NATIONAL CAPITAL GOODS POLICY : THE RIGHT WAY FORWARD- THE BEGINNINGS OF THE REAL FREEDOM MOVEMENT

 A few days back I got a flash news saying that there is a new policy that is coming up called National Capital Goods Policy. It said that around 30-40 % of the capital expenditure of India is based on Imports. The figure may be a bit under-quoted as my estimates say that the figures would be around 60-70%. Nevertheless a very late but very important realisation by the bureaucrats. My congratulations to them for comprehending  this subtle point.   For an entrepreneur like me this is the first time a very old wound and impediment is being attended. For the first time I feel confident that we are correcting our mistakes.

Now into the details. The net annual tax collection of India is Rs 15 lakh crore.  We import goods worth 5 lakh crore every year.  This 5 lakh Crore import allows 5lakh crore to cross our borders and by  rotation in the country of import-generates taxes for that country. Assuming that every rupee generates one rupee tax in the outside economy which is a norm in a good economy we are creating ONE ECONOMY OF THE SIZE OF INDIA OUTSIDE INDIA WHICH COMPETES WITH INDIA EVERY 3 YEARS.

Every three years we create one India competing with India by our imports.

To put it more simply- when we import goods our capital crosses the shore and reaches a foreign country. Just like a deposit in a bank generates interest for the depositor the money in rotation generates taxes for the economy with which that nation builds roads infrastructure etc. Like when we buy a tooth paste we contribute 15% of the value of the paste as taxes to the government. The tooth paste maker gives salary to his staff who in turn -say- purchases a 2 wheeler - where again government gets 25-30% tax. And So On.. When this capital leaves the shore  the country into which it enters starts getting taxes on the money rotated.

With this perspective let us look at imports due to procurement of Capital Goods ( goods that are procured to set up steel plant power plants roads highways etc).

In every nation there is something called as National Standards. In India we have BIS ( Bureau of Indian Standards) inUK they have EN Standards, in Germany Vds and so on. These Standards specify  the dimensions, materials, and the tests to be conducted for goods to be manufactured. For eg India has a standard for Fire Alarm Control Panels called IS2189. This IS 2189 would specify all the basic requirements for a Fire Alarm Control Panel.

To make sure that the products sold are certified to these Standards, the Standards organisations appoints Test Labs to certify these products. These Labs take up these samples and test them as per the requirements laid down by the standards and certify them.

A Vds ( German) approved product cannot be sold in UK and a LPCB ( UK certification) product cannot be sold in Germany. A product that is both LPCB and Vds cannot be sold in Japan as it requires a Japanese approval to sell in Japan. However take the case of India. In all the government tenders they specify that the product should be UL/LPCB/JS/Vds approved. But you will not find IS approved. This means that if I manufacture a product I cannot sell in India with an approval from a local authority. I have to take the product all the way to America or London to get it approved and then I will be eligible to sell the same in India. ?????!!!

Naturally in all the steel plants power plants highways bridges electrification etc  where tax payers' money is used in the name of growing the nation the national wealth is going into foreign hands.

Small items like MCCBs, Relays, Switchgears, contactors coils etc in government tenders are made to comply to foreign standards and only foreign brands are specified.

It would be interesting to note how this happens.

The foreign manufacturers' managers visit the consultants and explain to them that their product has these fantastic features accompanied by such and such certification from foreign standards. They take the consultants for a trip to their manufacturing facility abroad and show them their plant and many other things( pun intended). Then the consultants are given a specification which is incorporated by them in the tenders. It is as simple as that.

Hope that National Capital Goods policy changes all this and the end customer insists with the consultants to specify goods manufactured in our nation..

Needless to say that policy should be accompanied by a circular to the government purchasers and consultants that only goods carrying the IS label should be allowed in the tenders.

For me this is the starting of a the new real freedom movement. Why ? in my next post

Have a great time.

Prasad

IN DEFENSE OF VIJAY MALLYA

Today we found the headlines screaming about the escape of Vijay Mallya with 7 bags in a first class flight. They said that a person who sqaundered public wealth and cheated the banks has been allowed to escape.
To me it looked a tad different: to me it seemed that a person who had the charisma to employ lakhs of people expand a business from a small family run setup to the level of a global conglomerate that too in a business like liquor which is not an Indian Saraswat Brahmin's forte launch a grand luxurious airline which redifined flying comfort for the masses from a nation which has been hitherto known as a land of snakes and snake charmers vibed with the businessmen and people of elan in a way in which even they felt smaller.
The only flip side is that he belongs to a nation of thankless countrymen. A person who was solely responsible for generating huge amount of foreign exchange from his rather -our world class liqour business which was almost created from scratch.
All the Airlines were making loss. Indian Airlines and Air India Leading from the front followed by Jet Kingfisher and others. The only problem with Kingfisher is that it had a beautiful and successful liquor business which was generating cash to support to back it up.
Let us look at the story this way.

THERE WAS A BEAUTIFUL BUSINESS IN INDIA CALLED UB SPIRITS WHICH WAS DOING VERY WELL AND GROWING EVERYDAY. THE WORLD LIQUOR BARONS AND CORPORATE WERE AT THEIR WITS END LOSING MARKET SHARE. TO TOP IT ALL THIS COMPANY WAS CONTINUOUSLY ACQUIRING EVERY GOOD NICHE SMALL LIQUOR BRAND AND ADDING IT TO THEIR FOLD. THEIR CHAIRMAN MR VIJAY MALLYA HAD CREATED AN AURA AROUND HIMSLEF OF GOOD TIMES. THE BRAND WAS ASSOCIATED WITH GOOD TIMES FLAMBOYANCE FUN AND LUXURY.  SO MUCH SO THAT EVEN THEIR JINGLE YELE LE LE LE LE YO HAD ALMOST BECOME  IN INTERNATIONAL FAVOURITE APPEALING TO EVERY TASTE JUST LIKE THEIR BEER.

THE  WESTERN LIQUOR CORPORATE WANTED TO STOP THE MARCH OF KINGFISHER ANYHOW. THE WESTERN GOVERNMENT WERE LOSING FOREIGN EXCHANGE AND RUPEE WAS APPRECIATING. THEY WANTED ONLY THEIR LIQUOR TO DOMINATE THE MARKET SO THAT THEY GET THE REVENUES. KINGFISHER HAD TO BE STOPPED OR ACQUIRED.  THEY KNEW THAT IT CAN BE ONLY DONE BY THE SUPPORT OF THE TREACHEROUS CORRUPT BUREAUCRATS AND POLITICIANS OF INDIA. THROUGH  THEY GOT THE AIRLINES GROUNDED BY NOT GIVING CREDIT FOR OIL AND PARKING SPACE. THE INDUSTRY WAS ALREADY SUFFERING DUE TO IMPOSITION OF AIRPORT TAX AND PARKING FEES DUE TO THE NEW AIRPORTS.
THEY MADE SURE THAT NONE OF THE FOREIGN AIRLINES WOULD PUMP IN MONEY INTO KINGFISHER. THEY MADE SURE THAT THE BANKS AND GOVERNMENT DO NOT SUPPORT THEM WITH FUNDS. THEY USED THE MEDIA TO SHOW VIJAY MALLYA'S NEGATIVE PICTURE AS A BLOOD SUCKER AND PERSON GIVEN TO ENJOYMENTS NEVER HIGHLIGHTING WHAT GOOD HE DID AND WHAT A CHARISMATIC BUSINESSMAN HE HAS BEEN.
THEY FUNDED THE EMPLOYEES TO AGITATE AND TARNISH. THOSE EMPLOYEES WHO HAD BEEN EMPLOYED DUE TO HIS CHARISMA FOR MORE THAN A DECADE AND AN HALF  WHO BOUGHT FLATS PAID EMI EDUCATED THEIR CHILDREN  WHO ARE NOW SELF DEPENDANT ,, RAISED SLOGANS AGAINST MALLYA.  AFTER DOING ALL THIS THE FORIEGN LIQUOR GIANT WHO HAD TACITLY FUNDED ALL THIS ACQUIRED THE LIQUOR BUSINESS FOR ZILCH AND A BEAUTIFUL NATIONAL ASSET WHICH WAS GENERATING FOREIGN EXCHANGE SWITCHED HANDS.  THE BUREAUCRATS  AND POLITICIANS MADE SURE THAT INDIA GOES BACK TO IT'S OLD WAYS OF CONTAINING FOREIGN EXCHANGE BY DOING ALL SORTS OF TRICKS INSTEAD OF MAKING PRODUCTS THAT WOULD CATCH THE IMAGINATION OF THE WORLD AND GENERATE EXPORT REVENUE.. WE ARE CRYING MAKE IN INDIA MAKE IN INDIA AND WHAT DID WE DO TO THE GREATEST MADE IN INDIA PRODUCT KINGFISHER BEER ..................

MALLYA MUST BE DISGUSTED BECAUSE HE LOST THE WORTH OF ALL HIS TALENT AND CHARISMA : NOT BECAUSE HE WAS NOT CAPABLE , NOT BECASUE HIS TEAM WAS NOT CAPABLE , BUT BECAUSE OF A CORRUPT AND NON COMMITTED GOVERNMENT WHO WOULD PAVE WAY TO AN EASY TAKE OVER TO FILL THEIR PERSONAL COFFERS... NOW THE WHOLE NATION IS CASTIGATING HIM AS A TRAITOR..



FOR ME HE GENERATED TAXES EMPLOYMENT- PAID INTEREST TO BANKS- MADE WORLD CLASS PRODUCTS AND SERVICES, REBRANDED INDIA.

IF MALLYA WAS THE SON OF A MORE GRATEFUL NATION GOD KNOWS HOW MUCH MORE PROSPERITY  HE WOULD HAVE CREATED FOR HIMSELF AND OTHERS

Increase GDP just by faster rotation of funds

One Rupee Business One Rupee Tax With Four Rotations