Mfg sector key to India’s growth

Federation of Indian Chambers of Commerce and Industry (Ficci) is bullish about Indian economy, but strongly feels that the country should focus on manufacturing sector to drive the growth. “This is so because agriculture is reaching its limits. Though services are growing, but we can’t see growth in that space beyond a point if we don’t have manufacturing growth. But sadly we are not getting investments into manufacturing,” Sidharth Birla, President, Ficci, tells The Hans India in an interview. Excerpts.

India is registering steep de-growth in mining while manufacturing is also not in good stead. How can we expect growth without support of these two crucial sectors?

We are talking about it all across the board. Manufacturing has to be the biggest driver of the growth. This is so because agriculture is reaching its limits as it now touches 70 per cent of the population. Though services are growing now, but we can’t see growth in that space beyond a point if we don’t have manufacturing growth. But sadly we are not getting investments into manufacturing. Besides, there are lots of issues to be sorted out in mining. India has to decide on how it is going to do the mining. There is some conceptual, legal and Supreme Court issues. We are very sad that India which once exported iron ore is now importing the same. We hope the new government will resolve the mining issues. We need coal badly for power generation. We are not rich enough to import $100 billion worth coal in five years.

Do you expect GDP to grow faster post elections?

We always expect GDP to grow faster next year. The question is how much. Our GDP growth is around 5 per cent now. As per Ficci estimation, the GDP will grow anywhere between 5.5 per cent and 6.25 per cent. At least, we are up from what we have today. This is the prediction we made well before the elections were announced. Elections are not going to do magic in one day. But the election outcome will set base for next three years or five years. If GST (Goods and Services Tax) is implemented, we can easily add 1.5 to 2 per centage points to our GDP growth. This will be one time increase in growth. However, we don’t think GST will come in before middle of 2015 as the new government has to resolve all the contentious issues and put critical infrastructure in place for the rollout. However, the worst is over now when it comes to the Indian economy.

Can aviation infrastructure in small cities drive growth of the sector? How many small cities can have airports in India?

We need infrastructure for growth of aviation sector in the country. There are many small cities where we can have airports. With low-cost airlines in place, there is a visible trade-off between travelling on trains and aircrafts. Earlier it was mandatory for airlines to operate services to North Eastern part of the country. It was a compulsion then. But now many private airlines are operating on those routes because air traffic has increased. I think what growth you are seeing in smaller airports today in terms of number flights is in fact driven by traffic and actual availability passengers. It’s no longer by compulsion.

Many say taxes on aviation turbine fuel (ATF), which vary from state to state, have become a hindrance for aviation growth…

My suggestion is that state governments and Centre sit together and sort out such issues. After all, the country has to decide whether it wants to make ATF available at international prices or more than that. If we have multiplicity of taxes, it will be detrimental to all players in the sector.

Bills related to aviation including Aviation Policy have been deferred due to General Elections. Will that impact the sector in anyway? What about the FDI in aviation?

It’s just a matter of time before approval is given to them. There are no politics involved in the Bills as they are administrative in nature. Most of them are forward looking kind of legislation. They will go to the new Parliament. Coming to foreign direct investment (FDI) in aviation, already 49 per cent FDI is allowed and it’s a good start for airlines to come in. It is a positive sign that Air Asia and Tata Singapore Airlines are coming into India.