The Coronavirus Pandemic is having its consequences- both economic and strategic, as the liberal, democratic world is joining hands to end Chinese hegemony, or at least contain it unprecedentedly. India sits at the centre of the changing world order, as it is expected to replace China as the “world’s factory”.
India wants to be the next global manufacturing hub and the engine of world growth. Behind India’s deft diplomacy and renewed stress on the Indo-Pacific strategy, New Delhi has a single aim- occupying the space that the Dragon occupies. One of India’s leading manufacturing sectors is the Pharmaceuticals sector in which India already enjoys a huge advantage over China.
It is not a matter of surprise that Modi government’s first aggressive move is to kick China out of the supply chain in the Pharma sector.
The Print has reported that Modi government is likely to announce the final guidelines for its Production Linked Incentive (PLI) Scheme worth Rs. 6,940 crore, which is meant to augment domestic production of the Active Pharmaceutical Ingredients (API).
The government had approved the PLI Scheme in March, as the government wants to reduce India’s dependence on raw materials from China for the production of crucial antibiotics, anti-HIV drugs, vitamins, and cardio medicines.
In March, we at TFI had reported that the NITI Aayog, Department of Pharmaceuticals, Finance Ministry and the Prime Minister’s Office were together working on a blueprint to slowly shift API manufacturing facilities from China to India.
It must be kept in mind that though India is a supplier of finished drugs to many countries, drug manufacturers import 70 per cent of their API needs from China. Such over-dependence on China is both dangerous and unsustainable.
Therefore, the Modi government is trying to cut dependence on China when it comes to the Active Pharma Ingredients in line with Prime Minister Modi’s Atmanirbhar (Self-reliant) campaign.
The authorities have already reached out to 600 API and other raw materials manufacturers. The government is in the process of formulating the minimum requirements for the scheme, eligibility criteria and categorisation of incentives. The Modi government wants to incentivise a total of 136 selected manufacturers.
This is certainly not the first ominous sign for China that is coming from India, and earlier subtle steps suggested that India is planning to make full use of the global backlash that Beijing is facing.
The Confederation of All India Traders (CAIT), the apex body of traders’ union, recently decided to boycott Chinese goods worth more than 1 lakh crore rupees- 13 billion dollars approximately- by December 2021. CAIT has already prepared a list of 3,000 items which includes toys, gifts, FMCG products, confectionery products, cloths and watches, as good indigenously manufactured alternatives of these items are available.
Modi government itself has taken steps like developing a huge land pool to lure firms moving out of China and looking to translocate elsewhere. A Bloomberg report suggested that according to people in the know of things speaking on the condition of anonymity, a total area of 461,589 hectares has already been identified across the country in a bid to attract Multi-national Companies (MNCs) that will be looking for new sites once they shift their operations out of China.
Things are also moving positively for India- German footwear brand, Von Wellx, recently decided to move its factory operations from China to Agra, Uttar Pradesh, and a meltdown was visible in China.
Meanwhile, the United States has also decided to break the backbone of Chinese economy- manufacturing. The US wants to restructure the global supply chain, and India forms an inherent part of its plans.
The US Secretary of State Mike Pompeo said, “We’re working with our friends in Australia, India and Japan, New Zealand, the Republic of Korea, and Vietnam to share information and best practices as we begin to move the global economy forward.”
But the move to cut dependence on China for APIs is clearly the Modi government’s first direct move to move China out of global supply chains. India wants to make it big in the Pharma sector with renewed importance of the sector during the ongoing Pandemic. And the Modi government is thus making all attempts to become completely self-reliant in the Pharma sector.