May 20, 2017

Speaking at 33rd EEPC India Western Region Award, Mumbai

We are all aware, I’m not talking something new, how exporters also have misused the flexibilities in the laws in the past. And what we’re trying to do is make it a much simpler tax structure. It is going to be one nation, one tax. You will seamlessly get the refund of all that you have paid across the board. In fact, exporters, and I remember I used to always complain, we never got the refund of Octroi that we paid. Now that will be history. Right! But with GST coming into force, all the various taxes that are paid except electricity and alcohol and petroleum products, these are the three, which are left out I think. These are left out because, let’s build up a consensus on this also and we can always include them.

If you recall, the Opposition was trying to say this should be exempted permanently, but the BJP government has made sure that we can always have a dialogue and decide later on, so for the present we have kept it out. After all, would it be more sensible to keep struggling whether to keep it in or out with the states and, therefore, not get GST at all or does it make more sense to at least to get the rest of the things sorted out and then once the states have an experience of the success of GST, I am sure they may be willing to get more and more products into it. I think a practical approach, a willing approach where you move forward, is far better than being obstinate and sitting on your haunches and not achieving anything, which happened for, almost six-seven years in the past.

After all, the first, if you go back in history, GST was first mooted when, I think, Yashwant Sinha was the Finance Minster in the Vajpayee Government. We lost government in 2004, and then this thing went into the back burner. Somewhere around 2007, once again this was articulated in the budget and then it took them four years to come out with just the first draft of the law, 2011 we saw the GST law and it was full of holes and no consensus could be built up with the state. There was also the issue of states not trusting the central government for precisely the reason Mr Dhingra talked about – tax refunds. And why did that happen? Because if you recall, Central Sales Tax (CST), was withdrawn or reduced, let’s say, from 4% to 3% and 3% to 2% and the central government had given a promise that they will compensate the state, for the loss of revenue, year on year for 3 years and gradually make CST zero.

And all of us exporters have suffered CST and never got it back. Am I right in that? But, what did the then central government do? They reduced from 4 to 3, 3 to 2, and stopped after it, because they were and not able to build up a consensus on GST, which was to be the next step and be implemented in 3 years. But after 3 years, they also stopped compensating the states. Now the states said that if you really want us to support GST, then give us the credible confidence that you will compensate us if there is a loss in GST but your track record shows that (inaudible), you stopped compensating us when CST was introduced and, therefore, the trust factor was missing. विश्वसनीयता नहीं थी उस समय की सरकार पर और इसलिए अहम् सहमति नहीं बन पाई, consensus could not be built up.

And, we could never have expected to see the light of day in GST but for the relentless efforts of Prime Minister Modi and Finance Minister Mr Jaitley, who actually worked, and I am happy to share this with you, because I was a part of that first meeting, which Prime Minister Modi took on GST, which happened within the first 30 or 40 days of our being sworn in. Because we could understand that it is a good law but we had opposed it while we were in Opposition for not being able to address these concerns of the states, for not being able to address the concern that can a BMW car be taxed at the same rate as a Hawai Chappal, which the poor man wears? Are we really technically prepared with the robust framework in which GST can be implemented, the network that was required to implement GST (Inaudible).

All of these concerns were there before us, but Prime Minister Modi did not get deterred by these concerns. He accepted the challenge, and with his deft handling through the last three years, the Finance Minister Mr Jaitley has been able to achieve that, to my mind, the biggest reform that India has ever seen in our history. And to get 29 states, Union Territories, run by political parties of every (Inaudible), every different ideology to come on one page on this, so that the Congress, the Telugu Desam, the Telangana Rashtra Samithi, the AIADMK, the DMK, the Communists, the Akali Dal, and so much so, even the Aam Aadmi Party and Trinamool Congress, on one page to accept GST, I think is, one of the living testimony to Finance Minster Mr Jaitley’s immense ability to steer the economy, successfully.

And to my mind, today he, as the GST Council completed yesterday the final deliberations and we are now poised for GST coming in on 1st of July, 2017, he has proven himself to be the best Finance Minister India has ever seen in its independent history. And to my mind, the biggest beneficiary of that is going to be the Exporting Community, which always complains of multifarious taxes being lost in the system, which you were never compensated for. I remember going with application to Finance Minster as a part of EEPC, that our drawback grades really don’t reflect the true taxes that we pay. After all, custom duty we may get an exemption or we may pay and get a refund, which also if you recall in the old days what it used to mean? पता नहीं आप मुझे चाय-पानी पिलाएँगे कि नहीं आज, पर आज के चाय-पानी और उस समय के चाय-पानी में ज़मीन आसमान का फरक है | पानी पी लिया है चाय भी शायद आप पिला ही देंगे पर एक अच्छी भारतीय स्वदेशी चाय पिलाना मुझे एंड जो नए रंग के आज कल चाय आनी शुरू हो गयी है वह चाय को भूतकाल में ही रखना |

The country is changing. The county is evolving into an honest economy, the country is becoming corruption-free but we need all of you to be a part of that movement. If the BPT officials, and no comment on you Neeraj, but if the BPT officials are asking you for or troubling you during the custom clearance of your goods, if our custom official is troubling you during custom clearance of your export commodity, please don’t take them (Inaudible), tell us about it, talk about it. I mean let’s all as a nation, be a part of this cleaning up exercise. Very often, we read editorials, we hear many of you speak, Mohanji keeps sending me text messages every second-third day about, you have cleaned up the top, Modi government is doing a good job at the centre! पर नीचे वह पुलिस वाला नहीं बदला, नीचे वह ward office में परेशानी है, custom officer तंग करता है, port authority में कोई तंग करता है, बिजली का linesman तंग करता है, पर आखिर वह सुधार मैं आपकी सहायता के बगैर हम नहीं पाएंगे |

I cannot make a roving comment all linesmen in the electricity department are corrupt; I won’t be able to run that department. I cannot say all government officials, all PSU officials, all are inefficient, how will I run that department, how will the wheels of the economy run? Just like, I do hope you believe and, which is why you have called me, all politicians are not corrupt. And just like I believe that all businessmen are not evading taxes, in the same breath, this country’s biggest strength is its deeply ingrained honesty. We are still a country which is proud of its tradition, of its heritage, of our ability to run our country efficiently and effectively and if we all work together, then to my mind, there will be no difficulty in eliminating corruption in this country.

After all, there was a time, when to get a bank loan, you needed to know somebody in Delhi, you needed to get that important phone call made, so that your loan application can be expedited. Gone are those days, because in the last three years, I can say it, both with pride and with confidence, that no political leader ever has made one phone call from Delhi. I don’t think, even the officers have the, forget capacity or even the possibility or even the guts to make one phone call today from Delhi to get a loan sanctioned, to get a consignment cleared, to sort out a tax case. It will all happen on merit and that merit will prevail only when we all work together. ताली तो दो हाथ से ही बजेगी | नहीं नहीं मैं कोई कवि की तरह ताली बजाने को नहीं बोल रहा हूँ |

So, I have really, only to request all of you, look for that India, that new India, where we can all hold our head high. We are all part of that movement, to make rid India of corruption. Swacchta is not only the swacchta that we are trying to do in our homes and offices, and the streets of Mumbai or India, but swacchta will have to come into our work, when all of us pay our taxes honestly, then really we won’t have to worry about the tax department. When all of us classify our goods correctly, whether for export or for import, we won’t have to worry about the custom officer. When all of us import the right product or export the right product that we are doing, then we won’t have to worry about the inspections that our goods undergo.

I am sure, your point about electricity cost, having a large amount taxes is well taken, I grant you that, but at the same time, we could not built up a consensus among states, may be going forward, we will talk to them again and hope for a better agreement on that issue also, possibly also on petroleum products. But the choice before us, if you recall Prime Ministers Modi’s first engagement after he was announced as the Chairman of our Campaign Committee, and just before he became the Prime Ministerial candidate in 2013, that you have a choice between looking at this glass as half full or half empty. And I do hope that the half full glass is always something better than an empty glass.

And, the way the things were going, the despondency that had set into the nation, the way the economy was floundering, with very high interest rates, very high inflation and exchange rate which was instable, and to bring stability to that exchange rate we had to borrow $35 billion under the exchange (Inaudible) through our facility of 2013. I don’t know how many of you follow the Foreign Currency Market, I think all exporters must be doing that. To cool down the rupee, Governor Rajan had to borrow $35 billion with a government guarantee on a higher interest rate than what we were paying on all our borrowings, just to cool down the falling rupee. Now, all of those days really are no good for any importer or exporter.

I am personally of the school of thought who believes that a falling Indian rupee may sound optically very good for exporters, but actually it’s detrimental to our long term future. China never depreciated the Renminbi and look at their success on exports. They pegged it to the dollar and achieved far greater success, because, thanks to that, they were able to keep their interest rates down, thanks to that, there was certainty in what was happening. The whole world and their uncle and aunt came and invested in China, large manufacturing bases were built up. They got the benefit of economies of scale. They became competitive in the world market leveraging on their low-labour cost.

Certainly, ease of doing business helped, and they became one of the most competitive places to do businesses. They did not depend on the depreciation of the India rupee, as very often, some of our exporter try to suggest. By depreciating the Indian rupee, we are only causing more harm to our export competitiveness. And I say this with authority, as having been an exporter myself. My own experiences, I remember, at least in engineering exports, I can say it with authority that when the rupee depreciates, our buyers are not fools, they are also watching the Indian rupee. They take away that benefit, they reduce our prices and enjoy that benefits themselves. I don’t know how many of us have really enjoyed a depreciating rupee giving us far greater super profits in India.

And, on the contrary, our struggle used to be, to explain to our buyer, and I am saying it with personal experience, the struggle used to be to explain to the buyer that if I export $100 worth of goods to you and the rupee depreciation is 5%, please don’t reduce my price to $95.5. Because I don’t save the whole amount, all my import goods have become more costlier. My Interest cost is going up with the falling rupee. I pay more and more indirect taxes. My cost of labour is also going up in an inflationary situation, with DA going up and all that.

So, please look at it in a broader or a larger perspective and then come up with your demands or recommendations. As far as the refund of GST is concerned, I can assure you that we in government are even more conscious than you, that we want to promote exports. We respect the good work that your industry is doing. I will also talk to Hon’ble Finance Minster about this. We will try to bring in transparency in that, through a mobile dashboard or a website, so that all claims which are made are entered into that dashboard and as the payments are made that payment is also available. With your exporter code number or IEC number, you can login and see that you got your refund in due date or due time or with your GST registration number, we leave that for the experts to do. But we will bring in transparency, just like we have brought in transparency in almost in every aspect of governance that this government is doing. Whether it is post-demonetization information that was sought from the bid depositors, all of that was done in a seamless manner, through a website. Nobody received a single notice. Everybody got the opportunity on the website put in your PAN Number, feed in your source of that cash. After all, you cannot say that I withdrew 2 lakh rupees every month for my expenses for the last, let’s say 5 years, 10 years, but my wife has saving or what you call it – स्त्रीधन – जिसपर बड़ा हल्ला मचता था demonetization के दिनों में स्त्रीधन का क्या होगा, 2 लाख रुपये हर महीने निकालते हो, साल में 24 लाख निकालते हो, 10 साल में 2.5 करोड़ निकाल लिया लेकिन घर में 5 करोड़ स्त्रीधन निकल रहा है | तो after all, हम भी तो थोड़ी बहुत अकल रखते है ना, आपने ही चुनके वहां तक भेजा है |

My wife is here, Seema, she often says that she is smarter than me. I don’t know, whether that is correct nor no because that is something we keep fighting about. Because whether I chose a smart wife or she chose a smart husband, of course, the women is always right.

But the world is changing, India is changing. We have a choice whether we want to be a part of the past or we want to be a part of the new India that is evolving. अब भूतकाल ख़त्म हो गया है, भूत मतलब मैं past की बात कर रहा हूँ, और कोई connotation नहीं ले रहा हूँ | भूतकाल खत्म हो गया है, एक रोशनी भरा सवेरा आप सबके लिए आ गया है और मैं समझता हूँ इस माहौल में credible (Inaudible) suggestions लेके आप जो भी आएँगे पूरी तरीके से हम उसके लिए प्रतिबद्ध रहेंगे, संकल्पित रहेंगे |

आपने quality exports की बात की, excellent idea, excellent suggestion. Let us know which are those items? I know, for example, I think, for large transformers we have this problem that they have to go to Singapore for testing. I have already got a body in Gujarat, which is working to spend some 350 crores, so that that problem also we can resolve. Please! As, collectively, and may be EEPC work out nationally, which are those investments and items that are required, which can help India become self-sustaining in all testing and inspection facilities. And then let us work together in a Public-Private Partnership. हर एक चीज़ सरकार पर मत निर्भर होइये | I think that is the bane of the problem, when we expect government to do everything.  Get government out of our life, we will be far more successful in our work.

In that LED programme, till we had Rs 100 subsidy, was selling 6 lakh bulbs in a year, after I withdrew the subsidy, we are selling 6 lakh bulbs every day. 300 गुना बढ़ गया वह प्रोग्राम, सरकार निकल गयी, सरकार का काम ख़त्म हो गया | आप भी अपने आपको आत्मनिर्भर बनाने की सोचिये | आपने अभी बताया, $65 billion आपका engineering export है और आप रो रहे हो कि एक 5,00-1,000 करोड़ रुपये में testing facility EEPC नहीं लगा सकता है? I don’t know what is your bank balance. कितना है? That’s the problem.

And I will tell you why I say this, मेरे पास Institute of Chartered Accountants जिसका मैं सदस्य हूँ उसका Chairman दो दिन पहले आया और मैंने उसको कहा कि भई पैसा वैसा तो बहुत कमा रहे हो आप देश में 500 kiosks लगाओ, GST Counseling Centres बनाओ | और जब छोटे उद्योगों को, छोटे व्यापारियों को जिसकी turnover 1 करोड़, 2 करोड़, 5 करोड़, वह सीमा आप लोग तय करो, उन सबको free handholding करो, counseling करो लगभग जुलाई-अगस्त तक जिससे सबको सरलता हो जाए और समझने में आसान हो, और आप लोगों को fees नहीं देनी पड़े किसी को | मुफ्त में यह facility आप देश में प्रमुख 500 स्थानों पर establish करो | कल रात को by chance he bumped into me in the flight, यह तीन दिन पहले की बात है | He has promised me कि 200 centre तो वह 24 या 25 तारीख तक कोशिश कर रहे हैं शुरू करने की, मुफ्त में देने के लिए counseling | जब मैंने मुफ्त में कहा तो बोला I will have to talk to my Secretary, ऐसा कुछ उन्होंने कहा and that’s the question I asked him कि आपका bank balance कितना है | And do you want to know bank balance कितना है? Rs 800 crore! आपका नहीं, उनका, आपका उससे ज्यादा ही होना चाहिए | मैंने कहा 800 करोड़ रुपये बैंक में पड़े हैं और तुम hesitate कर रहे हो 20 करोड़ रुपये खर्च करने में? जनता की सेवा करने में?

आप ज़रा उसपर विचार करिए आप, क्या दायित्व सिर्फ सरकार का होगा हर एक चीज़ के लिए? क्या हम भी सब सामूहिक जनभागीदारी कर सकते हैं इस देश के उज्ज्वल भविष्य के लिए? बहुत अच्छी बात है इसको और बढाइये | कई जगह सुनने में आ रहा है कि छोटे लोग चिंतित हैं GST आने के बाद uncertainty की चिंता है, स्वभाविक है जब कोई बहुत बड़ा परिवर्तन आता है, transformation होता है, तो थोड़ी बहुत चिंता भी होती है और थोड़ी बहुत तकलीफ भी होती है | अब वही है half full, half empty, अब वह तकलीफों पर focus करना है या उसका solution निकालना है | और मैं समझता हूँ आप सबकी भी उतनी ही सामूहिक ज़िम्मेदारी है जितनी सरकार की है कि इसको सफल बनाने में हम सब साथ में प्रयत्न करें, इस देश का आर्थिक व्यवस्था, जो पूरा ढांचा है भारत की अर्थव्यवस्था का वह सुधरी है |

We have had good three years, fiscal deficits are under control, inflation has drastically fallen, interest rates have fallen. For exports, I do believe you have concessional interest, but we should encourage more and more of our exporters to raise foreign currency loans. If you are having difficulty on that please flag it off with any one of us. I will set up a meeting with Finance Minister, Banking Secretary, Revenue Secretary, whoever you want. Nirmalaji can take you to any one of them. आपकी ऐसी कोई समस्या operational आती है हम तट पर हैं, जो हम कर सकते हैं हम उसके लिए तैयार हैं | दोनों तरफ से हम पहल करें, दोनों तरफ से देखें कैसे इस सुधरी हुई अर्थव्यवस्था में मिलके we create more jobs, we develop more in the Make-in-India programme, we bring in better technology. We focus on Research and Development, so that India starts leading the world rather than only following the world.

For example, electric vehicles is going to be one big opportunity, which to my mind, is going to be a 100-150 billion export market, for all of us, which is good for the environment, which is good for the economy, which is good for jobs and which will be good for all of us living in cities, to bring down pollution in this country. So, we have a lot ahead of us. Let’s have that self-confidence. Let’s have that commitment, that we can do it. And I have no doubt in my mind that all the award winners of today will be at the forefront of this New India that we are engaged in building. And I have no doubt in my mind, that EEPC, collectively, will support these measures to bring about a robust, strong, honest economy, that India has been waiting for for seven decades.

Thank you very much!

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