Let’s assume that India is serious about growing its manufacturing sector to become 25 per cent of GDP. This target was first set by the Manmohan Singh government in 2012, with a lead time of a decade (hence a target year of 2022). That goal, of 25 per cent by 2022, was repeated by the Modi government when it launched its Make in India programme. There has been no progress so far, indeed the share of manufacturing has dipped somewhat since 2012. Under the new self-reliance programme, one could assume that the goal of 25 per cent share of GDP could be re-fixed for the year 2030 — i.e. with the same lead time of a decade. What would such numbers imply?
Assume optimistically that in 2021-22, GDP gets back to the Rs 204 lakh crore that it was in 2019-20, i.e. pre-Covid. Assume further that the economy grows at 6 per cent annually for the following eight years. The GDP would then become about Rs 325 lakh crore in constant rupees by 2029-30. If manufacturing is to grow from 14 per cent of Rs 204 lakh crore to 25 per cent of about Rs 325 lakh crore in 2029-30, it would have to almost treble from Rs 28 lakh crore to Rs 81 lakh crore, and raise its share of incremental GDP to 44 per cent. Annual manufacturing growth over 2022-30 would then have to be in excess of 14 per cent.
These numbers are way beyond anything that Indian manufacturing has achieved. Importantly, the import substitution push will not make a big difference. Even if some of the projected manufacturing growth is to come from substituting, say, 10 per cent of current merchandise imports ($45 billion annually, or Rs 3.4 lakh crore), and by obviating the future growth of such imports, the contribution of such import substitution to the total manufacturing sector would remain relatively small. Especially so since such domestic production will continue to have a significant import component, and therefore only partial domestic value addition.
Also read: Indian economy will struggle even after Covid, grow at 4.5% until 2025 – Oxford Economics
If overall GDP increase is assumed at 6 per cent within a scenario of rapid manufacturing growth, the services sector would have to slow sharply. Since manufacturing requires supporting services (trade, transport, financial services, etc.), a scenario where it grows at multiples of services sector growth is not realistic. Even if, alternatively, we were to assume that overall growth would be not 6 per cent but 8 per cent, and that manufacturing would account for no more than 20 per cent of rapidly growing GDP by 2029-30, the numbers for annual manufacturing growth would remain unrealistic.
This shows the limitations of attempting rapid growth through a manufacturing boost that focuses on the domestic market, especially with some of the thrust areas (like upstream investments for solar panels and telecom kits) being capital-intensive and therefore not contributing much to employment. As should be evident, atmanirbhar is more Nehruvian than the ruling dispensation might care to admit, whereas a real departure would be to focus on more labour-intensive sectors and export markets — thereby rejecting the export pessimism of Nehru’s time.
Can an economy of India’s size find enough export markets? There is only one way, in a world getting divided into trading blocs, and that is by joining one or more of the blocs. Which is why the decision to stay out of the Regional Comprehensive Economic Partnership (RCEP) has the potential to become, in the long term, one of the Modi government’s major blunders.
It is said that the RCEP would have further de-industrialised India, as it already has been (apparently) by a few free trade arrangements — an assertion that many contest. Nor is the problem only China, because India has a trade deficit with virtually every country in the Asia-Pacific. The problem is a broader one, of India’s competitiveness, which has to be improved so that opening up leads to more benefits than costs, to industrialisation and not its opposite. And the goal should be to avoid getting shut out of the region that will account for the bulk of the global growth in the foreseeable future. Given the RCEP’s time-table of two decades, India would have time to get ready. If India still prefers atmanirbhar, it is an admission of defeat.
By Special Arrangement with Business Standard.
Also read: IMF, G-20 warn recovery may be derailed, risks still very high
We have a large internal market to experiment on creating new products and services. So we don’t need to export to grow. But we should reduce import tariffs so that the products we design or manufacture can be cost effective. We obviously cannot make all components in India. Components have to be imported. Our labour costs are cheap so we have tremendous advantage.
What do goverments do with all this import taxes collected? They spend the tax collected on running the government itself!
It is not the Modi’s first blunder and it will not be his last.
He has blundered all along, and part of it follows from his wickedness. Wickedness shrinks the space for operation. Demoentisation was not a blunder, it was sheer wickedness. It was done to win UP elections at the cost of the country’s economy. After that, the economy went into a tail spin, it got hit with GST and Covid, and the room for manouevre closed. So India is going to have -10% GDP shrinkage. Of course Hindus will say it is the world situation and not the failings of their Supreme Leader. But China and Bangladesh have 4% growth.
Modi’s posturing with Article 370 and threats to China to use force has led to loss of land. It was both wickedness and blunder. Dishonouring an agreement is wickedness to Kashmiris ,who agreed to join India due to assurance given in 370. Then it means an arms race and India faces two front war. With a shrinking economy, the defence expenditure needs to be raised. Which means health and education has to shrink.
This is how the BJP’s rule will be. It will be a sequence of blunders due to militant Hindu posturing. Electing an uneducated chai wallah because he beat up Muslims, and expecting he will make India a great economic power was always far fetched. Modi can deliver Hindu communalism but not on the economy. He is qualified for the first, but notfor the second. Why can’t Hindus understand ?
Not signing RCEP is not a stroke of Modi’s Hindu genius, it is a sign that Hindus are uncompetitive according to international norms.
It is the equivalent of India taking part in the international maths test of randomly selected schools, and after finding it came near the bottom, withdrawing from future competitions. There was no effort to raise the standards of all schools within a fixed time frame. Likewise, there will be no effort to raise manufacturing standards.
The competition in the new Hindu ecosystem (Kapil Mishra) is for cow vigilantes, cow sevaks and fighters against an imaginary ‘love jihad’. Markande Paranjape believes that India does not work according to others, it works on dharma. Obviously, India cannot compete in the RCEP.
Now the ordinary Indian can continue to buy shoddy goods at inflated prices in the name of patriotism and nationalism. A few crony capitalists cornering huge profits at the cost of the common man/woman. Not to mention paying extortionate indirect taxes to the government.
So true Mr Vish.
Atmanribhar is pure nonsense. It is just a Sanskritised name for a thoroughly discredited economic strategy called Import Substitution Industrialisation (ISI). Old wine in a new bottle as they say.
ISI was in vogue in most developing countries after decolonisation and India was no exception. The basic idea in ISI was to produce as much as possible domestically and shield local firms from global competition by using tariff barriers, non-tariff barriers and quotas. Another element of the approach was to export as much as possible and import as little as possible.
In almost all the countries where ISI was implemented, including India, the results of the approach were nearly catastrophic. Domestic industries that were not exposed to competition could sell shoddy, unsafe and obsolete products and technologies to a captive market; the licence Raj proliferated in India; smuggling was rampant etc. Worse still, domestic industries never bothered to invest in the R&D needed to compete on a global market.
The Indian auto industry was a prime example of such a result of ISI policies. Premier Automobiles, Standard Motor Products India and Hindusthan Motors operated an oligopoly selling outdated and unsafe gas guzzlers to a captive Indian market. They had little or no interest or impetus to produce better cars given the fact that they had a readily available Indian market which had no choice. And when the doors of competition were opened, these behemoths collapsed to cheaper, better, safer and more economical foreign cars. Similar examples abound in many other industries.
Atmanirbhar entails going down one the same discredited path of Import Substitution Industrialisation. India will reverse the gains of liberalisation from the 90s. The licence Raj will come back and so will smuggling. And worse still, the mercantilism inherent in ISI – I will to other countries export but not import from them – is bound to be met with retaliations.
But then, I am not a smart Gujarati graduate of Delhi University – I studied my economics elsewhere.
You are mostly correct. But I would point out that at the time of Nehru, Import Substitution Industrialisation (ISI) was the the correct option, indeed there was no other.
At that time, western countries had decolonised but they were not willing to part with their technologies which they built up with education – and also capital extracted from colonies.
For example, when India asked Britain and US to set up a steel mill, they told Nehru to concentrate on agriculture, and they would sell the steel to us. India finally got steel mills from the Soviet Union. That was absolutely essential at the time. Nehru took the decision to develop nuclear technology and missile technology – that was remarkable and it has made the situation that India cannot be taken over by outsiders (it can collapse internally of course due to misrule).
Nehru’s foresight was incredible. Truman announced to Stalin in the Potsdam conference in May 1945 (after the unconditional surrender of Germany) that the US had exploded an atomic bomb, and soon it was used against Japan. Stalin realised the US could use it to blackmail the Soviet Union. So he asked Soviet scientists to develop the atom bomb, he gave them 5 years, and they did it 4. The Soviet Union tested in 1949. In the mid 1950s, the Soviet Union launhced Sputnik. India became independent in 1947, don’t you think in the aftermath of the chaos of partition, that Nehru was a visionary to realise from the US and the Soviet Union that India must have nuclear and space technology ?
It was only from the 1990s that the western countries were willing to go for global markets and to get that, they were willing to set up production outside. They had reached a dead end themselves – they were competing against each other with the same products of similar quality, so they sought an outlet elsewhere. The developing countries could not buy their products, unless the cost was lowered. This could be only done by localising production. The west then gets some profit from overseas production (their elites do) and the west tries to stay ahead by R & D – everything from Covid vaccine to alternative energy.
India realised the change slower than China, but MMS realised eventually from the 2000s onward. He put India into a position where it could link into international production and markets. With nuclear and missile technology, India need not fear a new East India Company taking over the country.
However, the change in economic policies got derailed by the rise of Hindu nationalism. The Hindus do not want MMS, he is Sikh, they would prefer Kapil Mishra or any such Hindu. India cannot be taken over because it has nuclear and missile technology, but the BJP has made India into communal tinderbox, and internal collapse is entirely feasible and likely (like Yugoslavia).
Returning to Import Substitution Industrialisation (ISI) in 2020 is a recipe for failure as you correctly point out. The BJP’s ecosystem is cow welfare, persecute minorities to make Hindus feel strong, and make dance shows for Hindus settled abroad. And since the economy is set back, return to Import Substitution Industrialisation (ISI) and pretend it is the highest patriotism.
But do you see any bhakths climb down about Modi ? The only person who has admitted publicly that she made a mistake in endorsing Modi is Tavleen Singh – but she is Sikh.
Nehru was the builder of modern India. He may have made some mistakes, but the Hindu Right is on a mission to prove that he was the destroyer of modern India.
Hitler and the Nazi right created a ‘stab in the back theory’ saying that the German army was actually winning World War 1, but peaceniks, leftists, Jews and democrats had forced Germany to a humiliating surrender. At the end of the war, Germany transitioned from Kaisership to a fledgling democracy called the Weimar Republic.
When Hitler and the Nazi Party came to power in 1933, they made the legend of ‘stab in the back’ the official history of the 1920s, portraying the Weimar Republic as the work of the “November criminals” who stabbed the nation in the back to seize power while betraying it. Historian Eberhad Kolb noted the Nazi propaganda machine depicted Weimar as “a morass of corruption, degeneracy, national humiliation, ruthless persecution of the honest ‘national opposition’—fourteen years of rule by Jews, Marxists, and ‘cultural Bolsheviks’, who had at last been swept away by the National Socialist movement under Hitler and the victory of the ‘national revolution’ of 1933”.
The Hindu Right is on a mission to prove that Nehru was the destroyer of modern India with their version of ‘the stab in the back’. According to this, Nehru, Gandhi, Congress stabbed India in the back with partition ; afterwards, they added to the humiliation of Hindus by pampering the Muslims; they persecuted honest nationalists like Golwalkar, Savarkar and Godse; we have had 70 years of rule by Luytens gang, Khan Market gang, Marxists and urban Naxals, who have all at last been swept away by the Hindutva revolution.
The results of the Hindu right will be similar to Hitler’s effect on Germany.
Correct. But this has nothing to do with economics. It’s just protecting the interests of your biggest donors and financiers against the interests of your common voters. Keep selling shoddy goods at inflated prices in the name of patriotism, nationalism, socialism etc. when it is none of them.
Thanks for the response Mr Vish. You hit the nail on the head.
What Modi and his fascist backers from the RSS and the Hindutva bloc want has nothing to do with economic or industrial policy but protection of vested interests. Vested interests being the Ambanis, Adanis, Baba Ramdevs and various other donors to the BJP political class. These crony capitalists now call the shots and the BJP does their bidding, the people of India be damned. Votes are anyway assured by merely waving a saffron flag and crying wolf about Muslims.
And the Indian middle classes, the bulk of whom are now enrolled in the Modi cult and have outsourced their thinking to the Great Gujaratis do not realise that their own living standards are in peril. Not to speak of jobs as India’s protectionism will lead to retaliatory tariff, non-tariff and quota restrictions from countries India wants to export to.
And, as you rightly point out the nation is again going to be awash with shoddy, dangerous products that no Indian would prefer. The “phoren” craze will be back with a bang.
actually he has made a good decision . We can enter into RCEP when we are manufacturing giants like japan, china etc
It’s impossible to compete with China unless we have Chinese laws that drive people to work 996 or 997. All these communists support anything that is related to China. So I ask you to tell government to enact such laws. The second is economies of scale that require massive investment. And government subsidies in taxes to export. Unless all these are put in place India can never compete with China.
The Chinese and other Oriental nations ( Japan, Korea, Taiwan) are workaholics. Indians by and large are not. Especially white collar workers. Most white collar folks in India prefer government sector jobs.
Divorce rate is climbing in these Oriental societies. Elderly are uncared for. Many people fail to find marriage partners. With high rates of economic growth, there will be always be accompanying impacts on a society and it’s culture.
Indians are more family oriented. Even If they want to work hard (like in the well-paid private sector software industry), it is only for a promotion or access to more money or position. The money or power they get will be spent on their family – house, kids, education, marriages. They are less likely to invest money they earned in a business venture or in R&D.
Mr NaveenT: Do you have statistics to back up your claim:
“.. Indians are more family oriented .. They are less likely to invest money they earned in a business venture or in R&D. ..”
Or is it merely your opinion ?
You need to take a trip to the Middle East where Indian labourers toil without rest for a pittance. Or to the agricultural lands of Italy where Indians – mainly Sikhs from the Punjab – put in 12-15 hour shifts for small change.
Kili, I think NaveenT was talking about white collar workers. Blue collar workers almost all of them work in informal sector toil hard both within and outside India. They are unprotected with retirement or insurance schemes. Typically they tend for themselves as you can see in the Gulf or migrant workers in India.
White collar workers on other hand get more attention from the government esp in government sector and established private companies. PF is a cost for both employer and goverment. Think about the protection like HRA, insurance etc…
If a habitual Modi baiter is criticising Modi for oot participting in RCEP then Modi must have done something very correct. This medium is mostly iused to bash Modi and hia policies. Every day there are at least 2 to 3 articles some of them even spewing venom at Modi.
Is the author Ninan the same, who is stooge of Firoz and Vadera family. Except you everybody knows that cpec is only for China to sell their dirt cheap products.
Is the author of this comment the same Anand who is a stooge of Adityanath, Modi and Sdhavi Pragya Thakur ?
The Chinese are not making just cheap products anymore. They are not the China of the 80’s and 90’s where they exported toys, textiles etc to the West.
Though their cheap products continue to flood third world markets, they have now gained expertise in engineering complicated and sophisticated products. They have moved on from “made in China” to “designed in china”.
The mind set in India is being a democracy and allowing “Free” speech, it is imperative to oppose anything and everything and if the Nation speaks in one voice even occasionally, it is blasphemous.
Economy is not always about only numbers. Else we could have anticipated the vagaries of the economy and avoided depressions et al, which was not the case. Neither is economy linear. A few random thoughts…
Labour counts for only abut 5% of export production costs – energy, location, trade routes becoming more important. Labour intensive sectors in India are mainly not into major exports. The odd exception could be garments which is not a commodity largely traded within RCEP countries. Soon after advances in technology and worker productivity have moved some industries away from labor-intensive status. Let us say, for now labor-intensive industries include restaurants, hotels, agriculture, and mining. Less developed economies tend to be more labor intensive for various reasons, forcing world manufacturing to relocate to Africa and Asia in the last few decades. India failed to visulise, when it could, and capitalize on this transformation. India is a laggard democracy where local opposition always blocks development. We are yet to realise a “Free trade” environment domestically. For instant, a reform allowing farmers to sell to anybody and as a corollary anybody can buy from any farmer has spawned protests.
Here is another example why RCEP may not be the panacea for India. Dairy farmers, led by Amul, have strongly resisted the deal as it would have opened Indian markets to Australian and Kiwi (New Zealand) farmers. The farmers from these countries produce cheaper and better-quality dairy products given the availability of land and subsidies from the government. The Indian dairy farmers are not yet ready to compete with farmers from these countries, and therefore, they opposed RCEP.
This is the point. India is not yet ready to compete with other countries of RCEP. Yes, it is a failure that for decades after Independence India did not plan its economy as well as some of its neighbours in Asia. That does not mean that we should dive into the deep end without learning to swim.
Indeed, your few thought are random – as usual.
‘India is a laggard democracy where local opposition always blocks development. ‘
Are you asking for doing away with democracy ? Modi wants that, so does Ambani and Adani, and many high caste fellows like yourself.
The reason India does not have competition is because of the Hindu social system aka known as the caste system. According to this, the sudra has to remain the tiller producing the food and wealth, but its distribution is controlled exclusively through the banias.
From top to bottom, the Hindu culture is based on monopolies of caste. It does not encourage mobility, which occur if there was competition.
India under the BJP has created a corrupt oligarchy, where a few industrialists like Ambani and Adani run monopoly capitalism, they help finance the BJP, and the BJP directs business in their favour (like Anil Ambani got Rafale). Thus, while the overall GDP has shrunk, Ambani and Adani have become richer post-Covid. Ambani has reduced salaries of Reliance employees to 50%. He is profiteering from Covid. The Bania has no scruples. Unlike Tata, which is not Bania run.
India is returning to the period of ‘Hindu growth’. Once you cannot compete, you cannot match international standards, and you will produce things like the Bajaj auto rickshaw for the protected market.
India’s economy is running with -10% contraction. China is running at 3%, Bangladesh at 4% growth. Everyone is equally affected by Covid. But India has incompetent rulers whose only claim to rulership is they are championing Hindus against Muslims.
MODERATORS: Are you guys asleep?
The resident hate speech writer is busy at work spewing his congenital hatred of Hindus and you guys twiddle your thumbs when awake. Letting this Ajmal Kasb clone rant and rave and insult the “infidels”.
I cannot fathom that this paid ISI thug has been allowed to continue this long, despite the many entreaties from commenters to rein his noxious comments …
SHAME ON YOU PRINT MODERATORS
I am the best writer here. Print knows it, and you know it also.
If you want to contest, discuss the argument. Cite to me which passage shows hatred of Hindus. I said the caste system is the basis of Indian uncompetitiveness. That is an observation, not a hatred.
Calling people ISI, Ajmal Kasab etc. is the familiar recourse of the third rate Hindu. Peel away the thin veneer of sophistication, and you are as crude as any Hindutva Hindu.
In fact, you embody the uncompetitive Hindu. You cannot refute anything I write, so you want a ban !
You are just like the Hindus who cannot compete with international quality and think banning imports is the solution.
“I am the best writer here. Print knows it, and you know it also.”
Oh really ? And who the f..k certified that ?
You are Ajmal Kasab, Babu Bajrangi and Tejaswi Surya rolled into one.
A lot of what you write is not worth refuting, Simply because your conclusion is always the same: It must be due to Hinduism.
About time your paymasters in the Pakisrtani ISI degarded your rank.
Criticism is cheap. What is your solution?
Do you have a roadmap to improve India’s competiveness? Why haven’t you presented it in the article?
He is a journalist. He is not getting paid by people of India. He can be a critic that’s all.
Politicians and bureaucrats are paid to do their jobs by the people of India. It’s their problem to figure out why we are under-competitive. They collect taxes from us don’t they? Everybody pays taxes. Even the poorest pay GST.
Modi already has the roadmap to improve India’s competiveness. India is leading in yoga, gomutra and gobar. India runs according to dharma, not cheap economics. We have sadh gurus and Baba Ramdev.
You bought it, so declare you are contended.
Nobody albeit China has become rich by trading with China.All their trading partners become more and more poorer
All RCEP members created excess capacities in every sector and struggling to find a market for it’s output..The finest brains from Business schools,brain wave from Tech schools created exaggerated estimates for look alike products ..classic e g automobiles, mobiles..Atmanirbhar is a step for.gradualism we can correct with every move…..
These automobiles, mobiles, TV sets, washing machines etc… have become quite sophisticated due to the electronics inside them.
We have failed to seize the electronics revolution.
We have many engineering colleges that teach how to design an electronic circuit or computer chip but we don’t know how to manufacture it.
Why should we Indians be cursed to live with third rate Indian manufactured stuff? Finally all Indian manufactured items finally end up to be third rate. Any and all.
Why don’t “you Indians” manufacture good quality stuff instead of cribbing against a sound policy on intenet?
Why should we Indian crony capitalists manufacturer good quality stuff when we can simply bribe the government to hike customs duties and discourage trade, so that we can continue to sell our shoddy goods at inflated prices? And there are plenty of patriots who are willing to enrich us while impoverishing themselves.
India exit of RCEP is a great bless to Asia, otherwise the pact will never concluded in time to be signed before Biden took office that will derail it.
Modi demanded to have a trigger system that India can snap back trade tariffs when trading % cross a threshold so it an protect its domestic players. He also demanded a Spore FTA aka CECA unequal term, that permit unlimited Indians to work and live in members’ countries, with mandatory recognition of India qualifications(99% not accepted globally).
None of Asean +3 agreed to it, so they decided better not to include India. Only Jp insisted to add a clause for India to join at its pleasure, as a form of face saving.
Jashyanka had blatantly criticized RCEP to defend Modi’s blunder, cited India agriculture, diary and fishery will be destroyed by RCEP, esp by Oz & Nz import. If these countries of 50x higher labour cost and need to air flown their prishable products over to India with tariffs (reduced over 10~20yrs) are still more competitive than Indians’, why would India want to bog down forever by such inefficient system?
India also kept complaining about China cheap products will destroy its domestic industries. Even with current high tariffs and Modi’s boycott China campaign, India can’t stop China inroads. There is no better value for money than China made products of variety, quality and capacity. India imported 80% of materials for its $60Bils drug industry. Without China products, few nations can stay competitive globally.
Instead of improve its industries over next 10~20 yrs, India RSS BJP opted to protect Ambani empire and its vote banks, leaving india neither in Asia nor West.
With 93% Indians earning below $2300 not qualify to pay tax, earning below $3/day, 1300Mils in poverty can’t afford a small car, 900Mils rely on gov subsidized agriculture jobs, 740Mils still defecating outdoor, 600Mils living in slums, 40% illiterate can’t write own name, another 50% badly educated, Top10% ranked BOTTOM LAST in global PISA Test, Top2% flee to West never return, what India got to lose to join CPEC?
If backward poor nations like Laos, Cambodia, Philippines, Indonesia, Brunei, Myanmar, Vietnam have courage to join, what make self professed superpower India chicken out? All India South Asia neighbors will not hesitate to plunge in if invited later.
BRI, SCO, BRICS, CECA, …all trade pacts and trading block that included India have one common trouble, paralyzed by a notoriously ONE WAY TRADE India trade policy since 1947. That’s why none of South Asia & Asean could have a successful trade deal with India.
Wannabe Singapore PM LHL signed an unequal India CECA, ruined Singapore with millions of fake certificate cheats, low grade labours, violence criminals, rioters, rapists, etc. Asean saw how disastrous India CECA can damage and view India predatory FTA with great fear. SK had rejected CECA in its FTA negotiation.
Okay Bat soup but you still didn’t give one solid reason why India should allow dumping of cheap(in price and quality) Chinese goods in India by signing RCEP. What’s in it for India?
Good or bad, Indian system is our system, at least it employs millions. Why should we be a market for the factories of China which employs its own cheap labour when it is not ready to allow our cheap labour to move?
This desperation among Chinese and their bots is self-evident of what a good decision it was on the part of the Government of India to withdraw from RCEP.
The new earned money had made the Chinese arrogant and they have forgot how they use to catch mouse to curb their hunger before uncle Nixon and Kissinger came calling in 1972 and taught them the benefits of trade.
You contradict yourself due to that typical Hindu jealousy.
‘This desperation among Chinese and their bots is self-evident of what a good decision it was on the part of the Government of India to withdraw from RCEP.
The new earned money had made the Chinese arrogant and they have forgot how they use to catch mouse to curb their hunger before uncle Nixon and Kissinger came calling in 1972 and taught them the benefits of trade.’
The second statement contradicts the first. The Chinese having learnt the benefits of trade are extending it. They are not desperate – certainly not for India.
Good information. Good.
Jashyanka had blatantly criticized RCEP to defend Modi’s blunder, cited India agriculture, diary and fishery will be destroyed by RCEP, esp by Oz & Nz import.
Our agri/dairy/fishing sector may not be advanced compared to Aus or NZ, but food security of 1.3B people should never be at risk. If sea routes are choked due to war or if there is a pandemic, I dread to think what would happen if we become dependent on food imports.
“Instead of improve its industries over next 10~20 yrs, India RSS BJP opted to protect Ambani empire and its vote banks, leaving india neither in Asia nor West.”
Our political system (party funds) at the Central govt level runs on crony capitalism. At the State government or Municipality level it is based on bribes collected from people for public services or on contracts handed out to contractors.
India was closed for business up to late 80’s, then we opened up in 90’s, and now we seem to be going closed again…crony capitalism is now uanvoidable.
Don’t blame the businessmen like Adani, Ambani or Tatas… They are only exhibiting natural instincts of business owners to protect their investments and markets. However with guaranteed protectionism from the political class,, Indian businessmen should invest more in R&D. That’s what the Japanese and Chinese businessmen did even when they had protectionism they gradually produced world class products which the whole world wants to buy.
Rajan Y,
Where will India going to find capital investment and technologies to develop rapidly when its closing up to China, the largest exporter & importer, largest investor, new leading technology innovator?
You need large investment & lot of cheap equipments/parts that Chinese(RCEP) have. And you need world largest Chinese(RCEP) mkt to sell your mfg products, agriculture produce….without, who will want invest industries in non competitive India that has costly tariff for import parts, with no access to tariff free huge Asia mkt?
Even India has more fertile good agriculture land & water supply than China, Oz & Nz, but it produces much less, inferior…and lot of wastage in transportation.
The fast moving globalization world don’t wait for laid back Indians to gradually develop its monopolize mkt, improving inferior products that neither can sell globally, nor is efficient to use domestically.
Jp achieved by opening up to West technologies, mostly on US Marshall Plan to groom Jp as Asia bulwark against Soviet communism. But it has good education system to train engineers that willing to work 24/7, lot of R&D investments, technology transfer by US, access to huge US mkt. This is Jp real miracle cause, US grooming.
Whereas India 94% engineers are unfit for employment(India CEOs). Its education system is broken, 40% are illiterate. India has no capital for expensive R&D, nor environment for it.
West has no geopolitical motive to transfer high technologies to India, nor open its market to India as no such cold war existed now. China factor is not strong enough for West to sacrifice, as Chinese don’t export ideology nor interested in expansionism like Soviet.
By closing up, India will continue to be backward & live in sleeping mode. All South Asians have already surpassed India, except Nepal & Pak awaiting CPEC to leapfrog India in next 10yrs. RCEP will get lot of investment & new development due to combine huge market access craved by West capitalists.
Industrial4.0 and AI automation in next 10yrs will revolutionize the world, eliminating billions of manual jobs. India backward labour intensive mkt will be greatest unprepared casualty.
China has already started unmanned agriculture farming of high efficiency, following Germany foot steps. Go youtude to watch, how drones are spraying pesticides using AI, autonomous ploughing, planting, harvesting, etc.
Eg. Huawei fully automated factory produce 100Mils phones p.a. requiring only 80 engineers. Taiwan Foxconn required 1Mil skilled workers to produce for iPhone. All future factories will be automated like Huawei.
So India has to embrace RCEP, CPEC, BRI, whatever it takes for it ride the China and Asia wave to dev rapidly, finding its own niche. There will be lot of pain, which Chinese also went through when they join WTO. Tens of millions lost jobs overnight with numerous inefficient states industries shutdown. But China developed as sweat shops over 40yrs to become what it is today.
India will be left behind neither in rising Asia century, nor in West declining trade block.
Huawei designs it’s own processors for smartphones. They are in same league as Apple and Samsung now.
I also read that Huawei is going to design it’s own smartphone operating system. Apart from this fact they are a telecom equipment major. It’s hard to imagine when both China and India were at same level as far as telecom, computers in the 1980’s. In software other companies like Tencent, Alibaba have surged ahead in smartphone apps, e-commerce and gaming. They were at same level as India in software in the 1990’s.
Amazing. We are the sleeping giant that refuses to awaken.
Modi doesn’t listen to you intellectual people and that is why he is successful
Indeed, Modi is successful. But India is not very successful.
There are diametrically opposite views from renowned economists and the layman is confused. On balance it looks safer not to allow too big a door for entry to China goods.
Which is bigger ? Kangana Ranaut or Bollywood ? America – although that would be far from an ideal strategy – can afford to turn its back on the world, under an isolationist like President Trump. Not India. See what percentage of the world’s GDP / trade we account for. Without continuing capital inflows – various alphabets – we cannot even pay for our oil and other imports. No one will beat a path to our door, cap in hand, seeking access to the largest middle class, the fastest growing economy in the world. Those fairy tales are not holding up well to sunlight. After Ladakh, we cannot even be sure of the net security provider bit.
Good points. We need to have the confidence that we can participate on the world stage and win. Not lose our nerve and turn inwards.
Sir. The data in the article is wrong. Author has confusion between nominal and real GDP….
Also mfg share in GDP data is wrong..
No problem with the argument but data errors are grave. Thanks
Sourced from Trading economics.com: “ Manufacturing, value added (% of GDP) in India was reported at 13.72 % in 2019, according to the World Bank collection of development indicators, compiled from officially recognized sources. India – Manufacturing, value added (% of GDP) – actual values, historical data, forecasts and projections were sourced from the World Bank on November of 2020.” T.N. Ninan of the Business Standard is one of the most experienced business journalist and an ex-editor of the BS. This article gets published in Saturday’s B.S. as an editorial under the column “ Weekend Ruminations”. It is highly unlikely that he will furnish wrong numbers. Real GDP is inflation adjusted nominal GDP. It is used only to measure annual GDP growth rate. Otherwise , GDP is always quoted in its nominal terms.
Chinese stooge
Socialist Modi murdabad. Socialism murdabad. Murdabad to all the political parties, politicians. Zindabad to capitalist party of India. Long live free market.
Socialist Modi?
But i thought Modi was ‘suit boot ki sarkar’, he was ‘Ambani Adani ka yaar’. Make up your mind first.
BTW, it was the Nehruvian Congress which opposed RCEP even before Modi decided to walk out of it.
We have already have free market. 1% owns 95% of India’s wealth. Their wealth has increased during Covid. Free mark.et is only for Ambani and Adani to loot. An oligogarchy is created. You will support because you are a beneficiary.
Not signing up to RCEP stems from false Hindu pride. India still prefers atmanirbhar, it is indeed an admission of defeat and inability to evolve.
The reason India is non-competitive internationally is because of the Hindu caste system. It mitigates against competition. Competition allows social fluidity and mobility. The caste Hindus do not want that. Instead, they want to have a few Ambanis and Adanis, and have monopoly capitalism. That works in the domestic market (although at the expense of creating gross inequality). Further ,Hindus are now groomed to destroy the businesses and properties of non-Hindus, to destroy competition further.
India cannot be in the same league as China and new economies of the Far East because it is more interested in creating the Hindu Ecosystem of Kapil Mishra. The Hindus will lead in yoga, gobar, gomutra, espirituality etc. which will sell in India, but is of no value abroad. One BJP Hindu Prof. Markande Paranjape of JNU proudly wrote that India does not work with the parameters of others, it rolls according to dharma. With dharma, India beats everyone because it is on its own !
Hindu ecosystem and high growth are complimentary. It’s the Hindus of India, be it our industrialists or our white collar workforce that have earned money which the Nehruvian losers like to throw around on their cuckoo schemes.
It’s the urban naxals and jihadi ecosystem that hates growth and entrepreneurship that are bad for India.
Economic growth has nothing to do with religion of any kind. But lack of social harmony can act as a brake.
Assuming social harmony exists, all that is needed is curiosity, work ethic and sincerity/honesty from majority of it’s people.
If social harmony is poor and majority of people’s attitudes are bad, then what you can see is exactly what is happening in much of India – power grabbing by whatever means and get-rich-quick mentality by whatever means. This corruption rich environment is not a fertile ground for businessmen and professionals to flourish.
You are absolutely correct.
I am a Hindu and I am proud of Azim Premji (a Muslim) for what his company has done in software services globally and his giving back to our society. I am sure he doesn’t contribute to political parties like Ambani does. Crony capitalism is bad for the people of India.
Terms like Skill India, Atmanirbhar all sound like good promotions but in reality to make industrial goods that the rest of the world is eager to consume, the majority of us Indians have to become much more diligent, persevering , sincere, creative, incorruptible and capable. Education levels have increased in India since the 1990’s but not necessarily these attributes. I say our character traits count more than anything else in propelling a nation economically forward.
‘Hindu ecosystem and high growth are complimentary ‘?
The Hindu ecosystem certainly compliments Modi’s claim of high growth !
So you think Kapil Mishra’s floating an online form for jobs in the Hindu ecosystem is the way forward ? The jobs he offered are for fighters to protect cows and save Hindu girls from ‘love jihad’. Certainly, Hindus have no competition for these jobs in India or internationally. So you are right, the Hindu ecosystem and high growth are complementary.
The BJP’s JNU appointeee Prof. Markande Paranjape thinks that India does not work with the parameters of others, it rolls according to dharma. That is the Hindu ecosystem.
If you believe that, fine, just stop aspiring to be China, US etc. Be like Myanamar.
Not signing RCEP was a good step because India’s priority is to save local industry and jobs.
‘As should be evident, atmanirbhar is more Nehruvian than the ruling dispensation might care to admit, whereas a real departure would be to focus on more labour-intensive sectors and export markets — thereby rejecting the export pessimism of Nehru’s time.’
What Nehru did was absolutely correct for that time. He had to concentrate on building steel plants, dams etc. That is the foundation. At that time, an export economy was not possible. Britain and the west produced everything, and they were unwilling to part with technology.
The suggestion to focus on more labour-intensive sectors and export markets is absolutely correct. Bangladesh has done that in textiles, leather etc. and has overtaken India in manufacturing. Indian leather industrtialists had to move to Bangladesh due to harassment by cow vigilantes.
Dreaming of jumping to high tech manufacturing is not possible at present because India has not built a widely, educated workforce. Japan, Korea, Taiwan and China have done that. Malaysia, Indonesia and Vietnam are on the road to do that. India is hampered by poor literacy and education – due to the caste system which decrees education for the few. That is the reason India can raise cow lynchers, rioters and goondas, but not skilled technologists and entrepreneurs. That is the reason Kapil Mishra can float an online form for Hindu Ecosystem and he can get so many Hindus to sign up. Amartya Sen has observed that all countries that became developed did so because they became fully educated. Hindus think that you become developed, and then educated. In practice, caste Hindus do not want every Indian educated as that would undermine their caste privileges.
Nehru was doing the right thing for his time. This lot are confused Neanderthals, only they can take a growing economy and set it back. Modi has met no single target he set. He has always moved on to something else. No more swach Bharat, we do not know where is the bullet train, there was no progress on bringing back black money from abroad, we have a new goal post – manufacturing should be 25% of GDP. The Hindus will clap their hands and say ‘how dynamic is the chai wallah’ because he has announced manufacturing should be 25% of GDP. At the last Olympics, India won zero gold medals. Modi announced a scheme whereby India will win x number of medals. Hindus proudly lapped it up, but I can assure you, India would have won zero if the Tokyo Olympics had not been postponed.
After sometime, the Hindus will forget, and a new target will be dangled before them. What motivates Hindus is crackers for Diwali, beating up Muslims, Christians and Dalits. They will see plenty of progress on these.
Lol…since when have Nehruvians and Jihadis started understanding economics?
Nehru had no idea how the world worked, his so called achievements are the achievements of the Hindu middle class and upper middle class.
The real Nehruvian achievements are hate for entrepreneurship, profit and hardwork among the intellectuals and politicians.
Nehru didn’t understand the concept of profit, of trade, heck he didn’t even understand how the world worked. All these government institutions were either in private hands or were started by the British imperialists before the independence.
Nehru was an ordinary man in extraordinary times
As far as berating Hindu right is concerned, we don’t lessons from those are waiting for not so virgin 72 hoors in their kinky heaven.
IgNobel Prize winner Ishant brays:
“.. Nehru didn’t understand the concept of profit, of trade, heck he didn’t even understand how the world worked ..”
So do you understand economics and more importantly, the economic models that were in vogue in developing countries after decolonisation? Evidently not.
Of course, it is easy to spew hate on Nehru and blame him for every possible ill in the country. But to Nehru’s credit, he did not engineer a pogrom where innocent Muslim women were gangraped by your thuggish Hindutva friends and their babies thrown into a fire.
And who the hell wants lessons from the Ishants of this world – men who get high inhaling the hot air emanating from the posteriors of the Arnab Goswamis, Adityanaths and various other assorted Gujaratis.
Oh Nehru did worse. Under his watch millions of Indians were slaughtered and dispossessed during partition. Something that no ‘pogrom’ can match.
Nehru did not wish for partition. It became unavoidable because RSS and Hindu Mahasabha praised Hitler’s model and advocated the same for minorities in India. Read Golwalkar and Savarkar.
Nehru had called ‘Hindutva, fascism Hindu style.’ In 1953, he wrote that unless Hindus change their outlook, India is doomed. He knew RSS and Hindu Mahasabha had made the Muslims demand partition. He expressed the premonition even in the India that remains, the Hindus will divide and break it up. That is happening in front of us.
“Dreaming of jumping to high tech manufacturing is not possible at present because India has not built a widely, educated workforce. ”
We must be passing out the highest number of technical graduates in the world. Most of them don’t get jobs after passing out as there are not enough companies to offer jobs to them. There are not enough companies because there are not enough opportunities for new businesses to start up. Not enough businesses starting up because there is not enough demand. I am really worried about the current generation in their 20’s. Education alone is not enough. Applying learnt knowledge on a job is the need and getting more skilled as one’s career progresses. There have to be enough opportunities for making good use of one’s technical education.
Needless to say economic development should be number one task of politicians occupying our top positions. Otherwise we cannot reap the benefits of our demographic dividend. Unfortunately today politics is all about just winning elections and continuing in power through crony capitalism and ideological ferment.
Completely Agree!!! The Best way to make Indian Industry Competitive is to introduce strong but fair competition.
It is worth pondering why not only India, but entire South Asia has poor maufacturing capabilities. Does that have something to say (in general) about the people and skills in this part of the world?
Are we Indians comfortable with being mostly traders?
If India still cares of Atmanirbhar, it is an admission of defeat is a classic statement. One of the grounds – valid as it seems – that RCEP will pave the way for inundating the Indian market with Cheap Chinese goods which will destroy the local industries, wipe out the job market, cause heavy drain on Foreign exchange etc. Is it not an admission of defeat that we cannot produce products like Chinese – quality products at affordable price? International market demands quality products, affordable price, dependable supply chain and consistent public policy. What is that the Govt has done to create the ecosystem necessary for such production cum supply chain. Having said that, I must say what the Govt has done in the existing circumstances is the only rear guard action to prevent further catastrophe emanating from its own actions. Already our economy has been shattered by Demo, GST, mindless pursuit of low interest regime and unplanned lockdowns. RCEP in the context it is coming will accelerate our downward march. Export will come down, imports will increase, foreign exchange will dwindle, investment will vaporize, causing all round disaster. In public policy, if you make one mistake, other mistakes will follow as an inevitable concomitant. Leadership calls for definite forethought, long distance vision and deep understanding the changing dynamic in the political, economic, strategic and social spheres. That requires talent. I do not want to say any further.
‘What is that the Govt has done to create the ecosystem necessary for such production cum supply chain. ‘
Kapil Mishra has floated an online form for creating a Hindu ecosystem – the purpose is a supply chain of go sevaks, fighters against love jihad etc.
The math furnished in the article is impeccable. There is no point in projecting highly ambitious targets. Share of manufacturing to GDP is currently at just 14%. By no stretch of imagination it can grow to 25% within a span of just 5 years. Manufacturing can grow only if there is high incremental domestic demand and/or rapidly growing export demand. Current scenario is not conducive to any such spectacular development . India’s exports are static, whereas countries like Bangladesh and Vietnam have overtaken us in terms of rise in exports. We must reconsider our decision not to join RCEP. While we are considering the cost by way of dumping of cheap goods by China and other countries and impact thereof on our domestic industries, we are NOT considering the cost of not joining RCEP. In the long run , the cost could be prohibitively high. For centuries we remained confined to ourselves imagining that India is the Earth. While Europe was getting transformed due to renaissance and the consequent industrial revolution, we remained immune to such development. The result was enslavement, not by a nation but by a trading company. We should ensure that history doesn’t repeat itself. Banning imports cannot be a long term solution; improving our competitiveness is.
Are you out of your mind?? India is an import based economy and signing RCEP could flood indian market with cheaper products and it would be major blow for atmanirbhar bharat.
The real issue is that Modi has failed to bring in major big impact structural reforms which will improve India’s competitiveness in manufacturing. Infrastructure, taxation, corruption, procedural issues, legal mechanisms and generally ease and cost of business have not improved much. Thus, immediate effect of joining RCEP would have been just to massively reduce the custom duties and get swamped by Chinese goods and Australian/ New Zealand dairy products etc. without any corresponding increase in Indian exports. This would have deleterious impact on many Indian sectors and this was not rightly acceptable to Modi. Thus, theoretical advantages of joining RECP would have remained only in theory and not resulted on the ground situation.
Modi can still do many things quickly to fix the issues in next 2-3 years and then open up to joining RECP. It is never a question of either RECP or Atmanirbhar Bharat. Both the ideas can be implemented simultaneously or sequentially. in fact, Atmanirbhar Bharat is a much broader concept and is applied to every sector of the economy including services, defense etc.
If RECP countries had agreed to Indian conditions, there was never an issue of not joining it. Also, we have trade agreement with ASEAN, so nothing much is lost except the import of cheap Chinese goods. We should give more emphasis on trade deals with USA and EU, as we can export much more to the countries there.
TNN knows all these issues very well and yet, he loses is balance as he is instinctively in attacking mode when it comes to Modi government!!
‘We should give more emphasis on trade deals with USA and EU, as we can export much more to the countries there.’
What does India have ? Gomutra and gobar ? Mythological movies ?
no point in writing this article sir.
it will only go to deaf ears.!!!
China stooge journalist working hard to get india in rcep. Even usa has lost trading with china. What are u even trying. India is against china trade and not other world countries. India wants free Trade agreement with all countries except china. Shame on this paid journalists
Throwing an unfit and untrained person in a boxing ring to fight with a heavyweight champion won’t make the former competitive, it will get him killed. RCEP would have harmed the already late industrialization in India more than even the East India company.
What India needs is a consensus about its future as an economy. Will it always stay a land of farmers with some white-collar IT professionals?
All the political parties have aligned their fortunes with the idea of India being the perennial “land of farmers”. Manufacturing is still seen and sold as an evil concept of capitalists trying to exploit poor labourers. India needs a change in mindset, i.e the mindset of people, of politicians, of intellectuals.
Nobody owes you anything, you would have to earn it.
The only sensible comment. The entire political system is opposed to doing the necessary reforms to make manufacturing competitive. But these same bozos and their uncles cry about slow industrialization. That is the problem with the Marxist ideology that pervades the Indian system – its practitioners are happy to keep India poor or kill their fellow citizens in pursuit of power and pave the way for the “revolution.” This insidious ideology, which has seeped into all corners of the Indian society, must be eradicated like plague for India to progress.
Manufacturing requires respect for physical work and pride in dirtying one’s hands. It also requires tremendous synchronicity between all workers and processes in the factory and raw material supplies otherwise work doesn’t proceed smoothly. To produce world class products or components it requires high attention to detail.
The Brahminical system of treating physical work as inferior has created a lackadaisical attitude in the working class population that chiefly does physical work. Almost everyone now wants to have a desk job like software Engineer, chartered accountant, banker, lawyer, marketing/sales etc. Our culture needs to value and encourage those who work with their hands like technicians, mechanics, factory workers, plumbers, carpenters, etc. Sadly today we don’t have enough of highly skilled workers who can work in factories to produce world class quality workmanship. And engineers / managers who are generally sitting behind desks don’t understand that highly skilled labour should be paid well and roadblocks in their physical work should be removed so that the worker can concentrate on producing quality work.
LOL. “The brahminical system?” Where do you learn these tropes? Let me guess – in the canteens of JNU or one of its clones?