IS INDIA READY FOR SELF RELIANCE?
Ever since the COVID-19 pandemic hit the major economies of the world, there has been a significant decline in world economic growth. According to the IMF, the world economy is expected to experience a fall in growth of about 3% which is the largest for a while now. Amongst those hit the worst, India has been one of the most affected economies with major organisations predicting a growth rate ranging from 0% to -5%. In a hope to revive the economy the government has been quick to respond with an Economic Stimulus package as well as a focus on a Self-Reliant India. But the question that is troubling world economists is whether India is ready to become self-reliant.
A self-reliant India in simple terms means that our country must be able to produce goods domestically and reduce dependence on other nations. Economically it implies that India’s exports must exceed its imports. India’s exports contribute about 23.64% of the total GDP which in itself speaks volumes about the high dependence of India’s demand on other countries. This is an important factor that needs to be accounted for in order to make India self-reliant. Let’s take a look at some of the major pointers that come to mind when talking about India’s road to self-reliance.
India’s biggest importer: China
India and China have been in the news recently for the wrong reasons, i.e., the Galwan Valley clash which has left Indian citizens fuming with anger. Amidst the huge geo-political tension, the fact remains that China has been India’s biggest importer for several years now. According to a 2019 report, India imported goods and services worth $68 billion from China which is a whopping 14% of the total imports of $480 billion. Certainly, a worrying statistic in the journey towards self-reliance.
Lack of Competition in Major Industries:
India recently became the second largest smartphone market in the world and though that might be a great thing, the bad part is there is potentially no Indian brand competing in the smartphone market. Major manufactures include Apple, Samsung, Oppo, OnePlus, Vivo, RealMe, etc. none of which are Indian brands. Samsung is the only brand which assembles and makes almost all its smartphones in India. All chinese manufacturers have factories in India but technically a majority of the parts used come from China. Another industry where India struggles is producing quality clothing products that can compete worldwide. Honestly, the majority of urban consumers go to shopping malls and shop for foreign origin or imported clothes, made in Bangladesh or Vietnam.
Financial Instability
Although India has a well developed Financial and Banking sector, liquidity remains a problem in today’s COVID strained economy. Lack of Financial depth means that many small and medium enterprises are not able to get credit to survive. Financial accessibility though improved from before, still is a challenge for many businesses. High rates of interest also pose a big problem to entrepreneurs.
Political Influence and Bureaucracy
Businesses in India have complained for a long time about the political influence that is straining business relations and expansions. The government of India talked about “Land, Labour, Liquidity and Laws” as part of the Economic Stimulus. Small and Medium Enterprises have been struggling during this period of lockdown and to improve their situation as well as push towards self-reliance, land and labour reforms need to be revolutionised. Bureaucracy and politics contribute to major negatives when it comes to building a domestic and globally competitive market in India.
Hon’ble Prime Minister of India has been very clear about being “Vocal for Local” and Indian industrialists are supporting this cause. Mukesh Ambani’s Reliance Jio, recently launched the JIo Meet App to compete with global entities such as Zoom and Google Meet. India is also the world’s second largest producer of Masks and PPE kits in just 3 months which shows the immense capabilities of Indian businessmen. India is also one of the major producers and exporters of iron ore and there is immense potential in the Steel Industry still to be explored. Mining remains an ever important sector for India along with the Automobile sector. Driving more demand for Indian brands such as Mahindra and Tata in the automobile sector will be a big move in terms of consuming domestic products. “Boycott Chinese Products” has been another trending topic in recent times with people fuming with nationalist sentiments and pledging to stop buying chinese or chinese origin products in the future. Certainly, a big step towards home-grown consumption and a positive for the government.
If India can become global competitors in the major industries of the world, then it is possible to talk about Self-Reliance. There need to be major changes in the labour and land laws as well as a push towards moving away from the bureaucratic approach. Improving financial depth and financial accessibility will be a major step towards ensuring a more business-friendly Indian Market. The road is long but with the support of the government and major industries, self-reliance may not be far off.
~By Shaurya Srivastava for Young Engine