Around for generations I think in history, and with successful implementation of GST, in which I think all of us have a stake, can become the turning point in the Indian economy where we expand our markets, expand our horizon, expand the possibilities of a better future for millions and millions of Indians. In that sense, I would like to congratulate each and every one of you for the new law that we have voted actually. It’s been a law passed by consensus, states across the country, across political affiliations have all come together to make this happen. And, in that sense, that’s the hallmark of good governance that while politics is there, you have politics during elections. Post-elections, the strength of Indian democracy comes from the fact that we can all get together, work together to make things happen, and today was one more success story in this journey where a broad consensus could be made amongst different political ideologies, different political ways of thinking, working, to come to a policy which I believe we are all in agreement that it is good for the country.
I am delighted that Network18 has chosen to organize the Global Natural Resources Conclave, more so because the natural resources of a country define its future. Very often when we talk about GDP, when we talk about what constitutes national wealth, we fail to realize the important role that minerals have while calculating national wealth, national prosperity. In some sense, whatever is below the ground in terms of the mineral wealth or for that matter even the soil on which agricultural produce is grown, the produce that comes on the ground, it could be as simple as forest cover in a country, because agricultural wealth is truly value added product. Human labour is another product that adds to national wealth. At one earlier interaction, somebody had corrected me that the animal wealth of the country also creates wealth, and it’s only when you put all of them together working in tandem, working to create value to bring prosperity to the people engaged in these various activities that a country can prosper.
India is blessed. We have a large number of minerals in the country. I believe at last count, we have mining activity in about 88 minerals totaling to about an output of $40 billion without considering petroleum products. Now, on the one hand, this may sound like a good figure, it may sound like a significant output. But to my mind, it’s certainly not the true potential of India. There’s a lot more we can do. There’s huge opportunity out there. And if one looks at the 7 decades of India’s independence, I think there have been a lot of lost opportunities when it came to using the natural resources that this country has been blessed with to its full effect.
Since I also hold the charge of Coal, and today I am facing the stress of not being able to sell the amount of coal that we are producing. As many of you may be aware we have actually regulated the output of coal, the production of coal in the last 12 months for lack of adequate avenues to consume that coal. And one of the principal causes of that is that in earlier years we never imagined that India could be a coal-surplus country. We had almost given up on our ability to mine the amount of coal that the country needs. In that process, over the last 10 or 15 years, we landed up setting up large amounts of thermal coal-based power plants which are designed to consume only imported coal; coal with much less fly ash, coal which doesn’t have the kind of impurities that our Indian coal has. And because of that, the country even today continues to import thermal coal on the one hand, and on the other hand we are stressed with large amounts of coal at the pithead lying in stock, waiting to be mined, but we are unable to mine it for lack of adequate market.
Fortunately, those days I hope are behind us when we would plan in that feeling of helplessness to depend on imported products. I have a piece of good news. Only about 10 days back, the Power Minister of Tamil Nadu met me. That’s a state which was planning to have a ultra-mega power project based on imported coal, for the last several years the process was on. And despite several interactions that I have had in the last 3 years, they were unwilling to compromise and, for whatever reasons they wanted to focus on imported coal. I am delighted that 10 days ago, the Minister has come and handed me a letter, saying that they would like to change the plans and would now like to set up that plant based on domestic coal, looking at the easy availability of coal and the large amounts of coal that we are domestically able to produce in the country today.
And the same goes, sector after sector when I assess the natural resources of this country. In fact, another very very ridiculous situation that I inherited, and I am told this has been going on for several years before this government came into power, was the situation where India produces alumina in fair measure, which could be a raw material for growing aluminium needs for this country. But we choose to export the raw material alumina rather than process it in the country, add value, add jobs, create wealth, create products, which can go to serve the people of India. And instead of that, we continue to depend on large amounts of imports both of alumina and aluminium products, and even more so, downstream aluminium products.
And, ladies and gentlemen, you will appreciate that a country which could produce alumina, instead of adding value is still dependent on imports, and the imports don’t stop just at alumina, they don’t stop just at primary aluminium, they go right up to the downstream finished products. So you are losing jobs at every end of the value chain, not only losing jobs in the primary production of aluminium but in the further processing. And, by the way, when you process aluminium into downstream products you actually create far more significant number of jobs, particularly, when a lot of that activity happens in the small scale and medium scale or smaller units across the country.
But I am at pain to try and make this system understand that it’s important to check this kind of wrong practices, support manufacturing domestically, encourage increased production of the alumina mineral, reduce aluminium in India, produce downstream products in India, be end-to-end self-reliant. Very often, the argument goes that it’s easier to import goods when they come from some countries and there are many countries which export their excess production to India at ridiculously low prices. Very often they subsidize and give export subsidies when value added products come to India. In fact, in aluminium, I don’t know how many of you are aware, a neighbouring country, which is one of the largest exporters of downstream products to India in aluminium, actually puts an export duty if primary aluminium was to be exported out of that country to stop that primary aluminium from getting exported, to encourage downstream manufacturing which means jobs for their people. But on the finished downstream products, they give a production subsidy, which actually makes the Indian market completely skewed. It encourages India to import end products, finished goods, rather than even importing the primary products. And then there is this argument made out often, but the people are benefiting from cheaper imported finished products rather than manufacturing it in-house. Maybe for economies of scale, maybe because this is their surplus capacity, they find it very economically viable or prudent to export it to other countries, even at throw away prices.
But I don’t know whether the people of India understand and realize the dangers, the lurking dangers in such a situation. The danger that we would not be able to create our own domestic industry, gradually, we would lose our competitive edge, first in the downstream or the finished product industry becoming more and more largely dependent on imports, at some stage later on even in the manufacturing of primary aluminium and be reduced to a raw material exporting country dependent on finished products on the rest of the world. And I don’t know if one realizes that once it is known to the world that India is totally dependent on somebody else for its needs then God knows what the price of that product could be tomorrow. Where is the assurance of this low value imports in future years once there is no competitive local industry in that product.
And, it’s very important and I am delighted that Network18 and CII have chosen to focus on this very important subject that while India wishes to be a part of the global network when it comes to exploration of mineral wealth, when it comes to freight rate, at the same time, we will have to realize that some amount of self-sufficiency and dependence on domestic sources is always good for the nation’s security in the future, for the nation’s own needs in the future and to keep the product pricing in check in the longer run. And all countries in the world do this. I remember when we put the Minimum Import Price on steel products, the United States within two days after that imposed a 270% import duty on cheap and indiscriminate imports of steel products in that country.
In fact, the time is ripe for India to aggressively go for more and more exploration of our natural wealth, our national resources. It’s time we invested heavily in the exploration activity. In fact, the figure that I got was that India only spends 0.4% of the world spending on exploration of minerals in India. I think that’s a very very dangerous situation. We are trying to change that. In fact, recently we have given out a 100 areas for exploration, some to the government companies; some are being bid out to private companies. The idea being that once we have a fair idea or a fair estimate of the natural wealth in those mines, we will have the ability to run a transparent auction process and give licenses to people to exploit that, to mine the mineral from these areas, and would have a fair idea what is the mineral wealth in each of these mining blocks so that that value determined out of a fair and transparent process – (a) ensures that there’s no discrimination, ensures that there’s no illegality, ensures that there is no corruption on the one hand, and, (b) the value that is received by state governments, mind you all of this value goes straight to the state government, helps the state governments run their programmes, particularly, their programmes for the welfare of the poor, the welfare of the deprived and marginalized sections of society, helps the state governments run programmes for a better future for the youth of our country, for the women of our country. And in that sense, probably, India is the first country which has separated exploration from exploitation of …….
There was a lot of criticism. There was a lot of resistance initially when we proposed this. I think gradually, the world is coming to terms and understanding the deep thinking that has gone behind this. In fact, we recently had some interactions with some African countries who were delighted at the prospect of what we have done where we separately give out a contract for exploration; pay the value as a contractor to the exploration company. After all, there is no rocket science in exploration. If at all there is a science or an art, or a combination of both, it is at best in the interpretation of the exploration results. And that we can leave to everybody, we can give out all the findings of exploration and let the people, the bidders for the mining licenses do their own inference, bid as per their own inference on what kind of value they can take out of that mine.
But in the process, we will be able to actually get the true value of this mineral, serve the people of India. And my party, the Bhartiya Janta Party, which is founded on the ideology of Pandit Deen Dayal Upadhyay, whose birth centenary we are celebrating this year, believes in what Pandit Deen Dayal Upadhyay had said more than 50 years ago that the nation’s natural resources or the wealth of the nation should first go to serve the person at the bottom of the pyramid. It is our duty that the national wealth is first used for the welfare of the poorest of the poor so that we can create a more inclusive society; create a society which works for a better future for 1.2 billion people, which gives everybody a chance for a brighter tomorrow. And, in that sense, our natural resource development in the days and years to come is going to be a very very important element of the economic development of the country.
A friend had once told me, that if India were to only focus on expanding the mineral wealth of this country and putting that into the service of the motherland, that itself could create millions of jobs, that itself could create that enabling framework which would help industrialization in the length and breadth of the country, that could add huge amount of jobs, particularly, in the eastern parts of India which have remained deprived, which have remained laggards in the development, economic growth of this country. And, as honorable Prime Minister often says, unless the eastern part of India progresses, keeps pace with the rest of the nation, the country cannot progress.
And I think we are blessed that states like Jharkhand, Chhattisgarh, Bengal, Madhya Pradesh, largely the eastern belt of India, is blessed with large amounts of natural resources. We are making a very very focused and concerted effort to get these resources off the ground. We will be looking to the support of all stakeholders in this sector in helping us expand our exploration activities much faster. In fact, you will be amazed that even the aerial mapping of our total land area has not been done so far. So we have, from the total 34 lakh sq. kms. or 3.4 million sq. kms of landmass of India, we have determined about 800,000 sq. kms. where there is an Obvious Geological Potential, the OGP areas, and have initiated the process. I think either today or tomorrow, the aerial mapping was going to start and over the next 2-2.5 years we hope to get the entire 800,000 sq. kms. of India’s Obvious Geological Potential areas mapped aerially to get a fair fix on the particular locations which need to be further explored. We are going to give out contracts for exploration. I would urge companies from around the world also to look at these contracts. You will get paid for whatever you spend on exploration and you will also have a potential upside if the mineral is found out of your efforts to explore that piece of land. There is a significant upside being offered along with these contracts. And then once we have the, I don’t know, G2, G3, whatever level of exploration in hand, we will put that data, all of that data in public domain and invite entrepreneurs and companies from India and across the world to be a part of this growth story of India.
I am sure the natural resource wealth of this country which we hope will go to serve the people of India has huge potential. At one point, I was estimating that the GDP of India comprises about 2.4% of mineral wealth. The effort is, which includes, of course, coal, which includes all the other minerals, the petroleum products, all of that, can we look at seeing whether we can double that and what would be a fair timetable or a fair timeframe in which we can double this potential.
I would urge the participants of this conference to reflect on it, to give us more ideas. We are open to new thoughts, new suggestions, ways and means by which we can do this entire process faster, more effectively, more efficiently and expand the frontiers of mining in India so that the next generation that comes in will see a far more developed India, will see an India ready to serve the world with products made in India, the Indian mineral wealth working to add jobs in India, Indian mineral wealth helping us in our efforts to make in India, and all of these efforts put together will comprehensively, just like the GST Bill that has been cleared today finally in all respects, help India accelerate its development process, work towards the better future for all Indians, across the length and breadth of India.
I invite all of you to be a part of this growth story in India. India is open for business. Please be a part of that story.
Thank you very much.
April 6, 2017 Speaking at India-Uk Energy for Growth Partnership, 2017, New Delhi