MUMBAI: Finance Minister Nirmala Sitharaman on Saturday signaled new Covid-era-style policy support to cushion the impact of conflict in West Asia, while urging Indian companies to step up investment and replace imports with local manufacturing.At the ET Corporate Excellence Awards, Sitharaman said the government was working on support measures for sectors affected by supply disruptions and rising input costs due to conflict in West Asia.“There is also discussion of support similar to what was provided during Covid under the Emergency Liquidity Credit Guarantee Scheme, which is such for most units that have been affected by raw material supply disruptions, rising prices and insurance risks,” she said.Regarding foreign direct investment, the Foreign Minister acknowledged the recent outflows and some weakness in inflows, arguing that investment decisions are not driven by purely economic indicators but also by “other considerations”, including global and strategic factors, even though India is the fastest growing major economy with stable indicators. Regarding the changes in capital gains tax and securities transaction tax, which some companies have demanded, Sitharaman said that strong inflows were recorded even when the taxes were in effect, and stressed that she “did not say yes or no,” indicating that they are under review.
“We will ensure availability of fertilizers and energy even at the cost of financial pressures.”The Union Finance Minister said the government will prioritize ensuring availability of vital inputs like power and fertilisers, even at the cost of financial pressures, relying on the pandemic rules of the game.“When fertilizer prices rose abroad, we kept buying them at those prices and ensured that there was no disruption in supply. Above all, the price was not passed on to farmers. Farmers continued to pay the same price,” Sitharaman said, pointing to a similar approach if the current crisis intensifies.On energy security, Sitharaman reiterated that India will continue to access crude oil pragmatically to protect domestic needs. “Whatever suits India’s interest will be our top priority. We will import it wherever it is available, wherever it is cheapest and wherever it can be supplied on time to meet our requirements,” she said.The minister stressed that the policy approach will not include trade-offs between growth, inflation and stability.
“We have to work on all three simultaneously, and constantly remain vigilant and alert to changes,” Sethharaman said, pointing to emerging risks including cyber threats to financial systems. At the same time, the Foreign Minister explained that government support must be matched by stronger action from industry, particularly in boosting domestic manufacturing and reducing dependence on imports.
“The Indian domestic market still requires many goods to be manufactured within the country.
The Federal Minister said that every import represents an opportunity for local manufacturing.Viewing import substitution as a business opportunity rather than a political mandate, Sitharaman added: “Why should we import when the industry in India is capable of producing these goods? Don’t you want to produce for Indian consumers? This is a huge market.”The Minister also called for greater flexibility and investment by companies, including in new technologies.