Indian
entrepreneurs encouraged to manufacturing
A few days back, during the Corona lockdown, I got a phone call from a young jeweler who is manufacturing artificial Jewelry in Jaipur. He was worried about the future of his business.
Besides the lack of demand, he was also worried about the Chinese components required
for his manufacturing. He informed me that China is the only source of
artificial gemstones required for setting in the jewelry. India has a border
issue with China and Indian citizens are in the mood of boycotting China and
Chinese products. Hence, if he uses Chinese artificial gemstones, there is a
fair chance of a boycott by Indians. I advised him to study if he could
manufacture those artificial stones for domestic and international markets.
Also, I suggested to him that this is a good time to explore because the whole
world is thinking of an alternative to Chinese products.
Later on, he replied to me with a
positive response. He informed me that he had searched for the required
machinery and chemicals needed to produce artificial stones. As it needs a
bigger investment, he has also been negotiating with some fellow
businessmen to come together. It is a well-known fact that Jaipur is an
international hub for colored gemstones. Plenty of skilled labor is available
in the market. Hence, it is a suitable venue for producing artificial
gemstones.
A few days later, encouraged by the
later conversation with the young jeweler, I started a telephone discussion
with one of my relatives based in Hyderabad. He is an importer of spare parts
for mining machinery and equipment. Though not an engineer, he has skills in the mechanical area. I suggested he manufacture a few of the spare parts, maybe one or two initially. In the conversation, it is revealed that Chinese parts
are much cheaper and manufacturing is not viable in India. I further suggested
him explore whether one or two parts are possible and cost-effective. He is
now researching the matter and may come out with a possible
solution.
Just now: India has banned 59 Chinese apps including TikTok, Camscanner, UC browser, Wechat, etc giving a tremendous blow to the App industry of China. All these apps have a large user base in India.
Wonderful
achievements in Indian manufacturing during Covid 19
We have seen that India has
successfully started manufacturing Personal Protection Equipment (PPE kit) in the post-Covid era. The country was not producing a single PPE kit in March 2020
and was fully dependent on Chinese imports. However, in just two months, i.e. in
May 2010, Indian manufacturers started producing more than 200 thousand PPE
kits per day. Indian manufacturers are not only meeting the domestic demand but
started exporting kits, better in quality than the Chinese Ones.
Surprisingly, India has become the second largest producer of these kits after
China. Similar things happened with the production of musk. There was a crisis
of masks in March and April and there was abandonment in May itself.
Indian companies have manufactured
ventilators, a life-saving equipment, during this period. The government of
India (PM care fund) has already purchased 60 thousand ventilators from
ingenious manufacturers. Now, India is ready to export ventilators.
The biggest surprise came from a
tribe woman in Chhattisgarh. She started producing sanitizers using honey trees.
Tribes use honey trees, commonly known in India as Mahua, to prepare liquor. The
tribal woman prepared alcohol out of it and used it to make sanitizers.
Sanitizer was scarce during the initial stage of the pandemic.
There are hundreds and thousands of
products that Indian entrepreneurs can manufacture, feed the domestic market, and export, too.
Advantages
for India
Geophysical
advantages
India is bestowed with the
advantages of demographic division. The country has a huge population, the
second highest in the world, truly diverged. The geography of India is blessed with
all types of natural divisions. It has mountains, plateaus, and
plains; rivers, forests, deserts, seas, and oceans. The northern region is
cold, the southern is hot and the rest has moderate weather. And we know that
different geology and different seasons are needed to manufacture different
products.
Heavy rainfall in West Bengal and
Assam supports the jute crop. Hence, the jute industry is developed on the banks of the Hooghly River surrounding the metro city of Kolkata. Similarly, the suitable weather of
Bengaluru helped in developing precision industries such as mechanical
watches.
Iron ore mines in Orissa and
Chhattisgarh and coal mines in Jharkhand and West Bengal are the reasons behind
gigantic steel plants like Durgapur, Rourkela, Jamshedpur, and Bhilai.
Average
age advantage (Younger population)
In 2020, the average age of Indians is
29 where more than fifty percent of the population is below 25 and sixty-five
percent below 35. Whereas, China's average age is 37 and it is 48 for Japan.
The average age in the US is 38.2 according to statista.com. The US had an
average age of 29 in 1960, exactly equal to that of India in 2010. And the world
has seen the progress of America after the 1960s.
Most of the developed and
industrialized countries are struggling with an aging population. Here, India
is in an advantageous position with the lowest average age among the major
countries in the world. India can leverage its young population to be a manufacturing
hub.
Advantage
of various skills and expertise
There are varieties of traditional
skill sets in India. The country produces numerous varieties of handicrafts in
different geographies. Jaipur produces marble statues whereas Bengali artisans
are proficient in clay modeling and terracotta arts. Similarly, Varanasi and
Thanjavur are renowned for their silk saris. Toosh and Pashmina shawls of
Kashmir and Ladakh are splendid and fetch high value in the international market.
Who doesn't envy the wooden artwork of Barmer in Rajasthan?
Semi-automatic power looms in
Bhiwandi, Ichalkaranji, Tirupur and Malegaon generate huge employment among the
skilled loomers. Similarly, Khadi clothes from the competent workers of Andhra
Pradesh are winning the hearts of fashion designers.
Where Tirupur and Kolkata are the
hubs for hosiery, Ludhiana is known both for hosiery and woolen. Delhi is known
for manufacturing jeans, Mumbai for branded garments, and Indore for fancy
readymade. You can add as many products, as you wish, to the list.
Expertise
in Information technology
India has a huge trained and skilled
workforce in the IT sector. India has been shining in the global IT since Y2K. IT
exports from India have been skyrocketing. Indian IT skills are recognized by
the global business leaders. What more, Indian IT professionals are heading the
top internet and software companies like Google and Microsoft.
India is way ahead of other
countries both in quality and quantity in the software industry.
Atmanirbhar
Bharat (Self-Reliant India)
Narendra Modi, the Indian Premier
recently, has called for Atmanirbhar Bharat. The invocation of the popular
leader is taken hand in hand by the citizens of India. The cabinet of
ministers, government officials, universities, and bankers are also prompted to
support the mission. It seems to be a flagship program of the central
government besides "Make in India". The program has the potential, to reduce dependence on China and to make India a global manufacturing
hub in the long run.
India
has failed to catch the manufacturing bus
China has caught it but India has
failed to catch the manufacturing bus since the 1980s. Both China and India had
similar levels of population that created a cheap labor advantage over Western
countries in the EU and the US. India had the highest number of engineers, even
more than that of China at that time. However, Indian policymakers failed to
assess the potential of globalization and missed the opportunity.
Den Xiaoping, the Chinese president
came out as a visionary, reversed the Chinese policy of intrusions, and started
a new era of Sino-American friendship. Until 1990, Chinese GDP and per capita
income were similar to that of India. However, drastic changes in Chinese
economic policy gave them an edge. Now, the GDP of China is five times that of India,
so the per capita income. Presently, the GDP of China is about $14.5 Trillion whereas that of India is only about $2.9 trillion.
On the other hand, India's footprint
in software and other BPO/ KPO sectors is clearly visible in the global scenario.
India
can help distressed global supply chain
As the US and the EU economies
started recovering, they were facing problems in the supply chain. Most of these countries
are heavily dependent on China for FMCG. India can start manufacturing those
goods at a fast pace to maintain the supply chain. The US stores have been
struggling to get supplies of petty things such as paper napkins, trampolines, sanitizers, and so on, as consumer demand has started soaring in retail
stores. Online sellers are also facing stress. Being optionless, they are
looking to China for a faster supply. Why India can't be an option?
Though the political leaders in the
US and the EU are continually batting against China, the traders are looking
into the same country for continuing supply of consumer goods. Even the public
sentiment is against China. However, they are left with no choice. Indian
entrepreneurs have shown their ability and courage to manufacture PPE kits,
ventilators sanitizers, etc at a faster speed and maintained the critical
supply line. They, now, have the opportunity to think globally and grab their
percentage in the global supply chain.
Reforms
needed
Indian policymakers have to reform
economic policy. They have to study Chinese development carefully during the
period and come up with a strategy. It also needs a political will to compel
government executives to implement those policies and guidelines determined by
the policymakers. A path-breaking correction is needed to grab the new
opportunity. When I talked to several industrialists and entrepreneurs, they
told me about what the reforms needed. A few of the most relevant reforms
required are stated below.
Land Acquisition Act reform
The Land Acquisition Act in India is an
old one. It was made looking into the agriculture-based economy. The time has
changed a quick reform is needed. Acquisition of a piece of land in India is a
tough job, even for a government. It takes years to get a piece of land to
establish an industry. This cumbersome process prevents investors from building an
industry. Not only are the Indian entrepreneurs, but foreign investors are also scared
of the rule. Hence, a speedy reform of the act is expected and the Union and
state governments have to act on it.
It is good news that the Indian
government has created a land bank by already acquiring some thousand hectares
and ready to give to the industrialists.
Labor
law reform
Labor law reform is the most
important one. late G D Birla, the then biggest industrialist in India once
said, " It is easier to divorce wife than to fire a labor". The same
stale laws are still haunting the entrepreneurs. It is ridiculous that an
entrepreneur cannot fire an employee whether he or she is productive or not.
However, an employee can switch easily without any bar. Many times micro, small, and medium enterprises suffer from the switching of their employees without
notice.
Political parties, always, make hue
and cry over labor reform issues. They have to look beyond the vote banks. If
India has to solve the unemployment problem by looking into its vast and ever-growing
population, it has to reform its labor laws.
Environmental
law reform
Many times, environmental laws
create hindrances in establishing an industry. We have to reform environmental
laws conducive to sustainable development. The country has to reduce
unnecessary burdens of clearances.
Lowering
tariff for electricity and oil price
Electricity tariff in India is much
higher in India compared to other countries, especially China. Moreover,
India is a country where an industry has to pay more than a domestic consumer
for electricity per unit. Similarly, oil prices are much higher in India. central
and state taxes play a major role in determining petroleum prices. Governments
have to reduce these taxes to provide cheap petroleum products to the
industries.
Enhancing
savings to GDP ratio
Famous economist and Rajyasabha
member Dr. Subramanian Swami argues that the Indian savings ratio is much lower than
that of China. Where India has a ratio of 29 percent, China has it in its favor
to 36 percent. He writes that if India can raise it to 36 percent it can reach a GDP growth rate of 10 percent.
Shifting
from service to product in software
Indian software professionals have been in
software services since the 1990s. To date, they are reining the global IT
industry. There is a large number of these professionals, educated, trained, and
experienced. However, India has failed to bring world-class IT products. Why
can we not create products like Google, Facebook, or Twitter? Why did we fail
to create a simple platform like YouTube or even a Vimeo? Why Indian IT
entrepreneurs are not looking to build a company like Microsoft, Oracle, or
Cisco? India provides the highest customer base for most of these companies but it is not trying to create its own. It is shameful to see Indians in TikTok or
Hello. India needs an Alibaba of its own.
