Even as China is trying to boost its exports and perk up its slowing economy by piggybacking on the recently devalued yuan, Department of Industrial Policy and Promotion (DIPP) secretary Amitabh Kant has said India should be watchful of instances of dumping from that country with “huge over-capacities”. Kant, one of the architects of the Make In India (MII) campaign meant to spur India’s manufacturing, said India must protect its core industries from a possible surge of cheap items from China. In an interview to Arun S of FE, he said China should invest in the MII initiative. He disagreed with RBI governor Raghuram Rajan’s suggestion that MII should largely be for catering to local demand. Stating that the MII initiative has an export thrust, he said it is about “making in India for the world”. Excerpts:
What is your assessment of the troubles faced by the Chinese economy and its impact on India?
The Chinese economy has huge overcapacities, particularly in core sectors. China is seeing a major slowdown. It was an export-led economy but its exports have slowed down. It has to find alternative markets. Their currency is devalued. Chinese companies will have to find markets such as India to offload production. However, India must protect its core industries. India must resort to using measures such as safeguard duty, anti-dumping duty and (better) standards. The Indian industry will also have to play a role in doing proper research and informing the government on instances of dumping.
Won’t such measures affect user industries that may be benefiting from cheaper imports?
There are challenges, but we have to find the right balance. It is important to take a long-term perspective. If you allow your main industries, such as steel, to be killed (by not taking action against dumping), when they (Chinese exporters) increase prices at a later stage, the same downstream industries (in India) that are benefiting now, will suffer severely. So we need to define and protect our core industries, and make them efficient.
What is your view on the opinion of some experts that perhaps this is not a conducive time for the MII initiative, given the excess capacity in India and in other emerging markets such as China, as well as due to constraints faced by India Inc in doing business and getting crucial inputs?
The question contradicts the ground reality. Since the MII launch, FDI inflow into India is up by 48% when FDI across the world has fallen by 16%. Indirect tax collection grew 37.6% (April-July) and (July) manufacturing PMI was at a six-month high. IIP has shown a positive trend. Monsoon is better than expected. We have seen major investments, including from Foxconn, Xiaomi, JCB, IKEA, Boeing, GE, Daimler and Ford as a consequence of the initiative. India is an oasis of growth amid a barren economic landscape. We are on the right path. We just need to be optimistic and accelerate our growth.
Raghuram Rajan had warned against choosing the path of export-led growth, saying “it won’t be as easy as it was for the Asian economies who took that path before us”. What is your view on his ‘Make for India’ statement, especially now that exports are shrinking due to poor external demand?
I have great respect for the governor. He is a fine economist. But nobody manufactures only for the domestic market. Daimler has put up a plant in Chennai with an investment of Rs 5,000 crore. They have looked at the domestic market but are using their production to export across the world. Volvo is exporting buses to Europe from India. Hyundai, which came in to cater to the Indian market, is exporting to 123 countries. India’s share in global merchandise exports is just 1.7%. India should treat this slowdown in global trade and its poor export performance as a crisis and turn it into an opportunity to enhance its share in the global market. India must produce to global size and scale and connect to global markets. India must realise that if it doesn’t continue to export, it will perish. Export and manufacturing are closely linked. If exports don’t grow, manufacturing won’t grow. We must push for exports so manufacturing grows in the long term, or else it will have repercussions. Therefore the policy cannot be ‘Make In India’ or ‘Make For India’. We have to make in India for the world.