Centre giving necessary support for manufacturing to remove dependency, says FM

PUDUCHERRY: The central government has ensured through several budget announcements, necessary support to industry to either start domestic manufacturing for the long run or immediately for the short run, source it from elsewhere and remove dependence on other countries, Union Finance Minister Nirmala Sitharaman has said.

The government was incentivising those who want to get themselves out of this dependence and be able to produce in our country.

Speaking at an interactive session at the Bharat Shakti Pondy Lit Fest here on Friday, the Finance Minister said, "our export account would say that we are still not adequately exporting to China. But actually it is going to China. But it never gets accounted like that because it goes to Vietnam and from Vietnam it sort of crosses the road and goes to China."

"It should technically be in my account of I am exporting to China. It doesn't happen that way because and I will be blunt in saying this, it's not going to be diplomatic, people are not going to like it. We don't get market access for those goods which are of bulk value, both in quantity and also the value that we can realise out of it," she said.

Noting that India doesn't get the market access to China, she said whether it could be buffalo meat or pharmaceutical generic drugs both of which are bulk goods which they buy from India, but not directly. "They go via Vietnam, they go via somebody else. So, there are items on which we have done better in the export, though they constantly deny market access."

India has taken a conscious call that for some items, capacity should be created within the country. "We may be importing them now. But sooner, you will find that there will be a complete shift. All the active pharmaceutical ingredients at one point in time, India was the leaders... gradually because of predatory pricing, we lost out on that game and we are not producing any. But now we've given incentives for people to restart," she said.

She said industries could produce their own APIs or KPIs also, which are required for our bulk drug industry.

The opposition's GDP number agenda had mala fide intent guiding it. "What hurts me more is to see them rejoice at what they perceive as India’s failure. This country, against all odds, the people of this country against all odds, are doing their best bit and India is growing as a result of that," Sitharaman said.

On freebies and welfare schemes, Sitharaman said if a scheme is properly budgeted and financially sustainable, it shouldn't be sensationalised or strictly categorised as a "freebie." However, she warned against the dangers of unplanned welfare, noting that allocating 80 percent of tax collections to committed expenditures leaves only 20 percent for vital capital investments like schools and hospitals.

While discussing the financial strain of unplanned freebies, she cited an example of a previously revenue-surplus state that fell into a revenue deficit within three years. She noted that such states then seek to borrow beyond the established ceiling of 3 percnet of their Gross State Domestic Product (GSDP) just to run the government.

Addressing concerns around digital payments, she clarified that the proposed Merchant Discount Rate (MDR) on UPI transactions is not a tax, cess or surcharge, and it does not go into the government's tax kitty. She assured that the MDR is strictly a fee between the merchant and the service provider and will not be passed on to the consumer.