When will the lion roar?
Two years ago in 2014 when the Make in India campaign was launched, the Narendra Modi Government defined it as “a major new national programme designed to transform India into a global manufacturing hub”. The aim and vision, articulated in the summer of September 2014, was timely, following on the success of India’s first indigenous space mission — “Mangalyaan”.
Now, two years down the line what has been the success of this initiative? The public sector undertakings in India can play a crucial role in the success of the Make in India campaign. However, it seems that the PSUs are still trying to get the manufacturing revolution going. The PSU Market Watch section in this edition reports how after dragging for more than two years, the State-owned gas utility, GAIL India Ltd, has cancelled a USD 7 billion tender for hiring newly built ships to ferry LNG from America after bidders did not agree to the Make in India terms.
The incident is a major jolt to India at a time when the Government is aiming at making the country shed “the biggest importer” tag and building the nation as a vibrant manufacturing hub.
So what went wrong?
Popular business writer TN Ninan in his book The Turn of the Tortoise—The Challenge and Promise of India’s Future writes, “While size has helped Indian democracy it has also led to policy errors, which shouldn’t have been made... India is big enough to offer the potential of a large domestic market; inevitably, that became the focus of policy...India continued to favour import substitution for much longer and this had its repercussions. The difference between exporting units and those with a domestic market orientation is that the former have to be competitive, the latter not necessarily so. In India’s case, the inward focus became so pronounced that the country became an economic prison, functioning behind high protective walls. It is, therefore, evolved into a market for mostly shoddy, usually overpriced goods that would not sell anywhere...”
What this tells us is that India is trying to join the manufacturing bandwagon a little too late in the day. As journalist-author Mihir Sharma writes in his book Restart—The Last Chance for the Indian Economy, “The Indian State is run for its nice, kindly Inspectors, and not for workers or entrepreneurs.” And this attitude needs to be corrected.
The Indian economy has been more of a tortoise than a lion over the last many decades. The ball is in India’s court to deliver on the Make in India promise. Global manufacturing is changing very fast. India has been left behind in this race and we are in an intense “catch up” phase to survive and prosper.
Speed, deep insights, micro level execution on many fronts and far-sightedness in the political class along with the flexibility and competence of the bureaucracy will determine if India remains the tortoise or metamorphoses into a roaring lion on the global stage.