PM's council weighs import curbs on luxury goods, gold to rein in CAD

The Prime Minister's Council on Trade and Industry, which met today, discussed among other things ways of raising import duties on luxury consumer goods and evolving innovative measures to reduce gold imports, in order to rein in the country's widening current account deficit (CAD).

The meeting also discussed ways of boosting exports of agricultural products and textiles, the two items the country has clear advantages.

One important suggestion that has come up during the deliberations was to bring the offshore rupee market onshore in order to better regulate trade and curb rupee volatility.

The council also discussed measures to reduce restrictions on foreign direct investment and speeding up the functioning of the Foreign Investment Promotion Board (FIPB) so as to attract foreign investment in the country.

Besides deliberating on the depreciation of the rupee and its impact on trade and industry, the meeting focused on measures to arrest the slowdown of industrial growth and measures to revive it through skill development and the setting up of industrial corridors.

Some of the steps suggested to reduce CAD include accelerating software exports by easing domestic movement of people, resolving tax issues, making inward visas easier and taking up the visa bill with the US.

Other suggestions included raising easy resources by selling shares of government undertakings like Specified Undertaking of UTI (SUUTI), BALCO, HZL etc and improving the operations of energy major Coal India Ltd through private participation.

The focus of the meeting was as much on reviving economic growth as on inclusion. Some of the suggestions that came up during the deliberations were:

• Extending accelerated depreciation to SMEs;
• Removing bottlenecks of pharma sector and increasing R&D;
• Putting a moratorium on loan repayment for delayed projects;
• Focusing on annuity based PPP projects;
• Boosting domestic electronic manufacture;
• Using PSU land for industrial parks;
• Restarting renewable energy projects;
• Focusing on incumbent investors for the short-run;
• Resolving tax issues and removing tax uncertainty;
• Using government procurement to boost local Industry; and
• Focusing on urban infrastructure.

On infrastructure development, the meeting suggested development of industrial corridors with sector specific zones and clusters.

Besides the existing projects, the council proposed acceleration of the Amritsar-Delhi-Kolkatta Corridor project as well as the region was vital importance for the country's economic growth.

More importantly, the meeting suggested the setting up of an efficient single window clearance system and better ways of facilitating enterprise.

The council also felt an urgent need for skill development, focused on the home service market besides using the national Rural Employment Guarantee Act (NREGA) for skill development.

The meeting was attended by the finance minister, the minister of commerce and industry, deputy chairman of the Planning Commission, chairmen of the National Manufacturing Competitiveness Council, PM's Economic Advisory Council and senior officials from the government and industry leaders.

The PM's Council on Trade and Industry has industry leaders like Rahul Bajaj, Ashok Ganguly, Mukesh D Ambani, Narayana Murthy, Azim Premji, Swati Piramal, Deepak Parekh, Jamshyd N Godrej, Chanda Kochhar, Venu Srinivasan, Sunil Kant Munjal, S Gopalakrishnan, Rana Kapoor, Sunil B Mittal and Naina Lal Kidwai as members.