There has been a resurgence in protectionist policies in recent years. The success of the self-reliance vision will depend on how well India is able to negotiate terms with countries, especially the US and European nations
By Akhil Bansal
The idea of Atmanirbharta, or self-reliance, was at the heart of prime minister Narendra Modi’s recent address to the nation. There are parallels between PM Modi’s message and Mahatma Gandhi’s concept of a self-reliant India, the bedrock of his Swadeshi philosophy. Self-reliance is woven into the tapestry of India’s journey right from the Swarajya movement. The renewed pursuit of Atmanirbharta sows the seeds for a new course of long-term development, and serves as the pivot on which India can emerge as a hub for manufacturing and investments. In order to achieve this vision, India needs to focus on holistic and sustainable development.
In the 1980s, Deng Xiaoping’s economic reforms were the trigger for China’s emergence as a global powerhouse today. Though successful, the energy-intensive Chinese model has troubling environmental and economic ramifications with significant income inequality, and may not be ideal for India. While there are many important learnings from China and its rise as a global superpower, India must now chart its own course to growth as a market democracy.
With its growth agenda, the government is set to play an important role in creating a conducive environment for business. Keeping in mind the fundamental pillars of this new, post-Covid-19 India that PM Modi highlighted in his speech, it is important that key policy changes are implemented.
Incentivising the establishment of production facilities in the country is critical, not just for assembly, but for raw materials, too. The need of the hour is a calibrated incentive plan, depending on the level of indigenous production. Certain curbs against the import of cheaper produce, from other countries, might be necessary while ensuring that the local produce is cost-competitive and sustainable.
The government should consider moving away from broad-stroke international policies and shift to a country-to-country model. The focus should remain on bilateral trade agreements, which ensure a balance of payments as well as technology-sharing. The government should forge partnership/alliance models with other countries and companies, especially in areas where indigenous capabilities do not exist.
To achieve real self-reliance, the country will also need to incentivise innovation, research and development to keep India at the cutting edge of the industry. These can be achieved either through the setting up of global innovation centres in India or through partnerships between leading Indian research/ academic institutions and their global counterparts. While the seeds of such collaboration already exist in the form of the NASA-ISRO partnership and joint vaccine development efforts for Covid-19, these ties should be enhanced across institutions and fields.
Governance and policy issues will also need attention as India seeks to carry on improving its ‘ease of doing business’ climate. Heavy investment on technology in government procedures and bureaucracy is a long overdue necessity that can’t be overlooked.
Building world-class infrastructure is extremely critical, and this requires huge investments. A strong framework for collaboration (e.g. contracting) and financing such investments needs to be established.
While competitive federalism is required in the long term, ensuring a common playing field, with a more cohesive and consistent policy framework achieved through collaboration, is vital. Clarity and transparency in the policy landscape are also crucial in restoring investor-confidence.
A cultural shift is required in the public sector and bureaucracy to avoid the constant distrust—whether it is towards private organisations or the public at large. While public-private partnerships are a step in the right direction, the success of such partnerships needs to be more widespread.
There has been a resurgence in protectionist policies in recent years. While these policies may carry a certain element of risk, bold and calibrated steps are needed to ensure the vision of the Atmanirbhar Bharat Abhiyan is achieved. The success of these steps shall lie in the effectiveness of collaboration India achieves through its bilateral relations, especially with American and European countries.
There has never been a better time in history to take such bold measures. Externally, there is an ongoing rebalancing of world powers, and India is being looked at as a partner in the current fight against Covid-19. Domestically, India has a strong government at the Centre, a bold leadership and a strong consumption story given its demographic mix.
If bold measures are not taken over the next five to ten years, China might far surpass us and our ability to achieve economic independence will get drastically impacted. Hence, it is critical that, with the vision laid out by the government, we act fast and act together to usher in a stronger, self-reliant and more prosperous nation.
The author is Deputy CEO, KPMG in India
Views are personal