It is rare to find a commerce minister who is comfortable with the finance minister. It is rarer still to see a finance minister who enjoys his relationship with the commerce minister. The relationship between the two is not exactly of distrust or suspicion.
But there are numerous instances of the commerce minister having fought with the finance minister over the government's economic policy issues and of the finance minister facing difficulties in managing the expectations of the commerce minister.
The finance minister sits in North Block. A road divides his office with that of the Prime Minister. The commerce minister's office is in Udyog Bhavan, situated at least a kilometre or two away from North Block.
The location of these three offices indicates a lot about the ministers' equations and status in the government. It also explains why the relationship between the two ministers is not always very smooth.
The finance minister is obviously the closest to the Prime Minister on all economic policy matters. The commerce minister's office is equidistant from the offices of both the Prime Minister and the finance minister.
But when it comes to taking a final decision even on trade issues, the Prime Minister's Office listens more to the finance minister than the commerce minister. And on issues overseen by the finance ministry, the commerce minister is hardly ever consulted.
Not surprisingly, therefore, commerce ministers have always had an uncomfortable relationship with their ministerial colleagues in North Block.
In the first half of the nineties, Manmohan Singh as finance minister had to contend with two political heavyweights as commerce minister -- P Chidambaram and Pranab Mukherjee.
For Dr Singh, it was a daunting task to manage the expectations of these two politically powerful commerce ministers. Mr Chidambaram did not last long as commerce minister as he quit after about two years.
But Mr Mukherjee, a former finance minister himself, did have some teething troubles before adjusting to the functioning style of Manmohan Singh.Murasoli Maran made no secret of his reservations about Yashwant Sinha's decision to phase out the income-tax exemptions enjoyed by exporters.
Ultimately, he had to submit to the wishes of the finance minister. Maran was also uncomfortable about the sharp reduction in import duties effected by Sinha as finance minister.
Sinha cut import duties because that was how he felt costs could be reduced and the domestic manufacturing sector made more competitive and efficient.
But Maran was uncomfortable and feared that domestic producers of goods would be rendered uncompetitive by cheap imports. He even began preparing a list of sensitive imported items.
Eventually, his fears proved to be unfounded. But that Maran made a forceful plea for a regular monitoring of imports underlined the different constituencies whose needs the two ministers are required to address and why the commerce minister will continue to have problems with the finance minister.
A major area of conflict between the finance minister and the commerce minister centers around the Exim policy. The commerce minister announces the exim policy for a period of five years.
But every year he announces significant amendments and introduces new schemes and initiatives to promote exports. The key elements in many of these schemes are tariff concessions that are offered to exporters or importers.
But the problem has been that commerce ministers have often shown the tendency to announce exim policy schemes involving tariff changes, without getting a proper concurrence of the finance ministry.
This has resulted in delays in implementing policies. For instance, the much-hyped scheme for special economic zones was announced even before all the other economic ministries had given their approval to the changes in relevant rules.
The Manmohan Singh government will be presenting its first Exim Policy later this month. Commerce Minister Kamal Nath is busy holding consultations with exporters and his team of officials to finalise a policy that would promote exports to increasingly competitive world markets.
But like many of his predecessors, the commerce minister seems to be facing problems with the finance ministry on several issues pertaining to the new exim policy.
For instance, the commerce minister is keen on scrapping the use of bank guarantees before a company applies for a licence to import capital goods against export obligation. But it has met with resistance from North Block.
On its part, the finance ministry is keen that export concession schemes that are not compliant with rules laid down by the World Trade Organisation should be phased out.
But the commerce ministry has reservations about the phase-out schedule. The commerce ministry also wants to exempt exporters from the levy of the service tax. But the finance ministry is not readily agreeable.
It now seems that the finance ministry does not approve of many of the proposals being framed by the commerce ministry for inclusion in the exim policy.
It is possible that the new exim policy may still go ahead with announcements of new schemes without receiving the green signal of the finance ministry. That would be unfortunate.Powered by 
