Addressing his first press conference today after taking over as CII President, Mr. Ashok Soota set a target for all those who represent Indian Inc. to ensure that India reaches the top 20 on the World Economic Forum's Growth Competitiveness Index by 2010.
Mr. Soota outlined CII's GDP growth forecast for 2002-03 under two scenarios. In the first "business as usual" scenario, Mr. Soota said that the economy would grow by 5.2 %. In the second scenario, a growth of over 6% was possible provided the reform momentum continued, according to Mr. Soota. To survive and grow, the CII President stated that " global competition will be the name of the game" and competitiveness would be the key to not only growth but also survival.
Explaining, CII's theme for 2002-03 "Competitiveness of India Inc.", Mr. Soota pointed out that "India Inc." represents the national government, State governments, business and industry, voluntary services / NGOs, Agriculture, Services and infrastructure.
Enhancing competitiveness would mean adopting a two-pronged strategy for competitiveness, according to Mr. Soota. The first part of the strategy would be made up of industry action wherein companies would take initiatives to benchmark with best international norms and improve competitiveness. The second part comprised of government action, which would include domestic policy reforms coupled with external sector reforms at the Centre and the level of the states, he added.
Spelling out CII's expectations from the government, Mr. Soota identified eleven areas in which the government will have to focus on during the current fiscal.
First, on WTO & global trade issues the government will have to focus on ensuring that the agenda for the Mexico ministerial would be industrial tariff, emphasizing on the need for partnership with industry and protecting India's negotiating position and spreading greater awareness on GATS (services), according to CII.
Second, on FDI the government should focus on the promotion of select sectors such as telecom, biotechnology, IT-enabled services etc besides traditional sector, reviewing of FDI caps and creating a conducive environment for investment to flow in, stated the CII President.
Third, in the area of tax reforms, Mr. Soota was of the opinion that the customs duty rationalization needed to be linked to domestic reforms in labour, state taxes, privatisation and infrastructure. Rationalisation should also remove anomalies to encourage value addition with the country, he added.
Fourth, on financial sector reforms, the government needed to focus on pension reforms as this would benefit the entire financial sector, according to the President. Pension funds could also mobilise long term funds for the infrastructure sector, he added. Banking reforms and prudential measures for the capital markets were other areas that needed attention, according to him.
Fifth, on agricultural reforms the government needed to focus on rural irrigation, seeds, extension services, unification of food and consumer laws, removal of multiple regulatory authorities and standardizing conflicting standard setting, stated the President.
Sixth, economic legislation were critical to carry next phase of reforms forward, according to the President. The government needed to emphasize on time bound clearance of legislation by parliament / standing committees although debate important in democracy, he added.
Seventh, on services there was a need to focus on new emerging champions such as healthcare, tourism, telecom, insurance, retail, entertainment, IT enabled, stated Mr. Soota. Greater debate on service tax was, he added.
Eight, on infrastructure the concern were on issues related to integrated transport policy, independent regulatory authorities, tariffs/user charges/tolling/subsidy finance corporatisation & rationalisation and legal reforms, according to him.
Ninth, Indian manufacturing had to increase not just its competitiveness but also its contribution to the economy if we intend to replicate the success of some of the Asian economies, he pointed out. Higher, 8%, economic growth was dependent on strong growth in manufacturing, added.
Tenth, CII felt that the government needed to use information technology in all areas of governance to improve efficiency, bring about transparency and accountability.
Eleventh, on SMEs the government needed to pass the Single Small Business Act for simplification of day-to-day procedures, the Limited Liability Partnership bill to limit the liability of partners to their equity contribution and use the Utility Model law for protecting small innovations.
On State level Reforms some of the areas highlighted by the President were the need to focus on power and labour reforms, facilitate quick development of SEZs and ensure implementation of VAT by Emphasizing on state preparedness - computerization and standardization of forms.
The areas that the industry would focus on, according to Mr. Soota were technology adoption, increasing R&D spend, making innovation top priority, adhering to corporate governance in spirit, building industry institute partnerships to train human resources, integrate e-commerce into business models, greater emphasis on quality, price and delivery of exports and target new markets.
To help achieve many of the economic, social and sector specific objectives of India Inc., CII's new initiatives in 2002-03 will cover five broad areas, stated Mr. Soota.
The first area would incorporate the formation of four new councils to assay developments and formulate strategies in agriculture, manufacturing, convergence and public policy, according to the CII President. The second initiative would be on the social and economic front, stated Mr. Soota. This would involve the setting up of, one, a North-East Committee to promote literacy and healthcare in the region and bring it into the national mainstream, two, an economic think tank called the Centre for Research on Economic & Social Issues and, three, a Social Integration Committee that would work with other NGO's and voluntary organizations to bring about more cohesiveness through relief and rehabilitation in disaster struck areas such as Gujarat & Kashmir, he added.
The third initiative would focus on the developmental needs of industry, according to Mr. Soota. According to him this would involve the setting up of five committees.
One, a CII-Women Committee to focus on women's empowerment through education, healthcare, etc. Two, an Entrepreneurship Committee that would look at ways and means to nurturing the entrepreneurial talent in the country. Three, an IPR & Patents Committee that would focus on building competency in design & innovation to strengthen the IPR regime. Four, an Accounting Standards Committee, to interface with accounting boards and with the DCA to instill international best practices. Five, in the area of e-commerce CII would work towards solving cyber law and security related issues and spreading awareness and usage of e-commerce. New initiatives in industry would also incorporate the launch of insurance portal - InsuranceInfoline.com and a site for foreign investors - Invest India Services, he added.
CII's fourth initiative would have a sectoral focus, stated Mr. Soota. Two new committees would be set up under this, according to him. The first would be the Housing Committee, keeping in mind the potential for this sector to generate demand for a host of other related sector, he stated. The second committee - US offshore IT committee would be CII's first ever offshore committee and would help in creating a synergy with it's counterpart in India and enhance the future prospects for this sector.
The fifth new initiative by CII would be to on the services front, according to the President. Three new committees would be set up to enhance growth in this sector, according to him. The first committee
would the Logistics Committee that would cover issues related to logistics and supply chain management- an important link in enhancing competitiveness, stated Mr. Soota. The second committee was the
inter-modal transport committee that would aim to improve connectivity and enhance mobility of goods and services within the country, he pointed out. The third committee would focus on Venture capital and private equity, he added.
On the outlook for the global economy Mr. Soota felt that was made of a combination of both good news and bad news. The good news was that with the IMF forecast of growth of 2.8% there were signs of a slow recovery, according to him. While the recovery is expected to be once again US led, there would be a lag before the Euro-zone and other economies follow. The CII President said that these tough times be used for creating internal and external competitiveness so as to leverage global growth when it takes place sometime in mid-2003.