SAARC economic alliance is the future, says BNCCI chief

Basic objective of WTO is to make trade and commerce free and equal for all. In a utopian situation, business shouldn’t be influenced by political relationships of countries. It would definitely be very prospective, if India, Pakistan, and China resolve to come together and take up the challenge of placing Asia in the top of the business map. If manpower is channelised in the correct direction India wouldn’t be far from success, because human factor is the most prominent factor in taking up any challenge, feels the president of the Bengal National Chamber of Commerce and Industry, B N Kumar. In an exclusive interview, with Debjit Chakraborty and Sonali Dutta of tendertimes.com, Kumar expressed optimism about the globalisation in India and the country’s future relationships with the neighboring countries.

Question: You are just back from China. Sometimes back BNCCI led a delegation to Pakistan as well. How do you find the prospect of India-China-Pakistan forming an indomitable economic alliance throwing up a real challenge to those who would like to dominate this trio under the guise of WTO agreement?

Kumar: New way of looking at it -- India-China-Pakistan and why only India-China-Pakistan? Why not the other SAARC countries like Bangladesh, Sri Lanka, Nepal? Though a very difficult concept to implement, still a beginning could certain be initiated by the respective countries together, if political will is there.

Question: What do you think could be the preconditions to forge such alliance?

Kumar: There must be some political balance or alliance to look forward to any kind of economic alliance. Such relationships stem from a political alliance. None the less I am very hopeful that a time will come, maybe after 3 or 4 years when our political leaders will be keen on forming such an alliance. The whole thing is certainly political and I am nobody to comment. There is no sign of breaking of ice at this moment. Things will be in proper perspective once there is free movement between the three countries.

Question: How such a movement could be initiated?

Kumar: Possibly you have noticed that during the visit of the Indian President to China, the opening of the ‘silk route’ which is the land-route over Sikkim and Bhutan, was proposed for bilateral trade. This hints at the ushering in, of the unique thought of making a formidable alliance of the three potential countries. This will definitely be a positive move towards the goal of achieving an economic alliance. In our last trade fair China came as a partner. Interestingly, a team from Uran a remote place in China, which is nearer to Calcutta than to Beijing, was the participant. They also showed deep interest in collaborating with Calcutta, which they realise, has huge market potential. Things are moving but unless and until there is continuous dialogues among the countries, things may not move in the desired direction. I personally feel with that, with WTO, globalisation and free passage of goods, things will make further progress in years to come.

Question: Could you identify the areas of common interest where such an alliance could make a beginning? Don’t you think China could play an effective role in achieving this objective?

Kumar: Apart from economic areas, tourism, cultural activities are also common areas of interest. Millions of people travel from China to India and India to China due to cultural activities. I think this movement of people can make a lot of difference apart from the transaction of goods. Certainly China is ahead of us in some the technological areas like deep mining, hydro-electricity, steel making, development of infrastructure including roads, bridges etc. China is definitely doing immaculately. In these areas we can work with them in their country. Again India is very advanced in specific fields like the information technology. Thus wherever we are strong they seek our co-operation and wherever they are strong we should seek their co-operation. In a nutshell these are the common areas of interest.

Question: Is it true that China is more interested in foreign capital investments in their country rather than taking the initiative of going out and trading?

Kumar: They have been very fortunate that, non-resident Chinese people living specially in Taiwan, Hongkong, Bangkok, have always invested in their domestic industries. These non-resident Chinese have in a way given impetus to the Chinese industries. In fact most of the money comes from these countrymen. Lot of funds has flowed into China, so they must have got used to this practice. This is the lighter side of the story. Secondly, they feel that they need to develop their country first i.e. to have further development thus they require people to go and invest there. I would say that even we want foreign investors in our country. Thus, whatever is applicable to China, is also applicable to India, because even we need funds, we need investments.

Question: What about the NRI’s, why aren’t they interested in investing in India?

Kumar: It is a matter of fact and let us accept it. It is not necessary to know the reasons. But at the sametime I must tell that there are a number of NRIs showing keen interest to invest in India. All are certainly not indifferent. They may not be as eager or keen to investment in their motherland as possibly the non-resident Chinese may.

Question: China is also gradually getting adjusted with globalisation. Are industries there crying for protection in the form of anti-dumping duties like Indian industry?

Kumar: China is very eager to adopt the WTO standards; but they have not totally committed to the jurisdiction of it. Thus their imports are still under some kind of barrier. Hence their anti-dumping duties are still not valid. Anti dumping is very much permissible under WTO, it is an antidote to protect our personal productivity. If some country is selling at a price which is not their real cost of production then the country where they are selling would always prefer to go for anti-dumping which is perfectly within the rules or guidelines of WTO. It is actually a ‘safeguard measure’ for the country that is selling the product. Import cannot be terminated so one has to resort to ‘anti-dumping’. This is an oracle in the hands of the country concerned under WTO.

Question: Is the coming of the privatised foreign companies, affecting the local players in any way? Is it hampering their business because they are trying to offer a cheap rate?

Kumar: The basic concept of WTO is to make trade and commerce free as far as possible, making the taxation limit identical, in more or less all the countries. However to achieve this, the pre-requisites are, the level of productivity and efficiency everywhere should be more or less equal. Some places may have certain advantages to dominate the market of definite products. For example, if rice in Malaysia is cheaper than rice in India then we will purchase rice from them. But at the same time an even playing ground for the local players should be maintained. Same kind of opportunities is being provided to both the domestic and foreign investors.

Question: Recently at a seminar in Calcutta the Pak ambassador in India has asserted that Kashmir is the key issue that has to be settled first and the rest could follow thereafter. In such a situation how do you find the Indo-Pak trade prospect? What effective role you feel India should play avoiding all kinds of rhetoric?

Kumar: You just quoted the Pak ambassador, who is a political entity, and it is a political issue on which I don’t want to pass any comments. I would avoid that. I wouldn’t question whether Kashmir is a key issue or not, but I would like to take this opportunity to draw everyone’s attention to a significant fact — even during the Kargil war the trade between India and Pakistan was not really affected much. It went on. Thus, so far as bilateral trade is concerned, it has certain ethics, certain momentum of its own. I also feel that business has opened up and progressed that will help the political people to bury their political differences and come to the same platform of understanding.

Question: Sri Lanka is emerging as a crucial factor in the shaping up of South Asian economic future. Strategically also world’s big powers are keeping close watch on the happenings of Sri Lanka could be roped – in into the entire economic growth process of this region? Some suggest that being one of the major tea producing countries an International Tea Promotion Agreement (ITPA) could be one such step for intra-regional cooperation. Your comment please.

Kumar: In spite of the problems in Sri Lanka our relation with Sri Lanka is excellent. There are many items, which we import from Sri Lanka; we have also taken up our custom duties on the import items of Sri Lanka. So far as tea is concerned we are certainly importing tea from Sri Lanka because it is very cheap. As far as tea is concerned, the important players are Kenya, Sri Lanka, India and to certain extent China. However these tea-producing countries aren’t very satisfied about the tea prices. So that, there is some scope of an understanding between the tea-producing countries, to get an economic price. Just like India and Bangladesh have an agreement, these countries can also work towards an agreement to ensure better control over the international market as well as to ensure better price realisation.

Question: Don’t you think the WTO policy instead of greater coherence among the developing countries in effect will disintegrate the existing regional cooperation among the developing nations and turn the region into an economic battlefield.

Kumar: The basic aim of WTO is that there should be free trade with uniform duties as far as possible. However this may lead to some kind of chaos and lawlessness where the efficiency and productivity is not very high. Well, I can only tell you that those countries that are going for WTO agreement are deliberately doing so to boost up their efficiency and productivity. Our political and economic leaders are of the opinion that unless and until there is competition; the productivity and the quality will not improve, we’ll remain where we are. So we are getting into a competition which is very healthy for the technological advancement of the nation. Some chaos and dissatisfaction will be there, but our challenging attitude will gradually give impetus to the rate of productivity, make it at par with international standards.

Question: Can you name a few industries, which are poised with a threat from WTO and globalisation?

Kumar: Steel, cement, mining, engineering, normal chemical industries to name a few. These industries are lagging far behind in respect of technology and productivity.

Question: In a developing nation like India is privatisation the solution?

Kumar: Privatisation is a way of increasing efficiency in the society. It is a way to lighten the load on the government. Privatisation is not the only solution. The government needs to make improvement on its operations. Our government should also aspire to be world standard.

Question: What is the overall reaction of industry to privatisation move?

Kumar: It’s quite natural that there is likely to be a mixed reaction for any landmark event. Some are of the opinion that the opening of the economy allow us to face more challenges. We must take this opportunity to improve our productivity and our quality, make our products more cost effective and attain success in the national as well as the international level. There are some others who feel that we may not be able to compete very effectively and successfully in all the products. Both the views are correct. Those who will gear up and take up the challenge will definitely do better in comparison to those who are mortally scared of facing the challenge. But the individual can only help in this regard. In India much of the policies as far as the labour is concerned are very old and the attitudes are very orthodox and at times damaging; that needs to be changed. From the chamber of commerce I insist that this attitude must change. Productivity does not depend on the physical priorities; it depends on the human priorities.

 

Question: How should the labour force or the human factors be motivated?

Kumar: Things, systems and rules should be more logical. They must be followed. The administration should have a strong will, that is how things will improve. To be very specific in the labour front in any other country have the authority to fire, whereas in India things are different. Humanity creates wealth, thus if some other country creates more wealth in comparison to India the difference is actually made by the human beings of that particular country. People in a successful nation are more result oriented, organised and rational. The rational approach should be brought back in every single area, whether it is labour force, leadership, trade union, work environment etc. The educated Indians are no less educated than the others. Those who are at the helm of affairs are very ignorant. The collective attitude of the people in this country is not rational. We have not administered ourselves well, which has made a radical difference in our lives.

Question: What is your opinion regarding divestment of PSU’s?

Kumar: Why should government be in business? There are some historical connotations; historically at a certain period, it was required but now they should come out of it. Everywhere in the world wherever government is in business they have not done well. If, that is the basic lesson then why should we repeat?

Question: Do you think that the loss-making PSUs owe the government for their losses because they used to make profit before being nationalised?

Kumar: No, this is not true, excepting coal. We have nationalised after they became sick. Nationalised industries have been set up as a deliberate policy, under India’s first Prime Minister Jawaharlal Nehru. There are certain things, which the government thought, came only under government jurisdiction. They may have had some profit in remote past but being a bureaucratic set up they had a tendency to deteriorate. But the question remains whether the government can improve the productivity. If the government can, then there is nothing wrong to nationalise a unit.

Question: Do you think our system should be de-bureaucratised for better and faster operations?

Kumar: Bureaucracy is a fact of life, it will remain. But if the government further delves into the industries and so does the bureaucratic system then that needs to be terminated for the well being of the society at large. Bureaucracy has to be restrained and guided.

Question: What do you think should be done for transparency of tenders including global tenders?

Kumar: I think on the face of it everything is transparent but I don’t see any openness in the language of the tenders. However as far as the web site is concerned, I would say that you have the great advantage of reaching many more people interested in tenders. At the same time the vendors need not send their representative for collections of the papers and other information, which they can avail through your web site, that certainly reduces their expenditure and energy, to a great extent. Never the less transparency and openness really starts after the tender is opened, as it happens everywhere; there I do not know how far you can bring about the transparency. But definitely you have an edge over the other media in the market.