Make in India to Self-reliance: beyond the semantics

In the address to the nation on 12th May, Prime Minister Narendra Modi announced an economic package worth Rs 20 lakh crore or 10 per cent of GDP, with a view to making India self-reliant and locating it in a strong position in the post Covid-19 world. He elaborated that the break-up of the package would help every section including workers, farmers, middle class and industrial units through various sops and measures.

The response to the announcement has gone on the usual political lines. Those supporting it hailed it as a panacea for the ills that we face today. Those opposing it were obviously less charitable with their response varying from a qualified welcome calling it a delayed decision to deep disappointment and yet another failure to address woes of millions of migrant workers. The opposition, I must say, cut a sorrier figure as they could be seen opposing exactly what they had demanded days back.

A great deal of dissection of the package would take place by experts of many hues; economists, industrialist and politicians on both sides of the divide would chip in with their discourses, especially after the devil in the detail is revealed gradually by the Finance Minister. Many of these would border on the fictive, whether pessimistic or optimistic. Not being able to make good sense of all this din, I leave that to the cognitive ability and judgment of the readers for now. The story, in any case, would soon start unfolding. I am, however, going to extract only a small but catchy part of the announcement.

Prime Minister Narendra Modi said that the country should view the Covid-19 economic crisis as an opportunity to achieve economic self-reliance. In his address to the nation, he stressed on the importance of promoting local products. He called it the Atma-nirbhar Bharat Abhiyan (or Self-reliant India Mission).

This has been given a thumbs up by many as the need of the hour to defend the country against the overwhelming impairment caused by the pandemic; a boost for Indians to capture global opportunities that are staring at us. China, which has nearly 30% share of the world exports at US $2.3 trillion of goods annually, was going to fall out of favour and as the global supply chains are given a makeover, India, with a fairly large domestic market and a potential to export more, has a now or never opportunity. This is another big debate because first, companies would be wary of investing anywhere for sometime unless the global outlook clears up and second, India has not been a favoured destination for global investments because of many reasons and not many of them have changed for the better.

There are advice galore for tweaking regulatory policies and provisions to animate our dormant entrepreneurial spirit and revamp the industrial philosophy to build a new India with global manufacturing moving to India. For example, riding the bandwagon of this one-time requirement of medical equipment is rather cynical; by all means as there is a demand but if we want a manufacturing footprint, it would not come so easily. Manufacture of PPEs and masks in large numbers does not make us great innovators or manufacturers. We cannot set our sights so low that, for a country of our size, with all industries practically at standstill, this be quoted as an achievement. I am neither underplaying this accomplishment not am I the devil’s advocate but we have to guard against becoming a victim of our own rhetoric, fuzzword and mediaspeak.

Leaving that big debate to bigger experts, I wish to red flag some issues related with technology which, to my mind, is at the heart of self-reliance in long term.

Make in India has not taken us too far; this model which merely stipulates 50% value addition in India is open to manipulation and even misuse. USA also has an equivalent Buy America policy and all overseas train makers have to go through a stringent audit verification at component level. Our audit, if at all, is perfunctory. In any case, we need a true Make in India with Design Development as an essential, else we remain an importer of technology or a leased manufacturing space. Privately, as I indulge in some consultancy here and there, I can tell you of umpteen appalling instances of lack of government and corporate support for new home-grown technologies and products. If we don't develop our own, we will continue to hop back to where we were, every fifteen years. There are many with a bee in their bonnets but institutional support prevents us from gathering any honey. 

I have repeatedly said that Transfer of Technology is an oxy-moron. We have learnt enough through this crutch since independence. It is time now to unleash the creator in us. I am not advocating the foolishness to tread in areas where we are still miles behind, I am talking of areas where we can tread and succeed. Readers may like to refer to detailing in the matter in the later part of  

Chapter VI : Our doubts are traitors at this site 

or my blog at

https://www.linkedin.com/pulse/excerpts-from-chapters-v-vi-s-mani/

Are we where Japan was in the fifties or China in the nineties? Yes. But are we ready to take that bull by the horn? I am yet to see those signals.

This omnibus banning of global tenders for value up to Rs 200 crores will not help that much. Let us examine as to why the Make in India policy has not had the desired impact. In local advertised tenders, the Indian liaison agents would quote and even build a small shack to show value addition of some kind. Although the Make in India policy calls for 50% value addition in India if a firm has to qualify for 20% price preference, there are many firms which get away by submitting manipulated documents.

One of the areas which need imports is machine tools? We have to get quality machine tools from abroad whether you do a global tender or not as the home-grown industry has not matured and would not mature merely through the exiting Make in India policy. Machine tools are the engines for quality production and you cannot hit at the wellspring itself. Moreover, there are small niche products which are not only difficult to duplicate and but risky too. A sound policy would be to continue to import these till the volume becomes high enough and amenable to competent indigenization. The price we would pay for misplaced attempts at localization here would be great.

The thrust has to be on large projects. Huge investments can easily drive indigenous efforts. That has been the China story; that was the model followed by China for rolling stock and they have marched ahead since, far ahead of India. They invested heavily in getting all the major rolling stock majors to set up comprehensive units in China on stringent terms favouring genuine transfer of know-why and know-how to China. The volumes offered by China were so great that these companies had no way to resist these terms. Within years the Chinese engineers acquired a capability to challenge these companies globally and now even in the protectionist Europe - a Hobson’s choice for these companies; a perfect example of economic muscle subjugating all the large manufacturers of the world to create a competition for themselves.

And what have we done? It is no secret that to address transportation requirements of people on account of massive urbanisation world over, Metros (and similar. Mass Rapid Transit Systems) have become the quintessential solutions and India has been no exception. The massive improvement in technology has also resulted in new generation design, functionality, efficiencies etc. Leaving aside the nostalgic Kolkata Metro initiative of 1984, which indeed was an engineering challenge then; it was met successfully in those constrained days, albeit sans the frills. On the other hand, starting with Delhi Metro during early 2000, in the last 20 years, new generation Metro projects have been taken up in India, usually in collaboration with respective state governments and viability gap funding.

To put things in perspective, just imagine what our country has invested in Metros. Rs 5 to 6 lakh crores already with another Rs 4 lakh crores in pipeline. Revised to present worth, this would be much greater. Approx. 30% to 40% of this would be in rolling stock and signalling, i.e., some 2 lakh crores. Is there any country in the world which would spend this kind of money and yet have no indigenous design or substantial high end manufacture in India to show for? Only low end work is done in the country. As for home-grown technology itself, there is hardly any.

Why are Metro trains and signalling holy cows? The Mumbai suburban locals move at higher speeds and at times greater frequency. These suburban trains and their equipment are now fully designed and manufactured in India. These trains may not meet the decorative or aesthetics standards of Metro trains but ICF can do Metro-equivalent trains at much smaller price as Train 18 initiative has shown to the world.

The story of rolling stock and signaling in Indian Metros is one of continuing stranglehold of multinational companies and elimination of India-grown technology competitors in large Indian Metro project opportunities. The specifications and eligibility criteria are designed to eliminate local companies. Will that change? Will the government beard this lion in his den? If they dare to do this, we would see meaningful movement on the path of this proverbial self-reliance. Otherwise, it would remain the buzzword it is not meant to be.