The recent BRICS Summit in Ufa, Russia talked of economic cooperation between the member nations. Omkar Kanwar, chairman of the Indian chapter of the newly constituted BRICS Business Council and Chairman, Apollo Tyres tellsSubhayan Chakraborty that the chapter has finalised areas of cooperation with other member countries, and allays fears that China might hijack the agenda of the grouping. Edited excerpts:
Has the BRICS Business Council, India identified areas of interests in terms of sectors and products that could be traded with each of these countries?
We have identified areas and sectors where we aim to promote cooperation in India and outside with businesses from other BRICS nations. Also, we have developed areas where we can ramp up exports to each of the BRICS countries. In terms of cooperation, with regard to China, we see a lot of interest in partnerships in sectors like infrastructure and railways. We are keen on developing synergies in areas like defence, aviation, pharmaceuticals and advanced manufacturing with Russia. With Brazil, there is a lot of interest in agro-processing and renewables. Mining and metals have emerged as priority areas for South Africa. These are indicative and not exhaustive. Federation of Indian Chambers of Commerce and Industry (Ficci), which provides the technical secretariat for the BRICS Business Council in India, is actively engaged with companies having business interests in BRICS markets. A series of engagements are also planned in future.
The combined output of BRICS is equivalent to that of the US. Does it not make sense to have a kind of economic integration in BRICS as ASEAN has or the future TPP or RCEP will have?
The economic weight of BRICS countries at the global level is increasing. Today, they account for nearly 20 per cent of global gross domestic product (GDP), 18 per cent of the global trade and nearly 21 per cent of the global foreign direct investment (FDI) inflows. However, our economic engagement level is below potential. Intra-BRICS trade and investment flows do not reflect the potential on offer. The need for greater market and economic integration is obvious. At the recently concluded BRICS Summit at Ufa, Russia, our governments have agreed on ‘The Strategy for BRICS Economic Partnership’ which provides for initiatives that would boost trade, financial integration and infrastructure connectivity among the BRICS countries.
China, whose economy is double that of the other four nations, dominates BRICS. Do you think it will hijack the economic interests of the grouping?
Certainly not. Even as the economic size of member states of the BRICS grouping varies, this partnership is unique in the sense that we work as equals and give due consideration to the proposals and priorities of all constituents. For example, in the BRICS Business Council, we work on consensus and all suggestions and recommendations must have the approval of all the Chairs. We have already submitted two annual reports to our respective governments and our partnership is a good example of how collaborative work can yield benefits for all.
The Modi government has embarked on Make in India. China is already a manufacturing powerhouse. Will it allow India to become one?
Each of the BRICS countries has tremendous strength in different areas. Brazil is an agricultural powerhouse with strengths in commodities. South Africa is home to huge mineral reserves. India has strengths in the service sector and is fast emerging as knowledge-led economy. Russia holds one of the largest reserves of oil and gas in the world. With such diverse strength areas of strength, we can support each other and take part in each other’s growth and development.
The Make in India programme is an opportunity for all other countries to come and partake in India’s growth story. We are actively seeking export-oriented FDI, which is appreciated by the other constituents. Several Chinese companies have visited India to evaluate manufacturing opportunities after reading about it in the BRICS portal.
Don’t you think $100 billion planned by BRICS as a pool to help the countries tide over dollar liquidity crunch is too small an amount, in case another global financial crisis hits?
The BRICS Contingent Reserve Arrangement (CRA) is a landmark initiative as it proposes to provide short-term liquidity support to the members to help mitigate any exigencies that may arise on the external/balance of payments front. The BRICS CRA is expected to serve the interests of our economies as it will boost access to additional foreign exchange reserves, provide mutual support and further strengthen financial stability. It would also contribute to strengthening the global financial safety net and complement existing international arrangements (from IMF) as an additional line of defence. Given that it is an important supplementary resource pool, I think the initial amount proposed is good.
Will the two banks promoted by BRICS force World Bank and IMF to give greater say to emerging economies, which US is consistently blocking?
One of the major agenda items of the grouping is to reform the global governance architecture which is yet to reflect the changing global picture where emerging economies are playing a larger role. BRICS countries would like the decision-making process at multi-lateral institutions such as the World Bank and IMF to reflect this. Whether the establishment of the New Development Bank (NDB) will hasten this process of change is something only time will tell.
The Society of Indian Automobile Industry (SIAM) expects subdued rural sentiments to impact sales growth in the automobile industry in near term. In fact, overall sales grew at just 1.5 per cent in the first quarter of the financial year. How do you see the performance of your company in the current financial year?
Overall, demand has been subdued. However, the monsoons – along with governmental actions on MSP – are slowly bringing the rural demand back. As the government steps up its initiatives on the infrastructure front, we will start witnessing positive sentiments on the commercial vehicle segment with a cascading effect on other segments. But it will take another quarter benefits to percolate down and I hope sales will go north by the third quarter of the current financial year.
The demand for Apollo’s truck-bus radials from both, the OEMs and the replacement market, is good. This increased demand for truck-bus radials, which is expected to grow further, has led us to expand our truck-bus radial capacity in Chennai from 6,000 to 9,000 tyres per day.