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The Prime Minister has shared his vision on Atmanirbhar Bharat. What kind of policy framework do you think needs to be put into place to make India more self reliant?
It is very clear that under the Atmanirbhar Bharat vision set by the Prime Minister, the domestic sector will have to be made more competitive. We will build scale and size and target-specific areas of global value chains and enhance our contribution to global trade. It was not about isolation as some have said. It is not about anti-globalisation. It is about actually penetrating global markets and using the strength of our domestic markets to do this and to achieve this we have a three-pronged strategy. One, invite investments both FDI and domestic into sectors of strength. Second, build scale to ensure economies of scale in the areas of strength and third, really kindle the animal spirits of entrepreneurs in India.
It is critical that we really push for this. We have already initiated several policy measures and we have brought in the production-linked incentives in mobile and electronics, in APIs and pharma and in medical devices, and we will continue to push for radical reforms so that India becomes easy and simple and we continue to push for growth.
I am not drawing you to political waters but Make in India was also a campaign which was in a sense unveiled by the current administration a couple of years ago. Some would argue, it never really saw the success with which it was really launched and ideated. So how is Atmanirbhar really different from Make in India?
People do not realise that because of Make in India, we could focus on ease of doing business. We jumped up 79 positions on the ease of doing business ranking. We could open almost all sectors of India’s economy through FDI and our FDI consistently grew over the last five years. This year we are receiving close to about $80 billion from foreign direct investment. Just imagine if this had not happened. FDI has brought along with it a lot of technology.
Thirdly, it is because of Make in India thrust we could focus on a new patent policy. We could really reduce the massive pendency on patent rights and patents and trademarks were pending for a very long time. In India we do not produce to size and scale and while we have subsidised agriculture, kept tax out from the services sector for a very long, we have penalised the manufacturing sector simply by land being at very high cost, through labour laws which have protected a small size and by ensuring that electricity costs are almost 2.5 times of other destinations. If you want to make manufacturing efficient in India, you have got to take care of these aspects. Without that, it will not happen. I think the focus this time is to really make manufacturing efficient and to make it globally competitive. There are several reforms which have been taken in this direction.
I saw your tweet yesterday that you are in support of India’s ban on Chinese apps. Why is that? Some would argue is it not against complete deglobalisation?
My view always has been that India has to be a data sovereign country. Any app released here has to respect data sovereignty. Secondly, my belief is that many of these apps are actually lifestyle apps. They are not utility apps and they should adhere to India’s data integrity, privacy, transparency and sovereignty. They must be transparent as far as the origin and final destination of data is concerned. This is critical to my mind.
Secondly, China as you are fully aware, has grown and evolved and developed as far as the tech world is concerned by totally closing the rest of the world. Google, Twitter none of them operate in China and you have to provide an equal field to everyone. So you allow your products to develop, do not allow other products to come in and create an imbalance and then you allow them to penetrate Indian markets. We have been very open about this because we believe in a free market economy but I think there was a challenge about the transparency of origin and final destination of data and I think that is critical.
Some would argue that in India you had two large success stories: one is pharma and second is auto. Now they both are big industries. One is based on chemistry and the other is based on supply chain. Why do you think other industries and other entrepreneurs are not able to achieve that?
My personal view is that India has a comparative and competitive advantage in nearly 15 sectors; around 14 to 15 sectors in the rest of the world. We have a comparative advantage to my mind in quite a few areas: chemicals, pharmaceuticals, leather, textile and food products. We enjoy substantial comparative advantage in terms of services trade with the rest of the world. But we have to make ourselves very competitive as far as land, labour and electricity is concerned. Now one of the challenges is that quite often, we get into the sunset areas of industry where it is very difficult to penetrate because other countries have already gotten into it. We need to get into sunrise areas and bring size and scale.
Secondly, it is very important that we focus on democratic things. Therefore, we start supporting all the sectors under the sun and start supporting every single exporter or producer. Look at the MEI scheme and the way it was expanded. We spent Rs 50,000 crores but we support even small exporters. Whereas if you look at the strategy followed in South Korea, they created global champions like Samsung and Hyundai. We support them to become a global champion and then they can do backward integration with the small MSME sector.
I think our strategy should be that we identify about 14-15 sectors, we identify global champions and we really support them and make them really big players. Along with that, you will see the MSME sector growing. Therefore, my personal view is that India must create big time global champions in several sectors and that is one approach we have taken through this production-linked incentive scheme. I think we need to do the same thing with automobiles, we need to do that in textile and in food processing to become a global champion.
But in order to be competitive, we have to automate more. If one of the underlying themes of Atmanirbhar Bharat is job creation, do you think somewhere that will get defeated because when you speak about size and scale, they require a lot of automation and the minute you start automating, you will become efficient but you will not create jobs.
India already has a very strong manufacturing base in high value segments that are already quite highly automated. You look at automobiles and mobile manufacturing. Even though these segments are highly automated in aggregate terms, they also create huge employment opportunities by providing jobs to very highly skilled workers and India has a plethora of high-skilled engineers and workers who are already pretty adept with working in automated settings. My view is that automation will only be a boon and not a curse. It will actually help us to move forward and Indians are quite skilled as far as this is concerned.