Speakers: Mr. Chandrajit Banerjee, DG, CII in conversation with Brig R.K. Sharma from Amity Institute of Training and Development (AITD)
About Mr. Chandrajit Banerjee - Chandrajit Banerjee (CB) is the Director General of the Confederation of Indian Industry (CII). CII is India's apex industry organisation, proactively enhancing the competitiveness of Indian Industry. He has been with the CII for over 33 years and has served as its Director General since 2008. In this post, he is responsible for the overall operations of CII. He is a member of several important Government Advisory Bodies at the National and State levels.
As DG of CII, he is responsible for leading and contributing to many policies level dialogues and discussions to enhance the competitiveness of India Inc and towards the development of India. He holds / has held Trusteeship and Board Member posts in many institutions which includes Institute of Economic Growth (IEG); Global Innovation and Technology Alliance (GITA); Bhartiya Yuva Shakti Trust (BYST); Society of Indian Defence Manufacturers (SIDM); World Economic Forum (WEF) Global Agenda Council of India; Commonwealth Enterprise and Investment Council (CWEIC); Indian Institute of Management (IIM), etc. He is also a Member of the Managing Committee of SPORTSCOM and Governing Council Member of Healthcare Sector Skill Council (HSSC). CII Foundation and India@75 Foundation, which are promoted and supported by CII, are also two institutions where CB is a Board level member. CB is also a Director of Singapore India Partnership Foundation (SIPF). He is a Director on the Board at the "Invest India" which is set up by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India.
He is also Secretary for many bilateral CEOs Forums constituted by the Government of India like Australia, France, Malaysia, Indonesia, Japan, Sweden, South Africa, etc.
Prior to his appointment as Director General, he held several leadership positions in key areas including sectoral verticals of Manufacturing, Services, Agriculture and Life Sciences as well as the SME sector. He has also led CII's policy work relating to macroeconomic policy, financial services, and corporate governance.
AITD – We welcome all of you to this Leadership Studio in which we are inviting Indian and global industry and top leaders to address the challenging facing the industry today. Today we have invited Mr. Chandrajit Banerjee, DG of Confederation of Indian Industries (CII) to talk to us on the topic ‘Recovering from Disruption Dealing with Uncertainty’.
Ladies & Gentlemen, with more than 58 lacs cases and 3.75 lac deaths as of today, the Covid’19 pandemic shows no signs of abating. As vaccine is yet to be found, lockdown remains the only way to slow down the spread. However, lockdown is also pushing major economies to the brink. The IMF has revised its global GDP growth estimate from 3.3% just a few months ago to a contraction of 3%. Something not seen since the great depression of the 1930s. IMF also says that India will remain the fastest growing major economy in 2020 and one must remember that Covid onslaught is only at an early stage in India. So where are we headed? Can India recover from this disruption? How long will the impact of the disruption last? What happens if the pandemic persists and grows?
Ladies & Gentlemen, to get answer to these uncertainties and to these questions, we will now be turning to Mr. Chandrajit Banerjee, DG, CII. CII, as you all know, is India’s apex industry organization with more 9000 direct and 3 lac indirect members. It is proactively enhancing the competitiveness of Indian industry. CII also serves as the reference point for Indian Industry and the International business community. Mr. Banerjee has been with CII for 32 years now and he has served as DG since 2008. In this post, he is responsible for overall operations of CII. He holds and has also held trusteeships and board member positions in many institutions including the CII foundation, Indian Institute of Management, World Economic Forum, Global Agenda Council of India and many more.
Ladies & Gentlemen, I will now hand you over to Mr. Banerjee to commence this talk. Should you have any questions during to talk, please post them on Q&A on the bottom of the screen and we will request Mr. Banerjee to take these up after his talk. Over to you Mr. Banerjee.
Mr. Chandrajit Banerjee: Thank you Brig Sharma for that introduction. I really appreciate that. Thank you very much for inviting me to this interaction here today. Its’s a pleasure indeed to always be with Amity and it’s a vision of the uncertain times that we find ourselves that this is taking place on a virtual platform and it’s always good to speak at this platform of Amity once again and this time on ‘Uncertainty’ and how can we lead during uncertainty.
In the last few weeks, if one sees the clouds of Covid have been gathering in all over the world. We have seen a massive rise in uncertainty. Just about 5 months ago, no one could have predicted such a complete disruption in all our lives as it is today. And even now how can we say as to what’s going to happen in another few months’ time. Nobody is certain as to how things are going to move from here on. We have seen many such events for causing an increase in the uncertainty index in the world for example the Oil Shock in the 1970s, if I can go back to rattle the history globally. By the way more recently the global financial crisis caused a worldwide recession that took years to return to stability with a fury really being out on whether we got out of the crisis completely before the Covid 19 struck us. Terror attacks and large wars have also raised uncertainty for businesses on many occasions before this. Unlike most Black Swan events that I refer to that we have seen in the last century or so this one has the indications for lives everywhere be it in any income class, any geography or any society and in the current situation there are many questions that really come to our mind such as “Are such uncertainty really going to be part of next normal? Will we see more such Black Swan events taking place? How is the present Covid Pandemic going to change the world? What should we do to manage the situation and even explore how we could find opportunities in today’s crisis?
Recently I was referring to this RBI paper which evolved very different criteria for measuring uncertainty in India and it has used big data to examine newspaper articles, internet searches and sentiment analysis. It found that uncertainty is negatively linked with economic activity in India. Higher uncertainty adversely affects inflation, private investments, financial markets and GDP. Therefore, as a nation, how we can manage uncertainty. This is a key to our growth and developmental mission and uncertainty is as is often said relates to the knowns and unknowns, the unknown knowns and the unknown unknowns. So in these changed and unprecedent circumstances, we will have to dice and slice the data points that we have at hand, use sophisticated forecasting tools, identify future scenarios and what would be the probable responses to the crisis situation that will keep unfolding before us. We must look at which are the key uncertainties that will impact economic and social institutions and industry.
We use these to prepare different scenarios or different possible future and for each of these different workouts and different strategies. Once we have various strategies options before us, we can decide on how we would be doing the best in terms of the selections. For India, the present situation throws up many challenges in the recovery issues. The Government of India’s decision to lockdown, many believe, quite timely. However, on the other hand this has had deep ramifications on the economic activities as many of us are seeing it today.
According to a snap poll conducted by us at the CII that captures the opinion of almost 300 plus CEOs in the country, it may take more than a year for the economy to get back onto its feet once again and additionally it is also important for us to note that according to a large proportions of the firms that were surveyed, a recovery in domestic demand for their product or services may precede the recovery in the foreign demand for the same. As far as the Indian economy is concerned, the Covid situation has impacted the most vulnerable sections of the society, the daily wage earners, migrant workers, households and at the bottom of the income pyramid and many others. Many sectors including the transport sector, the aviation sector, the tourism sector, the hospitality sector, construction sector is amongst the worst that are hit today. There are few more sectors, the MSME segment is facing the brunt of the crisis and needs revival plans and support to tide this over.
At the same time, there is a silver lining as one sees for the country and I delve on it in some details as we go along. After all it was a crisis when India undertook the economic reforms if you go back. For faster recovery from disruptive changes, the overall economic environment must be resilient and conducive. India has already taken several proactive steps to cement its leadership position at the global level. The Prime Minister initiated the interaction with SAARC countries, managed to get the G20 to work on the health emergency and brought together the BRIC countries. Over the last few weeks, the Government and the RBI have introduced some new policies that add to the waves of the reforms that I just referred to. The structural reforms are in the areas, as we have seen, in agriculture, in privatisation of public sector enterprises, commercialisation of coal mining, reforms in the power distribution companies and so on. We believe that these reforms will open new avenues for growth both in the domestic as well as in the global economy.
At the global level, we see several opportunities that are emerging in front of us today. New kind of globalisation may now be taking place, this would be characterised by sort of shorter supply chain, change in the just-in-time model of business, different ways of reaching the consumer, remote working, remote service provisions and so on. One of the present trends in the globalisation is shifting out of China and we have all heard quite a bit about it and that is pretty taking place amongst the businesses around the world. There is a definite opportunity here for India to capitalise on this trend and attract FBI in the key sectors of our economy. India’s current presence, if you see in the global value chain, is somewhat limited and there is a scope for enhancing FGI for plugging in into these global value chains. India offers a good opportunity in terms of comparative labour, high degree of quality attainments, significant outward orientation and so on and so forth. With some further key reforms, we need the country could attract significant investments from the globe. CII for instance has suggested land and labour reforms. We have also set talks about administrative reforms and judicial reforms which will all contribute towards investing the climate for investments.
A lot of progress has been made on the ease of doing business front. We have heard about it in terms of our business rankings at the global level but there is need to ensure that these percolates down to the states and the district levels of our country. The current situation has thrown up many issues at the central, state and local government levels which needs to be managed and there needs to be much more synergy and an effort is really required when it comes to ease off doing business in terms of this at the state level and the district level and ensuring conducive investment climate act really at the grassroots. Many reforms are required in the financial services sector also to enable businesses to access adequate credit and to make available funds for long term infrastructure investments. A corporate bond markets for instance are to be deepened and for this purpose and banks also needs to be capitalised adequately with efficiency norms. So, what would be the big ideas for business say in dealing with this uncertainty that we are in.
Taking this to the Covid context really, all CEOs today are in strategy mode looking at risks, looking at opportunities and checking out how to reshape their organisations post the Covid. The issues that are really going deep, one is going into deep dive so to say includes shifts in market, change in supply chains, leveraging technology and managing consumer expectations and above all figuring out how best to leverage the newly learned methods and newly learned merits from working from home as many of us probably still doing. This crisis has also actually taught us many things and it has opened our eyes to the new opportunities that we all keep referring to. For example, this is highlighted the critical importance to our food and nutritional security. I see greater scope for organic foods to gain markets if we institute the best grading and certification systems and organise the right logistics network. There is also a growing need for modernisation of Agriculture that will spur new demands for Aggrotech equipment, food chain infrastructure, food retailing and so on and in the recent months large sections of the society had a deepened-on e-commerce players and others delivering essential goods including food items at our doorstep and there is every reason to believe that e-commerce companies will continue to meet his market need ever after this crisis abates.
The lockdown that meant really that schools’ colleges and university students must stay put at home but thanks to the online services that it is possible for the classes to be conducted in the virtual space and it is being done and we look forward to much more of that happening and looking ahead e-learning will see a steep increase in demand and a huge lot of innovations are expected also in this space.
Pharmaceuticals and healthcare services, and I must speak about that and that will continue to see a rising demand. We are the largest provider from India as all of us know on generic drugs in the world. We supply the highest number of vaccines in the world. Our biotech sector is expected to reach easily about a 150 billion US by 2025 and India has the largest number of US FDA approved manufacturing facilities in the world. As our Prime Minister announced and he mentioned recently that Indian industry came to the fore and started producing masks, sanitizers, PPEs almost overnight. Much of this was not even been manufactured in India. These all were imported but today we can manufacture a sizeable portion and in fact also give to the world, PPE say for instance. Our textile companies have come together. We are manufacturing ventilators now in India. So, there are many opportunities that have gotten thrown up in the last few weeks and a couple of months and we are seeing India sees some of the opportunities. While we export drugs, say for instance, India also has capabilities in R&D and is currently actively working to develop a vaccine for Covid.
In addition, the healthcare sector can provide medical care to global patients in the country and is emerging as a major hub for medical travel. Further our doctors and nurses can still get overseas in very large numbers. Going forward I really see new demands, new investments waiting to happen in these areas of Biotech, Life Sciences and Healthcare Sectors.
Coming to the energy sector, even with the rapid fall in the crude oil prices, I believe this is a good time to push green energy for the green energy development. There ought to be new narrative on climate changes, green energy and health for all. India is rapidly moving ahead on green energy and this is likely to gather even more space. With travel restriction, there are many start-ups as we are seeing working on telecom and mobile app solutions. With good support, they can go into much bigger businesses.
Banking and insurance businesses are evergreen, and we will continue to serve people everywhere. It is just that these sectors too will have to find ways to cater customer needs in new and innovative way as we go along. There will also be rise in the demand for smart living solutions that will help automate functions that make life at home and office much easier. So, there are opportunities in the sector of even outsourced and remote jobs. India is already a lead player in the IT and IT enabled services accounting for more than 50% of the global exports with digital technology emerging even stronger after this crisis period. This can be effectively deployed to provide more services. There are also avenues opening in big data internet of things, blockchain and so on. Many of these areas where India has the potential to emerge as a leader. The list of opportunities that we have in front are some of these and there are many more. The question would be how best we can leverage these opportunities and we configure our business models. This brings me to what business must do to be able to really leverage these opportunities most effectively.
India has the advantage of a large and growing market. Businesses must recalibrate therefore their strategies. Asset light options are order of the day depending on more on people and knowledge power to drive new growth Adelaide. Flexibility will be really the key advantage for businesses in the current scenario. Agile organisations will be better able to change directions and opt to the new models of business. This is a kind of fast turnaround time and quick thinking that is going to keep businesses resilient and able to find the next big opportunity.
To conclude I would really like to talk about some quick action that our youth can contribute to dealing with the disruptions that currently are under way:
• First look at creative solutions for the innovative and for their unusual opportunities.
• Two work together for the right partners because collaborations and partnerships will be best way to device and implement pioneering solutions.
• Third keep your eyes open to finding new opportunities examining them and exploring how to leverage them.
• Four include the option for upskilling and deskilling in your life goals and ongoing basis and depending on changing work scenarios.
• Five keep abreast of what is happening in the technology world because this is where this new disruption will really emerge from.
• Six whatever you do in your official work domain as you go forward in your careers it must done with complete sincerity and loyalty to the organization because this is what will set you apart.
• Seven within all this never do site and social responsibilities and community engagement.
• Eight do what is protecting the environment and promoting the circular economy with minimum wastage.
• Nine adopt a balance work life modal that gives you sufficient time to explore what you are doing because it is possible that the next opportunity will come from all of that.
• Finally at number 10 I would leave with a message to never loose heart and to always remain optimistic even in difficult time.
I am sure we will get out of this current situation, and I will drop in at your campus someday to physically touch place with all of you soon. Amity will not only continue to be a leading institution and it has already led in toughs time but will also lead by example setting the trends for academia to build upon.
My association with Amity is strong and I look forward to growing that in the future and my thanks once again to the university for giving me this opportunity to share some of my thoughts with all of you and thank you very much for your patient hearing. Thank you very much.
AITD - What should be the future business plan to avoid such massive disruption?
Mr. Chandrajit Banerjee: A very important fundamental question for all businesses. All businesses must have a contingent plan, they do have contingent plan. That’s why during my speech I mentioned that what is important I mean surprises will come, there will be surprises from where this covid say for instance the health care was talked about, there was discussion on that there could be something on big health scare that will come but who imagined this could be of this scale and of this type but having said that the point I have mentioned was that there is need for all companies, all businesses, especially all institutions to be nimble footed and to be very fast and agile in their thinking and I think that is very critical at this point in time to anticipate to plan to really look today the way.
One of the biggest thing that happens especially in India and I would imagine that it happens all over the world but in India we function and we function brilliantly under pressure be it business, be it any other fear of the world and as I said that who at that point in time believe that Indian businesses would be able to start getting into a tractor company or an earth moving construction company getting into a manufacturing of ventilators, an automobile company working on ventilators, people who starting to manufacture PPEs which are world class PPEs in the world starting to manufacture them in the country. So I would imagine the agility and the nimble footedness is going to be one of the most important facets that will take us to deal with these sudden surprises that will come our way and that’s going to be very well critical in times to come
Q.- What future opportunities do you see for training and skill development professionals in the present circumstances?
Mr. Chandrajit Banerjee: I think one of the most important areas that comes out of covid 19 and well it was emerging covid 19 only aggravates it and I would see that what the biggest challenge that our country would face is that of jobs and that’s going to be very critical. What happens because of people have migrated back to their homes to rural India, companies would function with much lesser number of people, many areas of functioning would see much lesser number of labour, would see much lesser number of people in companies. So, there would be a push to which will go towards much more automation. We will see new types of, therefore livelihood which will also emerge in rural India in the district we will have to invest in that. We will have to see that non-agricultural rural-incomes are well developed so that we can really address this huge population of our country, are gainfully sort of employed and for all of this there will be new skills which will be required and even freelance skills will be required for every aspects of our society, every sector that I spoke about be it the hospitality sector, be it the services industry, be it the manufacturing industry, be it the education field, there will be different levels of skilling that India will require.
All skills future skills gaps that we have mapped upon shows that there is so much more that’s required in terms of skilling and that will be required because India will have to, Indian companies will be requiring people over a period, there will be requirements for different types of people. Therefore, that gap can only be filled up through skills and I would think that you would see much more investment both by government and by the private sector into skill development and for people in this entire eco-system of skill development.
AITD: - What leadership qualities are essential now for the Corporate Leaders because of this disruption and uncertainty?
Mr. Chandrajit Banerjee: - Let me try and answer this question this way. Leaders today needs to be resilient currently. It is important for them to consider the needs of all stakeholders particularly employees and workers to be still in confidence and other prospects. The leaders must communicate with their stake holders and be transparent. Further innovative thinking and really thinking completely in the new domain is what is required. For example, auto companies have configured to produce Ventilators and apparel companies in producing PPEs. New opportunities can be explored with the mindset of innovation.
I would really underline that one of the most important hallmarks of leadership will be ethics and commitment to its people because we need to show the leaders would have to lead the way. Today one of the things that has arisen especially in the corporate leadership is this gap which we have talked about in recent past about trust deficit which industry has sometimes experienced be it with the government or to be it with the civil society. So, standing tall through strong moral ground as well as on ethics is going to be one of the most important hall marks for leadership in our country.
AITD: - Leading Corporation Apple is planning to move one-third of its production capacity from China to India. Are we preparing to deal with such a massive production load given to stringent quality norm demand? Mr.
Chandrajit Banerjee: - My answer is two folds. Yes, in most of the cases and No in some. Yes, in terms of quality standards, our ability, our intelligence, our technology. Indian goods and products are sometime very competitive till the time its reaches to the factory store, it becomes less and less competitive as it goes from the factory door to may be the spot because of our logistic and so on and so forth. What I would really like to say that we have been global leaders in many things we have been able to establish ourselves as global leaders in manufacturing say for instance in car, the component industry and so on. I don’t see any problem from that point of view for a leading company like Apple to find its strong feet in India both from the services point of view as well as from the manufacturing point of view. But I would think that we needs, for attracting capital, we needs to focus on ease of doing business and we need to make things at the district level at the ground level becoming much easier for the business to function and I think that’s here we needs to do little bit of homework and we have to work in partnership between the industry and the Government to see that there are certain rules, regulatory frameworks reform, our internal reform are carried on very strongly to make such capital getting more and more attracted and become more and more successful in India.
AITD: - Should Corporate India focus on the bottom line or the top line to get out of this crisis.
Mr. Chandrajit Banerjee: I would say that Corporate India should not lose site on triple bottom line. They must look at both its own profitability it is important, it must look from the prism of its entire eco system where it is, the profit needs to be sustainable wherever we are doing, what comes out of sustainable products, sustainable services that needs to be very carefully seen and of course corporate India would have to work with a lot of human face. Human face when I say it is for its employees it would also needs to be whether the way they manage, and I think most of the corporate would do that is being very ethical and very right in its practices as it moves along because this is the time when a lot of flabs will get cut out of your company.
You will be obviously cutting and most of us are doing it, every one of us are seeing to it how we can cut costs, cut corners. When I say cut cost it is the extra that we are spending which is probably unnecessary and how do we become smarter that is going to be the focus of the business models will change. I would imagine that the focus would be completely different from what it has been. The new normal will be completely different from where we were. So, what we would need to be in search of at this point of time is to see how we can become more and more competitive given that the challenges both in demand as we move along and supplies related challenges that we have would remain for quite some time to come.
AITD: Your views on the Chemical Sector post Covid-19 era.
Mr. Chandrajit Banerjee : Between the Government and the Industry we have been looking at some of the sectors which can be seen to become “Champion Sectors” in the country and there are many sectors that we believe can be the sectors for tomorrow for India. I will name some of the sectors. Food processing is one such sector and is a very labour-intensive sector and India can go into strong heights. Similarly, there are other sectors like textile, auto components.
Chemicals is one such sector I would imagine that India has huge strengths in terms of both quality chemicals and chemicals both for internal consumption but more so far also export is one sector will be a growing sector and there are many issues which relates to how we can see to it that way we are able to create much more conducive environment of ease of doing business in the chemical area notwithstanding the issues of environment etc that we need to keep in mind but that’s one sector which has enormous scope in India to expand and we would look forward to actually that being nurtured in India to become one of those Champion Sector I talked about.
AITD: What will be the impact of Covid 19 on medical tourism?
Mr. Chandrajit Banerjee: I would imagine that this is the temporary challenge in fact many countries look forward to coming to India for medical value travel. I think this is one industry which is very badly hit now, but I would imagine that as things move on it will take a few quarters for this to heel up. We are dealing with the challenge that this point in time but let me say that I would imagine that this is a promising sector for India we have some of our best products and services at the most competitive prices across the world that healthcare is being delivered in India. So, we would emerge out of this, but it will take the next few quarters for us to do so but we will at some point in time will bounce back. Here also I would mention that we need to with the scope that we have and the way where we are operating, I see a tremendous gap there we have a huge potential in this, and I think post covid we must be very careful.
Things are slowly opening, there would be some people trickling in as you will see in the next couple of quarters when the airline sector start operating across the world, but I would imagine India’s potential on medical tourism is not realized near full potential at all and I would say by next year we should see that once again come back. But now yes, it’s a very stressful sector I must agree.
AITD: If this pandemic continues for another 6 months (say), most of the domestic and international consumption will go down to the bottom. In this case what are the future opportunity for us?
Mr. Chandrajit Banerjee: The way I would look at as you know there is a lot of action which is being taking place in terms of both the cure as well as the vaccine. There is a lot of work which is going into it, and I am quite hopeful that we will sooner or later get some sort of a cure which will enable us deal with it in much more effectively than what we are dealing now. I would imagine that across the world, we are learning to live with this, we are learning to live with it, anyone can have it as long as we can get cured as long as a cure would be available, much before probably the vaccine comes in, we should learn how to live with this and to live with this we should have to focus on how do we destigmatize some of the entire issues which relates to COVID, we need to understand that we need to accept that and move on. But as we go along, there would be, I see the next two quarters to be very challenging, demand would not be picking up, I am sure all of us are buying less all of us are not going to malls, there no malls are open, no retail stores are open. So, there is a demand which is not there now. So, what we really need to do is to see how we can enthuse demand now. So, we are saying that we need to do more and more business as normal to see and I mentioned about ecommerce being one of it to see how consumption can be seen to come forth in the next few months. But yes, there is a challenge and if such challenges happen, I am sure we will see newer interventions from the Government besides whatever we have seen which has been done to see how the economy is kept alive with those interventions which would be extremely important.
AITD: What are your views on trade post pandemic and more specifically on the role of organisations like WTO?
Mr. Chandrajit Banerjee: WTO as you have rightly said is under pressure. But we will see more and more countries talking about how we talk about this word which is come back protectionist attitude by many of the countries flouting the WTO regulations or WTO framework. Now having said that I would imagine that you will also see a new normal growing there and there will be some countries which will come forth in terms of contributing to what could be that new normal be. India has a huge potential. There is always as you are rightly seeing that goods from some countries, investments into some countries are getting challenged now. So, India should pick up on that opportunity. We are seeing that that there is a huge amount of possibility of India to cater to the world and it's not just the pharmaceutical sector which India has today supported many countries, but India is capable of its products to be supplied to the rest of the world and that might lead to that new normal that I was talking about and yes there are many guidelines and rules which the WTO prescribed.
Some countries even getaways we don't even know the type of violations that take place in some of these countries in terms of WTO rules. But yes I would say that multilateralism should be supported and we should see WTO being living up to be once again being relevant and it would be very important for WTO to be relevant and I think some of the countries like ourselves must work towards it, towards creating much giving much more teeth and power to as is required to a body like the WTO so that it can really look at trade, the World Trade in the right perspective and in all of that I see the opportunity for India to be very strong if we get our act right and of course I mentioned some of the points that we need to do well.
AITD: Migration has been observed from ancient time. Is this an opportunity for India to decongest its industrial settings and create new job opportunities or new landscape in India?
Mr. Chandrajit Banerjee: This is a very important question. All along we have always focused and we have always thought and for us still this time again the normal way of functioning was to make the city smart, the city more infrastructure wise smart otherwise smart we needed to cater to the migration which used to take place from the rural to urban and we always catered too much more of investments into the urban infrastructure and cities. I have always championed the idea and I think what we need to also look at India is to see how we can make our villages smart how we can look at and I mentioned it during the course of this discussion, during the question answer session, I talked a little bit about how we can look at more opportunities in rural India through social as well as a physical infrastructure being invested upon and I also mentioned that we need to see it to how we can focus on non-agricultural rural livelihood and I think non-agricultural rural livelihood creation of that would be also very important. The other aspect is we have seen this, we have noticed that the pattern of migration very clearly in the last few weeks as to how it has happened in India.
My suggestion and one way to work for is also to see that in India the right type of investments is also directed towards certain parts of the country which would also lessen the type of migratory hazards that we have seen. So, we need to create jobs for people where they are, and I think that's going to be a very essential part of our planning that we should work focus upon. So here again I would imagine there is a partnership approach that will be required from the local State Government, the Central Government and the industry to see how certain typical type of investments are carried through proper planning and development of infrastructure into those areas from where we have seen migratory labour in such large number. Besides of course this is very important point of creating strong rural infrastructure both healthcare, education, I would imagine and many other, the district level hospitals improvement, district level jobs which need to be created through investments. And I would imagine these all has to be non-agricultural income to a great extent which will sustain people to stay back happily in some of the areas which they leave and come to urban cities.
AITD: Do you feel that the financial package is enough to look after MEMEs or what more needs to be done to protect MSME and unorganised sector in India?
Mr. Chandrajit Banerjee: It’s an important question because one of the most affected sectors today yes of course is Small, Micro and Mid-size companies. The credit availability says for instance for MSME and the reduction in interest rates should help the MSME now and monetary support as in some countries is a fiscal challenge and CII has recommended opening credit taps for them. The redefinition of the sector as you know it has been redefined the MSME sector will ensure that more enterprises are able to get the packages that are available for the MSME and we believe that this will be introduced very quickly and at the earliest and it is important that the MSME’s are facilitated through competitiveness measures which would be better industrial parts, better logistics, more information on tapping export markets, they have a strong export potential, they should be able to do that. Besides the MSME's payments are also pretty much delayed both from the government departments as well as from PSU that even from some private sectors and I think that's something that now when we talked about the role of business and what should we be doing that something that we should be careful about in terms of seeing to it that they are paid.
The unorganised sector which is a very important point that you said I would imagine that we should see to it that the entire unorganised sector which employs so much, actually which is we are able to focus very seriously on both migrant labourers as well as the unorganised sectors because most of them are employed in the unorganised sector as a special sort of a Department which needs to really focus both at the state level and at the senior level. But at the MSME I would like to say that many of the measures that have been taken over the last few years the MSME’s liquidity issues have been somewhat addressed by the recent stimulus packages and that should be of help, the 3.7 lac crores through liquidity support which was including loans with the government guarantees that's one very important point and 2nd the 9250 EPF support where government paid the EPF contribution of both employers and employees, that's a very important point. And the ₹75,000 crores of liquidity support to NDFCs which predominantly lends the MSMEs. So, these are some of the things which I would think would help the MSMEs which are the backbones. If MSMEs are not strong it would be difficult for the supply chain to be completed with a large company also will not be supported. We need to have a very strong focus on the MSMEs.
AITD: There has been massive disruption of supply chain because of the disruption in China and other parts of world. So, what do you think needs to be done to make India and Indian industry more attractive to these foreign investors who may be thinking of leaving China?
Mr. Chandrajit Banerjee: As I mentioned the two aspects of this global supply chains have been severely disrupted as we are talking about the global supply chain. This will obviously have a strong effect on the Indian imports and exports and what all really needs to be done to make the global trade and business sustainable in the future is a big question that is coming up. India's exports and imports have been really affected by the lockdown in most countries. We have had interaction on exports with our Commerce Ministry and one of the things that it stated that while exports contracted by over 60% in April there is an expectation that the contraction can come down to about 30 to 35% in May with a June numbers probably which will be at par with what we were last year. So, the minister also really felt that the exports can be greatly boosted by reviving manufacturing, so we also need to look at diversification of our export basket from India.
Our share in the top global exported items is less than one 1% and it is important to build up a product such as electronics, machinery, automotive and so on and so forth. And on the import side the falling oil prices has been an additional factor in contraction by about 58% and if we are to become an export powerhouse and avail of the global opportunities in shifting supply chains, then our imports should be carefully calibrated so that imports and raw materials have no tariffs while higher tariffs are based on final goods.
It is here that we have an opportunity to become really the supply chain of the world as alternative to China which is also being driven by changes in their policies and higher labour costs in China. So ramping up local manufacturing capacity, further improving ease of doing business and more reforms In addition to what has been announced specially on the land reforms, on the labour reforms, on cost of finance, cost of power, top class infrastructure and business friendly regulations and many such easing of such processes will really help India get some of those investments that we talked about and gain a major footprint in the global supply chain. That's the way I would look at it.
AITD: What technology do we need to embrace in our country post COVID?
The top companies in India have globally comparable technology standards if one can see and can match global benchmarks in Artificial Intelligence, Machine Learning, Internet of Things etc. This is also beginning to happen in the second-tier companies. So, among the MSME the capability for technology is very high as we see in the numerous start-up that have emerged in the last five years. These are based on technology and new ideas and new platforms. However, the larger base of MSME require assistance for technology adoption.
The Government therefore should set up two new tool rooms and ensure that common facilities are made available in industrial hubs. Industry 4.0 is sweeping the world and all of us know that and we in India can be much a part of this revolution and I think the mindset change is there, but the challenge is to lower costs and to make these technologies readily available. This in itself is an opportunity, however, there are many issues that needs to be addressed, first we need to encourage R&D and innovation and the government should set up an R & D fund which will absorb at least 50% of the risks. Second one would like to see that we still need to strengthen the IPR regime in terms of implementation. Finally, India has a large pool of scientific and engineering talent which needs to be skilled and to be readily absorbed so you talked about skills earlier so another potential of what work you can do to skill.
Click below to watch the recorded conversation.
Click here to know about all our corporate training solutions.
Get in touch if you would like to know more about us.
Credits:
Moderated by: Dr. Nitin Batra