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Elaboratingon the point that it was unwise to view it as all gloom and doom, he referred to the compensating factors that could be expected by next year. For instance, we would have also had a full year of lower direct and indirect taxes, the efforts of discovering newer markets would have started bearing fruit, also the free trade agreement with the European Union would have come into place.
Navigating global export challenges
Conscious of the fact that in general export growth was in any case likely to be a challenge in the coming years not on account of trade restrictions alone but because growth in the developed worldwas going to be difficult. If there is no underlying demand, the export opportunities will be limited, he said.
Also in sync with the fact that finding alternate markets could not happen overnight, he opined, “findingother markets will be possible but not easy because China is also having its own challenges with respect to exports to the US and will be competing for a share in other markets.” Also, not missing the fact oftheir higher ability to finance buyers and extending long lead time for payments apart from offering product and price discounts.
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The chief economic advisor saw lessons for other sectors of the economy in the story of the Indian pharma industry’s response in 1995 following the TRIPS agreement. The Indian pharma took to upping their investments intoresearch and development taking theseup to between 4 and 7 per cent of their turnover.
Ease of being honest
The CEA also pointed to efforts within the government to move on the path to deregulation with a sense of heightened urgency. He described it as the one secret sauce that we have to juice up growth. And it was “not so much about ease of doing business but about ease of being honest.”
In a fun-filled and insightful rapid fire round with Anant Goenka, executive director, The Indian Express Group, the CEAchose land reforms over labour reforms for a higher multiplier effect, albeit he did find both important. To theCEA, the land reform was more about fixed cost of doing business. From a foreign investors’ perspective it was more about tax certainty and tax processes – advance pricing agreements and safe harbour limits coupled with day-to-day interactions and processes. It was more about time taken to resolve issues and about setting time limits and sticking to those.