Focus on infra& ease of biz: Tata Steel MD
What are you expecting for the manufacturing sector in Budget 2021?
We have lost a couple of years because of the pandemic but we expect things to get better this year and next year and go back to the normal growth levels that we saw in pre-pandemic days. So, the investment cycle will come back. The last couple of years saw everyone deleveraging but as demand and margins come back, we will get back the investment cycle as well. That is what I expect for manufacturing. Many of the government’s initiatives have encouraged manufacturing in India, for India and I think that is important. When manufacturing investments go up, the whole ecosystem comes up. We have seen that in the auto industry over the last 20-30 years. It is an ecosystem which includes some world class auto component manufacturers. I expect that to happen in other areas of manufacturing.
There is expectation of a super rich Covid surcharge. But there is also the expectation of bringing infrastructure back. Give me your top two or three Budget recommendations which will get the private sector to get back to increasing capex which will have a domino effect and lead to job creation in manufacturing and services?
It is important for the government to invest in infrastructure. It is extremely important for two reasons; one, it drives demand for many products, including steel or cement or many other products that we manufacture in India.
Secondly, investment in infrastructure creates activity far away from urban centres in rural areas. So, it is not just about urban infrastructure. Rural infrastructure and construction has always been one of the biggest vehicles for employment. So there is a great opportunity for money to flow from the government to people through the construction sector and create demand for many products.
The second thing that infrastructure does is it addresses a lot of factors which undermine our competitiveness outside the factory gates. Industry should be asked to be competitive inside the factory gates. Both the state and the central governments should work in competitiveness outside the factory gates and building infrastructure is one way to drive that. So in many ways, infrastructure to me is the number one as far as my wish list is concerned.
Secondly, continue to work on the ease of doing business. The government has been doing a lot of work on it because cost of money is high in India and the cost of time is high and the longer we take for clearances, the longer we take to acquire land, the longer we take to build factories, it eats into the margins and costs. Ultimately, the investment cycle will come back to the private sector not only when demand grows but also as profitability improves.