SOURCE: VIDHI BUBNA / FOR MY TAKE / IDRW.ORG.
Prime Minister Narendra Modi,in his Independence Day address to the nation called for an ‘Atmanirbhar’ Bharat, or a self-reliant India. Modi’s ambition is to make India – ‘make for the world’ and to frame the Indian intent to emerge as an alternative to China on the world stage by contributing to the world economy. According to the Indian Prime Minister “How will a country export raw materials, and then import finished products?” The concept of ‘Atmanirbhar’ Bharat was developed by the Narendra Modi government in the aftermath of the COVID 19 pandemic and an economic package of ?21 lakh crores was announced in May to strengthen and contribute to a self-reliant economy.
The recent India-China border tensions have set the impetus for reduced dependence of imports, especially from China and encourage consumption of locally made products. The government has started taking steps toward this by placing curbs on imports including on 101 defence related items as well as restrictions on imports of television.
Specific to China, the government has put investment by the Chinese companies under the government approval route from the earlier automatic route as well as placed curbs on government procurement from Chinese companies. India’s latest set of incentives to entice businesses moving away from China seems to be working with companies from Samsung Electronics Company, to Apple Incs.’ assembly partners showing interest in investing in the South Asian nation. India has also extended similar incentives to pharmaceutical businesses and plans to cover more sectors which may include automobiles, textiles, as well as food processing industries.
While companies have been actively looking to diversify supply chains, it hasn’t yet translated into big gains for India despite the nation, making it cheaper for businesses to open shop. Vietnam remains the most favored destination, followed by Cambodia, Myanmar, Bangladesh and Thailand, according to a recent survey by Standard Chartered Plc. Kaushik Das, Chief Indian Economist at Deutsche Bank in Mumbai has said that there is a reasonable chance for India to gain in terms of incremental investment of supply chain within the country over the medium term. The government expects the programme for electronics alone to lead to $153 billion worth of manufactured goods over the next five years. Bringing an additional investment of $55 Billion over five years adding 0.5% to India’s economic output. This could shift an additional ten percent of global smartphone production to India in five years, most of it from China.
In July the Electronic and Information technology (IT) Minister Ravi Shankar Prasad announced the Prime Minister’s launch of the challenge to encourage Indian application developers and innovators to create an “Atmanirbhar App Ecosystem” that would replace foreign based apps. Up until now, despite being on the receiving end on the economic side India never wanted to project itself as being in direct competition with China, largely because the strategy was to emphasis more on the complementary than the differences. Besides self-reliance, the second strategic message in Modi’s speech was that India is ready to expedite the bringing in on companies willing to invest in India. Like the Prime Minister said, despite the Corona Pandemic – top companies in the world are “turning to India”,Modi in effect was trying to capture the opportunity for India from the growing international anger against China. India has put in place its intent to make all structural changes necessary for companies to work in India – from policy reforms to amending laws.
With a population of over 1.6 billion, India’s market size is a formidable economic asset that cannot be ignored or dismissed by countries around the world. It is well known that the country happens to be the world’s second largest market for mobile phones, the third largest currently for solar power equipment, second largest importer for arms, the largest consumer base for such companies as Facebook, (and until very recently TikTok.) as well as the third largest consumer of oil. China on its part has long exploited access to its markets as a lever to bring other countries to heel. It has done so, recently against Australia and in the past with Philippines, Bolivia and others, systematically discouraging imports from India. The strategy for India is to take the reins and flex its large consumer powerbase. The middle class market with its great buying potential has the capability to give China a run for its money and attract companies to a ‘Make in India’ market which should strategically pay off for the future of the Indian economy.
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