How India can become

Manufacturing hub?
- By Ankit Agrawal

28-06-2020
 ankitmay28@gmail.com

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28-06-2020
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ANKI

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This shows how far an average Indian is from an
average Chinese or American.

That is why economists repeat that India has to

grow rapidly for several decades at a stretch if it
wants the average level of lifestyle to reach
anywhere close to the developed world.

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 For this,

We continuously need to increase

our manufacturing sector.

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 BUT INDIA’S DEPENDENCE ON CHINA

Contrary to perception, India imports a lot of

intermediate goods from China, and stopping that
trade will affect our ability to produce finished goods.

There are sectors that are import-dependent such as

automobile, pharmaceuticals, electronics,
telecommunications, etc.

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Thus move towards boycotting these goods could be counter-
productive, impacting the overall competitiveness of the
Indian manufacturing sector and undermining our
competitiveness to export.

But does that means India should resign to becoming a

“slave” to Chinese imports?

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 Ofcourse the answer is “No”.

But, the path to overcoming our dependence on Chinese

goods — or for that matter, imports of any other country,

Requires Indian policymakers and businesses to put in real

hard work and not resort to lazy solutions such as
banning trade or raising tariff barriers.

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 REASON FOR INDIA’S POOR SHARE IN GLOBAL TRADE?

The first thing to understand is that India’s poor share in

global trade, especially on goods, is a reflection of
our acute lack of competitiveness.

This is the harsh truth but far too often, instead of accepting
this reality, policymakers have blamed India’s stagnant
exports performance on weak global demand.

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 WHAT ARE DOMESTIC BOTTLENECKS?

Poor infrastructure,

Lack of reliable electricity,

Logistical delays,

Regulatory hurdles,

Problems in enforcing contracts etc.

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 HOW TO REDUCE THE COST OF MANUFACTURING?

We need to be more sector-specific and

Focus on factors of production that can

make a meaningful difference.

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 For example,

India’s desire to revive textile exports can be helped by

increasing productivity in cotton plantations (by better
implementing available technology, like BT Cotton).

Trade negotiations (bilateral, multilateral and

plurilateral) to lower tariffs that India’s exports face
abroad can boost India’s exports in textiles and
engineering goods”.
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 Towards fine-tuning a sector-specific strategy to
boost exports,

The government can just revisit the advice rendered

by its Chief Economic Adviser Krishnamurthy V.
Subramanian in the latest Economic Survey
released this year.

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 India must not harbour
“misplaced insecurity on the trade front”

India has gained from trade agreements: a 0.7%

increase per year in trade surplus with partner
countries for manufactured products and
2.3% per year for total merchandise.

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 Second,

The current environment for international trade

presents India an unprecedented opportunity to chart
a China-like, labour-intensive, export trajectory.

Thereby create unparalleled job opportunities for our

burgeoning youth.

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According to the Survey, by integrating “Assemble
in India for the world” into Make in India,

“India can create 4 crore well-paid jobs by 2025

and 8 crore by 2030”.

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The Survey singled out China as a model for India to emulate.

“China’s remarkable export performance vis-à-vis India is

driven primarily by deliberate specialization at
large scale in labour-intensive activities,

Especially ‘network products’, where production occurs

across Global Value Chains (GVCs) operated by
multi-national corporations”.

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 How India can become
Manufacturing hub?
- By Ankit Agrawal

28-06-2020
13-04-2020
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