INSUBCONTINENT EXCLUSIVE:
State should partner with the private sector and support firms, especially midsized ones, that want to open up new markets.4 min read Last
after being elected prime minister in 2014, New Delhi has chased the dream of a prosperous manufacturing sector
stunning degree, these efforts have failed
The value added by Indian manufacturing grew 8.1 per cent between 2001 and 2012
In the decade from 2013, for most of which Modi has been in power, the figure slowed to 5.5 per cent
In 2012-13, exports approached 20 per cent of sales
Last year, they dipped below 7 per cent, and the proportion will likely be even lower this year.
If not for the growth in mobile phone
exports, the numbers would be even more dire
It pushed large parts of its supplier ecosystem, including subcontractors such as Foxconn Technology Co., into India as part of a global
on exports, the entire sector grows, responding to the pull of far larger markets than even India's pool of domestic consumers represents
Automotive components are another successful business in India, and the sector is similarly driven by the global focus of multiple large
And if corporations are all behaving a particular way, it means that they have the wrong incentives.
In this case, the government has
focused corporate energies inwards instead of outwards
components are told by senior officials that they should seek to substitute imports, they will recognize that quicker profits might come
be doing instead? First of all, it needs to resist calls for more tariffs, deeper subsidies and higher trade barriers
While the rich West might be able to afford defensive industrial policies, still-developing India needs to play offense.
Then, authorities
clogged and delay-prone Indian ports
partner with the private sector and support firms, especially midsized ones, that want to open up new markets
There are years of research showing that Indian companies only take advantage of free-trade agreements, for example, when the government
I was at a seminar not long ago with a senior Indian trade bureaucrat
A small manufacturer asked if the government could assist him in finding new markets, especially in African countries with which he was
Modi has spent too long talking up domestic demand and coddling manufacturers
They do not reflect the views of www.business-standard.com or the Business Standard newspaperFirst Published: Oct 04 2024 | 9:38 AMIST
