Mr. Jindal, thank you very much for joining us here on the CNBC TV18 25th anniversary. It's great to have you. And what we are discussing tonight, ladies and gentlemen, is whether we are at a breakout moment as far as India's manufacturing sector is concerned. So straight up, Mr. Jindal, we had Uday Kotak here this morning saying that India needs to up its game as far as competitiveness is concerned. We can no longer be protectionist on trade. We need to be far more liberal. How do you respond?
So just before coming here, I heard this comment and I said Uday is not in manufacturing. So I was saying that you know, we are not yet the factory of the world. Let us first become the factory of the world and then we should open up our doors for competition. Let there be no tariffs, nothing. I mean, the United States, even after let's say 100 years and 150 years of developed nation status, even today they have tariffs. Europe is putting tariffs, right? And we are saying that we should open up? Then we will kill our manufacturing. In any case, today our GDP manufacturing GDP is only 17% of our GDP, right? And we must get to 25-30%, what China is. But if we open up and become liberal, then we will kill our industry. You talked about tariffs. Donald Trump says tariffs is the favorite word that he has in the dictionary, and he has promised that he is going to go full throttle as far as tariffs are concerned. What is that going to mean? We don't know the quantum. We don't know what finally will happen. But in the threat and what he did in his previous term, what will it mean? Now, Donald Trump, in my opinion, he is very clear. He is very clear-headed, straightforward, and blunt. But he has a clarity of thought. And he says that for me, America is first. I want to build America. I don't care about the world. For me, America is the world. And therefore, I don't want... I want my industry to grow. I want America to grow. American industry to produce goods. It's not that Chinese should sell to me and then I will consume. I don't want to become only a consuming country. I want to produce and consume. So therefore, I will put tariffs. Yes, tariffs do make you, let's say, lethargic. Let's say it becomes... you become more uncompetitive. But you have to bring down the tariffs to become competitive. But you have to allow the kid to grow up before you start running the race.
So let me throw that argument back to you. You said you have to allow the kid to grow up. So where are we, sir? Haven't we adulted yet as far as Indian manufacturing is concerned?
Not at all, not at all. It's what I said: teenager and pre-teen. Pre-teen. Yeah, we are just kind of four or five years old, really. Absolutely. In manufacturing, yeah. Because, you see, China, if you open up the records and see China in 1990, what kind of protection China had? In 2000, what were their protection levels? And what they are today? Today they are opened up because they became the factory of the world. I wanted to export steel in '98-'99 to China. I was not permitted to do that because China had tariffs. They removed the tariffs. But now today we have zero tariffs on steel. Chinese steel, which is surplus—they are near 60% of their capacity surplus capacity—so it comes via Japan, Korea, Vietnam, Malaysia to India at 0% duty.
So you are saying that there is a case for higher tariffs to be imposed?
I am not saying higher tariffs, but there has to be... the government must have a very clear view of what they want. They want the heavy industries to come up in this country. Because the steel industry, for example—I am just taking steel as an example because I belong to the steel industry—if you don't want the heavy industries to come in India, you want to rely on Chinese steel industry to build the Indian ecosystem, Indian SMEs and MSMEs, I have no problem. I can go somewhere else and invest. I don't have to invest here. But I love this country. I would love to invest here. I have grown here. I have earned my bucks here, right? So I would love to invest here. But the thought that MSMEs and SMEs are more important than the heavy industry—no, if the heavy industry dies, MSMEs and SMEs die. So you have to... you have to...
You're sounding pretty sanguine about growth as well as the future. Not really?
I mean, yeah, but this is fact. Because the steel industry needs huge investment, right? So for making huge investment, you have to make profits. If you can't make profit, then my shareholders will not give me money to invest, right? So then I can build more industry. Today, for example, India needs 20 million tons of steel every year. China needed, let's say, in the year 2000. We need it today. So 20 million means $20 billion of investment every year. Any other industry can afford that investment? We are willing to do that investment. But there are only in every country, there are only four or five players that invest in any industry, right? So $20 billion among four or five players is a huge investment. So we are doing it. But if we don't make money, we can't invest. Okay.
So let's talk about you set... you know, you said if the conditions are not right, you will go elsewhere and invest. I mean, in a manner of speaking, I'm not saying that you are going to do that. But I am talking about, for instance, your own international plants, your own international expansion in markets like the US, for instance. Are we going to see more of that being built out?
Personally, no. As I said, I love India. I love to expand in this country. This is my karma bhoomi. So I want to do it here. But I want the right policies. I want the country to really think about how to develop the heavy industry. You know, number one, the government... For example, we cannot be a country that exports minerals and imports finished products. We cannot be that. There has to be a complete... I have been advocating this policy for a long time, more than 20 years. Please don't export minerals. Please allow Indian industry to consume the minerals, add value, and export the products, right? But we are exporting minerals and importing products. This is a complete no-no. Number one. Okay. Number two, there has to be a level playing field, right? A country like China has huge surplus yearly. 500 million tons? We consume 150 million tons of steel. China exports near 150 million tons of steel. So therefore, there is no way that we can compete with China. I mean, it's not that we are not comparatively efficient in a normal year than the Chinese steel companies do. But the Chinese are all state-owned companies, yeah. And for them, profit is not very important. It's more like a job creation. It's an ego-boosting thing that every province has this steel plant, right? So that's why, because you know, one state says that Shanghai has bigger capacity than Beijing, and Shanxi has bigger capacity than Luzhou, you know, that kind of thing. They have competition, right? Healthy competition. But therefore, they don't care for the profits. But if we don't make profits, then we don't have the state exchequer writing checks for us. Then you don't get money. Yeah.
That is one of the aspects, Mr. Jindal. You know, it's almost a blow hot, blow cold relationship with China, isn't it? I mean, you just talked about all the reasons why we should not do business with China. And through the COVID period, you were very clear: we should not do any business with China. But now you are doing business with China. You have a joint venture for the electric mobility space with a Chinese company. So do you believe that there is a need to be pragmatic on how we engage with China?
No, absolutely. With any country, in fact. Even Pakistan, for that matter, we should be pragmatic. To deal with Pakistan, we should be pragmatic. Yeah, we should not say that no, no, no, nothing doing. So when I said don't... we should not do business with China when Galwan happened, because I was very clear that we cannot deal with an enemy state. Pakistan, for that matter, is an enemy state. But still, if we work properly, you know, with a control mechanism, we should open up and do business. Because with Pakistan, even with Pakistan, okay, because a very poor neighbor will always hurt us. So therefore, we should think. We should have a long-term... but this is not a foreign policy discussion we are having. But my point is that with China, we should, because China has already developed this technology on electric vehicles. Today, 60% of their new car sales are electric and new energy. India, we have 0%. And this is the way forward. We import our fuel for the cars. Petroleum products are imported 85-90%. It's imported. So it's in our interest that we transition ourselves to a technology that is domestic, that is local technology. Local technology is from China, but manufacture in India. Absolutely. Because technology exists in China. We must develop it over time in India, but we must bring the technology and develop the products in India.
