Happy 2021. Break out the innovation

Context: Indian industry must drive our economic recovery through innovation and exports

Some impacts of COVID 19 pandemic

• Economic Impacts: Global economy shrinkage of 5 %l Indian Economy shrinkage of 7.5 %.
• Labour supply: labour-force participation rate (LPR) of less than 50%; female LPR is below 21%.
• Worsened the plight of farmers: Pressure on agriculture increased as migrants returned home from higher productivity urban jobs to lower productivity farming.

Steps taken by government: for economic recovery driven industry and Innovation.

• Atmanirbhar (AN) or self-reliance programme:
  • It aims to deepen technical capability within the Indian industry and is supplemented by a production-linked incentive (PLI) scheme. (aims to provide a subsidy of Rs 2 trillion over five years).
  • Increased protection of Indian industry.
  • Aim to build a more competitive and globally robust Indian industry.

Way forward: for strengthening Indian industry

• Create a stronger export-oriented stance: by
  • Removing tariff protection. (e.g. within 5 years)
  • Creating a pro-trade policy with free-trade agreements.
  • Shedding misplaced preference for a strong rupee.
  • Tie paying the PLI subsidy to the fulfilment of export commitments.
• Aggressive investment strategy by industries: for technology and international markets by increasing In-house Research & Development (R&D) investment because,
  • At present, it accounts for 0.3 % of Gross Domestic Product (GDP), compared with 1.5 % for the world, while India has no presence in top 5 Industrial sectors.
• Government should revise its investment priorities:  Move our public research funding from the state autonomous R&D institutes to higher education because,
• At present, public research in our higher education sector accounts for 0.05 % of GDP, compared with 0.4 % worldwide.
• E.g. Replicate the success of Institute of Chemical Technology in Mumbai in producing fine research output for decades.