Business Today

India Inc on the agenda for the new government

Here's what the who's who of India Incorporated has to say to Modi 2.0 government which is supposed to take on several economic challenges in near future.

twitter-logoE Kumar Sharma | June 1, 2019 | Updated 00:10 IST
India Inc on the agenda for the new government

Kiran Mazumdar-Shaw, Biocon's chairperson and managing director

Focus on agri-tech and leveraging the FPO model for agrarian transformation: If you look at India and its agrarian economy, I really believe that focusing on agri-tech is going to be very important. Technologies that are aimed at improving agricultural productivity, delivering value-added agriculture and focussed around the farm to market opportunities that ensure better realisation for the farmers. I personally believe that the farmer FPO (Farmer Producer Organisation) model should be hugely expanded with a large number of incentives for the FPOs because you need cooperative farming and within it the FPOs is the only successful model and encouraging that is a good way to ensure better realisation for the farmers. They could play a role in bringing about value-addition in agricultural produce.

Micro-entrepreneurship should be another area of focus especially for job creation. It has the biggest job-creating potential in rural India. A fund for micro-entrepreneurs could be created in rural areas and through this, there could be better monitoring also on how many micro-enterprises are getting created and in the process build a database in this space.  

Increase R&D investments: For this, we need policies that incentivise CSR and corporate spending into R&D with much better tax breaks. One kind of tax breaks if a company invests in its own R&D and another kind of tax break if it invests by giving research grants to universities then it should get bigger tax breaks. We need to evolve and look at such kind of policies that can bring private sector money into public sector needs.

Gender equity is a huge issue and there is a need for focus on this. Consider this, in case a farmer has committed suicide, the moment the widow of the farmer claims ownership of the land that belonged to her husband, chances are she will be killed or ostracised or removed from the family because, the moment a man dies the male members of the family claim stake.

To boost private sector investment and for exports, the SEZ scheme should not face the sunset and should be continued. There is a need to provide additional tax breaks for investment with job creation.

Consumption: To boost consumption, GST has to be further rationalised and reduce it on many items. Or else, we end up only adding to the cost.

G V Prasad, co-chairman and CEO, Dr Reddy's:

Focus on the five basics: The government must strongly encourage business. Unless you create wealth it will not result in growth leading to job creation. You cannot get yourself out of poverty by just distributing money. There are a few basic things that every citizen needs and those should be the focus areas for any government. On health, the government should ideally take ownership for the health of its citizens.  Apart from healthcare, people need a high quality of life, education, public infrastructure and jobs. The focus should be on creating jobs through sustainable businesses.  Improve the quality of life of citizens by taking care of the environment. The environment today is all messed up and every major city in the country figures in the list of top most polluted cities of the world. The government should also invest in education.

Models: I am encouraged by the fact that for the first time the government is talking about healthcare. There are models all around the world - the NHS model of healthcare in the UK is one, the Nordic countries have very good systems. They have high tax rates but all the basic minimum needs of people are met with a very high quality of life. Even within our country, we have best-in-class examples like the Kerala literacy and healthcare, the Delhi Mohalla clinic is a great idea, Delhi has also improved its schools.  

S Chandramohan, president and group CFO at the Chennai-headquartered Tractors and Farm Equipment Limited (TAFE) and the chairman of the Confederation of Indian Industry (CII), Tamil Nadu

Infrastructure building and employment creation

S Chandramohan, president and group CFO at the Chennai-headquartered Tractors and Farm Equipment Limited (TAFE) and the chairman of the Confederation of Indian Industry (CII), Tamil Nadu Council, speaking to Business Today on the condition that his views would be taken in his personal capacity and not representing his company of the CII, says, there are several measures that the new government could take to boost infrastructure in the country and also in the process create employment. "Other than raising funds through disinvestment in select public sector units - both profit-making and some that are financially stressed - and then spend on infrastructure creation, the government could also consider monetising some of the public land holdings. "India has large public land holdings - be it connected to ports, airports, railways or defence. Some of these could be monetised not to reduce the fiscal deficit but only for building infrastructure and in the process also create employment opportunities."

Second, he feels, for the private sector investment to take place there have to be some additional growth drivers. Key to this is raising the savings and getting it back from 30 per cent to 35 per cent and more. The government has also promised reduction of corporate tax but if the government is constrained and is unable to get the corporate tax down, then it still needs to give some incentive to the industry such as restoring and enhancing the weighted deduction on research and development apart from higher investment allowance for plant and machinery or any incentives linked to investment. "Weighted deduction of minimum 150 per cent on revenue towards research and development, which has already been reduced from 200 per cent should be continued beyond the present expiry date of March 2021. Our spend on R&D in this country is negligible and hence we should not allow this provision to lapse after March 2021." Also, "While the government has provided relief on additional employment, the conditions regarding restricting it to Rs 25,000 per month may be increased without limit (or at least significantly increase the limit) apart from increasing the 30 per cent deduction for three years on an additional employee cost over three years to a minimum 50 per cent over two years."

Chandramohan is also of the view that the "subsidy for any capital equipment including tractors and implements should be given directly to the farmers and purchase by the state governments directly should be stopped."

To boost exports and earn more foreign exchange, given that global trade scenario is becoming challenging with most countries having an inward growth focus and raising trade restrictions, there is need to leverage India's low cost of medical treatment compared to several other countries. Therefore, a medical or health tourism strategy with a long-term plan will help. This also has the scope for employment creation.

He feels no major policy thrust to boost private sector investment and on employment creation can be complete without looking at the textile industry. He sees a clear need to boost the textiles industry by creating world-class textile clusters, correcting duty anomalies. "At present, the synthetic textile sector suffers from the inverted duty of 18 per cent on fibre and 12 per cent on yarn and fabric. While there is a provision to claim the refund of inverted duty the process is quite time-consuming impacting the working capital. The anomaly needs to be addressed by reducing the duty to 5 per cent to bring revenue neutrality in line with cotton. Plus, electricity tax should be subsumed under GST."Apart from that facilitate technology tie-ups for polyester. "Buyers will not only follow once we create these but given that the textile sector is a major employment creating industry, it will lead to a lot of job creation. Also, it is a space that China is vacating and we could step in." He feels, by correcting the duty structures and with right incentives, the costs could be lowered for the textile units and that could compensate for the disadvantage they have vis-a-vis other developing countries like Bangladesh and Indian companies could build and invest in ventures within India. He says there could be tax incentives linked to additional employment creation and support the industry perhaps with employment subsidy or any of the measures that do not come under the WTO purview.

S. Sivakumar, Group Head - Agri and IT businesses, ITC

Three-pronged strategy that makes farming a lucrative enterprise

A three-pronged strategy aimed at promoting demand-driven production that is in tune with the changing patterns of food consumption; climate-resilient farming that takes into account the risks arising out of changing climate and depleting natural resources; and farmer-centric interventions given that a model of one scheme or one solution cannot serve the needs of all farmers, would all go a long way to ensure agriculture becomes a remunerative enterprise for farmers, says S Sivakumar, who leads the agribusiness and IT at ITC.

Detailing on each, he says,

On demand-driven production:

Promote the development of inclusive plate-to-farm value chains through public-private-producer partnerships by combining the strengths of all the stakeholders to support India's resource-poor but resourceful farmer.

Facilitate delivery of real-time information and personalised knowledge to the farmers by village-level agri services entrepreneurs. At an estimated requirement of 3 million such entrepreneurs to serve the 120 million farmers across the country, this would be the single largest skill-based-job creation launched by any government.

Support these new-age agri services entrepreneurs with digital platforms (both public and private) that use smart technologies to enable high-yielding, early-warning, waste-mitigating (through the Internet of Things, image recognition, predictive analytics etc) agriculture, and transform agri extension from the conventional paradigm of 'last mile of the scientist' to one of the 'first mile of the farmer'.

Create vegetable production zones in the vicinity of the top-100 towns of the country by setting up climate-controlled cultivation facilities and offering them on lease to trained rural youth.

Encourage food processing and crop-specific storage and handling systems for minimising post-harvest wastage.

Provide thrust to value-added exports of agri produce, through World Trade Organisation-compliant incentives to offset the high-cost infrastructure.

Reform APMC Act to offer freedom to farmers in selling their produce, as also to transform mandis into post-harvest-services organisations.

Deepen the commodity derivative markets to enable farmers to discover prices before planting the crops.

Set up national agri market intelligence system to monitor variables that impact crop prices and use data analytics to guide the planting decisions of the farmer.

Set aside the customs duties collected on import of agricultural products towards the corpus of price stabilisation fund to support farmers in times of a significant drop in domestic prices.

On Climate-Resilient Farming

Set up a national irrigation authority with a mandate to reach water to every farm on a mission mode. Prepare a blueprint covering both the supply side (appropriate method of water harvesting in different regions) and the consumption side (conservation through efficient pumps and micro-irrigation) aspects and a roadmap for the revitalisation of natural water bodies.

Develop an 'atlas of natural resources', mapping the current status and future scenarios of top soil and water resources across the country, for kicking off time-bound rejuvenation work, as also for sensitising the farmers on resource-use the intensity of their cropping decisions.

Strengthen crop insurance system for expeditious settlement of farmers' claims by making      use of remote sensing and drone surveillance for loss assessments.

Promote integrated farming system consisting of polyculture, permaculture, bee-keeping, animal husbandry, agro-forestry, and renewable energy as a naturally-resilient method of farming.

Step up research and development work on indigenous varieties of seeds and breeds that are naturally tolerant to weather variations and moisture stress.

Set up community-owned-and-operated seed banks for multiplying high-quality seeds of open-pollinated varieties of crops to improve seed replacement rates for raising farm productivity.

As for Farmer-Centric Interventions

Encourage farmer producer organisations (FPOs) as an aggregation mechanism to bring the power of scale to the small farmers.

Strengthen producer organisation promoting institutions (POPIs) to build and incubate robust FPOs by developing their self-governance capacity and business management competence.

Provide financial support to FPOs for creation of farm level infrastructure for cleaning, grading, sorting, assaying, as also for the establishment of farm equipment custom hiring centres.

Encourage innovative formats of organisation for consolidation of land holdings - with individual farmers continuing to be the owners of their land - to enable economic scale in farming and capital investments.

Help augmentation of farm incomes through additional sources, such as dairy, poultry, honey-making, solar power generation, agro-tourism, etc.

Set up a national centre of excellence to develop women-friendly farm equipment to minimise their physical drudgery in farming activities.

Make Krishi Vigyan Kendras responsible for reducing the cost of cultivation in their catchments through adaptive research.

Convert input subsidies into direct pre-season financial support to both land-owning and tenant farmers for buying inputs through pre-paid cards valid at accredited dealers.

Reji K Joseph, director of Kerala-based Paragon Polymer Products Pvt Ltd

GST refunds, a key pain point.

Reji K Joseph, director of Kerala-based Paragon Polymer Products feels that while implementation of GST was a good measure, especially for companies that have an all India market, there are problems. "The main problem is getting a tax refund (input materials have different taxes above 5 per cent) and our products come under 5 per cent. So, we are eligible for refunds of the input materials and this runs into crores." But then, he says, "our company can make profits only when we can get these refunds in time and not end up each month with a huge outstanding."

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