Policy uncertainty, cost of doing business dent investor confidence, says CII President

Election outcomes shouldn't dictate validity of contracts, says CII president and Tata Steel CEO T.V. Narendran

India’s corporate tax rates may have been cut, but the effective cost of doing business remains high if you factor in the cesses and the mandatory CSR spending norms, Confederation of Indian Industry (CII) president TV Narendran said. The Tata Steel global chief executive and managing director said the sanctity of contracts has also been fraying. “It should not be that somebody has won or lost an election and the validity of contracts then suffers. The Union as well as State governments need to do more to ensure sanctity of contracts and policy certainty to boost investor confidence in India,” he emphasised, while speaking on structural challenges for the country’s manufacturing sector, vaccination programme and the economy in a free-wheeling interview with The Hindu. Edited excerpts: First, there is relief that COVID 2.0 is behind us in some sense. Second, global macro-economic conditions are much more positive than when we came out of the first wave. Most governments across the world are spending a lot of money, revising growth rates upwards at least in the developed world. China has had a V-shaped recovery and is already back to pre-pandemic levels. So there’s a lot more optimism on the global recovery. This time last year, no one thought vaccines would be available so fast. So, in many ways, there are positives. COVID 2.0 was more of a humanitarian issue than an economic issue. COVID 1.0 was a bit more economic, with the humanitarian impact becoming visible as migrant workers started going back. The key point is how will the rural markets behave? Because last year, the rural markets led the recovery in July. The rural markets came back strongly because there was a lot of labour available locally and a good monsoon. This year, maybe three-four weeks back, we were more concerned because the impact of COVID in the rural markets was not so visible as it is for the urban markets. But what we have been hearing from some of our members is it's not as bad as we had feared it would be. If you talk to the tractor manufacturers, their concern is a little bit more on cost pressures rather than demand growth. We ourselves feel that the agriculture sector will grow 3%-3.5%, which is close to last year. I would say ‘cautiously optimistic’ is probably a good way to describe how we feel. But by the time we have the next National Council in July, we'll probably have a little bit more insight from our members.