Prime Minister of India - Dr. Manmohan Singh

PM's concluding remarks at the meeting of the Council on Trade and Industry

Ladies and Gentlemen,

I am grateful to Shri Krishnamurthy, and the members of the National Manufacturing Competitiveness Council, and to Shri Ratan Tata, and members of the Investment Commission, for the valuable work they have done. I am also grateful to all of you for your comments and suggestions.

I think in the two reports we have a comprehensive account of the kind of initiatives we must take to bolster our manufacturing sector. I request my colleague, the minister for commerce and industries, and the relevant ministries to study these reports carefully and bring before the Cabinet relevant policy proposals on which we can act. I also suggest that these reports should be sent to Chief Ministers so that State Governments are aware of your thinking on these issues.

I think the overall climate for investment has improved and I am sure it will continue to do so, inspite of the various challenges our country faces. When we are faced with specific problems we tend to miss the big picture. Let me remind you that the big picture for India is a positive one. Our growth rates have increased in the past three years, including the rate of growth of industrial production. The business climate for the foreseeable future is positive, despite the constraints imposed by high oil prices and gaps in infrastructure. On both fronts our Government has taken steps to narrow the gap between supply and demand.

The overall rate of investment has also increased and I am sure it will continue to do so if we persist with policies that will make investment in infrastructure more attractive and secure.

However, I do believe that we can do much better than what has been our record in recent years. I am aware that around this table we have business leaders with a vision and the determination to take the economy forward. But we need more of it. We need more risk takers and entrepreneurs who are willing to think big and think into the future.

I would like to leave you with three thoughts for your consideration:

First, you must pay attention to employment generation and the welfare of the working class. This will improve the climate for investment by contributing to social and political stability. You must also pay special attention to issues like displacement of rural folk in areas where large industrial units are being set up. There is no reason why there should be a confrontation between business and the rural poor. Rather, the rural poor should welcome new industries in their areas since these do create new employment opportunities. We have had some trouble in recent months relating to displaced persons and this should be avoided. We must be careful and avoid such controversy especially in the case of special economic zones and industrial parks.

Second, I think Indian industry must take a more serious look at investment and trade opportunities in our larger neighbourhood. To begin with the South Asian region, but also in South-East Asia, West Asia and Central Asia. There is considerable interest in these countries in expanding our trade and investment relationship with them. I do think India must be more open to our immediate neighbours, especially the less developed economies. I also think we must prepare ourselves for closer economic cooperation with the economies of South?east Asia. I am aware of the concerns expressed by some of our businesses in this regard. Our Government will be sensitive to genuine concerns.

We will also ensure that we enter into mutually beneficial agreements that are balanced and not one-sided. However, Indian business must come to terms with the fact that countries in Asia are coming closer economically. India cannot lag behind. There are both economic and strategic gains to be made through such engagement.

Finally, I would like to draw your attention to a few issues which are important for the long term competitiveness of the Indian industry. In R&D, the proportion of public:private investment is 30:70. In our country, R&D expenditure is largely in the public sector. We need to reverse this because it is investment in R&D which can keep you ahead of competition. For example, I am not sure whether we have taken advantage of the immense opportunities that have emerged from the dismantling of the Multi Fibre Agreement. As I see trade data, I worry whether we are actually a beneficiary of this dismantling of a major trade barrier. Maybe we need better product R&D in textiles and garments. We also need R&D to develop competencies in sectors of industry where we are still not world class. Will we continue to be exporters of iron ore or will we be one of the largest steel manufacturers in the world? The central government can provide a supportive policy environment, and it can take fiscal measures. However, it is for you to accept the challenge and make the leap of faith.

These are exciting times for Indian business. New opportunities for growth are opening up all the time, both at home and abroad. Brand India has acquired a new edge and a new appeal. There is growing global recognition of our entrepreneurial capabilities. We must strike when the iron is hot! I wish you all the best in your endeavours. Our Government will do what is needed to create a more hospitable environment for trade and business. I thank you for your time and interest.