Here is the full text of Nirmala Sitharaman's interview:

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NEW DELHI: Minister of commerce and industry Nirmala Sitharaman has termed the UPA government's move to impose retrospective tax as "tax terrorism", while emphasising that the Modi government would squarely address the issue to send out the right signals to foreign investors.Speaking to TOI, Sitharaman said, "During the consultations for the preparation of the budget the finance minister has been reminded of this (concerns related to tax disputes)... Many repeated the word 'tax terrorism'. The FM is completely seized of it and he did agree that we have to be fair in tax practices to ensure that we don't give the wrong signals."While expressing her views on a wide range of issues, the minister highlighted concerns about free trade agreements (FTA) – which is said to have adversely affected domestic manufacturing – and allowing FDI in e-commerce, which many view as allowing FDI in retail through the backdoor. She also stressed on renewed trade and business engagement with China and the US.However, her special emphasis was on the deleterious impact of retrospective tax on foreign investor sentiments. She said, "That one step – I am a not even naming it – has done so much damage and therefore we have to be extremely cautious that we don't do any such thing."During Pranab Mukherjee's term as finance minister the government had amended the tax laws retrospectively to slap a Rs 13,000-crore tax demand on Vodafone after the Supreme Court rejected an earlier move. There are several other disputes that the tax department is embroiled in, ranging from Shell to Nokia, against which investors have complained.Possibly to talk down expectations of a miraculous economic recovery, Sitharaman said the economy was in "terrible shape" and the "treasury is completely wiped out", reducing the headroom for the government to boost spending to revive growth.The minister, who is finance minister Arun Jaitley 's deputy in North Block, asserted that the government will try and boost FDI to supplement domestic efforts through a policy that is "nuanced, calibrated and sector-specific".While she spelt out her support for FDI in defence and railways, Sitharaman acknowledged concerns over allowing FDI in business-to-business e-commerce. "This concern (of FDI in e-commerce being FDI in retail through the back door) has been expressed by a lot of people. And that is a very serious concern because it also links up to the concerns which have been expressed about FDI in multi-brand retail. Certainly with both sides heard, we are going to discuss both with the finance ministry to understand actually where the threads lie and only then a call will be taken. At the moment nothing has been decided on it."Is manufacturing in a really bad shape?No doubt. First, that the economy is in a terrible shape is felt by every sector and it is felt right down to the bottom. There is just no second though that the economy is in a state of doldrums. But then there are also high expectations. You have got the mandate when the treasury is completely wiped out of what it should have. The biggest constraint and difficulty and therefore the challenge is because of the treasury — the lack of resources. We are moving forward but we are terribly handicapped for want of resources.Does the lack of resources mean greater role for the private sector?At any point in time it has got to be both the government and the private sector. The prime minister and the finance minister are very clearly saying we will do everything to bring in ease of doing business, whether they are legislative steps, giving the right kind of messages, looking at some reforms, rolling out GST. So, we are not just looking at one set of schemes, we are looking at it comprehensively. Our focus is 360 degrees.Will there be a rethink on multi-brand retail?Multi-brand retail still has a wide implication on the Indian economy. This government is not against FDI in any sector but we have to understand the sector by sector implication of decision on FDI and multi-brand retail has so many self-employed people who without a little bit of helping from the government have survived over centuries. It is just not fair to say that we are opening up because we want cheaper goods, easier access to markets and all that to let these people go out of business. We have no business to do that. First we should empower them to compete internationally. And that is where our government's approach is going to be on FDI nuanced, calibrated and sector specific.What happens to decision already taken, such as Tesco?This is an executive decision. In spite of its own party-led government's decision, for instance, Kerala protesting they ( Congress ) still brought it in. We will have to see how best this is going to work. We will certainly look at it but we are very clear multi-brand retail is a no-go area right now.There is only one case and asking them to go would send a wrong signal...Certainly we are not going on that route. I would not want to elaborate on it but we have to look at it.What about free trade agreements?We have undertaken a complete review of FTAs. Each FTA is being looked into because the perception from various quarters is that FTAs have helped the partner countries and not us. I am not blaming the FTAs per se but it could have just been that we did not leverage to our advantage. We have to look at it, learn from it and very quickly redress the problems otherwise advantages which are naturally available for India are all lost. We have to understand FTAs and wherever necessary whatever steps have to be taken for course correction we will do it.Did tax issues derail SEZs and investment?During the consultations for the preparation of the budget the FM has been reminded of this definitely. Repeatedly, so many of them have said that tax cannot be regressive. Many repeated the word 'tax terrorism'. The FM is completely seized of it and he did agree that we have to be fair in tax practices and ensure that we don't give wrong signals. That one step, I am a not even naming it, has done so much damage and therefore we have to be extremely cautious that we don't any such a thing.Is it possible to do away with retro tax, that one step?Let's see how's it is going to emerge. That is something that we have to understand and handle it because the net impact in the business and the business psyche has been conveyed to the FM several times. Wait and watch because I can't pre-empt what the FM will do.How do you plan to deal with China on trade issue?I would first of all want to remove the thought of fear about China. China is a great opportunity. China has scope for so many things for us. We can draw more tourists and investment from China. Many things China wants to export to us can be produced here, whereby our employment will increase, production for our market will happen but with investments coming in. But I am looking at commerce ministries to engage with China to make sure we are drawing more investments from them. Third, Chinese market has to be opened for us. Many of our manufacturers, many of service providers, many of our projects can go into China for which we need engage with China understand their requirements.How do you plan to resolve the trade disputes with the US?We have ratified the WTO, we have systems in place, we are absolutely conscious of commitment to WTO. We are equally conscious of our national interest and everything that is required for us to stand up and assert our rights, our pharmaceuticals is a classic example. Our courts have also stood by the people of India. So there is no contradiction here. But we have to assert our rights. If the US has any questions or concerns, we are fully willing to engage and convince them about what we are doing. We are not doing anything which is not WTO-compliant. So if they have a grievance they should happily engage with us with the confidence that we are going to address their concerns but as equal partners.Would allowing FDI in B2C e-commerce be seen as allowing FDI in retail through the backdoor?This concern has been expressed by a lot of people who have been engaging with us. And that is a very serious concern because it also links up to the concerns which have been expressed about FDI in multi-brand retail. But certainly with both sides heard we are going to discuss with the finance ministry to understand actually where the threads lie and only then a call will be taken. At the moment nothing has been decided on it.What about defence?Every year you are buying equipment for upgrading with the intention of keeping our defence preparedness high. And this money goes out of the country. It's not an investment. It's gone forever whereas if you had the capability in India the indigenous capability to produce if not everything at least that can be produced at least that money would be an investment, it will be within the country. It will create jobs, it will be an asset and the capacity will be built. So the intention is to first look at indigenous capability. Invest in indigenous capability to produce and ensure that kind of a investing in indigenous capability is not restricted just to the Indian investments but to that extent opening up for FDI. But we are conscious that we are talking about a sector which has security implication and therefore we have to take a call to what level with technology without technology calibrated progress it.What about Railways and construction?A: Again Railways is desperate for investment. It needs money for expansion. It needs money for safety. It needs money for modernisation and for Railways the quantum of investment that you need just India cannot suffice so FDI would be a very good opportunity. But that's an area in which the Railways minister will have to say than we need to speak.