Giving his expert comments on the full year Budget presented by the Finance Minister todaym, Ravi Shankar Prasad, Minister of Telecom giving his said tweaking of duty structure would surely boost manufacturing of electronic products in India. "In fact, we have alraedy received proposals worth Rs 21,000 cr for electronic manufacturing, and Rs 6000 crore has already been approved," he said The Finance Minister in his full year Budget 2015-16 today proposed to educe the rates of basic customs duty on certain inputs, raw materials, intermediates and components (in all 22 items) so as to minimise the impact of duty inversion and reduce the manufacturing cost in several sectors. Would this move see tablets and smartphones now manufactured in India now? Answering a query on the government mulling the possibility of BSNL- MTNL merger, Prasad said more than the merger, currently he is more focused on revivng the health of these two comapnies which were profit making till 2005-2006. However, he declined to speculate on the spectrum auction but said they expected bidding to be very competitive. Below is the transcript of Ravi Shankar Prasad’s interview with Shereen Bhan on CNBC-TV18. Q: You have approved electronic clusters, you have corrected even more the inverted duty anomalies that existed, not just what the last Budget did but more so in this Budget as well. Do you feel confident that we are finally going to see tablets, smartphones being manufactured in India? A: I can tell you that till now proportions were Rs 21,000 crore in the field of electronic manufacturing has already been received and we have approved about Rs 6000 crore plus. Not only electronic goods in the field of IT, take the case of defence electronics, medical electronics. Today 60 percent of defence manufacturing is electronics. You may recall that we have also segregated medical electronics from the general pharma canvas. All these are going to be promoted and encouraged in a very big way and what is a matter of great encouragement for me personally that I have been talking to a lot of chief ministers all over the country and all of have become very excited. They understand the enormous potential of having electronic clusters. Not only one, they want two, three; that is very good. This is just the government of India exemptions or encouragements and the states will come with their own encouragements. Coupled with the fact that they are going to have heavy kitties because of the 14th Finance Commission recommendations; it is win-win for all. Q: To move away from Telecom and also talk about the IT and the ITeS sector because the government has recommended certain things in the Budget. There is of course a Rs 1,000 crore startup business in technology driven areas fund that the Finance Minister has decided to set up. They both have decided to reduce the withholding tax rate in payment royalties and technical services fee to help the IT, ITES sector. What is the kind of growth that you now envisage as far as this sector is concerned which really in a sense has been the golden goose, both in terms of export revenues as well as job creation? A: You are right but unfortunately IT has been more in the service sector. Now, IT products are coming in a big way including a lot of IT startups They have been meeting me, they had met the Finance Minister many times, they wanted incentives; that incentive is here today and you may recall cabinet about a couple of months ago approved the establishment of an electronic development fund to the tune of Rs 10,000 crore where government of India funding will join with Angel Funds for innovation for more incubation and today’s announcement also today. Therefore in duty structure with electronic development fund, with today’s declaration of further incentives; all this is going only to promote IT products in a very massive way both in terms of innovation, also in terms of safeguarding of intellectual property of the creators and other incentives. Therefore India is a happening place in the field of electronics and IT. Q: The government has also articulated for the very first time that on the disinvestment front it is looking at strategic disinvestment. I know you have been mulling the possibility of a merger between MTNL and BSNL, are we to assume or understand that perhaps in the future from a strategic disinvestment point of view either of those two companies could be on the list? A: I don’t completely discount the merger but as of now my main focus is to revising the health of these two companies. I can tell you on your channel, you have been following this sector very closely, the way these two public sector undertakings have been ill-treated in the last seven years is something to be seen to be believed. Both of these companies were in profit by the year 2005-2006, thousands and thousands of crore. What happened in the subsequent years that hey have come under such a critical state? Something which I can openly tell you today that every attempt was made that they are not allowed to expand. Q: Given where things are currently today you said you are considering a merger but could a strategic divestment also be considered? A: I haven’t said I am considering merger. I only said it is an option. As of now my firm focus is to first improve their health, make them more productive – MTNL and BSNL both. I am very happy in the 7th phase BSNL is going to make an investment of Rs 4000 crore by itself. Let me first restore their health. Q: Let me finally end by asking you and I know you won't comment specifically on the auction proceeds that you are likely to accrue even though there is talk about between Rs 80000-100000 crore. The Budget has budgeted in Rs 42865 crore from communication receipts this includes spectrum and FM airwaves etc. Would it be too ambitious to expect anything close to Rs 80000 crore form the spectrum auctions? A: When spectrum auction is going to start from next week, you want me to speculate? I don’t want to make any comment except to say that we have made available the maximum quantity of spectrum and one thing I can tell you the government till now has earned the highest in terms of earnest money deposit, highest ever in the history. The total business climate is quite good, I expect to have a very good competitive bidding for this spectrum auction. Q: The government has also articulated for the very first time that on the disinvestment front it is looking at strategic disinvestment. I know you have been mulling the possibility of a merger between MTNL and BSNL, are we to assume or understand that perhaps in the future from a strategic disinvestment point of view either of those two companies could be on the list? A: I don’t completely discount the merger but as of now my main focus is to revising the health of these two companies. I can tell you on your channel, you have been following this sector very closely, the way these two public sector undertakings have been ill-treated in the last seven years is something to be seen to be believed. Both of these companies were in profit by the year 2005-2006, thousands and thousands of crore. What happened in the subsequent years that hey have come under such a critical state? Something which I can openly tell you today that every attempt was made that they are not allowed to expand. Q: Given where things are currently today you said you are considering a merger but could a strategic divestment also be considered? A: I haven’t said I am considering merger. I only said it is an option. As of now my firm focus is to first improve their health, make them more productive – MTNL and BSNL both. I am very happy in the 7th phase BSNL is going to make an investment of Rs 4000 crore by itself. Let me first restore their health. Q: Let me finally end by asking you and I know you won't comment specifically on the auction proceeds that you are likely to accrue even though there is talk about between Rs 80000-100000 crore. The Budget has budgeted in Rs 42865 crore from communication receipts this includes spectrum and FM airwaves etc. Would it be too ambitious to expect anything close to Rs 80000 crore form the spectrum auctions? A: When spectrum auction is going to start from next week, you want me to speculate? I don’t want to make any comment except to say that we have made available the maximum quantity of spectrum and one thing I can tell you the government till now has earned the highest in terms of earnest money deposit, highest ever in the history. The total business climate is quite good; I expect to have a very good competitive bidding for this spectrum auction.
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