Beijing, May 26, 2019 (BSS/PTI) – India should cut interest rates further
and adopt consistent policies for the export of agricultural produce to
enable Indian exporters to take advantage of the current US-China trade war,
industry body Ficci’s President Sandip Somany said Saturday.
Currently on a business trip to China, Somany also said the NDA government in
its second term should focus on getting big ticket investments from China,
specially in the capital goods sector, and motivate Chinese machinery
manufacturers to set up plants in India.
The bruising US-China trade war, under which both countries have slapped
billions of dollars worth of tariffs on each other’s exports, offers a big
opportunity for some category of Indian exports to make a dent in both the US
and Chinese markets, Somany told PTI here.
Somany, who is the vice chairman and managing director of HSIL Limited, the
second largest glass manufacturer India, also met the Indian Ambassador to
China Vikram Misri and the Secretary of China’s Boao Forum for Asia, Li
Baodong.
If the US-China trade war continues, it offers good opportunities for Indian
exports in certain areas, he said.
“If you are competitive, we can replace China in those areas. But the
government has to be supportive because production costs are high which makes
our goods not competitive.
“Our interest rates are at life time highs, which makes our goods not
competitive. That is an issue. Our inflation rate is low, running around 3
per cent. What is the need for banks to lend at 10, 11 per cent? It is
uncalled for,” he said.
The interest rates need to come down by another 100 or 150 basis points, he
said.
He also said the NDA government in its second term should make agricultural
exports more competitive by adopting a consistent policy.
China has a huge potential for agricultural produce as it is a net importer.
Now that the trade war is going on, India could step up its exports of
soybean to China, replacing to an extent US shipments, he said.
Since last year’s Wuhan summit between Prime Minister Narendra Modi and
Chinese President Xi Jinping, China began importing some agricultural produce
like rice and sugar. India is also trying to step up soybean exports to
China.
The trade deficit in 2018, according to Chinese official data, climbed to USD
57.86 billion from USD 51.72 billion in 2017 in about USD 95.54 total
bilateral trade.
India’s exports to China went up to USD 18.84 billion in 2018, an increase of
15.2 per cent compared to 2017.
“Unfortunately, the Indian agriculture policy is not consistent. When the
prices go up, the government bans exports. We should become large exporter of
agri products with consistent policy. When the prices go up, the government
should import instead of curtailing exports.
“Because the government interferes with exports and raises duties at the drop
of the hat, agricultural exports in India have not done well,” Somany said.
Now that the US-China trade war is going on, one of the things the government
should do is to step up exports of soybeans to China.
“We don’t have a great agricultural export policy and don’t give it a
priority, that is the problem,” he said.
About India-China trade, he said Chinese machinery manufacturers should be
invited to set up plants in India.
“We have huge trade deficit with China. Chinese companies should be motivated
to set up investments in India, like the Chinese mobile phones being
manufactured in India. The same should done for electronics and other
categories,” he said.
To boost Indian exports to China, which has become an important trade
partner, India should start selling value added products to the country
instead of raw materials and chemicals.
On India’s demand for China to open its pharma sector, Somany said Indian
pharma companies feel the Chinese market is not an easy place to invest in
due to entry barriers.