPP) for not being an active liberaliser. We have liberalised just about everything except multi brand retail. You tell me if there is anything more we can liberalise we will be very happy. Q: Would you be in favour of the FDI cap changing as far as broadcast media is concerned? A: I am a civil servant; these are issues which have to be decided by political decisions. Q: I am asking for your opinion? The decision is the governments but I am asking for your opinion? A: There is a lot of inter-ministry discussions, issues go to the cabinet. Policy decisions are taken at the cabinet level. I don’t think I should talk about policy decisions here.  _PAGEBREAK_Q: Let me then ask you as far as defence is concerned because that is the other big area of opportunity. We have seen a surge as far as defence industrial applications and licenses are concerned. Can you throw some colour on the kind of investments that have already come in and what you expect further?A: Huge amount of energy, huge amount of vibrancy. I see a completely new dynamo as far as the defence sector is concerned. We have cleared something like close to 75 licences. There is zero pendency as far as licences are concerned. I see a whole lot of Indian players, Mahindra's, Tata's, Bharat Forge, all of them going out, driving manufacturing. Bharat Forge is selling four new units for defence manufacturing. So is Mahindra, so are Tata's. I see a completely new energy. Airbus has come and had discussions here. Boeing has started manufacturing here. And I see that in the coming years, India will be a very key driver of global manufacturing for defence. Q: Since you are talking about global manufacturing from India for the defence sector, the directed offset policy where the government is essentially telling people what to do, what not to do and so on and so forth, do you see that as being an obstacle, that being a challenge because we have been hearing it for a long time now that we are going to see new procurement norms and this is of course part of that over-arching policy. But do you believe that that is the need of the hour to review that? A: You are quite right. The Defence Ministry has already put out a draft of procurement rules. Q: Which, by the way, industry feedback is very, it is not making things any better. A: Let me tell you that Defence Ministry have appointed a committee. That one man committee is making its recommendation and I am quite sure with all the pressure from other ministries as well, we are going to see a very liberal and a forward looking progress of policy in the days to come. I think the mood is for change. Q: How soon? We have been hearing about  the new procurement policy for over six months now. A: The problem with journalists like you is that you raise the expectations so high. Q: We are only going with statements coming in from the government. Mr Parrikar, since the time he took office said, the announcement is going to be made shortly, the announcement is going to be made shortly and industry is waiting to hear.  A: You are not talking about clearing of 75 licences.  Q: I am talking about clearing of 75 licences. A: To my mind, this should be through in the next five to six months. Changing a defence policy is a very complex, very cumbersome job. It requires a lot of detailed stakeholders' consultation. I think that process is on; we should allow the Defence Ministry to take it through this process.Q: As far as the ease of doing business is concerned and we have seen sort of states like Telangana and Andhra Pradesh competing now of course other states as well but these two in particular to try and woo investments, deemed clearances in 15 days and so on and so forth but there is also the downside to that which has been highlighted for instance yesterday by down to earth report which seems to suggest that in the quest to attract new investments things like how the allocation of water resources will take place, the environmental cost is being ignored. Does that worry you than in the quest for the ease of doing business, we maybe overlooking the social cost?A: No, our objective should always be that whatever we do, we must do it in an extremely sustainable manner. I think that is something which we have constantly pointed out but while we are talking about sustainability, while we are talking about recycling of 100 percent water, while we are talking about public transportation to these manufacturing sites for workers and so on, it is very critical, very important to realise that manufacturing has been held up to completely outdated and very complex procedures, rules, regulations angst which have been for the last sixty years, India has made itself an extremely complicated place to do business. We are all for sustainability but cut out all these red tapes, cut out all these procedures, cut out all these rules and regulations which have hampered India as a manufacturing nation, I have been repeatedly saying that in the name of sustainability don’t kill manufacturing.Q: You have been saying that but the World Bank was here to do its adjustment of India, what is the prescription that is coming from the World Bank if any of course you have a very aggressive target, you want to move to 50 in the ease of doing business rankings over the next two years, are we ready to be able to get close to there?A: I think the government has worked hard and I must complement several ministries who worked very hard. So that bit for this coming year we have already submitted whatever we had to do and we are now looking at the next year. Our target is that in three years time, we must get into the top50 and I am pretty confident that at the speed at which we are going we should be able to achieve this but that is the World Bank bet. I don’t think we need to improve for World Bank's sake, we need to improve for India's sake, we need to make ourselves extremely easy and simple so that India can grow at 9-10 percent over a long period of time.Q: What about your own index of states?A: We have pushed the states, we have created this whole competitive spirit, this competitive zeal amongst states and I see a lot of interest, enthusiasm and huge amount of energy amongst states to improve themselves better not merely Telangana and Andhra but I see this across Maharashtra, I see this across Uttar Pradesh, more than that I see this in West Bengal. So we have created that competitive zeal, they have to do things till July end, they have given in their papers by August and we will have the complete index ready, we will put it out as to which are the best performing states and which are the worst performing -- this will be in public domain.Q: By August end?A: Absolutely. We are doing the study along with World Bank and that should be out in public domain by the end of the month though in a totally transparent manner.Q: We will be following that story and you are right about states like West Bengal has seen several changes being made there.A: It is important to create that huge competitive zeal across sectors, across government schemes.Q: Let me ask you about the export story because while foreign direct investment (FDI) into India has been going up our export picture over the last few months has been consistently deteriorating, how concerned are you about what is happening on the export front of course a lot of that is linked to what is happening with global growth and the current global slowdown but do you believe that there is a need to perhaps review what we are doing as far as our export market strategy is concerned?A: First and foremost it is important to understand that India is an oasis of growth in the midst of a very barren economic landscape across the world, across USA, across America, across Europe, there is complete slowdown but despite that India has been able to attract FDI, but it is very important to understand that India must push for exports. You cannot in the long run be a great manufacturing nation till your exports don’t grow. Only if exports grow at rapid rates, India's manufacturing will grow. They are very organically linked to each other and I think we need to push for it. Having said, we just had a new export policy and I am sure it will provide great impetus to growth but the way the world is growing, if you look around the world, there are trading blocks, the transatlantic, the transpacific and India is going to play increasingly aggressive role in this.Q: The Chief Economic Advisor (CEA) cautioned saying that these sort of preferential agreements that are being signed between nations, India may find itself isolated and may lose out on account of that, is that a concern that you share as well?A: I don’t share that at all. I think this is the way the world is going to grow and expand, this is the way trading blocks will grow across the world. If you look at the last ten years, this is the way it has expanded and India must become a far more aggressive, far more committed player, India must use this as an opportunity to seize a larger trading share in this trading block.Q: I know this is not under your beat if I could call it that but let me ask you about what is happening as far as anti-dumping duties are concerned, the US has imposed anti-dumping duties on Chinese tyres, there is a lot of talk about India perhaps imposing safeguard duties as well on hot coiled steel, do you believe that given the present situation this would be the appropriate thing to do?A: First and foremost we must understand that in the last four weeks China has knocked off 3.4 trillion of its wealth. That is roughly about 22 percent of its wealth has been wiped out in last four weeks. It has created huge overcapacity, it was an export led economy, it has to find market for this otherwise China is going to sink and therefore it is going to use its large capacities into pumping goods into places like India where there is a domestic demand whether it will be steel, whether it will be many other products. India must be prepared for this and India can be prepared for it in three different manners. To my mind India must first and foremost do its standardisation, it must use nontariff barriers such as standards, it must have very strong safeguards and it must strengthen itself in the safeguard mechanism, it must strengthen itself far more aggressively in the anti-dumping measures. Having said this I must say that the Indian industry must preopre itself, it must do its homework in a far better manner, it must prepare documents so that safeguards and anti-dumping machinery can quickly react to this.Q: So you think this is the need of the hour?A: Absolutely it is the need of the hour.Q: What more can we expect now, it is pretty much a year on as far as the make in India mission is concerned, the next three-four priorities?A: Couple of things -- one is that there is no need for any pessimism at all which many journalists tend to generate. There is a huge need for optimism, FDI has grown by 48 percent, manufacturing is at a six months high, manufacturing PMI has just been released yesterday, it is at a six months high, inflation is at low levels, monsoon is much better than what was predicted. To my mind India is on the right course, the right direction, we just need to accelerate it further.