Road to Atmanirbhar Bharat
Historical perspective
India chose the path of self-reliance in state-run heavy industries and strategic sectors after independence. In the decades following independence, this choice of self-reliance had placed India ahead of most developing countries. In the 1970s & 80s, however, India did not modernize these industries to climb higher up the technological ladder. The private sector, which had backed the state-run core sector approach in its Bombay Plan, stayed content with near-monopoly conditions in non-core sectors in a protected market. Little effort was made to modernize light industries or develop contemporary consumer products. India’s industrial ecosystem was thus characterized by low productivity, poor quality and low technology, and was globally noncompetitive.
India lose in the ‘lost decades!
India completely missed out on the ‘third industrial revolution. 3rd industrial revolution comprised electronic goods, microprocessors, personal computers, mobile phones & decentralized manufacturing & global value chains during the so-called lost decade(s). Today, India is the world’s second-largest smartphone market. However, it does not make any of these phones itself. Even for Textile India depend on China for Textile chicaneries. India manufactures only a small fraction of solar photovoltaic cells and modules currently used, with ambitious future targets.
self-reliance’ after India embraced globalization?
At the turn of the millennium, when India embarked on liberalization, privatization and globalization. So, the very concept of self-reliance was rubbished. This happened in the belief that it was like reinventing the things already invented and wasting money on it. And when advanced technologies could simply be bought from anywhere at lower costs. Two related ideas have prevailed since then, and neither delivered the desired results.
Basic Idea
1. Unsuitability of PSUs in the globalized world
The first idea was that public sector undertakings (PSUs) are, by definition, inefficient and sluggish for the competitive globalized scenario. No effort was made to engender either real autonomy or a transition to new technological directions. Instead, PSUs with capability and scale were undermined or abandoned, along with many nascent research and development (R&D) efforts, for instance, in photovoltaics, semiconductors and advanced materials. The private sector displayed little interest in these heavy industries and showed no appetite for technology up-gradation. With entry of foreign corporations, most Indian private companies retreated into technology imports or collaborations. Even today, most R&D in India is conducted by PSUs. And much of the smaller but rising proportion of private sector R&D is by foreign corporations in information technology and biotechnology/pharma.
2. Foreign companies were expected to bring new technologies in India
2nd idea was that inviting FDI and manufacturing by foreign majors would bring new technologies into India’s industrial ecosystem. This was thought to obviate the need for indigenous efforts towards self-reliance. But mere setting up of manufacturing facilities in India is no guarantee of absorption of technologies. Most of companies comes with round tripping money without technology, Import key parts from native county, business partner remain lurch for technical know how. There is no evidence from any sector that this has taken place or has even been attempted. The fact is, foreign majors jealously guard commercially significant or strategic technologies in off-shore manufacturing bases.
The key problem of self-reliance is therefore neither external finance nor domestic off-shore manufacturing, but resolute indigenous endeavor including R&D.
Global Views on Self Reliance
Japan’s post-war success, was seen as a template by some countries to follow. The economic miracle - Post WW2 to end of cold war era Japan become rapidly become worlds 2nd largest economy by 1990.
Post WW2 Japan and Germany benefiting from the Cold War, it bcz economic interventionism of Japanese government and and aid and assistance of US Marshal Plan. Countries like South Korea, Taiwan, Singapore and Hong Kong, these countries took huge technological and industrial strides in the 1970s and 80s. South Korea emerged as a global powerhouse in manufacturing, but also in endogenously developed technologies. Taiwan developed technologies and manufacturing capacities in robotics and micro-processors. While Singapore and Hong Kong adapted advanced technologies in niche areas. These self-reliant capabilities were enabled, among other factors, by planned state investments in R&D including basic research (3-5% of GDP), technology and policy support to private corporations, infrastructure and, importantly, education and skill development (4-6% of GDP). Thailand, Malaysia, Indonesia and Vietnam have focused on off-shore manufacturing lower down the value chain and without the thrust on self-reliance. This is useful for job creation but is an unsuitable model for a country of India’s size and aspirations. China is, of course, unique in scale and in its determination to become a superpower not just geopolitically but also in self-reliant S&T and industrial capability. China advanced purposefully from low-end mass manufacturing to a dominant role in global supply chains. It has now decided on shifting to advanced manufacturing. It has set itself a target of becoming a world leader by 2035 in 5G, supercomputer, Internet of Things (IoT), artificial intelligence (AI), autonomous vehicles, biotech/pharma and other technologies of the ‘fourth industrial revolution’.
Way forward for India. India may well have missed the bus in many of technologies in which the U.S., Europe and China have established perhaps insurmountable leads. Yet, self-reliant capabilities in electric and fuel cell vehicles, electricity storage systems, solar cells and modules, aircraft including UAVs, AI, robotics and automation, biotech/pharma and others are well within reach. Large-scale concerted endeavors would, however, be required, since self-reliance will not happen by itself. State-funded R&D, including in basic research, by PSUs and research institutions and universities needs to be scaled-up significantly, well above the dismal 1% of GDP currently. Upgraded and reoriented PSUs would also be crucial given their distinctive place in the ecosystem. Private sector delivery-oriented R&D could also be supported, linked to meaningful participation in manufacturing at appropriate levels of the supply chain. India’s meager public expenditure on education needs to be substantially ramped up including in skill development.
Way Forward
Self-reliance would need a paradigm shift in our approach toward many things. First and foremost is the R&D. Potential of the PSUs has to be tapped to their fullest in the realms of R&D. The second area of focus should be education. These two areas are the key to achieve self-reliance and should be the focus of policymakers.
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