The Indian Weightlifting Federation (IWLF) did some heavy lifting of policy this week. Last year, the Federation ordered four sets comprising barbells and weight plates from a Chinese company. The IWLF declared that it would stop using any equipment made in China. Touch screen calls for boycott of Chinese products fuelled by a rush of rage is not entirely new and surfaces periodically, in the aftermath of a face-off in Doklam and then in Galwan on the Line of Actual Control, galvanised by anger every time China shows its true colours. It is true that sentiments convey public opinion and are necessary, but they are not sufficient to alter ground realities. If only WhatsApp wishes were horses!
Data depicts a harsh reality — fury is followed by furious expansion of imports from China. In 2000, India’s imports from China totalled to $1.5 billion — roughly 2.9 per cent of all imports. In 2010, this rose to $ 30 billion. In the decade since, which witnessed major episodes of intrusion by the People’s Liberation Army, imports from China spiralled to over $ 70 billion — roughly 14 per cent of all imports. India imports more from China than any other country.
Mind you since 2000 a flood of recommendations flowed from a plethora of committees — including one set up to ‘Examine the Possibility of Replacing Multiple Prior Permissions with Pre-Existing Regulatory Mechanism’! There has been a parade of programmes and acronyms — SEZs, NIMZ et al. Success of declarations of transformation is best illustrated again by data.
In 1998, India imported electrical machinery worth $ 90 million from China. By 2010, this spiralled to $ 9 billion and by 2019, it touched $ 20 billion. It could be argued that electrical equipment involves technology but what about other imports. Between 1998 and 2019, imports of furniture, mattress and light fittings went up from $ 3.9 lakh to $ 900 million and that of ceramics and glassware from $ 4.1 million to $ 958 million.
The prequels and sequels of messed up policies and missed opportunities stretch back decades. My book ‘Accidental India’ chronicles how politics failed India’s economy. In 1964, the Homi Bhabha Committee appointed by Jawaharlal Nehru after the 1962 debacle recommended focus on computer hardware and software, leveraging the Indian proficiency in maths.
Blinded by ideology, India drove out big tech such as IBM and missed the bus — the biggest hardware players are in Korea, Malaysia, Taiwan and China. India almost missed the bus in software too. The sector was grounded by the ban on import of computers and data communications all the way till
1991 when N Vittal conceptualised the idea of software technology parks.
The question is not just about what is imported but also why. The answer is competitiveness. In 1992, India’s GDP was $ 350 billion and that of China was $ 390 billion. Three decades later, China’s GDP is at $ 15 trillion and India is at $ 2.7 trillion. The gap is explained by competitiveness — China is the world’s top goods exporter netting around $ 2.5 trillion.
It is not that Indian companies are not competitive. India’s two-wheelers are exported to over 30 countries. India is the global hub for design and export of compact cars. India’s textile and garment companies supply to international brands and retailers. Success though has been few and far between primarily because politicos and babudom have persisted with and perpetuated inspector permission raj. India’s share of manufacturing in its GDP is where it was in 1991 and has yo-yoed between 14 and 17 per cent.
Make in India, a grand idea, lacks legs to run. Competitiveness calls for liberation of factors of productivity. Land and labour continue to be trapped in confounding laws. Land acquisition can be eased using Article 254(2) of the Constitution but states are reluctant. A model labour code is languishing and even small steps to reform are stymied by war in the Parivar. Cost of capital is hostage to government borrowings driven by debt and deficit of Centre and states. Expenditure reforms and aggressive privatisation can free resources to retire debt and fund infrastructure. Every business is subject to inspections under 12 different Acts on any given day of any month. Clean up of regulatory cholesterol demands decentralisation.
The circumstance of the pandemic and the rethink across countries on supply chains present India a window to align and leverage democracy, demography and demand. There are opportunities galore. The roll out of 5G affords a window to craft policy to woo makers of network components and devices. Migration from fossil fuel to electric offers an opening to repurpose Indian Space Research Organisation’s battery know-how for public transport and personal mobility. Countries are scouring the world for pharma and vaccine production. To start with, public sector enterprises on the divestment list could be designated as Special Economic Zones (SEZs), for design of a plug and play investment regime.
All of this calls for recasting economic security as national security, consistent political commitment to make things happen. The shift of orbit from dependence to scalable resilience could offer global investors a viable alternative and diminish the centrality of China in the global growth story. Now that would be a true tribute to the bravehearts.
Shankkar aiyAr
Author of Aadhaar: A Biometric History of India’s 12 Digit Revolution, and
Accidental India
shankkar.aiyar@gmail.com