Prime Minister (PM) Narendra Modi, on May 12, said, “Today it is the need of the hour that India should play a big role in the global supply chains”. With global supply chains disrupted by the coronavirus disease (Covid-19) pandemic, India can and must turn this crisis into an opportunity. A close reading of the PM’s speech revealed his vision for an aatma nirbhar Bharat (self-reliant India). It is about making India self-confident and self-reliant to take global competition head on. A passion for quality and excellence, achieving cost competitiveness through size and scale to penetrate global markets are the mantras that we need to follow to make India truly aatma nirbhar.
Champion companies like Jio in telephony, Tatas in Steel, Mahindra in automobiles, Vedanta in metals and mining, ITC Limited in the fast-moving consumer goods sector, Amul in the dairy sector, among others, are making a name for themselves on both domestic and global stages. These brands, while gaining significant franchises across the world, are also creating enormous value for India. The nation needs to transform our local champions into global ones. Brands such as ITC and Amul have the processing capabilities and market linkages to serve the world, benefiting farmers in the process. ITC has invested in cutting-edge research and development to anchor domestic agri-value chains. The Amul success story bears no repetition. In automobiles, brands such as Tata, Mahindra, Hero and Bajaj are internationally recognised. FabIndia in garments and Forest Essentials in wellness and cosmetics are other examples. India must create a policy environment that enables local brands to thrive on the global stage.
Many countries have enabled the creation of global giants, and we must learn from them. Japan’s auto companies such as Toyota and Honda have dominated the world. South Korea has created technology giants such as Samsung and LG. China has enabled the creation of giants in the electronics, toys, apparel and solar energy sectors. The Japanese economic miracle saw a war-ravaged country transform into a global leader. South Korea’s per capita income was $158 in 1960, compared to $82 in India and $89 in China. Its per capita income in 2018 was $31,362. China and India had similar levels of per capita income in 1990. By 2018, China’s per capita incomes accelerated to $9,770, compared to $2,010 for India. These countries nurtured domestic industry, focused on cost competitiveness, quality, size, scale and adoption of cutting edge technologies to enable global expansion.
The government must facilitate the creation of an aatma nirbhar Bharat. The first avenue is to enable economies of scale in Indis’s manufacturing. For this, action will be required at the state level. Cross-subsidisation of energy, making it cheaper for consumers at the expense of industry, needs to go. We need to provide industries with a regular and cheap supply of power to boost their competitiveness, along with the creation of plug-and-play facilities.
The second avenue is land. States must identify and develop large tracts of land and provide them with infrastructure. States must also ease the process of labour laws. Uttar Pradesh and Madhya Pradesh have phased out older labour laws. Other labour-sending states must do the same, while taking care of the concerns of workers. Easing the regulatory environment will ensure that we attract both domestic and foreign capital to our industrial hubs.
Related to all of this is urbanisation. Self-sufficiency in job creation and domestic demand will be driven by urbanisation. Urban innovation, decentralisation and municipal finance will serve as great tools to ensure that we implement the PM’s vision. Decentralisation will ensure that cities are able to govern themselves without depending on the state and central governments excessively. Next, we must connect our urban and industrial hubs through efficient infrastructure.
The Centre must continue its push in elevating infrastructure to world-class standards. Timely land acquisition, environment clearances and release of funds must be ensured so that projects are completed on time. The ministry of road transport and highways has created a portal “Bhoomi Rashi” to fast-track the land acquisition process. All other government departments should adopt this model.
Next, the government must drive efficiencies in the logistics sector. India’s port turnaround time is around 60 hours; China’s 20 hours and Korea’s 12 hours. So there is room for improvement. Digitisation of ports, moving processes to an online system will reduce compliance costs. Port collaborative decision-making must be implemented at the earliest. The development of 200 minor ports, through public-private partnerships, must be pursued.
The government’s role is to create an enabling environment for large-scale manufacturing and sourcing. The private sector must also work to develop flexible and resilient supply chains. They must achieve cost competitiveness through frugal innovation, technology adoption and leadership, along with a focus on process efficiencies. The PM emphasised that we must raise the quality of products. Therefore, the adoption of global quality standards is imperative.
The reforms in agriculture are being hailed as a 1991 moment for the sector. Commercial coal mining and putting out more than 500 mines for bidding will see our dependency on imports of minerals reduce. Reforms in the civil service and the judiciary are needed to reduce regulatory burdens. India must create an ecosystem encouraging innovation and the development of new technologies. Reforms in apprenticeship and education, along with expanding public investments in human capital are required so that our workforce is prepared to take the challenges posed by global competition head-on.
Aatma Nirbhar Bharat is not anti-globalisation. It is about making India self-confident and self-reliant to take on global competition. It is about driving India’s socioeconomic transformation.
Amitabh Kant is chief executive officer, NITI Aayog
The views expressed are personal
May 27, 2020