Making self-reliance work for India

Context: For self-reliance to be effective, the country must reduce protection and invest in exports and learning. 

Challenges to Self-Reliance

• Tariff protection: against imports especially from China is opposed to the idea of self-reliance being redefined as outward-looking.
• Lack of competitiveness: due to increased tariff which left the competitiveness and learning at the choice of firms.

Redefining Self-Reliance:

• Protection must be temporary: 

• Scheduled tariff reduction must be fully credible and transparent so that the firms know exactly what to expect and can invest with confidence.

• Combine protection with exports: 

• Japan, South Korea and Taiwan are models for both the advocates of import substitution and export promotion.
• For E.g. In Taiwan, firms had to export over half their output — if these targets were not met, the protection was removed.
• The great advantage of exporting is that it forces competitiveness.
• Firms must also learn what product features are in particular demand.

• Invest in learning:  This requires conscious effort to move towards efficient production.

• For E.g. When Hyundai Motors learned how to manufacture efficiently by repeatedly disassembling and assembling the sample cars they had imported.

• Beyond protection: Manufacturing of PPEs and N95 masks is a fine example of how idealism and challenge can deliver extraordinary results.
• India is today the second-largest producer of PPE’s (5,00,000 per day) and is now considering its export.

Conclusion: Self-reliance must be our sturdy ideal, not self-serving rhetoric to justify protection.