Swadeshi vs Make in India

by May 15, 2020 0 comments

For a sentiment to become reality, we need to generate mass confidence, demand and scale of home-grown brands, a tall order

If there is one big lesson that COVID-19 has taught us, it is the need to be self-sufficient and shed some dependencies of globalisation, which have been good for market economics but have been tested during the pandemic that has found us wanting in preparedness. From testing kits to drugs, ventilators and hospital equipment and capacity, we are relying on imports. The poor budgetary support to healthcare and education over the years has meant our public health system is extremely fragile while our R&D is languishing. Yet if some rapid inventions of the last month-and-a-half are anything to go by — indigenous test kits, ventilators and aggressive vaccine efforts that are both reliable and cost-effective — then the crisis has also opened up the possibility of capitalising on our innovation and skill sets. If we prime and encourage these efforts through incentive and funding hereon, we could at least develop some resistance given the frailty of our healthcare services. For example, the pharmaceutical industry imports nearly 70 per cent of crucial chemical ingredients from China. It is with the idea of building self-sufficiency in mind that Prime Minister Narendra Modi has given a clarion call about being “vocal about local” goods but set off a neo-Swadeshi movement in motion. Canteens of military personnel have even been asked to stock up “made in India” products, including FMCGs. While we must attempt our own recovery in crucial sectors bit by bit, a blanket call may sound a bit like sloganeering, considering we depend on global brands for 70 per cent of all consumer goods. The fact is all such home-grown enterprises have failed in the past without economies of scale and the depth of experience. In the end, the imports have always come cheaper. So till we generate a mass demand, develop scale and upgrade quality benchmarks, “be Swadeshi buy Swadeshi” will just be a sonic boom. Perhaps, this is a good time as any to at least push “Make in India” at the granular level. At the same time, we also have to take care about not being too insular and protectionist but competitive. Once we graduate to a level-playing field and comply with the market insistence on evolved standards of quality, our brands could see greater visibility internationally instead of having curated presence. But that’s still a long way off. Anyway, most MNC majors, who have been doing business in India for over 50 years, source raw materials locally and manufacture them here. So it is not like they should be turfed out or that we should be left without stocks of essentials. There is no doubt that India should promote local manufacturing, which will create jobs and develop critical engineering and manufacturing skills. But that “import substitution” should be done by encouraging foreign firms to bring in their expertise and money to India, not discourage them.

The Gandhian ideal of self-reliance did birth several home-grown majors, some of which have survived though most have fallen by the wayside. JN Tata established his Swadeshi Mill in 1886. And Ardeshir Godrej believed that India could realise its dream of self-rule by reducing its dependence on the West for manufactured goods. But we aren’t a colonial outpost anymore. One has to look at what happened to home-grown soft drinks, born after the American giants were chucked out by the Janata Government in 1977. While Thums Up survives today, it is owned by Coca-Cola. Localisation did not give birth to globally competitive companies, so we must temper our reactionary responses. Similarly, Bajaj Auto’s incredible international success today is because it competed in the crucible of the Indian market with foreign giants. And the success of the Tata Group, Mahindra and Hero, all Indian multinationals, is because they have weathered competition and have collaborated with the best foreign partners. India is particularly dependent on China, importing goods and services worth $50 billion more than it exports. We are deficient in rare-earth metals and cannot produce solar power equipment, wind turbines, cellphones, laptops and electronics. Many international manufacturers already have plants here, assemble 90-100 per cent of their portfolio here, are expanding their R&D facilities and component sourcing from India. Global brands dominate 90 per cent of the market in the smartphone and television categories, although the latter did have a healthy domestic brand showing till about the 80s. Our own brands of refrigerators, washing machines and ACs have long lost out to Chinese, Japanese and South Korean imports. Our discretionary and luxury segments are totally dominated by global brands. Khadi is still a home-spun effort that has slim international acceptability as Indian linen. But if our experiments with home-grown retail majors, hypermarket chains and fast food brands are any indication, then we have stood up quite well despite global players. Promoting Indian firms for smaller contracts is a worthwhile cause. But we should stop conflating self-reliance with Swadeshi. India is an integral part of the global economy and we do not want to go back towards the bankrupt days of India in the 1970s. 

(Courtesy: The Pioneer)

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