A plan to make local Indian brands truly global: analysis
On May 12, Prime Minister Narendra Modi said: “Today is the time when India should play a major role in global supply chains.” With global supply chains disrupted by the coronavirus disease pandemic (Covid-19), India can and must turn this crisis into an opportunity. A close reading of the Prime Minister’s speech revealed his vision of a aatma nirbhar Bharat (Self-sufficient India). It is about making India self-confident and self-sufficient to face global competition. Passion for quality and excellence, achieving cost competitiveness through size and scale to penetrate world markets are the mantras we must follow to make India truly aatma nirbhar.
Leading companies like Jio in telephony, Tatas in steel, Mahindra in automobiles, Vedanta in metals and mining, ITC Limited in the fast-moving consumer goods sector, Amul in the dairy sector, among others, are making a name for themselves. same both in the national market. and global stages. These brands, while gaining significant franchises worldwide, are also creating tremendous value for India. The nation needs to transform our local champions into world champions. Brands like ITC and Amul have the processing capabilities and market links to serve the world, benefiting farmers in the process. ITC has invested in cutting-edge research and development to anchor national agricultural value chains. Amul’s success story is not repeated. In automobiles, brands such as Tata, Mahindra, Hero and Bajaj are internationally recognized. FabIndia in clothing and Forest Essentials in wellness and cosmetics are other examples. India must create a policy environment that enables local brands to prosper on the global stage.
Many countries have allowed the creation of world giants, and we must learn from them. Japanese auto companies like Toyota and Honda have dominated the world. South Korea has created tech giants like Samsung and LG. China has allowed the creation of giants in the electronics, toys, clothing and solar energy sectors. The Japanese economic miracle saw a country devastated by war become a world leader. South Korea’s per capita income was $ 158 in 1960, compared to $ 82 in India and $ 89 in China. His per capita income in 2018 was $ 31,362. China and India had similar levels of per capita income in 1990. For 2018, China’s per capita income accelerated to $ 9,770, compared to $ 2,010 for India. These countries fostered the national industry, focused on cost competitiveness, quality, size, scale, and the adoption of cutting-edge technologies to enable global expansion.
The government should facilitate the creation of a aatma nirbhar Bharat. The first way is to allow economies of scale in the manufacturing of Indis. For this, action will be required at the state level. Cross-subsidizing energy, making it cheaper for consumers at the expense of the industry, must go. We need to provide industries with a cheap and regular energy supply to boost their competitiveness, along with the creation of plug-and-play facilities.
The second avenue is land. States must identify and develop large tracts of land and provide them with infrastructure. States must also facilitate the process of labor laws. Uttar Pradesh and Madhya Pradesh have removed the oldest labor laws. Other states that send labor must do the same, while addressing workers’ concerns. The flexibility of the regulatory environment will guarantee that we attract national and foreign capital to our industrial centers.
Related to all this is the urbanization. Self-sufficiency in job creation and domestic demand will be driven by urbanization. Urban innovation, decentralization, and municipal finances will serve as excellent tools to ensure that we implement the Prime Minister’s vision. Decentralization will ensure that cities can govern themselves without over-reliance on central and state governments. Then, we must connect our urban and industrial centers through an efficient infrastructure.
The Center must continue to push to raise infrastructure to world-class standards. The timely acquisition of land, environmental authorizations and the release of funds must be guaranteed so that projects are completed on time. The Ministry of Road and Highway Transport has created a “Bhoomi Rashi” portal to speed up the land acquisition process. All other government departments should adopt this model.
Then the government must boost efficiency in the logistics sector. The response time of the port of India is around 60 hours; 20 hours from China and 12 hours from Korea. Therefore, there is room for improvement. Digitizing ports, moving processes to an online system will reduce compliance costs. Port collaboration decision-making should be implemented as soon as possible. The development of 200 minor ports should be pursued through public-private partnerships.
The government’s role is to create an enabling environment for large-scale manufacturing and sourcing. The private sector must also work to develop flexible and resilient supply chains. They must achieve cost competitiveness through frugal innovation, technology adoption, and leadership, along with a focus on process efficiency. The Prime Minister emphasized that we must raise the quality of products. Therefore, the adoption of global quality standards is essential.
Reforms in agriculture are being hailed as a 1991 moment for the sector. Commercial coal mining and the removal of more than 500 bidding mines will reduce our dependence on mineral imports. Reforms in the civil service and the judiciary are needed to reduce regulatory burdens. India must create an ecosystem that encourages innovation and the development of new technologies. Reforms in learning and education are required, along with the expansion of public investments in human capital so that our workforce is prepared to face the challenges posed by global competition.
Aatma Nirbhar Bharat is not anti-globalization. It is about making India self-confident and self-sufficient to face global competition. It is about driving the socio-economic transformation of India.
Amitabh Kant is Executive Director of NITI Aayog
The opinions expressed are personal.