“Every citizen of this country has resolved to turn this crisis into an opportunity. We have to make this a major turning point for this nation. What is that turning point? A self-reliant India,” – PM Modi
When Prime Minister Narendra Modi instilled the seed of a self-sufficient and self-reliant India with an announcement of a $265 billion stimulus package, called the “Atma Nirbhar Bharat Abhiyan” (Self-Reliant India Scheme) and revived the ‘Made in India’ movement, amounting to around 10 percent of Indian GDP—one of the largest stimulus packages to date by any country, especially an emerging economy like India, in response to the effects of COVID-19, India charted out her journey to a more self-reliant future.
However, the raised eyebrows spur a dilemma- will it take off, cripple or meet a dead end?
The coronavirus pandemic brought headache to the already coping Indian Economy.
The United Nations Industrial Development Organization (UNIDO) survey brought up the picture of COVID-19’s impact on the manufacturing industry of the Indian Economy – at a complete standstill.
The gross domestic product rose only by 3.1 percent in the fourth quarter of the financial year 2020 (January to March) — the lowest quarterly GDP growth since the fourth quarter of the financial year 2009 (by India’s Central Statistics Office data).
India’s response to COVID-19 was appraised globally and criticised locally due to its inadequacies concerned with the poor and migrant workers and pandemic-hit businesses.
The ‘Self-reliant India’ move promised a way for progressive reforms and the growth of the country towards a more prosperous future. PM addressed “India’s self-reliance will be based on five pillars — economy, infrastructure, technology-driven system, vibrant demography and demand.”
Applauding the “Atma Nirbhar Bharat Abhiyan”, Indian Commerce and Industry Minister Piyush Goyal asserted that India did not want to be “dependent or at least not overly dependent on the rest of the world.”
And that the country is confident of its ability to “produce quality products…in a cost-competitive manner, that [it could] compete with anybody in the world…even given some of the disadvantages that [India] faces.”
The stress was laid upon the fact to become vocal for the local products and make them global.
Under this campaign, a special economic package has been released by the government, which will benefit various segments including cottage industry, Micro, Small and Medium Enterprises (MSMEs), labourers, middle class, and industries, among others.
Also, to prove the determination of a self-reliant India, Land, Labour, Liquidity and Laws have all been emphasized in this package.
|Overall Stimulus provided by Aatma Nirbhar Bharat Package|
|Sn No.||Item||Rs crore||US$ billion|
(Businesses including MSMEs)
(including migrant and farmers)
|4||Tranche 4 and 5
(New Horizon of Growth)
|5||Earlier Measures including PMGKP||1,92,800||27.35|
|6||RBI Measures (Actual)||8,01,603||113.72|
A self-reliant India with a ‘re-packaging’?
Days after PM Modi’s announcement, Finance Minister Nirmala Sitharaman released details of the economic relief package in a five-part announcement that spread over five days.
The package announcement was considered to be a new avatar of the measures announced by the Reserve Bank of India in March 2020! Some also claimed that the scheme is a summary of all the major initiatives taken by the Modi government since 2014-from Make in India, Digital India to Skill India, Mudra Loans to Startup India & Stand-up India, etc.
The economic relief package attracted criticism for being a ‘leaking plan’ which failed to support the falling GDP and investments done for creating employment opportunities rather than providing direct compensation to the adversely affected people.
It might sound good ideologically, the idea of going local, however, was considered to be a restatement of the Swadeshi ideal of the Swadeshi Jagran Manch, promoted by Rashtriya Swayamsevak Sangh, rather than a new formulation.
Will the five pillars of ‘Atma Nirbhar Bharat’, enumerated by Prime Minister Modi as economy, infrastructure, technology, vibrant demography and demand, be able to hold up India’s collapsing economic structure?
How self-reliant are we?
Sectors heavily dependent on imports
- Electronics Industry – Imports most of the primary and critical components used to make them, including printed circuit boards (PCBs). Around 88 per cent of the components used by the mobile handsets industry are imported from countries like China, according to the Confederation of Indian Industry. Also, Electrical equipment such as smartphones and computers.
- Medical Industry – Over 60 per cent of the country’s medical devices are imported as well. Medical devices like ventilators also rely on imports of several crucial components like solenoid valves and pressure sensors.
- Solar Power Industry – Imports cells and modules
- India’s dyes and dyestuff industry– Heavily dependent on imports of several raw materials, while speciality chemicals for textiles like denim
Sectors partially dependent on imports
- Pharmaceutical industry – Although India’s pharmaceutical industry is capable of making finished formulations, and also has domestic manufacturers of several key ingredients used to make them. Yet, the industry imports some key ingredients for antibiotics and vitamins currently not manufactured in India. CII reports says that India imported around Rs 249 billion worth of key ingredients, including fermentation-based ingredients, in FY19, which accounted for approximately 40 per cent of the overall domestic consumption. India is currently encouraging its domestic pharmaceutical players to manufacture fermentation-based APIs. However, this may take a few years.
- Electric vehicles industry- Imports chemicals used to make cathodes and battery cells on a large scale.
- Auto Industry- Imports various components
We are left with a question – Is there any sector that stands self-reliant, have minimal dependence on imports or have the capacity to immediately scale up production here?
The only one- India’s textile industry too, faces stiff competition from China on the global front.
India holds the capacity to manufacture products including hot water bottles, mercury thermometers, hypodermic needles, wheelchairs and patient monitoring display units.
However, the preference of manufacturers to import and market the items has halted the production of some of the items that were earlier produced in India.
Why these industries import?
- Insufficient large, stable sources of clean water and electricity
- Large Investments
- Higher costs in inputs such as electricity and logistics
- high costs and low availability of land and infrastructure
We need to make our industries efficient and innovative while strengthening their infrastructure.
How can India become self-reliant?
The government has identified 12 sectors, including auto components, textiles, industrial machinery and furniture, where focus would be given to make India a self-reliant country and a global supplier.
Commerce and Industry Minister Piyush Goyal said, “There are several sectors that have been identified in which India’s competitive and comparative advantage over the other countries is seen.
We have identified 12 sectors in which not only will India be ‘Aatmanirbhar’ (self-reliant) but can also lead the global supply chain.”
The sectors include, food processing; organic farming; iron; aluminium and copper; agrochemicals; electronics; industrial machinery; furniture; leather and shoes; auto parts; textiles; and coveralls, masks, sanitisers and ventilators. Alongside, the potential is also seen in agrochemicals, pharma and APIs (active pharma ingredients) sectors.
Piyush Goyal also added, “organic farming holds huge demand and if farmers adopt this and increase the production of crops like maize and corn, it can help in food security as well as making ethanol, which can be used to blend with oil, to cut India’s oil import bill. On iron ore, he said the industry can look at significantly increasing steel production from 100 million tonnes to 300 million tonnes.”
“Now, we want that India’s capital goods industry should stand again and we should import only those machines whose technology we do not have. We are not stopping imports…we want to be self-reliant.
“We have studied these sectors, discussed with industry…which can make India self-reliant and a global power… In these sectors, we have competitive and comparative advantage… India can become a global production centre,” Goyal added.
Role of MSME (micro, small and medium enterprise) sector in India’s journey
The MSME sector holds a significant role in turning India’s vision of self-reliance into a reality. India needs to strengthen its local industries’ positions on the global map.
As per Ashim Sharma, Partner and Group Head, NRI Consulting & Solutions, “As is oft-quoted, every crisis brings to the fore an opportunity; the current one has created an urgent need to focus on the MSME sector, which was facing neglect over the last couple of years.”
In a big push to MSME sector, the Indian government has revised the MSME definition so that maximum MSMEs can be covered under the government benefits, provided access to collateral-free automatic loans to small businesses and MSMEs, and global tenders of up to 200 crores have been disallowed in the government procurement, besides that several other policy moves/reforms related to Ease of Doing Business, market access, debt finance, and liquidity have been rolled out too.
In key sectors of the economy like coal, minerals, defence, aviation, space, and atomic energy several long demanded policy reforms have been introduced.
Some of the notable initiatives launched under Aatmanirbhar Bharat (Self-Reliant India) package are new public sector enterprise policy, the introduction of commercial licensing in the coal sector, enhancement in the FDI limit in defence sector (from 49% to 74%), and opening up of private investment in space activities, which includes enabling private players to work in collaboration with the department of space in specific projects.
Refreshing the Agriculture Sector
Settlement of the PM Fasal Bima scheme is also in full swing. Private insurance giants like Future Generali India Insurance corroborate the government’s claims.
The group alone has settled claims worth Rs 276 crore in the first two months of the lockdown.
Rs 10,000 crore scheme for the formulation of Micro Food Enterprises (MFEs), Rs 20,000 crore for fishermen through the Pradhan Mantri Matsya Sampada Yojana (PMMSY), Rs 1 lakh crore for an Agri Infrastructure Fund and Rs 15,000 crore for setting up an Animal Husbandry Infrastructure Development Fund were given to the Indian Agriculture sector.
The first measures announced by the Union government after the countrywide lockdown was the first instalment of the PM-Kisan Samman Nidhi payments to farmers for the new fiscal.
The scheme puts Rs 2,000 into the bank accounts of 8.7 crore small and marginal farmers. Simultaneously, wages under the MGNREGS scheme were raised from Rs 182 to Rs 202 per day.
The way forward
- India might miss the shot on Large-scale concerted endeavours, but she holds self-reliant capabilities in electric and fuel cell vehicles, electricity storage systems, solar cells and modules, aircraft including UAVs, AI, robotics and automation, biotech/pharma and others are well within reach.
- The country needs to ramp up its state-funded R&D done by PSUs and research institutions and universities and also supporting the Private sector delivery-oriented R&D.
- Focus on education and skill development is the need of the hour to make India’s vision of ‘self-reliance’ a reality. The country also needs to develop a more vibrant self-employed sector and entrepreneurial potential
- A technology-driven “Atmanirbhar Bharat” relies heavily on digitizing India, with an emphasis on health and education technologies. As a part of this scheme, the government aims to implement the National Digital Health Blueprint under the National Digital Health Mission
- A technology-driven robust healthcare system
- Blending the potential of public and private sectors and encouraging them to work together with a common national interest
India needs to build a bridge between robust localisation and inevitable globalisation complementary to one another. We, all at once, cannot become world-leaders by becoming self-sufficient.
We cannot be forced to settle for bad quality products or services just because they are labelled as made-in-India.
India as a country must set free her productive capacities and clearing off the pitfalls of incompetence, corruption, government control, duplicities, inefficiency, false ideologies and bad politics.
We hail from a country in which the absence of domestic production of personal protective equipment (PPE) was addressed by quickly ramping up PPE production became an exporter of COVID-19 related medicines and other essentials to every single nation which raised a demand for that.
In the last two months, India supplied Hydroxychloroquine and paracetamol to over 120 countries and more than 40 of them received these medicines as a grant from India, everyone praised India for reflecting an exemplary collaborative spirit in the middle of such a crucial time.
As India takes the courageous call for self-reliance, it can offer a lot to the world!