Bilateral trade pacts have to be mutually beneficial, not one way, says CII President Sanjiv Puri

Will the India-Pakistan military tensions following the Pahalgam terror attack affect the Indian industry and economy?

Terrorism is an issue that many nations face. For sustainable economic growth and good quality of life of people, security is of paramount importance. The terror attack in Pahalgam was a terrible thing to happen. There is no logic behind targeting innocent civilians. We stand in complete solidarity with the government which is acting as a very responsible nation. 

The industry remains committed to doing whatever is required at this time. The Indian economy is resilient. What has happened till now is not likely to materially impact the economy. How things will unfold in the future is not known. But our fundamentals are strong. Whatever disturbances, if anything more happens, the industry is committed to addressing it and ensuring the economy remains resilient.

What are the industry’s expectations and concerns around India’s negotiations with the US on a bilateral trade agreement ?

The US is the largest economy and India’s biggest trading partner. So, it’s going to be the largest and most important FTA for India. A trade pact has to be mutually beneficial. It can’t be one way. It has to be constructed taking advantage of complementarities and synergies. In some sectors there will be more trade from one side, while in others the other side will have more. 

While India is a large and consuming market with enough opportunity for both players, there would be some sectors where things can become more competitive. The focus has to be on domestic drivers of competitiveness. The government has announced the high level committee on regulatory reforms creating a bold blueprint. A lot of reforms are also at the State level.

Factor reforms, including land and labour, are the pieces that will enhance competitiveness. The idea to set up the national mission on manufacturing is also commendable as it takes an integrated view of manufacturing. A lot of steps have been taken in the past.

There are concerns around rules or origin. It should be simple, transparent and digitised. Important enablers are also dealing with non tariff barriers and mutual recognition agreements.

One side effect of the BTA could be greater dumping of products from some countries with excess capacity, which is another concern.

Are there some sectors where the Indian industry is prepared for zero-for-zero tariffs in BTA with US?

There will be several  labour intensive sectors, such as apparel, which are important for India in terms of zero tariffs as it would create a number of jobs. There are many sectors where India can aggressively play because of the transformation that the economy has seen on account of a lot of policy interventions over time and the investments industry has made in technology and competitiveness.

What are the prospects of the India-UK FTA just announced?

We welcome the India-UK FTA which is very comprehensive and impacts all sectors of the economy–services, agriculture and manufacturing. It opens up opportunities to enhance bilateral trade. This agreement is also like a template for the future, and gives a very bold message to the world that India is ready to sign FTAs and integrate in the global value chain. It will also provide impetus to creating resilient supply chains or alternative supply chains in the world.  India becomes a preferred country because it has scale, economies of production and  stem talent. And besides that India is a large growing consumer market.

India is a services power house and the totalisation agreement enhances comparativeness. As access is also provided to agriculture, it’s a good positive for food processing and agro sector.

What are your expectations from private sector capital expenditure which are seen as lagging?

The CMIE database on projection announcements is already positive. If you look at the forward capex survey that the government did, that is also showing an uptick. Now subsequent to that there are global developments, I mean tariffs etc, that create uncertainty which is not good for business. So there may be some pause, some wait and watch approach, some pushing back of investments could happen. But goods things are also happening.