Go on Enter the Competition

Context: Industrial policies, in order to achieve the goal of wealth generation and remove poverty deprivation, need to be more competitive at both local and global level.

Recent government reforms to drive competitiveness: 

• The ‘ease of doing business’ drive,

• ‘Make in India’.

• Digitalisation and transparency in the government’s decision-making.

• Repealed obsolete laws.

• Insolvency and Bankruptcy Code (IBC), 

• Goods and services tax (GST), competitive corporate tax rates 

• Better Political relations with countries with the potential to invest in manufacturing 

Reasons for India’s failure to industrialise: Failure to understand the true essence of competitiveness. 

• Before liberalisation: Industrial Policies were restrictive
• Foreign investments were discouraged.
• The importance is given to import substitution over exports.
• Bias towards the public sector, ignoring the private sector.
• Rise in tax evasion, black money generation and corruption. 
• Public distrust of politicians, bureaucrats and industrialists leading to higher costs and reduced competitiveness.
• Failed to devise a strategy after liberalisation:
• Foreign Investment Promotion Board set up in 1991 failed to attract investments into manufacturing leading to persisting uncompetitive manufacturing environment.
• Excessive compliance requirements increased the cost to benefit.
• Failed Industrial Policies: Recent government reforms to boost manufacturing and business have failed to live up to expectations.

Way Forward

• Acknowledging the significance of competitiveness: by the political establishment, senior bureaucrats and economists, implementers of policy, entrepreneurs and managers, and citizens.
• Competitive manufacturing: through continuous value addition in products will benefit consumers and lead to higher demand and faster growth of industry at global (exports) and local level.
• Role of government: 

• To act as a facilitator: rather than a controller.
• Foster competitive manufacturing: by reducing the cost of production.
• Attain Economies of Scale: Bring out policies encouraging quality production through a globally competitive supply chain of small and medium industries.
• Ensure laws align with the aim of fostering competitiveness.

Conclusion: India needs to unite (along with all political differences ), and in partnership, to make it a truly competitive manufacturing country