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How PM Modi hinted at replacing China as the hub of manufacturing

PM's message was clear

Akshay Narang by Akshay Narang
13 May 2020
in Economy1
Modi
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There is nothing like a good crisis to push for economic reforms and activity- while the Balance of Payment crisis in 1991 had created enough space for the then Prime Minister Narsimha Rao to push economic reforms, taking India out of the era of Nehruvian Socialism, the COVID-19 crisis of 2020 is allowing Prime Minister Modi to push India towards self-reliance and dismantling the remains of the pre-1991 era that continue to hold back the Indian economy from becoming a manufacturing behemoth.

In this sense Prime Minister Modi’s 8 PM address yesterday is one of the most important of all his 8 PM addresses. He has dropped hints- hints that reveal how India aspires to take over the responsibility of becoming the “world’s factory” from China. With his Rs. 20 lakh crore package worth 10 per cent of India’s Gross Domestic Product (GDP), the mantra of “Atma Nirbhar Bharat Abhiyan (Self Reliant India Campaign)” and emphasis on the policy of Vasudhaiva Kutumbakam, that is, the entire world is one family, Prime Minister Modi has spelt out the vision of a Vishwa Guru Bharat live never before.

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At the outset, PM Modi made it clear that India’s self-reliance is aimed at international peace and prosperity, unlike the Chinese version of expansionism. Prime Minister Modi said, “India does not advocate self-centric arrangements when it comes to self-reliance. India’s self-reliance is ingrained in the happiness, cooperation and peace of the world.”

Unveiling his plans to pull the country out of the slowdown created by COVID-19 outbreak and related lockdowns, PM Modi spelt out his vision for a self-reliant India laying down five pillars:

  1. An economy that brings “quantum jump” instead of “incremental change”
  2. An infrastructure that becomes associated with the image of “modern India”.
  3. A system that is driven by technology that can “fulfil the dreams of the 21st century”.
  4. Our vibrant demography that is the strength of the “world’s largest democracy”.
  5. A demand which is increased and met by strengthening every stakeholder in the supply chain.

Every one of the five pillars that Prime Minister Modi spoke out gave a loud and clear message to the world- India is ready to take over the role of a manufacturing hub from China, in a manner which actually stands to benefit the world. 

India is now looking at bold reforms to push India towards industrialisation, something that Prime Minister Modi himself emphasised when he said, “Friends, it is now imperative for the country to move forward with the commitment of Bold Reforms to create a self-reliant India.” 

He added, “Now the scope of the reforms has to be broadened, giving a new height. These reforms will be in the entire supply chain related to farming, so that the farmer is also empowered and will have minimal impact on agriculture in any other crisis like corona in future. These reforms will be for, rational tax system, simple and clear rules-of-law, good infrastructure, capable and competent human resources, and building strong financial system. These reforms will encourage business, attract investment and strengthen our resolve for Make in India.” 

What Prime Minister Modi said is not without substance, as there are already signs of the country moving onto the path of self-reliance. The Centre is reportedly preparing to offer tax incentives and procurement preference in government contracts to local manufactures, and in fact, the Union Home Ministry has already decided that all the Central Armed Police Forces (CAPF) canteens that cater to lakhs of CAPF jawans and officers, will now sell only locally manufactured goods.

This is in line with Prime Minister Modi’s plans of making vibrant global brands out of Indian products which is why he said, “every Indian has to become vocal for their local, not only to buy local products, but also to promote them proudly.”

Meanwhile, ET Now has also reported that steep non-tariff barriers will be imposed to deter imports, and the states are also likely to be asked to overhaul their procurement process giving preference to domestic manufacturers.

In his speech, Prime Minister Modi expressed confidence in India’s ambitions of self-reliance and stated, “When the Corona crisis started, there was not a single PPE kit made in India. The N-95 masks were produced in small quantity in India. Today we are in a situation to produce 2 lakh PPE and 2 lakh N-95 masks daily. We were able to do this because India turned this crisis into an opportunity.”

The Financial Daily quoted a government official as saying, “The idea is to cut down dependence on reliance of imports from one country while encouraging local manufacturing… Why should we be importing furniture and leather in which we have competence?” The official added, “Support measures are also likely to aid local manufacturers build brands globally.” 

Prime Minister Modi is not only looking at making India self-reliant and promoting local brands into becoming global ones, but he is also looking at overhauling the Indian Economy into one that is free of hurdles in land acquisition, overly regulative labour laws, monopolistic practices in the farm sector and so on.

In his address, he said, “In order to prove the resolve of a self-reliant India, Land, Labour, Liquidity and Laws all have been emphasized in this package.” We at TFIPOST have already reported how a number of reforms have been unveiled by the BJP-ruled states across different areas, viz. relaxing labour laws, easing land acquisition and ending the monopoly of APMC mandis in the farm sector.

Ever since the exodus of companies from China started, owing to its mishandling of the Wuhan virus Pandemic, India has been capitalising upon this opportunity by identifying a massive land pool, offering world-class highways and engaging with foreign companies, including Japanese, Korean and American companies in order to woo them to relocate manufacturing into India.

With his latest speech, Prime Minister Modi has assured the rest of the world that they can shift manufacturing to India and that India will not harbour hostility against the rest of the world unlike the current manufacturing giant, China. 

A self-reliant India with better business conditions that not only fuels Indian growth but also safeguards world peace and prosperity by allowing countries and corporates to escape the kind of hostility that they faced in China during the ongoing Pandemic, is at the root of Prime Minister Modi’s speech that was laced with hints of India replacing China as the hub of manufacturing.

Tags: ChinaCoronavirusmanufacturingPM Modi
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