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President Speak - February 2009

Policies and Packages for the Industry – How Beneficial ?

This issue of IIA News gives you an update on the industrial policies of several states of India along with the draft paper on new industrial policy for U.P. as proposed by IIA in response to the state govt’s request.

As the readers would observe that through this draft paper, we have attempted to highlight the bottlenecks to the industrial progress of the state with the objective to improve the situation in future. While being progressive in our approach, we have also tried not to loose sight of ground realities and we hope that the suggestions offered by us would facilitate the task of the policy makers to a great extent.

Apart from the above, the newsletter also carries an insightful article by Shri Mukesh Tandon, General Secretary, IIA on the recently passed ‘Limited Liability Partnership Bill, 2008’ . I am sure that SMEs would find it quite useful.

The CEC election notice along with the nomination form are also available in the present issue for the convenience of our Members.

Coming to the economic slowdown, a World Bank Report titled ‘Global Economic Prospects 2009’ says: "Growth prospects for both high-income and developing countries have deteriorated substantially, and a movement of global growth from 2.5 per cent in 2008 to 0.9 per cent in 2009 appears to be on the cards." Speaking specifically of India, the World Bank expects India to grow at 5.7 per cent in 2009, followed by a bounce back to 7.7 per cent in 2010.

In order to subdue the impact of the recession, the Govt is once again coming up with a new stimulus packages for the MSME manufacturing sector in particular. “India is facing a slowdown, with the manufacturing sector facing a sharper slowdown. It is important that we take counter and corrective measures to ensure that demand remains very high. While the government has taken a number of fiscal measures and the RBI monetary measures, perhaps more measures are necessary,” Home Minister P Chidambaram said emphasizing that the country was facing only a slowdown and not a recession.

Irrespective of how one may define the prevalent economic scenario, my feelings towards the so called stimulus packages are not on the positive side so far. I share the feelings of Delhi Exporters Association which has recently made a statement that if exporters are exempted from different taxes imposed upon them then there would be no need for any bailout packages or sops from the government.

Further, FIEO has also presented a case for SME exporters pointing out that RBI should ensure adequate availability of dollar denominated credit. This will help them to reduce interest cost, moreover, the support given under Marketing Development Assistance scheme of Department of Commerce with total allocation of less than Rs 100 crore for promoting exports of over USD 170-175 billion is hardly adequate.

If the above points are seriously considered by the govt., it would significantly lessen the impact of the recession on the MSME segment including the exporters. Let us hope for the right stance from the govt level.

For all those interested, IIA has already opened registration for the next phase of Canton Fair(China) and all the necessary details are available in this issue as well as on our website. We shall also shortly provide details regarding the Trade & Investment Mission to Trinidad & Tobago on the website.

We look forward to your feedback !