Nirmala Sitharaman’s record at Udyog Bhawan will boost the confidence in South Block
Dr. Pritam Banerjee
For being a successful Union Minister for Commerce and Industry (MCI) requires a versatile range of talents. Tough multi-lateral and bilateral trade and investment deals require statesmanship and ability to balance India’s priorities with the vested interests of negotiating partners. Dealing with issues pertaining to various sectors across manufacturing, services and agriculture. Meeting demands of doing business reforms and trade facilitation involves working with various other departments and ministries, and even state governments who might not share the same sense of urgency. It is rare that India is blessed with a MCI who does all of this competently, and does so with grace and minimum amount of fuss. Smt Nirmala Sitharaman as CIM was one of those rare talents.
Smt Sitharaman took over when India and other developing nations were being challenged at the WTO by the strategy of advanced countries to dilute the assurances made in Bali Ministerial negotiations in December 2013. At stake was a permanent solution to ensure the sovereign and moral right of poor countries to maintain public stockholding of agricultural produce to ensure food security and provide for a robust public distribution system, as well as to have safeguards against import surges of key agro product. This can play havoc with domestic agriculture markets and the lives of millions of farmers. The Nairobi Ministerial in December 2015 saw Smt Sitharaman overcome pressure tactics to ensure both of these priorities got the acknowledgement that they deserved. Since then, India’s principled stand on these issues, articulated by her in all major forums gave a clear message to the developed countries.
Another interesting turn was the introduction of the idea of having a Trade Facilitation Agreement for services in the WTO, like the one for goods. Unlike goods, services markets are regulated by a plethora of domestic regulations and rules that inhibit trade. For a country like India with a large pool of young and educated professionals, such services markets represent an enormous opportunity. While the concept of Trade Facilitation in services would take time to find traction, Smt Sitharaman must be credited with intellectually challenging the WTO to come up with a response.
Three other areas stand-out in Smt Sitharaman’s innings as MCI. The first one is the way the system of export incentives are being slowly re-designed to ensure sustainable competitiveness of Indian industry. As the vision evident in the Foreign Trade Policy 2015-20 unveiled in April 2015, export promotion would have to address sector-wise competitiveness and reward efforts to move up global value-chains rather than provide short-term sops.
Since then, Smt Sitharaman has personally addressed industry on the challenge posed to traditional export development riding on lower labor costs by automation and robotics in both manufacturing and services, coupled with growing threat of
protectionism in advanced countries through the use of product standards. She has also made the industry aware of the fact that the old ways of government support to exporters would not be sustainable due to WTO rules. Formulating a new export incentive regime and addressing structural problems in India’s overall competitiveness are areas which were working in progress under Smt Sitharaman. Her successor, Shri Suresh Prabhu would have to pick up a thread on this front when the next revision of foreign trade policy expected in September.
The second major area where Smt Sitharaman left a mark is the way she led from the front in pushing doing business reforms. Getting licenses and regulatory approvals, customs processes, and inspections regimes together made India relatively un-attractive to foreign investors and for years nobody had given the attention they deserve. Smt Sitharaman as MCI played a crucial role in developing and implementing an aggressive reform agenda of the government on this front. Resultantly, India has been a preferred global destination for green-field FDI in the last two years. Her ability to work together with other Ministries was a crucial element in the overall success.
Finally, Smt Sitharaman’s outreach to industry in the run-up to GST implementation requires special mention. Her ability to engage with the large corporates and SMEs with openness and transparency and instill confidence amongst business stakeholders about the GST roll-out went a long way to soothe fears and concerns. She represented the key concerns of industry, and especially the export sector vocally to the GST Council, and while not all of those demands were finally accepted, her willingness and ability to take the lead has earned her great respect.
It is precisely this respect, intellectual rigor, and ability to balance several priorities that she carries over to her current assignment as Raksha Mantri. It is no secret that India’s defence establishment and preparedness stands at cross-roads. On one hand incidents like Doklam and calculated escalation of tensions on the J&K border highlight the continued threat of a ‘two front’ collusion. China’s relatively benign attitude of the past is changing with India asserting its commercial and strategic interests in Asia and Africa. India’s refusal to play ball on the one-belt-one-road (OBOR) has already signaled that India would not ‘roll over’ to accommodate Chinese strategic interests.
At the same time, India’s defence preparedness suffers from critical hardware and manpower deficits. As a former Commerce Minister and a person with extensive knowledge of strategic aspects of international
commerce, Smt Sitharaman would be pondering over India’s energy and resource security dependence on
supply chains across seas, and over land borders with South East Asia. Keeping these routes secure and unobstructed is critical for sustained growth. Thus, India needs a more comprehensive military doctrine that includes force projection and intelligent deployment. That in turn requires the ability to invest in technology, proper hardware, attract right kind of skills and impart new types of training to our military personnel. As Defence Minister, Smt Sitharaman would be in charge of realising these objectives in mission mode.
Her ability to balance several stakeholders would come in handy as she tries to upgrade and reform India’s underperforming public sector entities in defence production, while encouraging the Indian private sector to undertake ambitious projects. The competition between Tata and Lockheed Martin and Adani and Saab to make single engine next generation fighter jets augurs well for both technology transfer and lowering dependence on imports. Smt Sitharaman would be expected to build upon such development to create a genuine military industrial
complex in India capable of supporting the defense forces of an emerging great power. Her experience in the Commerce and Industry Ministry should prove to be useful in this.
She would also have to deal withboth the civilian bureaucracy in the MOD and the military bureaucracy in the armed services to think out of the box. New technologies are constantly re-defining what is possible. For example, can a lithium battery powered submarine be more cost effective than a nuclear submarine forIndia’s defence priorities? An appropriate and considered response to such questions can only come from those with domain expertise. Would Smt Sitharaman be able to induct talented officers from the services directly into the bureaucracy and decision making process in the Ministry, challenging the dominance of the civilian cadre? Would she able to speed up critical procurement of all types of military hardware and
supplies without which our forces are operationally hampered? Last not but the least, can she address the human day to day concerns of our men and women in uniform? Going by her record as MCI, the answer is likely to be an emphatic yes.
(The writer is Senior Director-Corporate Public Policy for the Deutsche Post DHL Group responsible for South Asia. The views in this article are his own)