By: Asad Mirza
75 years after independence, becoming the fifth largest economy in the world and poised to be the third largest economy by 2030, India has indeed surpassed many significant milestones. But the moot question here is what has fuelled India’s growth, the services or the manufacturing sector, and what should be its future plan of action.
The economic reforms ushered-in by the Narasimha Rao government in 1990s, and the subsequent unshackling of chains bounding the private sector ill then, proved to be a boon for the Indian businessmen. But more or less these economic reforms ushered in the groundwork for future transformation of the Indian businesses, which were able to lead the growth curve with the services sector.
Currently G-20 Sherpa and former head of the Niti Aayog, Amitabh Kant in his book, Made in India: 75 Years of Business and Enterprise, offers an insider’s peep.
In to the second-generation reforms which began in 2014 and delves deep into the policies and people behind the new age start-ups and their novel businesses versions that are unleashing the entrepreneurial zeal among the Indian youth.
Kant’s ringside view as a top policy maker have added immensely to the book, besides highlighting his out of the box campaigns such as Make In India, Start-up India, God’s Own Country, and policy changes like Performance-Linked Incentive Scheme (PLI), Aspirational Districts, e-Mobility, Green Hydrogen, and Ease of Doing Business reforms.
However, the book has also gave an opportunity to the top business leaders and policy makers to air their views about the future course to be taken by the Indian government and the businesses to lead this economic growth trajectory.
Speaking at the book release function of the book, EAM S Jaishankar made a strong pitch for the country to refocus its economic growth strategy on manufacturing. While Kant emphasised that the growth of MSMEs (Micro, Small, and Medium Enterprises) in India is also desirable but is contingent upon having very large companies.
On the other hand N Chandrasekaran, Chairman of Tata Sons expounded that there are three transitions coupled with moving geopolitical situations. From the transition’s point of view, the first is digital and AI, second one is energy and third one is supply chain. In all the three transitions, India is probably the best placed country in the world, to maximise on the opportunities offered and further propelling the Indian growth story.
Uday Kotak highlighted the resilience and stability of the Indian banking system and financial systems in the world today. He felt that the Indian banking industry has got something right in comparison to the US and European banks. He said we have got our act together, we have created a stable financial system, well capitalised and it’s a goldilocks time – lowest non-performing assets, clean credit, reasonable growth in the book, and none of these risk issues like we are seeing in the developed nations. Thus, assuring the stability and the solidity of the Indian financial sector; in the future too.
Taking the debate further on services sector v/s manufacturing sector, Jaishankar opined that this focus on services was actually an elegant excuse for being incompetent. He further emphasised that India will never be a great country if it is not a great manufacturer. He also batted for the Production Linked Incentive Scheme (PLI) scheme, which provides incentives for domestic manufacturers.
In his opening remarks, Kant, distinguished India’s economic growth challenge from that of other countries like China and South Korea. He stressed on the need for India to foray into sunrise sectors of growth like mobile manufacturing and electric mobility, industrialising further without carbonising.
While pushing for a refocus on manufacturing, Jaishankar remarked correctly that India need to stop looking for a China fix. Indian growth cannot be built on the pattern of Chinese efficiency and planned inputs and outputs.
India surely lost on the count of efficiency, when during the Covid period, with lockdowns affecting Chinese production capabilities and the order books getting bulky, Chinese companies preferred to spread base in countries like Vietnam instead of India.
Jaishankar also touched on the gap of comprehensive national power between India and China, which he described as a big concern in the diplomatic arena.
Comprehensive national power is a common parlance in foreign policy to refer to a totality of a country’s economic, military and political power.
The foreign minister went as far as to say that improvements in Ease of Doing Business (EDB) have helped grow India’s “global stature”, and proves that India is finally moving towards “a politics of delivery”.
Without directly referring to the Ukraine war, the Indian foreign minister remarked that the current “global polarisation” is an opportunity for India.
“Global polarisation has made diplomacy far more complex but it is also a window of opportunity for many nations. Smart business moves can really open up many possibilities,” he said.
Unambiguously all the participants were unanimous in highlighting and appreciating India’s robust economic growth since 2014, increase in its global stature besides expanding its wings in those sectors which were hitherto considered unapproachable or unfeasible for the Indian businesses to manage, but Indian businessmen have proved the critics and naysayers wrong, majorly due to the support and guidance provided by the government.
As most of the panellists at the book launch agreed we indeed have to take a clarion call to move our industries to the manufacturing paradigm but additionally we also have to focus more on building-up the infrastructure ecosystem, which could sustain these large scale manufacturing activities, which in turn will give a boost to the MSMEs, only then we could be safe and proud in proclaiming that India’s development story after 2014 has been a successful one, based on its performance levels.