ASSOCHAM asks industry to hold price line, denies cartelisation

New Delhi, Jun 11 -- Newly-elected ASSOCHAM President Sajjan Jindal today called upon the industry to hold on to its price line in the face of severe cost pressure and asked the government to scarp Press Note-1 to send positive signals to foreign investors.
''These are difficult times for industry as inflationary pressures costs are rising and there is a tendency to hike prices of industrial goods. An important item on the agenda of ASSOCHAM is to dialogue with various industry segments to keep a cap on price increases,'' Mr Jindal said while addressing his first press conference after taking over as the chamber President.
Mr Jindal said ASSOCHAM will work hand in hand with the government to fight inflationary pressures. Mr Jindal, who is Vice-Chairman and Managing Director JSW Steel Ltd, denied that there was cartelisation in the steel and cement industry, an allegation made by top government functionares. He said had it been so then domestic prices of these commodities would have been in excess of global prices, while the fact is that they are much less. He said some leading manufacturers of steel had recently met Finance Minister P Chidambaram to argue out their case that there was no cartelisation in the cement and steel sectors.
Mr Jindal said Press Note-1 was an Act which was introduced in the past to protect the interests of domestic players, who run the risk of direct competition with their foreign joint venture partners, better equipped with technology and capital.Press Note-1 entails a no-objection certificate from a domestic player to a foreign partner if he wants to set up another unit in the same line of production. ''Since there has been a paradigm shift in the Indian industry, its perspective and purpose of regulation needs to change. The Indian industry is today matured and expanding fast in foreign turf, moving away from the protectionist approach. There is, therefore, no needfor such a law,'' Mr Jindal said. He said there were at least 50 foreign players facing rough weather on account of Press Note 1 adding that the law countervails the government endeavours to liberalise the economy and its approach towards globalisation. It is a stumbling block in the wayof promoting Foreign Direct Investments, he said.
Mr Jindal made out a case for enlarging the Public Distribution System to bring more commodities under its fold, such as pulses and some new food items.He said the chamber will impress upon the government to ban export of more sensitive items, especially those relating to food.This will be over and above the measures the government has already taken by way restricting export of non-basmati rice and wheat. Regardng Press Note 1, Mr Jindal said seven years back ASSOCHAM had suggested three years cooling off period to give domestic players adequate time to consolidate. Mr Jindal, however, sought continuation of 'Press Note 5' and 'Press Note 9' as their stipulations better serve the interests of the country in their current form. However, the government needs to review the situation from time to time and keep amending laws which prevent foreign companies from investing in India.
Mr Jindal said rising global crude prices were due to cartelisation by a handful of OPEC nations, which have fully regulated the crude oil production and taken the rest of the world for a ''ride.''It was, therefore, necessary that all countries formulate a joint strategy to put pressure on the OPEC for increasing crude production so that the rising prices of the product are contained and subsequently moderated.
To a question relating to GDP for the current fiscal, Mr Jindal said as the agriculture sector was expected to perform better because of good rains, India’s GDP would be close to nine per cent in 2008-09. ''As a matter of fact, if manufacturing does better and can come out of the adverse impact of high input costs and higher inflation rate, GDP growth rate might go beyond nine per cent,'' he said.
Talking about the steel sector, Mr Jindal opined that India’s mineral resources, including iron ore, should be used only if there is value addition. ''It is an irony that 85 per cent of the total iron ore exported from India goes to China and in turn is imported back to India. If mineral exports are not discouraged, a situation may arise when investments committed by the lead global steel players for India might not materialise,'' he said.
Talking about ASSOCHAM's search for new markets, the tycoon said the chamber would explore possibilities of establishing business linkages between India and Latin American countries.Latin America, particularly countries like Chile, Brazil, and Venezuela, are still virgin areas for India Inc, he said. Mr Jindal said ASSOCHAM in cooperation with the Ministries of External Affairs and Commerce and Industry would be developing a mechanism to enhance economic activities three-fold with Latin American countries in the next two years.