New Delhi: In the first interview he has given after the recent killings in Nandigram over threatened land acquisition for SEZs, Commerce and Industry Minister Kamal Nath has made clear that the Government will not “politically wriggle out” of SEZs and added that he was hopeful that the Pranab Mukherjee-headed Empowered Group of Ministers will soon clear SEZs where no land acquisition issues are involved.
In an interview to the CNN-IBN programme Devil’s Advocate, to be broadcast at 830 PM on Sunday, March 18, Kamal Nath was asked if after the recent killings in Nandigram, the government remained committed to SEZs or would it use the present freeze to politically wriggle out.
Kamal Nath: There is no political wriggling out. It’s an act of Parliament. Cabinet has considered it. But there’s the question of land acquisition which must be fair, it must be equitable, it must be at the right price. It must be inclusive of the people. Nandigram was a very unfortunate incident of land acquisition, but we must not confuse land acquisition with SEZs. They are two distinct things.
Karan Thapar: So the Government remains committed to SEZs?
Kamal Nath: Absolutely.
Karan Thapar: Nandigram and political concerns have not put you off?
Kamal Nath: They have not put me off.
Karan Thapar: And the Prime Minister is with you when you say this? He too is committed to SEZs?
Kamal Nath: Of course, the whole Government is committed.
When asked by Devil’s Advocate if he was confident that the Empowered Group of Ministers headed by Pranab Mukherjee would accede to his request to clear SEZs where no land acquisition issues arise, the Minister unhesitatingly expressed his optimism. He said:
“Where there is no land acquisition issue the Group of Ministers would consider such cases. Of course, there is a fear now where land acquisition is concerned, where land is in dispute, but where there is no land in dispute why should we be worried about it? I am an optimist, of course.”
The Industry and Commerce Minister said he was worried that if clearance for such SEZs was not forthcoming several might opt out of India and take their investment elsewhere.
“Of course I am worried. There is investment competitiveness from Thailand, from Philippines, from Indonesia. If FDI is coming to our special economic zones it can also jolly well go to Thailand, Philippines and Indonesia. Investment has to be attracted. It can’t be demanded. (If there are delays) they will feel unstable. At the end of the day they are here because they look at India as a credible country.”
Speaking about the manner in which land acquisition is being handled by various state governments, Kamal Nath told Devil’s Advocate that he was personally in favour of giving farmers a stake in the development that comes up on their land in addition to the market price. He said the Government’s new National Re-settlement and Rehabilitation Policy was likely to include this:
“We need to have a good land acquisition rehabilitation policy. There’s no doubt about it that land acquisition has to be transparent. The new land acquisition policy is looking at all these things. And whichever way it happens, whether by giving him (the farmer) a job or a stake, by whatever way, he must be part and parcel (of the new development). Land acquisition must be all inclusive. I fully support that and I think that’s the right thing to do.”
In the interview the Minister refuted claims by the Ministry of Finance that SEZs could lead to a loss of revenue of Rs 1,00,000 crore over four years. As he put it, this was “a distorted picture”. He explained that, as things stand, customs and excise duties are anyway refunded on exports. Now, in the case of SEZs, these customs and duties would not be charged in the first place. But what the Ministry of Finance was doing was to make public the quantum of customs and excise duties forgone without mentioning that anyway the same amount would also have been refunded under present export laws. As he put it:
“On the one hand you carefully calculate you never collected these taxes but don’t say you would anyway refund them. It gives a distorted picture.”
Talking about the level of revenue SEZs would generate, the Minister said:
“Economic activity generates more revenue. One can’t be more basic than that. This is no rocket science… I believe there’s a very major substantial revenue gain (from SEZs).”
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The Minister also told Devil’s Advocate that SEZs would definitely create a meaningful number of jobs and that criticism they would not do so were wrong. He also refuted the claim that SEZs should be set up in backward districts and that most proposed SEZs were IT-related and only a few were concerned with manufacturing. We give below an extract from this part of the interview:
Kamal Nath: SEZs are about manufacturing. SEZs are going to go where exports are because they are largely meant for exports. So SEZs are not meant to go to the backward districts.
Karan Thapar: But do you have enough SEZs in the manufacturing sector to give a meaningful boost to employment?
Kamal Nath: Of course. There are 50 SEZs on the ground. SEZs have started functioning.
Karan Thapar: And they will increase employment?
Kamal Nath:How can you manufacture without employment? How can you even put up an IT SEZ without employment?
Karan Thapar: So there will be a meaningful impact and not just a marginal impact on employment?
Kamal Nath: Any impact on employment is good but this is going to be meaningful also.
Finally, on the subject of SEZs, the Minister indicated that even though the SEZ Act did not relax labour laws, state governments “still have that freedom under the labour laws” and he indicated that inter-state competitiveness could ensure they exercise this freedom. As he put it:
“The state governments still have that freedom under the labour laws. There are various types of labour laws and they can make them more attuned to the specifics of that area. Now, there’s a new competitiveness between states. They want to attract investment. Whatever they think is in the best interest of the state they will obviously want to do it.”
However, the Minister also revealed to Devil’s Advocate that several state governments have written to the Government for further relaxation of labour laws: “Some of the state governments have even written to us asking for it. The Central Government has not yet responded. The Chief Ministers will themselves take it up in the next Chief Minister’s meeting.” The Minister added that he would seriously consider this. As he put it “Of course I would consider it”.
In the interview, Kamal Nath was also questioned about the entry of FDI and large domestic corporate houses into the Indian retail sector. Asked whether he was concerned that the study he has commissioned from ICRIER might conclude that the entry of large corporate houses would have an adverse impact on small retailers, the Minister said :
“I don’t believe that can be the case because, number one, we have 25 million people joining the middle class and we are having 9.2 per cent growth and people coming with more purchasing power. We need more retail.”
At this point the Minister was specifically asked if this meant he would not seek to close down the retail outlets recently opened by Reliance and replied:
“There is space for everybody I believe. (However) that’s what the ICRIER study is judging. I could be wrong. I am not saying I’m right.”
However when the Minister was asked about what impact FDI (as opposed to large domestic corporate houses) could have on the Indian retail sector, he first seemed to suggest that there would be no difference between the two. As he put it: “I don’t think it’s a question of FDI in retail. Its always a question of big versus small.”
However, on further questioning the Minister appeared to shift his position and unequivocally claimed that FDI in retail would cause dislocation and therefore it could only be permitted at the back-end. As he put it:
“I believe there is going to be dislocation. To me it appears that the entry of these players is going to close down (retailers) because their ability to take a loss, their ability to stand, to stock is much more than a small retailer and if they want to put their money in (to India) I want them to put their money where it strengthens the small retailer … the possible dislocation which can occur leads me to think that they must put their money where we need it, they must put their technology where we need it and that’s the back-end.”
The Minister said that small retailers would need to be strengthened to stand up to FDI in retail : “I have always said that if FDI in retail will upset the small retailer we need to strengthen the small retailer. That’s why I have said if they want to come in they should go to the back-end. They should invest in packaging and technology.”
Speaking specifically about the proposed Bharti Wal-Mart tie-up, the Minister said:
If Wal-Mart supplies to every retailer good food products whereas (today) 40 per cent (of them) rot, if they put up a cold chain, if they put up packaging, if they put up supplies to every retailer it strengthens my retailer.”
Finally, the Minister was asked about the public perception that there was a difference between his views regarding the entry of FDI and large corporate houses into the retail sector and the position taken by the Prime Minister and Sonia Gandhi. He said:
Kamal Nath: Not at all. I have always said no FDI in retail should dislocate the small retailers. It should be incremental and it should create new jobs.
Karan Thapar: Are you pushing it at a faster pace than Sonia Gandhi and the Prime Minister?
Kamal Nath: I don’t think so.
Karan Thapar: So there are no differences, either in principle or in practice, between you on the one hand and the Prime Minister and Sonia Gandhi on the other?
Kamal Nath: No. Absolutely.
Watch the complete Devil's Advocate interview on CNN-IBN, at 8:30 PM, on Sunday, March 18
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