Anupam Shah

Biz@India

April 2015

Hannover Messe Unique opportunity for Indian engineering

Anupam Shah, Chairman, Engineering Exports Promotion Council (EEPC)

Engineering lies at the heart of the Indian industry, accounting not only for a large chunk of exports but also the centre of the Make in India campaign of Prime Minister Narendra Modi. Rightly so, it occupies the lead position at the Hannover Messe 2015 where India is the partner country. Anupam Shah, speaks about the way forward.
 
How have engineering exports from India performed during 2014-15? What are the prospects for the current year? How is EEPC working towards promoting engineering exports?
 
Engineering Exports recorded a growth of 16.6 per cent in the eleven months (April- February) of the current fiscal over the same period last year. We should end the fiscal year with total exports of USD 70 billion, our target for the year. For 2015-16, it is bit too early to venture even wild guesses since the Government is yet to announce the new Foreign Trade Policy. Once that is done, some tentative projections can be made. EEPC has been at the forefront of promotion of engineering trade and investment and not only exports. We do so through a combination of promotional efforts in global markets, interacting with the Government, formulating policies and through dissemination of information and training, we help in promoting exports from the country.

Which sectors have driven the growth of the sector? What are the key countries to trade with and in which commodities?

Industrial machinery, auto and auto components, iron and steel and products made of iron and steel as well as non ferrous metals and their products have been main product groups while new segments like aircraft parts and shipping parts and components are becoming important constituents of exports from this sector. EU and North America are still the major markets though the gap with the rest of the world is closing as India’s engineering exports diversify globally.

How has been trade with Germany? How does it compare with other markets?

In the first 11 months of 2014- 15, Germany has been the seventh largest export market accounting for USD1.9 billion. USA is the single largest country export destination accounting for USD7.1 billion followed by UAE at USD5.4 billion.

How does the government support your promotional activities? How can ‘Make in India’ campaign help the sector to grow?

EE PC India is an autonomous body under the Department of Commerce of the Ministry of Commerce & Industry. The Foreign Trade Policy lays out the various promotional supports that Government provides to the exporters including engineering exporters that are routed through the EE PC India. These include various market promotional and market access initiatives, helping in branding of engineering products abroad, testing of products abroad as well as enabling our companies to meet the challenges of countervailing investigations abroad.

How can Make in India strengthen Indo-German relations?

The new Government wants to make India the manufacturing hub and for which has laid out a 10-year vision. The objective is to promote the various advantages of manufacturing in India in various sectors including engineering. Germany is the eighth largest investor in India with presence of several German companies to strengthen the economic tie. Further, Indian majors like Tata Steel, Hindalco, and Suzlon also have their footprint in Germany. In terms of technological collaborations, Germany is the 2nd most important partner of India. Clearly, the Make in India initiative is the perfect policy that can be used by the German companies to expand their manufacturing capabilities in India not only for the domestic market but also to export to the rest of the Asia.

In the Union budget, the government has increased investment allowance in manufacturing and focussed on improving quality of technical education in the engineering sector. The reduction in corporate tax to 25 per cent would make the Indian firms’ tax liability at par with the ASEAN economies while lowering of tax on royalty and technical fee would help the technology upgradation.

Major emphasis has been placed on skill upgradation and the ease of doing business. The legislative framework being thought about in the grant of clearances would go a long way. Some of the initiatives like the Mudra Bank for the SMEs are well thought out measures. The priority to Digital India is the right initiative towards Make in India. Postponement of GAAR and the commitment to avoid retrospective tax would boost investment sentiment.

What are the major issues that Indian exporters have been facing? How can these be solved?

The main problems that are faced by the Indian exporters are relatively higher transaction cost; higher interest costs; policy uncertainty; and, access to markets especially for the SME sector. The government has already initiated some steps with regard to lowering transaction costs. They have reduced the number of documents required for exports. We hope this process will be carried further. The new Foreign Trade Policy needs to be announced and exports should be declared a National Priority Sector and brought under priority sector lending.

A CII study forecasts engineering exports are expected to touch $120 billion by 2015. What is your take?

I think USD120 billion by 2015 is a bit ambitious given the international trading situation but we do hope that in the next two to three years we will be able to reach this level. While we feel that 15 to 20 per cent export growth is feasible in 2015-16, one needs to keep in mind that the global trading scenario is increasingly turning protectionist and austerity measures are curbing aggregate demand in all countries. There is a need to rejig the growth paradigm that many in the developed world are pursuing if we are to revive international trade and curb protectionist tendencies.

Finally, what are your expectations from Hannover Messe, Germany? How will it help engineering sector to grow?

The Hannover Messe is a prominent platform for the producers from all the core sectors for showcasing their high-end products. It is therefore a great occasion for our companies to showcase their technology to the global manufacturers with the hope that this will help in enhancing stronger collaboration and Make in India a distinct possibility.

India is expected to cross a growth rate of 8 per cent as a result of the new government’s adoption of a slew of aggressive reform measures. These measures have led to the opening up of some key sectors to attract fresh foreign investments. Germany on the other hand is already recognized as the richest economy in the Euro area. Therefore, the time is also ripe to make our co-operation in the engineering and manufacturing space stronger and mutually rewarding and we do hope the Hannover Messe will give the necessary thrust required.