Amitabh Kant, who recently took over as secretary in the Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce and Industry, cautions against any attempt at reversing the existing foreign direct investment (FDI) policy in the multi-brand retail segment. He tells Nayanima Basu the FDI limit in defence should be increased to 74-100 per cent from 26 per cent. Edited excerpts:

Though the government has liberalised the FDI regime in several sectors, nothing seems to have kicked off significantly, especially in multi-brand retail. On the other hand, the Bharatiya Janata Party (BJP) has made it clear it will not allow FDI in retail. Are there any chances of it being reversed?

The FDI policy in multi-brand has been cleared through a detailed deliberation. Governments come and go but the country needs to move forward. There has to be consistency in the policy. Multi-brand retail needs to be seen from the perspective of creation of jobs. We need to make it easier for the investor to enter India. It is a very young policy. It needs to be given some time. We have to promote and market it and sort the challenges for investors. Reversal of the policy will have an adverse impact.

The BJP prime ministerial candidate, Narendra Modi, recently said in an interview that if the party comes to power, it will review the FDI policy in all sectors...

Reviewing is not a problem. But whichever government comes in has to realise this country needs manufacturing. It has to realise that if the country has to achieve and maintain 9-10 per cent annual growth rates, like China, then manufacturing has to be given a massive thrust, which in turn will lead to creation of millions of jobs.

What about FDI liberalisation in certain key sectors such as defence, crucial for growth of high-end manufacturing. Last week, DIPP released a compendium on FDI where norms were not relaxed for institutional investors in defence companies.

We need to open the defence sector. We are going to relax the FDI policy for the defence sector. DIPP will prepare a paper on this as soon as the new government comes in. The (FDI) cap needs to be increased to 74 per cent, with 49 per cent under the automatic route. In fact, in high-cutting edge technology areas, even 100 per cent has to be allowed. Defence is the driver of critical manufacturing, innovation and new technology and this sector can be a major driver of job creation as well.

What about FDI in railways, real estate and e-commerce which got stuck because of the Election Commission's intervention?

We are going to push and get them floated as soon as the elections are over. We are keen to give a go-ahead on all of these, including defence. In e-commerce, it is inevitable. We are all prepared.

FDI inflows have plummeted 36 per cent in FY13, year-on-year. This year, although the final numbers are yet to come, the picture looks grim. In April-January, it has reached $18.74 billion, down two per cent from $19.10 billion in the same period a year ago.

Let us move beyond the numbers. FDI is a function of the economy, a function of growth in the economy, of your ease of doing business. FDI cannot be looked at in isolation. Almost 90 per cent of the FDI that is coming to India is through the automatic route, while 10 per cent is through the FIPB (Foreign Investment and Promotion Board) route. I believe it is important that we create an environment where the ease of doing business improves radically.

What you are saying is nothing new. What is it that you will do differently?

I will make sure that states are difficult to deal with follow and practise what some of the best performing states are doing in the ease of doing business. Then, India's position will go up by 89 ranks in the World Bank index.

You are saying FDI inflows are plummeting because India does not have ease in doing business?

Yes, of course. It is because of this that manufacturing here is not taking place the way it should be. My first and foremost challenge as DIPP secretary will be to get manufacturing back on track. India cannot grow at high rates without growth in manufacturing. We cannot create jobs without it. For this, the ministry has to step out and work with the states in partnership. Every state, irrespective of which government runs it, wants to grow, wants development and wants jobs.