Interview: Omar Abdullah, Minister of State for Commerce

INTERVIEW: OMAR ABDULLAH, MINISTER OF STATE FOR COMMERCE
"We Will Develop Newer Markets"

When Omar Abdullah bagged the Commerce and Industry Ministry during his very first ministerial stint, it was seen as a parking slot for yet another political scion. With Murasoli Maran at the helm, no one really took him seriously. But the 30-year-old former executive (he's worked for Oberoi Hotels and ITC Global) proved to be a quiet and serious worker. That stood him in good stead when Maran fell ill. In this interview with BT's Seetha, Abdullah talks about how he's been coping with his job.

Q. You've been holding the fort in Maran's absence. How did it feel?

A. Oh, it's been a great learning experience. It's a pity it had to be on account of Mr Maran's ill-health. In effect, the ministry has been run by me and the officials. Parliament , especially handling starred questions, has also been very interesting as you don't know what kind of supplementaries the members are going to ask.

Has your experience in the corporate sector helped in your work in this ministry?

My stint in ITC Global has probably been most useful. It gave me hands-on experience. I saw the whole process of buying, packaging, and exporting first-hand from an exporter's point of view. It gives me a clearer idea when I am interacting with industry people.

A lot of the problem our exporters face have to do with procedural bottlenecks...

Yes, transaction costs are very high. But we have consistently tried to simplify procedures and systems. We're also computerising the Directorate General of Foreign Trade (DGFT) offices. We now are in a position to offer electronic licences. But exporters are not willing to take advantage of this. They still want to go to the offices and get their licences.

A lot of problems exporters have to face have less to do with the commerce ministry...

...And more to do with other ministries. Our exporters have to pay a very heavy infrastructure cost. We are constantly taking this up with the concerned ministries. We've asked the Ministry of Shipping for help in getting more mother vessels of overseas companies to berth in India. A lot of our exports have to be transhipped through Singapore, Sri Lanka, and Dubai. We're working on all this. It's not, unfortunately, an overnight solution.

The US economy is slowing down. How will you sustain export growth?

It's going to be a challenge. One, the export basket needs to be widened. And two, newer markets need to be developed very aggressively. That is why you see programmes like the Focus Latin America programme. Because of the intensive efforts we have been putting in, Latin America is today our fastest-growing market. It has the possibility of being a very good market for us. But we have to ensure better connectivity and change the mindset of our people. Traditionally, we have been more comfortable with the US and Britain. But now, with more and more competition for the American and British markets, Indian exporters are going to have to look at newer areas.

You've set a $4-billion target of exports to Latin America in the coming three years. Are you confident of achieving this?

If we continue with these kind of efforts, we'll see growth there. We're also looking at markets which, after the Pokharan nuclear tests in 1998, have not grown the way they should have. Trade between India and Canada has been extremely sluggish because, after Pokharan, government-to-government contact has been very restricted. I'm hoping to take a business delegation to Canada next year to re-establish our contacts there. Our total trade with Canada is $1.3 billion. The new Canadian High Commissioner has set himself a very ambitious target of $3 billion by the time his term ends. So we will work on this together.

You've also been focusing on South Africa...

Actually, Africa itself. While a lot of African countries have political or military problems, they are still buying, and in quantities of more than $1 billion. We will start a Focus Africa programme next year.

What about diversifying the export basket?

Well, we keep talking about it. We can't force exporters to export products. All we can do is encourage them and develop markets for them, and that's what we do.

Do you think the government overreacted on the question of Chinese imports?

Look, Chinese exports are extremely competitive. Legally, you have no business stopping imports that are coming in from paying the duties. Domestic industry has a case when they say sub-standard imports are coming in. It also argued that while it had to pay excise duty on maximum retail price (MRP) which has to be printed on the product, imported goods face customs duty only on declared value. We have only taken small steps essentially to weed out underinvoicing or to try and get rid of the sub-standard products. But you can't stop the good quality, low-cost products from coming in.

But you're pushing up transaction costs for even these...

They are basically WTO-compatible non-tariff barriers. I believe, personally, that the government needs to do a lot for business. You have protected this industry for more than 45 years. You can't overnight throw away the protection and say, ''fine, you sink or swim, it's your problem''. Some safety net has to be provided. Not permanently, but just so that they get used to the fact that they're now going to face a competitive environment. And at the same time, the government must work towards completing its side of the bargain-bringing down our transaction costs, etc.

But you're hurting the consumer.

Yes. But we're trying to balance both interests by not stopping imports, by not going back to the provision where we can re-impose quantitative restrictions. We're not even raising tariff levels. God knows there's been enough of a cry from industry to raise tariff levels right up to the bound rates.

In any case, this is temporary. Competition is here to stay. So rather than fret about it and wait for the government to do something, domestic industry must take the bull by the horns, become more cost-effective, quality-conscious, and aggressive in finding markets. If they're going to face competition from imported products, then they should go out and compete in other markets overseas as well.

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