Almost three decades ago in 1991, India started transforming its political economy from a Fabian socialist one to a slightly capitalist one. This transformation was of a very peculiar nature as it was mainly driven by foreign companies which got access to the Indian market. American, British, and Japanese companies set up their shops in India to sell their goods and services. Chinese companies flooded the Indian market through their goods.
- Even after LPG reforms in 1991, no local business group other than the already established Reliance could make substantive gains
- After PM Modi came to power, many other groups like Tata, Adani, Vedanta felt incentivised to contribute to the Indian growth story
- Local capitalism is the need of the hour as foreign capitalists are known for ditching countries when they need them most
Indian Business groups flourishing
However, in this transformation, somewhere the Indian companies were missing. Except for groups like Reliance, there were hardly any domestic companies that grew exponentially. However, in the last seven years of the Modi government, many domestic business groups including Reliance Group, Tata Group, Adani Group, and Vedanta Group have established themselves in the domestic market, and are competing with the global giants.
Moreover, the country now has more than 90 unicorn startups, emerging in sectors ranging from Software as a Service (SaaS) to beauty products. The overall number of DPIIT recognized startups is more than 50,000 and today our nation boasts of having third largest startup ecosystem in the world.
Local businesses are need of the hour
So, in the last seven years, the Modi government has indigenized capitalism. In the earlier decades, capitalism was mostly driven by the foreign companies who exploited the Indian market and Indian labor, but ultimately took the wealth to their home country. The wealth created through indigenized versions of capitalism will remain in the country and contribute to the coffers of the government as direct and indirect taxes. This will give the government space to spend more on infrastructure creation and welfare expenditure.
India needs large companies in sectors like defence, semiconductors. Also, the country needs to be Aatmanirbhar in critical technology areas. If the Russia-Ukraine conflict teaches one thing, it is that Aatmanirbharta is the only way forward in today’s unstable global system. The Western powers brought the economy of Russia on heels by imposing multiple sanctions. And if India is not Aatmanirbhar, it will meet the same fate if it falls on the wrong side of the prevailing consensus.
Defence-The largest benefactor
The Aatmanirbhar Bharat campaign recognised Defence as the major sector where India needed to pull up its socks and become, if not entirely but somewhat self-sufficient. Currently, India, the third-biggest military spender in the world, is also the second-largest importer of arms. Between 2016-20, we imported 9.5 percent of total arms imported worldwide.
As reported by TFI, taking the Make In India and its motto to the core, Union Defence Minister Rajnath Singh earlier this year earmarked around 64 per cent of the Defence Ministry’s modernisation funds under the capital acquisition budget for 2021-22 — a sum of over Rs 70,000 crore — for purchases from the domestic sector.
In order to promote indigenous design and development of defence equipment, the ‘Buy {Indian-IDDM (Indigenously Designed, Developed and Manufactured)}’ category has been accorded topmost priority for procurement of capital equipment.
Nationalism aligned capitalism
The Indian capitalism of the 21st century must be led by Indian companies, not the western MNCs. The American companies cannot be trusted, because at the end of the day, they are just an extension of the American state. Therefore, Indian companies must become global leaders in critical areas, and our capitalism must be one that puts nation-first, not the consumerist capitalism of Europe. The indigenous capitalism developed under Modi government will make the country the Vishwa Guru that it used to be for thousands of years.