Aatmanirbhar Bharat
During the last three decades of globalization, the protection of domestic industry was considered like a crime. It was being said that free trade is the panacea of all economic problems. The rationale given, was that hindrance to the free trade would make our industries inefficient, as lack of competition will hinder efficiency and would impact competitiveness. During the Corona period there has been a big change in the thinking of policy makers in India and the world. Prime Minister Narendra Modi has said that the biggest lesson the country has learnt in this corona crisis is that we have to become self-reliant.
Prime Minister's call of 'Vocal for Local' (indigenous) has become people's call now. To make our country self reliant, or 'Atmanirbhar', we would need to make requisite efforts. For this, the people’s representatives, technocrats, leaders of industry and trade, social activists; all will have to make concerted efforts. We know that India has been a country of diversities. Every province, every district of our country, and even every village has its own specialty. We know that each district is known for one or more types of skills, agricultural product(s) or one or more industrial clusters. Generally, more than one type of characteristics exists in the same district. In the absence of encouragement and incentives, over the years, districts have been losing their distinct identities with regard to their industries, skills and agriculture produce. Every district of our country produces a variety of excellent agricultural products, but due to lack of appropriate system of price incentives, promotion, storage and marketing, many of these products are facing the danger of extinction. Sometimes, despite having domestic capabilities in the efficient production of these products, the country has to even import them.
On the other hand, so far as manufacturing is concerned, various districts of the country are known for modern and traditional industries. There are places like Ludhiana which is famous for woolen hosiery and bicycle industry, Tirupur for cotton hosiery, Agra for shoe and iron forging, Badouhi for carpets, Banaras and Kanjeevaram for sarees and many others which are world famous. Chinese dumping and neglect of the government, red tape, inspector raj, lack of finance, lack of access to new technology, etc. are some of the reasons that have led to the decline of these clusters.
In the past, due to the obsession towards globalization and the dominance of multinational companies, these industries witnessed a significant decline. Today, when we are talking about self-reliance (Atmanirbhar Bharat), efforts are also needed to be made to preserve and enhance their local products according to their specialization. Along with the efforts of the Central and State Governments towards protection and promotion of local industries, if the people’s representatives, industry and trade leaders, social activists etc. make efforts, then these enterprises will naturally get a new lease of life. Learning lesson from pandemic, if the country revives and promote its manufacturing, which has deteriorated due to perverted policy framework and unfair competition from China, and then it will increase employment and income in the country and improve the standard of living of the people.
Self-reliance will not come overnight
Some people believe that in this era of globalization, we are so much connected with the rest of the world, that our efforts to become self-reliant can prove to be regressive and suicidal. Such people fail to appreciate that resolve to self reliance is not about stopping imports from China or elsewhere altogether, but to gradually reduce dependence on China.
Due to apathy of governments in the past towards dumping of Chinese goods, our industry got destroyed. However, we have to rebuild our industry and we need to ready ourselves to find alternatives. We must not forget that most of the imports from China are those which are either produced or could be produced in the country. These include steel, chemicals, machinery, vehicles, fertilizers, pesticides etc. There are many imports, which do not even require high technology. Such zero technology products can easily be produced in the country in a short span of time. In such a situation, a lot of imports from China can be stopped.
Self reliance is not impossible
Though, it’s true that goal of self reliance is no cake walk and its fraught with many hurdles. However, we can’t say it’s impossible. Several critics try to reject the idea of self reliance on two counts: First they term this approach to be impractical due to huge dependence on other countries, especially China; and argue that this kind of policy may cost heavily due to adverse impact on industries dependent on components and raw material coming from China and/or due to increase in cost, as we will have to opt for costlier alternatives. Second, they argue that this kind of approach to self reliance will push us back to Nehruvian days of protectionism meaning thereby high cost and inefficient industries. This may make the industry uncompetitive. The conclusion they draw with their arguments is that under the circumstances self reliance is impossible without hurting the economy.
However, they fail to appreciate that policy of self-reliance by encouraging production in the country cannot be equated with protectionism. It is of course true that, for rejuvenating our industries or for new industries to flourish, the import duty on goods coming from abroad will have to be increased a bit; to discourage dumping, anti-dumping duties and in some cases safeguard duties may also be needed; standards are also needed to prevent inferior foreign goods, and alongside a host of other non tariff barriers like imposition of reciprocity clause may be needed to be imposed. Those who call these measures as protectionist must understand that US imposes more than 6500 non tariff barriers, China imposes more than 3,500 such barriers, while India imposes nearly 350 such barriers only.
It has to be understood that the protectionism before the new economic policy of 1991, especially during Nehruvian era, led to inefficient industrialization, because during that period, extremely high import duties (100 percent to 600 percent) were being levied in India, which could actually said to be a hindrance to efficiency. The era of high import tariffs has already ended after the WTO came into existence. India is already bound by WTO rules. But there are provisions and flexibilities in the WTO as well, through which we can promote our industries and protect them from unequal competition. Fascination towards unbridled globalization of the last three decades and the obsession of our policy makers towards free trade, have led to extreme lowering down of import tariffs much below the WTO bound rates. Whereas, WTO rules allow India to have an average import duty of up to 40 percent, our average import duty is around 10 percent. Under these provisions, the Government of India increased import duties on some items including electronics, mobile phones, consumer goods, etc. from 10 percent to 20 percent and this helped reducing imports significantly. In the last 2 years between 2017-18 and 2019-20, India's trade deficit with China has come down from $ 63.2 billion to $ 48.6 billion. Apart from anti-dumping duties, countervailing duties, we can also impose non-tariff barriers and encourage Indian industries by implementing standards. Such actions cannot be equated with pre-1991 protectionism. Almost all countries impose tariff and non-tariff barriers for the protection and promotion of their industries, so why can't India do the same. India's unilateral free trade will prove suicidal when other countries are increasing import duties in the name of ‘trade war’.
Therefore, critics have to understand that the continuous decline of industries due to cheap Chinese imports was never in the country's interest. Why a steadily increasing trade deficit does not distract critics, is beyond comprehension. The need of the hour is that efforts should be made to stop imports, primarily with incentives to our industries. And after that, by making products of international standards, we can, not only fulfill the requirements of the country, but also export to foreign countries. It has to be understood that every country is protecting its industries, so we cannot equate measures adopted under the WTO provisions and framework, with protectionism. In fact, this effort of self-reliance by the country can play an important role in raising income and employment in the country.
Efforts at home turf
Prime Minister in his Independence Day speech, has said that self reliance is not a word, it’s a resolve. To fulfill the national resolve, efforts will have to be made at all levels. PM said that country can no longer remain an exporter of raw materials and importer of finished goods. To make the country capable to produce for the world, we need to make all out efforts. Apart from curbing unequal competition from imports, by way of raising tariffs, anti dumping and countervailing duties, non tariff measures including standards; we need to make efforts to create an eco system to develop domestic industry. We understand that in the post independence period our economic and industrial development has been badly affected by excessive regulations,
Bureaucratic hurdles, red-tape, inspector raj, socialist mindset of conducting economic activities and strangulation of our entrepreneurs. In the post new economic policy period, though the rhetoric was of lifting regulations, red tape, giving encouragement to private enterprise, government policy remained concentrated to only import liberalization, allowing MNCs in the name of FDI and amending domestic laws to only facilitate foreigners. Obsession for free trade and import liberalization (especially from China) resulted in destroying our industries, rather than making our industry efficient. FDI also didn’t help in transfer of new technology. Rather in the name of technology outflow of foreign exchange increased manifold by way of royalty and technical fees.
Country has witnessed that how our small industry and even individuals came forward and made face masks and PPE kits when they were in short supply; China was trying to profiteer from our helplessness. Similarly many labs came forward to address the problem of shortage of testing facilities and today we not only have sufficient facility of testing COVID19, cost of testing has also come down drastically. When country and the world was witnessing a shortage of ventilators, one Company Skanray Technologies, Mysuru, which was producing 5000 ventilators in a month, took the hill task of helping companies to fulfill the requirements of the country, by generously sharing the design of their ventilator, with other manufacturers and made it possible to manufacture 60,000 ventilators in the country in a short span of two months; and now country is exporting ventilators in huge quantity and is fulfilling the world's demand. Hard work of our farmers instills confidence in the countrymen that we will never face shortage of food items. During Corona period, we see many examples of how, many employers continued with payment to their workers despite lock down. We need to understand that; lot of damage has been caused by the blind obsession towards globalisation, in the yesteryears, impacting domestic production and employment and has led to excessive dependence on other countries, especially China.
Time has now come to give encouragement to domestic efforts to increase production indigenously. These efforts are becoming visible. For increasing production of active pharmaceutical ingredients (APIs), a production linked incentives (PLI) package of more than rupees 12 thousand crores has been rolled out. For electronics and mobile phones PLI package of more than rupees 42 thousand crores has been given. Nation has witnessed, how our industry both big and small, responded to the Corona challenge by producing PPE kits, N95 masks, ventilators and many other equipments. We supplied HCQ tablets to the world. Pharma industry is already geared to produce Corona vaccine, once it gets regulatory green signal.
Under these circumstances, government’s budgetary push is important but not sufficient. We need to change the mindset of the bureaucracy, regulatory bodies, government’s machinery, judiciary and media. We need to get rid of rules and regulations designed to foster socialist system. We need to allow our young entrepreneurs (start ups) to freely work to flourish their new ideas to bring in new technology and generate wealth. Modi government’s push to start ups, stand up needs to be taken to the next level. Dream of ‘Make in India’ has to be realized by encouraging Indian youth entrepreneurs. We know that India missed the bus of first, second and third industrial revolutions. It’s a time for fourth industrial revolution, which is digital revolution. Given huge size of Indian economy and huge market opportunities, global giants are trying to exploit the potentials in their favour. Many people think that we are undergoing a threat of digital colonisation also. We need to seize this opportunity and make our country Atmanirbhar digitally as well. Corona, though came as a pandemic, a threat and a challenge; our country has resolved to convert the same into an opportunity. Let’s all work together towards the same and take our country out of foreign economic dominance, unemployment, poverty, deprivation and stigma of underdevelopment.
