The Hindu Business Line : `I am focussing on structural issues in specific sectors'

There are serious problems in exports of tea, coffee, rubber, spices, marine products and leather industry and they have to be addressed. — Mr Jairam Ramesh, Minister of State for Commerce

Intelligent, tech-savvy, quick and witty may describe most upwardly-mobile persons. But these qualities in a politician, in a business that is cut-throat competition and all gut feeling, makes Mr Jairam Ramesh, the Minister of State for Commerce in the UPA Government, a refreshingly different person to engage with.

In his first formal interview to the print media after assuming office in Udyog Bhavan in New Delhi, Mr Ramesh, who authored the National Common Minimum Programme (NCMP), is forthright: "We have to look at global issues from a local perspective.

That is why I have called my stint here from Marrakesh to Moradabad or Louisiana to Ludhiana," while referring to his remit as a Minister pitching for local issues so as to enable the Commerce Department root itself in the domestic economy.

When reminded that in the 1990s he was, as a columnist and TV anchor, known as a neo-liberal preacher of the Washington Consensus, Mr Ramesh says that "it is unfair to say so". He recalls that he wrote six years ago: "What India needs is not globalisation but glocalisation and this was the word that Tom Friedman picked up."

Excerpts from the interview:

On the oft-repeated issue of increasing India's share of exports in world trade by one per cent in a couple of years:

I am not focussing too much on numbers but on structural issues in specific sectors such as textiles, leather, handlooms, handicrafts or domestic aspects of exports — on exports that add value to our natural resources, that develop small towns such as Tirupur, Moradabad or Ludhiana.

I believe that globalisation rests on a very strong internal foundation and this has been neglected. There are serious problems in tea, coffee, rubber, spices, marine products and leather industry and they have to be addressed.

For example, in leather, an overwhelming 95 per cent of the export is of men's shoes when there is substantial demand world over for women's and children's shoes.

In tea, we are the world's largest producer and Pakistan is the world's second largest importer and, yet, we don't sell to Pakistan. Coffee consumption in India has been stagnant for the last decade and 80 per cent of that happens in only one State — Tamil Nadu. Similar is the case with pepper and cardamom, where we lag in productivity.

I am taking plantation by plantation. We have a problem with Free Trade Agreements (FTA) with pepper imports from Sri Lanka.

Pepper imports from Vietnam are not a problem because that pepper is imported by the oleoresin industry and re-exported. Pepper from Vietnam is not competing import but that from Sri Lanka is.

Similarly, Guatemalan cardamom comes into India from Nepal and that is a problem. We have to get our domestic economy in shape... trade makes domestic economy competitive.

Sixty per cent of our marine product export is of shrimps and we must diversify away from it.

We have to get out of this subsidy approach to export. Exports should take place because you have a certain competitive advantage in price and quality.

I don't believe in the fiscal approach to exports. If you are compensating exporters for local taxes, that is one thing. But if you are rewarding them... I think the Target Plus (TP) was a completely ill-advised scheme and I am glad it is being discontinued this year.

The motive behind Target Plus may have been good but the way TP operated left a lot to be desired.

As the price stabilisation fund (PSF) scheme for the plantation industry has failed because a pittance of Rs 500 is provided to farmers in a year of distress, a Group of Ministers (GoM) — comprising Messrs Sharad Pawar, Kamal Nath, P. Chidambaram, Vayalar Ravi — was set up a few days ago to re-work the entire scheme.

A proposal is also on the anvil to set up an Expert Committee under Dr Vijay Kelkar and Mr N. Rangachari, former Chairman, IRDA, to think up a viable system to manage volatility in prices through an insurance mechanism for farmers.

On handlooms, handicrafts and traditional medicinal exports:

I just visited Chirala in Andhra Pradesh where the handloom industry is in deep distress.

The weavers do not have hank yarn, the looms are antiquated as is the marketing set-up. I made a commitment of Rs 1crore from my MPLAD funds to modernise looms to replace 1,000 pit looms with modern jacquard looms.

Co-optex has done well in Tamil Nadu but APCO has failed in Andhra Pradesh.

Because of its employment potential, I have taken up the handloom sector, even as it is, with the Textile Ministry because it is the second largest employer, after agriculture, in the country.

On the employment-export link:

The only rationale for export today is employment — an RIS study has shown that the export sector now has 9 million jobs. If exports were not to take place at all, these jobs would be lost. We don't face a foreign exchange constraint but we face an employment deficit.

So, exports have to plug the job deficit, not the dollar deficit; anyway there is no dollar deficit.

We have to back words with investments for the export industry. It is not enough to make announcements in policies — we have Agricultural Export Zones (AEZs), plans to develop towns of export excellence.

There are schemes for cluster development and viability gap funding; money is not a constraint, nor are ideas, but detailed project preparation is the problem.

For instance, in the Assistance to States for Infrastructure Development for Exports (ASIDE), by which Rs 500 crore is disbursed a year, five States — Gujarat, Andhra Pradesh, Maharashtra, Karnataka and Tamil Nadu — walk away with 75 per cent of the funds because of their `absorptive' capacity.

My focus is to bring weaker States such as Bihar, Orissa, Jharkhand, Chhattisgarh and Jammu and Kashmir, and the North-East.

Similarly, Rs 100 crore is spent for the Market Development Assistance and Market Access Initiative schemes. Here, all export promotion councils (EPCs) are treated on a par. But, I think, we must give priority to four or five EPCs that have the potential to generate employment and exports.

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`I am focussing on structural issues in specific sectors'