India should sign more FTAs, reduce tariffs to compete with rest of world: Subrahmanyam

New Delhi: India needs to sign many more Free Trade Agreements(FTAs) with other countries and reduce tariffs to compete with the rest of the world, Niti Aayog CEO BVR Subrahmanyam said on Friday.

Addressing the captains of the Indian industry at a CII Annual Business Summit, Subrahmanyam said the government should not protect any sector from competition.

PSU Watch is now on Whatsapp Channels. Click here to join

"I think we should be very, very confident about our capabilities about India actually being able to be competitive with the rest of the world," he said.

India has just one insurance company among the world's top 50, while there are only two banks in the list of global top 100, Subrahmanyam said.

"I think we should go for very low tariffs. India should sign many more FTAs," he said.

Asserting that Indian companies can be on a par with their counterparts of the rest of the world, Subrahmanyam said, "We should not try to protect anybody. Sectors that have protected themselves end up getting more ambassador cars."

Subrahmanyam noted that the Indian industry and services will grow and will live up to the potential only if "we trade more".

He also cautioned against protectionism and highlighted the need for India to get into global value chains (GVCs) to boost exports and secure supply chains.

"Let wind come from all sides, from multiple doors, multiple windows. The breeze will blow outwards also," he said.

The Niti Aayog CEO noted that there has to be a concerted effort to make India part of global value chains.

"We need to get into global value chains and to get into global value chains means a fundamental change in a lot of things.

"It means low tariffs, it means low procedures. It means no protectionism," he said.

Subrahmanyam also called for greater private capital into the infrastructure sector.

"I think private investment in infrastructure is not there. We need to come up with new models and arrangements in which private capital is enthused into investing in infrastructure.

"That will also require a lot of improvements in contract management, dispute resolution, and in fast-tracking our legal processes," he said.

According to him, anybody who has run into a situation where they feel that legal redress will take 3-5 years, that is a cost.

"And that automatically is a disincentive," Subrahmanyam said.

Responding to a question on how India should address non-tariff barriers like European Union's Carbon Border Adjustment Mechanism, which seeks to impose tariffs on the import of carbon intensive goods like steel, Subrahmanyam said he does not see these as barriers, these are realities of life.

"If you want to sell a product in a particular location, you have to meet the standards of that place. I don't think these barriers are put up to cut off trade because they apply equally to local as well as foreign, which means it is local standard," he said.

According to him, if there is a CBAM in Europe, the CBAM applies to local as well as foreign, they have to meet those standards themselves.

"It is time to realise that non-tariff barriers (NTBs) are not barriers. Labour, environment, and other issues are a part of society and if a society actually imposes conditions there, industry has to adjust," Subrahmanyam said.

"That is the only way to be competitive. To think that we will be able to change that is futile," he added.

Highlighting the need for reforms in financial services, Subrahmanyam said India needs its own JP Morgans and Citibanks and that requires a very, very forward-looking thinking.

"We need much bigger banks, we need much more global players and we need a financial sector which has the muscle to service Indian firms not just in India but across the world," he said.

Pointing out that India's industrial transformation unleashed after the 1991 economic reforms, he said 90 per cent of the companies that exist today are here in their size because of what happened then.

Subrahmanyam pitched for reforms in education and skilling.

While admitting that India has done well in creating jobs but not enough in labour-intensive sectors, he said, "Every industrial estate in India should become an enclave which then gets the benefit of far less regulation, far less control."

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)