Meet the target of creating 75 mn jobs over the next 5 years

Venu Srinivasan, Chairman & MD, TVS Motors Ltd

'Meet the target of creating 75 mn jobs over the next 5 years.'

What does liberalisation mean for India Inc?

Pre-1991 we were tightly regulated for setting up a plant, increasing capacity, raising money. It was a very tight licence regime.

India was a very high-cost manufacturing country. Post-1991, companies were able to raise money and manufacturers became more competitive. India also became an attractive destination for MNCs.

From services to products, we saw a huge surge in investments in India.

India not only became attractive for investment and creating jobs overseas, but also for domestic companies, and our exports have started growing.

Banking was opened up, insurance opened up in a limited way, so many things happened, which created a new India. Result: In the last 20 years per capita income has grown rapidly, that too in dollars.

How did liberalisation help capital flows?

Not just inflows; outflow has increased too. Capital convertibility was practically brought in. Indian companies started acquiring companies overseas.

Today the Tatas are the largest employers in the United Kingdom. While domestically, we attracted capital and lots of capacity were created. Equally India Inc also was able to grow overseas.

Are you happy with the current state of reforms or is it time for new reforms?

The first 10 years yielded very good results. People developed the confidence that India was a very good environment to operate in.

But now manufacturing reform needs to go to the next stage and it has not happened so far. For the services sector, more financial sector freedom is very very important.

What reforms are needed in the manufacturing sector?

Factory rules need to be changed. There are multiple inspections and licences required -- from pollution control boards to the Factory Act, gratuity, provident fund and others.

Each one has a regulator and an inspector, and unlike China, there is no single window. This is why the sector is not going forward to the next level in India, which can be a place to invest for export.

If my accounts can be audited by a CA, why can't factory inspections be given to professional bodies? Like company secretaries, who are CAs or management accountants, we can have certification done by chartered engineers.

Typically, we have five inspections per month as compared to a factory in Thailand.

Other examples are employees insurance. ESI should be corporatised and should be thrown open to competition.

Factory reforms must take place to meet the target of creating 75 million jobs over the next five years.
How about labour issues? This has been a major challenge for auto companies...

Multiplicity of unions and recognition of unions are two major issues.

Wherever the Union government is involved largely, other than ESI, liberalisation has taken place, but wherever the state governments are involved, nothing has happened.

Which are the other sectors where reforms are needed?

Power, mining and Goods and Services Tax.