The Union government is planning a new industrial policy to increase the share of manufacturing in overall GDP, Commerce Minister Suresh Prabhu said at the News18 Rising India Summit.
Prabhu was speaking as part of a panel discussion, The Making of a New World Power, where experts talked about steps the government should take to convert India into a middle-income economy.
“India's GDP has been dominated by services rather than agriculture or manufacturing and there are some structural issues involved in the process but there is no doubt that manufacturing needs to be stepped up," Prabhu said.
Apart from the commerce minister and Amitabh Kant CEO of NITI Aayog from the government, the panel included top sector chiefs including Vedanta Group’s Chairman and Founder Anil Agarwal, State Bank of India (SBI) Chairman Rajnish Kumar, Deep Kalra, Founder and CEO of Makemytrip.com and Sanjay Nayar, CEO of KKR India- leading global private equity and investment firm.
“We are still producing too small and not reaching global markets…We need new laws to facilitate better manufacturing and exports,” Kant said.
Nayar of KKR India said that even though he shares the bullishness on the Indian economy, but is concerned that the only thing India has going for it is consumption.
“No economy can be built solely on consumption… Apart from consumption, people should also save and invest actively,” Nayar said adding that a "massive black hole" in the banking system is dragging the economy down and that it was time to "attack structural issues head-on”.
SBI chairman Kumar agreed that public sector banks lacked expertise and failed to to do due diligence on credit appraisal during the euphoric years around 2010. This led to non-performing assets burgeoning to Rs 7.7 lakh crore (as on December 2017) as per the latest figures of the Finance Ministry.
However, he pointed out that the contribution of public sector banks must be recognised in India’s development and that there is “no country in the world where banks have not had a problem”.
Kumar also reiterated his views on privatisation of PSBs that ownership of a bank should not matter and there is no uniform prescription to privatise PSBs as we have several examples of good and bad companies in both private and public sector.
“A large PSU company can be run by its CEOs and owned by the public, with the government still holding a minor stake….Private institutions from India are well regarded all over the world and we can produce our own goods from natural resources instead of importing,” said Anil Agarwal, citing the standstill of Goa mining as unfortunate.
Resonating Agarwal’s views, Kalra of Makemytrip.com said India is no longer very different from Silicon Valley and there is no dearth of brain-power in India, but it rarely came up with great digital products.
According to him, “India has taken the message of Athithi Devo Bhava (a guest is equal to God) too literally and it is now easier as a foreign company to do business in India.”
The commerce minister assured that the government is trying to redefine ease of doing business for each city and district and the role of the government would be to facilitate an increase in manufacturing and bringing in the investment necessary to do so.