India should not take the path of rupee devaluation to improve its export prospects, but look at enhancing the quality of its offerings for global conpetitiveness, Mahesh Gupta, President, PHDCCI, has said.

The strength of rupee has to be maintained and devaluing it is not the answer to the export slowdown faced in the last several months, Gupta told BusinessLine in an interview, his first after assuming charge at the helm of industry chamber.

Gupta emphasised that India has to fight the global battle on the strength of quality of its products/offerings and not on the weakness of its currency.

"We should not cut down our currency to such a low that people don't have confidence in you. We don't want our currency to devalue to such a level that people who have invested in India lose their hope," Gupta said.

Gupta's remarks are significant as it came at a time when the country's exports have been contracting for eleven straight months and there is clamour from export community for currency adjustments to maintain export competitiveness.

The PHDCCI President made it clear that he was not making a case for RBI to support the rupee, but only emphasising that the rupee needs to find its own level based on the market situation.

For industry, Gupta's advice is that they would do well to improve the quality to improve their competitiveness of their offerings in the global markets. This would be a better thing to do than reduce the prices to gain market share, he noted.

Demand worries

Gupta said that the industry's main concern now was about the lack of demand and not so much about the cost of capital.

"Industry is looking for demand and Government has to do something to help prop up demand," he said, adding that there are several ways to increase demand.

For instance, the Government could give a boost to the real estate sector by increasing the tax deduction for home loans of individuals to Rs 5 lakh from Rs 1.5 lakh now, he said.

"Whatever income-tax collections that Government will lose would be offset by increased economic activity and demand for steel, cement etc. You lose X on one side, you get 2X on other side. The only problem is our government is divided into so many departments that it is difficult for it to look at one big picture," he said.

Gupta said there are several learnings for India from the recent recovery of the US economy and how the US Government helped improve demand by supporting consumers.

GST disappointment

Gupta said the industry was disappointed over the current logjam in implementation of goods and services tax (GST).

"Obviously we are disappointed. Trade has been demanding for this reform. If it is not happening, then it is a disappointment. Let's hope it happens from revised target date of June 1 next year", he said.

Ease of doing business

Gupta said there was more road to travel on ease of doing business. The Modi-Government should tread the path of labour reforms and make laws that would enable industry to gain the right to employ or right to terminate depending on demand conditions in the economy.

"We don't want anything free. However, we want an atmosphere where we can compete with the people around the world. What laws exists around the world, we should be given the same laws. For make in India, you give us the same platform as those available abroad," Gupta said.

srivats.kr@thehindu.co.in

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