1st tranche of India-US trade deal finalised, will be in force when terms match peers' advantage: Piyush Goyal

Union Commerce and Industry Minister Piyush Goyal said the first tranche of the India-US Bilateral Trade Agreement (BTA) has been finalised and is undergoing legal drafting. He said the agreement would be operationalised once India secures a comparable advantage over its peer countries.

“The US BTA, the 1st tranche, has been finalized,” Goyal said, adding, “It's going through final contours, legal drafting, we hope to be able to finalize that soon and operationalise once we get comparable advantage over our peer countries.”

Shri Ram College of Commerce's (SRCC) Centenary Conclave, Goyal said there is no change in his stand or in his statements of the past few months. SRCC, part of Delhi University, was founded in 1926 and is marking 100 years.

Manufacturing push

Goyal said manufacturing's share of GDP has been falling since the 1950s. Efforts are under way to grow it faster than the overall economy. He said India can look to lift manufacturing growth from 7% to 9%.

He does not think South Korea's Chaebol formula, which relies on large family-run conglomerates, will work in a large country like India.

Tax warning

On inequality, Goyal said the UK recently changed its tax laws and ended up encouraging investors and creators of growth to leave the country. India, he said, must create more and better opportunities and skill its youth.

He said heavy taxes push wealth creators to other destinations, while lower taxes can raise collections, citing the Goods and Services Tax (GST) as an example.

Gold lesson

On ways to curb rent seeking, Goyal said transparent processes, backed by people and businesses, can reduce it. He gave the example of gold imports. The government used to issue licences at a 1% concessional duty, with the aim of giving more people, including 8-9 lakh small jewellers, an edge.

He added that officials would look at total applications and allow importers to bring in gold. Some importers realised they could apply for a large quantity and get a larger quantity cleared. The government had to allow 160 tonnes but received applications for 3,000 tonnes, so the process had to be stalled.

Goyal said the government is paying the price of this honest process, which led to court litigation. He said the government wants all activities to be transparent, with equal opportunity for all.

China's lead

Goyal said China moved away from communist thinking in the 1980s to promote capitalist enterprise. It built large capacities and an economy that delivered consistent growth. India, he said, took only baby steps towards capitalist enterprise in the 1990s.

Turning to the UPA years, he said Congress leader P Chidambaram stated in his first budget speech in 2004 that he had inherited a strong macroeconomy. He said extra-constitutional authorities, such as the National Advisory Council (NAC), interfered and dictated to the government.

He also said an opposition leader tore up a bill passed by the government led by the economist Dr Manmohan Singh. By March 2014, he said, India had become one of the "fragile five" economies, with growth down to 4% and inflation at 8%.