As a result of high profile defaults by a few businessmen, the entire business community is viewed with suspicion. This has never happened before, says Khambatta
Restrictions on Letter of Undertaking (LoU) as well as other form of bank loan enforced following the Nirav Modi episode in Punjab National Bank were knee jerk reactions from the Reserve Bank of India (RBI), said Piruz Khambatta, chairman of Confederation of Indian Industries (CII) Western Regional Council.
“As a result of high profile defaults by a few businessmen, the entire business community is viewed with suspision. This has never happened before,” Khambatta, who is also the chairman and managing director of Rasna Private Ltd. He said that this has caused a shortage of liquidity for small businesses, as fresh fund raising has become more difficult. On the other hand large firms are easily raising funds from abroad. “The lending rates have come down but the SMEs are not getting the funds,” he said.
It is in this backdrop that CII will encourage its members to go for corporate governance in next one year. It will educate its members to desist themselves from all forms of corrupt practices.
On the economic development of the country, Khambatta said that economic growth rate of India is higher than other countries but there is case to grow even faster as the effects of demonetization and the teething troubles regarding the roll out of Goods and Services Tax (GST) are a thing of past. He said that the country needs to focus on increasing the exports and reducing import for a better growth rate, for which it is pertinent to improve our physical infrastructure and have a relook at the sops to encourage exports. “The existing incentives for exports are not working and we need to redesign them. The logistics cost to procure a raw material from India is higher than from importing from China. The turnaround time on Chinese ports is drastically lower than ours,” he remarked.
Focus on underdeveloped states
The newly formed body for the western region of CII will focus on states that have relatively lower growth rates. Gujarat, Maharashtra, Madhya Pradesh and Goa form the western region of the business body. During the period 2011-16, Gujarat led the region with a CAGR of 10%, followed by MP with 7.1%, Maharashtra with 6.8% and Goa with 1.4%, according to a CII report. Khambatta informed that CII plans to accelerate growth of Goa and MP betting high on the inherent strengths of the states. “In Goa, we are looking at bringing more cruise liners, remove the bottlenecks in mining and encourage more ship building activity there. In case of MP, we will focus on agro industries,” he said.
Indian companies need to be innovative
Khambatta said that India needs to aggressively focus in real innovation to give additional boost to economic growth. Till now we were following or copying what had happened elsewhere in the world. Now we need to focus on real issue and working on India's strengths in new age manufacturing focusing on Artificial Intelligence, Blockchain, etc.
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