‘Atmanirbhar Bharat’ & the public ban on Chinese goods–an enormous opportunity waiting to be grabbed
chirajitpaul
Jun 20, 2020
4 min read
To emerge from the economic hole created about by Covid-19 and resultant lockdown, Narendra Modi, the prime minister of India called to build an ‘Atmanirbhar’ Bharat (self-reliant India) which will manufacture most of the products it consumes thereby cutting down dependency of imports. It is supposed to have multi-dimensional benefits – generation of local employment, boost to GDP, correction in balance of trade situations and protecting supply chain in case of global catastrophes such as Covid.
The slogan assumed an unprecedented boost due to aggressive Chinese movement on a long-standing border dispute in Ladakh which brought about death of more than 20 Indian soldiers raising a national uproar.
Much before the brawl between the soldiers broke out (and the deaths) Mr. Sonam Wangchuk, the Magsaysay award winning engineer, innovator and education reformist (also a resident of Ladakh) gave a clarion call to boycott Chinese products and services as a protest against their unnecessary aggression towards India.
The three things combined presents a massive opportunity before the Indian industry to take a giant leap. Bilateral trade between India and China stood at $88 Billion in 2019 with a trade deficit of $53.5 billion in China's favour, which is the largest deficit for India with any nation. Mr Wangchuk’s logic of killing through wallet-power can put an end to the ever-rising deficit. Cheap Chinese goods which have flooded the Indian market through offline and online merchandising has discouraged Indian manufacturing who could not compete on prices (only prices, not technology nor marketability). The reason for the low prices of Chinese goods (which includes counterfeit and poor-quality products) are economies of scale, cheap labour through exploitation, subsidized shipping and other government incentives. Even basic things like electric lamps used for decorative purposes during Diwali and posters of Hindu gods and goddesses put up inside Indian homes came from China.
Some sections have already started a hue and cry over India’s possible cut-down of trade with China as if India will slip back into the stone age if Chinese goods would stop flowing in. As that is not the subject of this discussion, I would refrain from sharing a perspective on that argument. I would rather focus on how India can maximize this opportunity for its own good.
With a lot of migrant labourers returning to their villages, rural India is flooded with skilled and semi-skilled workers longing to find employment locally. With the possibility of a wide range of products now being manufactured by India (mostly for captive use) the timing may just be right for a manufacturing revolution. Products which does not need technological excellence could be produced as part of cottage or MSM (Micro, Small, and Medium) enterprises. The manufacturing can happen close to where the demand (or raw material) is to minimize on shipping time and costs.
To set up enterprises, one will need to identify certain key factors like availability of market, technology, skills, raw materials and capital. Based on the local and viable availability of most of these factors, choice of finished products could be decided. To facilitate the above an experienced and enthusiastic promoter will have to chip in. The promoter, who could be an established business house, could offer management expertise to the cottage enterprises by lending its management executives for the mission. Imagine if the Vice president, Marketing of ITC limited would plan the marketing strategy for locally made electric string lights, or the Finance Controller of a TATA Company draw up the capex layout plan for a stuffed toy facility. And this could be done as a part of CSR (Corporate Social Responsibility).
Blueprint of how the system can work:
Corporate group will start an initiative called ‘groomed enterprises’ which will be a part of the parent organization (say with 20% holding, rest held as a cooperative shareholding by participant villagers) [ex. ABC Pottery Works, a TATA groomed enterprise]. Here, TATA will start with 20% equity and finance the project through bank loans, lend its management staff to draw up strategies and supervise the operations whereas the cooperative shareholders would provide labour and other functional services to manufacture the product. Profits would be distributed to the cooperative shareholders as bonuses/ dividends. TATA’s share of dividends would add to the reverses to build the capital base.
Like this, all the corporates would have a number of groomed enterprises venturing in a range of products and services. Thus, there would be Reliance groomed enterprises, Mahindra groomed enterprises, Birla groomed enterprises, Infosys groomed enterprises etc. Comparable products of different groomed enterprises will compete with each other in the marketplace. The annual report of the parent company would, under the CSR section, report the financial statement of the ‘groomed enterprises’.
This model has the potential to bring about a sea change in the manufacturing and rural economic picture of India taking us much closer to the $5 trillion GDP target (absolute GDP). [NB. In PPP terms India’s GDP is already $11+ trillion – 3rd in global rankings] as set by the prime minister.
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