`Not a serious setback for industry'

Interview with Rahul Bajaj.

Rahul Bajaj, chairman and managing director of Bajaj Auto Limited, the flagship company of the Bajaj Group has always been an active participant in debates on issues relating to the World Trade Organisation. As the head of one of India's top 10 business houses and as president (twice) of the Confederation of Indian Industry (CII), Bajaj has played an important role in shaping India's industrial policy. His hardline stand on protecting industry during WTO conferences is well known. In an email interview to Anupama Katakam, Bajaj says that agriculture, not so much the Indian industry, is the victim at Cancun. He also points out that if India needs to get the support of other developing countries in areas where it is affected, it has to support them in areas that are important to them. Excerpts:

Does the collapse of the Cancun conference represent a serious setback for Indian industry's global blueprint?

The Cancun meeting was not at all a serious setback for Indian industry's global blueprint. It is our agriculture and, to some extent, textiles and garments that could have benefited with a successful meeting in Cancun. The rest of the Indian industry would, in fact, have had to face reduced rates of import duties. Hence, Indian industry, including the automotive industry, has not suffered in any way. To the extent, in our own interest, we want to reduce import duties, nothing prevents our doing so. This may, perhaps, happen in any case in the forthcoming Budget subject to what takes place in Geneva in the meantime.

What is your opinion on the proposals that were on the table for non-agricultural market access? Sections of the Indian industry were known to be apprehensive about the proposal to reduce tariffs in certain industrial product lines sharply. Is this a case of a sectional interest becoming the enemy of the general interest?

The subject of non-agricultural market access was not seriously discussed at Cancun. Most of the time was spent on agriculture and the four Singapore issues. Hence, certain sections of the Indian industry, such as the auto component industry, being apprehensive of the proposal to reduce tariffs did not become an issue. The question of "sectional interest", in your words, becoming the enemy of the general interest is, therefore, irrelevant.

Do you think the proposal for tariff-free access in certain product lines will be renewed? If so, what should be the Indian industry's response?

I do not see, in the foreseeable future, the possibility of tariff-free access in India to industrial products except, if at all, in areas where Indian industry has no objection.

There are indications that the United States will not bother too much about multilateral forums like the WTO and would be focussing on concluding bilateral free trade agreements with key trading partners. What would be the implications, as you see it, for the industry?

The U.S. has already threatened that it will now go the bilateral and regional trade agreements way. This can have many implications in general. However, I do not believe there will be serious adverse implications for the Indian industry. Indian industry (excluding textiles) already has access to the U.S. markets on reasonable terms with import duties generally being low. The only problem industry faces, like the steel industry, is anti-dumping duties being levied by the U.S. government. This has nothing to do with the U.S. entering into bilateral trade agreements with key trading partners.

The immediate cause for the collapse of the Cancun talks was apparently the failure to achieve consensus on the "Singapore issues" - investment, transparency in government procurement, competition policies and trade facilitation. Would negotiations on all these issues be inimical to India's interests or should we think of a situation where we can accept talks on some of them?

The real cause for the collapse of the Cancun talks was agricultural though the failure to achieve success on the Singapore issues became the immediate cause in view of the actions taken by the African countries. If we have to get the support of other developing countries in areas where we are affected, we have to support them in areas that are important to them. Keeping this view in mind, we have to fight against all the four Singapore issues, even though we are really against investments and competition. We also have reservations on transparency in government procurement as we would like defence procurements, for example, to be excluded from the transparency clause. This is still the demand of many developing countries, including Malaysia. Also, we would want the right to give preference to domestic companies though we shall do this in a transparent manner. We have no serious problem in discussing trade facilitation. However, many least developed countries would need a great deal of investment to implement this and hence this is a problem for them.