For ‘Make in India’ to work — buy Indian

VINOD SHARMA | Updated on January 20, 2018

A patriotic choice: To make in India REUTERS

The Centre has made some right policy moves. We consumers need to pitch in

Picture this. You are out shopping, and find two articles. Both are similar in looks, apparently of similar quality, specifications and cost almost the same. One with a proud symbol of “Made in India”, the other “Made in C….”. Now you have to make the right choice.

That dilemma, and that consumer choice, is central to making ‘Make in India’ a reality.

Globalisation has meant that manufacturing (make) has moved to wherever it is the cheapest. A key instrument used in WTO agreements has been the reduction/ elimination of import duties. Open market access is what the developed world seeks.

The impact

The fruits of global competition are what the developing world is promised in return. This means that China is today the factory of the world.

This also means that many nations in Africa will probably never make a light bulb. The higher cost of manufacturing — finance, energy, logistical and manufacturing infrastructure, compounded with the absence of skilled labour and lack of scale economies — will perpetuate itself.

What is wrong with that, you may ask. The answer lies with the aspirations of their youth, who do not wish to stay farming in their fields or spend the rest of their lives as tourist guides.

India, however, has a rich experience in manufacturing. Several sectors that have done well for over three or four decades are now feeling threatened. The high costs of finance, energy and logistics, compounded by a complex transactional environment (English for Inspector Raj) have rendered most sectors non competitive. The impact of these disabilities is directly proportional to the amount of value add. No wonder, manufacturers have turned traders.

The traditional instruments to encourage manufacturing viz. graded tariff protection, direct tax exemptions and indirect tax incentives — are all blunted now. So what can the government do?

Plenty. Fortunately, the current government is doing the right thing by addressing some of the root causes of disabilities. The multi pronged reforms in the power sector, as an example, will in a few years make electricity available at globally competitive rates with reasonable quality to the industry. Once this is done, there will be no further need for subsidies or incentives on this account. These are of course long term measures, and past track records have not been encouraging. We can however hope that this time, our collective cynicism is misplaced.

Leveraging demographics

A reasonable job, a livelihood that promises stability of income and prospects of growth — this is what every young adult wants, this is their right, this is our “insurance” to keep crime off the streets, to keep society peacefully and hopefully happily engaged in economic growth. This is the only way that India can leverage her demographic dividend. In this environment, we as consumers can play a significant role - by encouraging products that are made in India.

We do not need to pay a higher price for this choice. A clear preference for “made in India” products is all that is required to trigger the movement.

A voluntary declaration of the percentage of value added per product can help. This will enable a differentiation between manufacturers, assemblers, traders posing as manufacturers and importer traders. The government can help by appointing a watchdog to monitor such a voluntary disclosure.

Our role as citizens is to show a clear preference for goods “made in India”. It is such “patriotic” choice that has partly made Japan and Korea what they are.

A Japanese expat in India would prefer to rent a Japanese car, over any other. Will “Make in India” remain yet another political slogan? That depends on all of us. The answer lies in our pride in “Make in India”.

The writer is a Delhi-based entrepreneur

Published on March 03, 2016

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